SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------------
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1994
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-9786
THERMO INSTRUMENT SYSTEMS INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-2925809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
504 Airport Road, Post Office Box 2108
Santa Fe, New Mexico 87504-2108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
---------------------------- -----------------------
Common Stock, $.10 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to the
filing requirements for at least the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference into Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of January 27, 1995, was approximately $218,981,000.
As of January 27, 1995, the Registrant had 47,570,240 shares of Common
Stock outstanding.
Documents Incorporated by Reference
Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1994, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on May 22, 1995, are incorporated by
reference into Part III.
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PART I
Item 1. Business
(a) General Development of Business.
Thermo Instrument Systems Inc. (the Company or the Registrant) is a
worldwide leader in the development, manufacture, and marketing of
analytical instruments used to detect and measure air pollution, nuclear
radioactivity, complex chemical compounds, toxic metals, and other elements
in a wide variety of materials. The Company also markets process monitoring
and control instruments primarily for the oil, gas, and petrochemical
industries. Through its 86%-owned subsidiary, ThermoSpectra Corporation
(ThermoSpectra), the Company develops, manufactures, and markets precision
imaging, inspection, and measurement instrumentation that employ a variety
of energy sources or signals as well as high-speed data acquisition and
digital processing technologies. In 1994, the Company's ThermoSpectra
subsidiary sold 1,505,000 shares of its common stock in private placements
at $10.00 per share for net proceeds of $14.0 million, resulting in a gain
of $6.5 million.
Effective April 4, 1994, the Company formed an environmental services
joint venture with Thermo Process Systems Inc. (Thermo Process), another
public subsidiary of Thermo Electron Corporation (Thermo Electron). The
joint venture operates under the name Thermo Terra Tech. The Company
contributed the analytical laboratories and the nuclear health physics and
environmental science and engineering services businesses that comprised
its Services segment. Thermo Process contributed its environmental
laboratory business, which specializes in fast-response testing of
petroleum-contaminated soils and groundwater, and approximately $31 million
in cash and short-term investments.
The Company owns 49% of Thermo Terra Tech and accounts for its
interest in the joint venture using the equity method. As a result, the
Services segment operations are no longer consolidated in the Company's
financial statements. Under the terms of the joint venture agreement,
66.67% of income earned by the joint venture after April 4, 1994, will be
allocated to the Company until the first to occur of (a) the joint venture
has accumulated $5.1 million in net profits, (b) April 1, 1995, or (c) the
date on which at least 70% of Thermo Process' cash contribution to the
joint venture is first invested in one or more additional businesses.
Thereafter, the Company's share of the joint venture's income will be 49%.
The Company historically has expanded both through the acquisition of
companies and product lines and through internal development of new
products and technologies. During the past several years the Company has
completed several complementary acquisitions that have provided additional
technologies, specialized manufacturing or product development expertise,
and broader capabilities in marketing and distribution. In 1994*, the
Company's acquisitions included the assets of IRT Corporation for a
purchase price of $7.3 million, and several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes Incorporated
(Baker Hughes) for a purchase price of $89.7 million. On January 1, 1995,
the Company acquired the assets of the Analytical Instruments Division of
* References to 1994, 1993, and 1992 herein are for the fiscal years ended
December 31, 1994, January 1, 1994, and January 2, 1993, respectively.
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Baird Corporation, a wholly owned subsidiary of Imo Industries Inc., for
$12.3 million in cash, subject to a post-closing adjustment. On March 1,
1995, the Company entered into an Asset and Stock Purchase Agreement (the
Agreement) with Fisons plc (Fisons) under which the Company agreed to
acquire the Scientific Instruments Division (the Division) of Fisons for
202 million British pounds sterling. The Division is principally composed
of operations that are involved in the research, development, manufacture,
and sale of analytical instruments to industrial and research laboratories
worldwide. Consummation of the acquisition is subject to several
conditions, including approval by Fisons shareholders, regulatory
approvals, consent of certain third parties, and customary conditions to
closing. The Company intends to fund the purchase price from available cash
and through borrowings from Thermo Electron. Thermo Electron has guaranteed
the obligations of the Company under the Agreement. The purchase price is
subject to a post-closing adjustment based on the net asset value of the
Division as of the closing date.
The Company was incorporated in Delaware in May 1986 as a wholly owned
subsidiary of Thermo Electron to succeed the instruments businesses that
were previously conducted by several Thermo Electron subsidiaries. As of
December 31, 1994, Thermo Electron owned 39,634,271 shares, or 83%, of the
Company's outstanding common stock. Thermo Electron is a major manufacturer
of biomedical products including heart-assist systems and mammography
systems, papermaking and recycling equipment, alternative-energy systems,
industrial process equipment, and other specialized products. Thermo
Electron also provides environmental and metallurgical services and
conducts advanced technology research and development.
Thermo Electron intends, for the foreseeable future, to maintain at
least 80% ownership of the Company, so that it may continue to file
consolidated U.S. federal and state income tax returns with the Company.
This may require the purchase by Thermo Electron of additional shares of
common stock and/or convertible debentures of the Company from time to time
as the number of outstanding shares of the Company increases. These and any
other purchases may be made either on the open market or directly from the
Company or pursuant to conversions of the Company's 7% subordinated
convertible note due 1996 or the 3 3/4% senior convertible note due 2000
held by Thermo Electron. See Notes 5 and 11 to Consolidated Financial
Statements in the Registrant's 1994 Annual Report to Shareholders for a
description of the Company's outstanding stock options and convertible
obligations. During 1994, Thermo Electron purchased 1,931,327 shares of the
Company's common stock on the open market at a total cost of $57.4 million.
(b) Financial Information About Industry Segments.
The Company operates in one business segment: the manufacturing and
marketing of analytical, monitoring, and process control instruments used
to detect and measure air pollution, radioactivity, complex chemical
compounds, toxic metals and other elements in a broad range of liquids and
solids, as well as to control and monitor various industrial processes
(the Instruments Segment). Prior to April 4, 1994, the Company also
provided environmental science and engineering services, laboratory-based
testing, and nuclear physics services, which comprised the Company's
Services segment. These services are now being provided by the Thermo Terra
Tech joint venture.
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Financial information concerning the Company's industry segments is
provided in Note 13 to Consolidated Financial Statements in the
Registrant's 1994 Annual Report to Shareholders and is incorporated herein
by reference.
(c) Description of Business.
(i) Principal Products and Services
Instruments manufactured and marketed by the Company employ a variety
of advanced technologies and spectral, electroanalytical, and separation
techniques to determine the composition, structure, and physical properties
of natural and synthetic substances. The Company's instruments can be
broadly categorized by their use as analytical, monitoring, or process
control instruments.
Analytical Instruments
The Company's principal analytical instrument products are atomic
emission and absorption spectrometers, Fourier transform infrared (FT-IR)
and FT-Raman spectrometers, mass spectrometers, high performance liquid
chromatographs, gas chromatographs, and X-ray fluorescence instrumentation.
Atomic Emission (AE) and Atomic Absorption (AA) Spectrometers identify
and measure trace quantities of metals, and other elements in a wide
variety of materials, including environmental samples (such as soil, water,
and wastes), foods, drugs, cosmetics, and alloys. The Company sells its
products to a wide range of customers in manufacturing industries such as
producers of aircraft, automobiles and trucks, computers, chemicals, food,
pharmaceuticals, and primary metals; service industries such as waste
management companies and commercial testing laboratories; and government
and university laboratories.
The Company is a leading manufacturer of sequential AE spectrometers,
in which elements are analyzed one at a time, and simultaneous AE
spectrometers, in which many elements can be measured at the same time. The
Company produces AA spectrometers in single-, double- and four-channel
models. The Company is the only major producer of multichannel AA
spectrometers, which provide several operational advantages over
single-channel instruments, including speed of analysis, increased
accuracy, reduced sample consumption, and analysis over an extended range
of concentrations.
The Company's FT-IR and FT-Raman spectrometers are designed to
nondestructively determine the chemical composition and physical properties
of materials. These instruments are used in many areas of chemical
research, industrial quality control and process monitoring, and for
solving a wide variety of materials analysis problems. The Company offers a
variety of models ranging from newly introduced models designed for routine
applications to highly advanced research-grade FT-IR spectrometers.
The Company is a leading manufacturer of commercial mass spectrometers
and has pioneered many of the significant developments and applications of
mass spectrometry. The Company's mass spectrometry products identify and
measure the components of a sample for organic chemical compounds or for
inorganic compounds. These instruments are used by customers in
environmental analysis and pollution control; in research and production of
pharmaceuticals; in biochemistry; in analysis of foods, chemicals, and
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petrochemicals; and in health and forensic science. The Company provides
both stand-alone mass spectrometers and combined systems that use its own
chromatographs or those purchased from other companies. These products span
a range of sensitivity, specificity, separation technologies, data-handling
capabilities, sizes, and prices.
The Company sells high performance liquid chromatography, capillary
electrophoresis, and related instruments and equipment used principally in
the research and development and production monitoring of pharmaceuticals,
chemicals, and personal-care products, and for environmental monitoring.
These instruments separate the chemical components of substances for
purposes of identification and measurement. Capillary electrophoresis is a
relatively new separation technique that is based on a combination of
chromatographic and electroanalytical technologies and is particularly
useful in biochemical, pharmaceutical, and environmental research.
In 1994, with its acquisition of the Tremetrics and TN Technologies
businesses from Baker Hughes, the Company added two analytical testing
technologies: gas chromatography and X-ray fluorescence. Gas chromatographs
are widely used in environmental and industrial laboratories as stand-alone
instruments or in conjunction with mass spectrometers, where the gas
chromatograph separates a sample into individual chemical components for
the mass spectrometer to identify. Applications include the identification
of organic compounds, from pesticide residues on vegetables to chlorinated
organics in drinking water. The Company sells a wide variety of gas
chromatography detectors that measure trace levels of pollutants in water,
soil, and air. X-ray fluorescence instruments allow for the nondestructive
analysis of inorganic elements. Applications include alloy identification,
on-line process monitoring and quality control, characterization of toxic
metals in soil, and thickness and/or composition of semiconductor thin
films. In addition, the Company manufactures and markets digital
oscilloscopes, multichannel transient recorders, high-resolution waveform
analyzers, laser scanning confocal microscopes, and X-ray microanalysis
equipment, as well as X-ray imaging systems used for quality assurance and
failure analysis applications primarily in the electronics industry.
Monitoring Instruments
The Company manufactures monitoring instruments for two principal
markets: the detection and measurement of nuclear radiation, and the
monitoring of air pollutants including toxic and combustible gases.
The Company's nuclear radiation monitoring instruments detect and
measure alpha, beta, gamma, neutron, and X-ray radiation emitted by natural
sources and by radioactive materials used in nuclear power plants and
certain governmental, industrial, and medical facilities. The Company is a
leading manufacturer of a broad range of stand-alone and portable
instruments and computer-integrated instrument systems used to ensure the
safety of personnel from exposure to nuclear radiation. Nuclear power
plants and U.S. Department of Energy (DOE) facilities purchase
approximately 70% of the radiation monitoring instruments sold by the
Company. The businesses acquired from FAG Kugelfischer Georg Shafer AG in
1993 provide two classes of products. The radiation safety-measurement
products division is a major supplier of instruments and systems that are
manufactured to European standards for personnel protection and
environmental monitoring. The radiometry division manufactures industrial
gauging and process control instruments used principally by manufacturers
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of flat sheet materials, including metals, plastics, rubber, paper, and
fibers.
The Company's air-monitoring instruments measure pollutants in ambient
air and from stationary sources such as industrial smokestacks. The
principal pollutants measured are oxides of nitrogen, sulfur dioxide,
carbon monoxide, ozone, and volatile organic compounds (VOCs). These
instruments are used by utility and industrial customers to ensure
compliance with environmental regulations, by government agencies to
monitor air quality, and by research facilities. The Occupational Safety
and Health Administration's safety requirements for protecting workers from
toxic or explosive atmospheres in confined spaces are addressed with the
Company's detectors, instruments, and systems for sensing, monitoring, and
warning of such dangers. These worker-safety products are used in a wide
range of applications, from large petrochemical plants, utilities, and
industrial manufacturing facilities to commercial buildings.
In addition, the Company manufactures equipment that provides on-line,
real-time analysis of elements in bulk raw materials, such as coal and
cement. These analyzers are used by utilities to determine the sulfur
content of coal to ensure compliance with air quality standards and by the
cement industry to test raw materials to assure product quality and
uniformity.
Process Control Instruments
With the 1994 acquisition of the EnviroTech Controls business from
Baker Hughes, the Company now addresses the process monitoring, analysis,
gauging, and control instruments market, primarily for the oil, gas, and
petrochemical industries.
The Company manufactures and markets a number of process monitoring,
analysis, and control systems including: analog and digital recorders for
continuous process industries; process and laboratory analytical
instruments and monitors to detect lethal gases for the oil, gas, and
petrochemical industries; supervisory control and data acquisition software
for process monitoring and operator interface in a variety of industrial
processes; and turnkey, integrated systems to control networks of distant
oil and gas wells.
The Company also manufactures and markets process gauges and
noncontacting and nonintrusive process control instrumentation to measure
liquid levels, density, weight, and flows for a variety of industries.
Application examples include measuring levels in a pharmaceutical reactor,
determining the percentage by weight of solids contained in a mining
slurry, or monitoring the flow of fluid into a wastewater treatment
facility.
In addition to analytical, monitoring, and process control
instruments, the Company supplies related accessories, spare parts, and
instrument maintenance and training programs at its own and its customers'
facilities.
Thermo Terra Tech Joint Venture
Effective April 4, 1994, the Company formed an environmental services
joint venture with Thermo Process Systems Inc., another public subsidiary
of Thermo Electron. The Company contributed the analytical laboratories and
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the nuclear health physics and environmental science and engineering
services businesses that comprised its Services segment. Thermo Process
contributed its environmental laboratory business, which specializes in
fast-response testing of petroleum-contaminated soils and groundwater, and
approximately $31 million in cash and short-term investments. The Company
owns 49% of Thermo Terra Tech and accounts for its interest in the joint
venture using the equity method.
Thermo Terra Tech provides comprehensive laboratory-based
environmental testing, analysis, and related services for the detection,
measurement, and monitoring of hazardous wastes and radioactive materials.
Thermo Terra Tech's services also include design and construction
inspection of water supply and wastewater treatment facilities, surveying
and site planning, transportation engineering services, solid waste
management services, and building services.
Customers and Marketing
The Company sells many of its products and services to customers whose
activities are subject to numerous environmental quality, pollution
control, and occupational safety and health regulations and laws enacted by
federal, state, and local governments and by international accord.
Customers include industrial manufacturers, environmental laboratories,
utilities, waste management and treatment facilities, and government
agencies. The Company's analytical instruments are also used in biomedical
applications such as analysis of drugs and drug metabolites; in academic
and industrial chemical research; in forensic science; in energy and
mineral resource exploration and production; in metals processing; and in a
range of product quality assurance and process monitoring applications. The
Company's process control instrumentation is used primarily in the oil,
gas, and petrochemical industries.
The Company sells its products through its own marketing and sales
force in North America, Europe, and Asia and receives additional market
coverage through authorized representatives throughout the world. Some
products are distributed through original equipment manufacturer (OEM)
agreements. The Company's products are installed and serviced in most major
markets by the Company's personnel. Installation and service in some
countries are provided by authorized representatives. Customers may
purchase service contracts from the Company to cover equipment no longer
under warranty, and service work also is provided on a time, materials, and
expense basis. Training courses on both the operation and maintenance of
the Company's products are conducted for customers and authorized
representatives who service the products.
(ii) & (xi) New Products; Research and Development
The Company maintains active programs for the development of new
products using both new and existing technologies and for enhancing
existing products by improving their price-performance ratio. The
development of new applications for analytical instrument products is an
especially important element of the growth strategy for these products.
Although the Company's products are subject to obsolescence due to
technological developments, sudden obsolescence is not characteristic of
the Company's business.
Research and development expenses for the Company were $42,924,000,
$34,510,000, and $26,138,000 in 1994, 1993, and 1992, respectively.
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(iii) Raw Materials
The Company manufactures many of the parts and subsystems used in its
products, including optical components and proprietary circuitry. Other
components, including packaging materials, integrated circuits,
microprocessors, and computers, are manufactured by others. The raw
materials, components, and supplies purchased by the Company are either
available from a number of different suppliers or from alternative sources
that could be developed without a material adverse effect upon the
Company's business.
(iv) Patents, Licenses, and Trademarks
The Company's policy is to protect its intellectual property rights,
including applying for and obtaining patents when appropriate. The Company
also enters into licensing agreements with other companies in which it
grants or receives rights to specific patents and technical know-how.
Patent protection is believed to provide the Company with competitive
advantages with respect to certain instruments such as its mass
spectrometers with ion traps. The Company also considers technical
know-how, trade secrets, and trademarks to be important to its business.
(v) Seasonal Influences
There are no significant seasonal influences on the Company's sales of
its products.
(vi) Working Capital Requirements
There are no special inventory requirements or credit terms extended
to customers that would have a material adverse effect on the Company's
working capital requirements.
(vii) Dependency on a Single Customer
The Company's Instrument Segment is not dependent upon a single
customer, or a few customers. The Company's former Services segment, the
business of which is now conducted by the Thermo Terra Tech joint venture,
derived approximately 30%, 31%, and 30% of its revenues in the three-month
period ended April 2, 1994 and in 1993 and 1992, respectively, from
contracts or subcontracts with the federal government. No single customer
accounted for more than 10% of the Company's revenues in any of the past
three years.
(viii) Backlog
The backlog of firm orders for the Instruments segment as of December
31, 1994 and January 1, 1994 was $139,596,000 and $115,620,000,
respectively. The backlog of firm orders for the Company's former Services
segment as of January 1, 1994, was $26,196,000. The Company anticipates
that substantially all of the backlog at December 31, 1994, will be shipped
or completed within the current fiscal year.
(ix) Government Contracts
Not applicable.
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(x) Competition
The Company generally competes on the basis of technical advances that
result in new products and improved price-performance ratios, reputation
among customers as a quality leader for products and services, and active
research and application-development programs. To a lesser extent, the
Company competes on the basis of price.
The Company believes it is among the principal manufacturers
specializing in analytical instrumentation, although it faces significant
competition from other companies, many of which are larger than the
Company, and technologies in most of its product lines and its relative
position in certain markets cannot be determined due to insufficient data.
The Company believes it is a leading supplier of mass spectrometers, FT-IR
spectrometers, FT-IR and FT-Raman microscopes, and optical plasma-emission
spectrometers and a major supplier of atomic absorption spectrometers. In
liquid chromatography, the Company believes its competitors include several
larger companies and numerous specialty manufacturers. In its remaining
analytical instrument product lines, the Company believes its competitors
are mainly smaller, specialized firms.
The Company is a leading manufacturer of ambient air monitoring
instruments and a major manufacturer of source monitoring and worker-safety
monitoring instruments. Some engineering companies compete for large
ambient air monitoring installations, but they do not manufacture the
individual instruments that form a major part of the system, therefore,
they will often buy these from the Company on an OEM basis.
The Company has a relatively small presence within the large and
varied process control marketplace, which is extremely fragmented and
comprises several large companies and numerous smaller companies.
(xii) Environmental Protection Regulations
The Company believes that compliance by the Company with federal,
state, and local environmental regulations will not have a materially
adverse effect on its capital expenditures, earnings, or competitive
position.
(xiii) Number of Employees
As of December 31, 1994, the Company employed 3,966 people.
(d) Financial Information About Exports by Domestic Operations and About
Foreign Operations.
Financial information about exports by domestic operations and about
foreign operations is summarized in Note 13 to Consolidated Financial
Statements in the Registrant's 1994 Annual Report to Shareholders and is
incorporated herein by reference.
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(e) Executive Officers of the Registrant.
Present Title (Year First Became Executive
Name Age Officer)
--------------------- ---- ------------------------------------------
Arvin H. Smith 65 President and Chief Executive Officer (1986)
John N. Hatsopoulos * 60 Vice President and Chief Financial Officer
(1988)
Denis A. Helm 55 Senior Vice President (1986)
Earl R. Lewis 51 Senior Vice President (1990)
Richard W. K. Chapman 50 Vice President (1994)
Barry S. Howe 39 Vice President (1994)
Paul F. Kelleher 52 Chief Accounting Officer (1986)
* John N. Hatsopoulos and George N. Hatsopoulos, a director of the Company,
are brothers.
Each executive officer serves until his successor is chosen or
appointed by the Board of Directors and qualified or until earlier
resignation, death, or removal. All executive officers, except Mr. Chapman,
have held comparable positions for at least five years either with the
Company or with its parent company, Thermo Electron. Mr. Chapman has held
management positions at the Company's Finnigan Corporation (Finnigan)
subsidiary since 1989, first as marketing manager and, beginning in 1992,
as president. Messrs. Helm, Lewis, Chapman, and Howe are full-time
employees of the Company. Messrs. Smith, Hatsopoulos, and Kelleher are
full-time employees of Thermo Electron, but devote such time to the affairs
of the Company as the Company's needs reasonably require.
Item 2. Properties
The Company owns approximately 1,203,000 square feet of office,
engineering, laboratory, and production space, principally in California,
Colorado, Florida, New Mexico, Texas, Wisconsin, Germany, and England, and
leases approximately 957,000 square feet of office, engineering,
laboratory, and production space under leases expiring from 1995 to 2017,
principally in California, Massachusetts, Connecticut, Texas, Wisconsin,
Japan, and Germany. As of December 31, 1994, the Company has a $10,855,000
mortgage loan that is secured by 200,000 square feet of property in
California with a net book value of $16,564,000. The Company believes that
its facilities are in good condition and are suitable and adequate for its
present operations and that suitable space is readily available if any of
such leases are not extended.
Item 3. Legal Proceedings
The Company has been notified that the Environmental Protection Agency
has determined that a release or a substantial threat of a release of a
hazardous substance, as defined in the Comprehensive Environmental Response
Compensation and Liability Act of 1980 (CERCLA or the Superfund law),
occurred at two sites to which chemical or other wastes generated by the
manufacturing operations of subsidiaries of the Company were sent. The
notifications allege that these subsidiaries may be potentially responsible
parties with respect to the remedial actions needed to control or clean up
any such releases. Under CERCLA, responsible parties can include current
and previous owners of the site, generators of hazardous substances
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disposed of at the site, and transporters of hazardous substances to the
site. Each responsible party can be jointly and severally liable, without
regard to fault or negligence, for all costs associated with the
remediation of the site. In each instance the Company believes that its
subsidiary is only one of several companies which received such
notification and who may likewise be held liable for any such remedial
costs. The Company also is involved with one site under California law
where the Company may be required to participate in remediation.
The Company evaluates its potential liability as a responsible party
for these environmental matters on an ongoing basis based upon factors such
as the estimated remediation costs, the nature and duration of the
Company's involvement with the site, the financial strength of other
potentially responsible parties, and the availability of indemnification
from previous owners of acquired businesses. Estimated liabilities are
accrued in accordance with Statement of Financial Accounting Standards No.
5, "Accounting for Contingencies." To date, the Company has not incurred
any significant liability with respect to any of these sites and the
Company anticipates that future liabilities related to sites with which the
Company is currently involved will not have a materially adverse effect on
the Company's business, results of operations or financial condition.
On September 27, 1993, Analytica of Branford, Inc. (Analytica) filed a
complaint against the Company's Finnigan subsidiary in U.S. District Court
for the District of Connecticut. The complaint alleges that Finnigan has
used apparatus, and has manufactured and sold products which aid and
instruct end-purchasers to use the apparatus, in a manner so as to infringe
a U.S. patent entitled "Method of Producing Multiply Charged Ions and For
Determining Molecular Weights of Molecules By Use of the Multiply Charged
Ions of Molecules", and asks for injunctive relief, profits, unspecified
damages, and attorney's fees. The Company believes that the Finnigan
products and applications which Analytica seeks to challenge may include
mass spectrometers equipped with electrospray ionization sources which are
used for multiple charged ion analysis of high molecular weight compounds.
Finnigan has filed its answer denying infringement and also has
counterclaimed for a declaration that the Analytica patent be held invalid
and not infringed. Discussions between the parties, including settlement
discussions, are continuing. No trial date has been set.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Information concerning the market and market price for the
Registrant's Common Stock, $.10 par value, and dividend policy is included
under the sections labeled "Common Stock Market Information" and "Dividend
Policy" in the Registrant's 1994 Annual Report to Shareholders and is
incorporated herein by reference.
Item 6. Selected Financial Data
The information required under this item is included under the
sections labeled "Selected Financial Information" and "Dividend Policy" in
the Registrant's 1994 Annual Report to Shareholders and is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required under this item is included under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's 1994 Annual Report to Shareholders and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements as of December 31,
1994, are included in the Registrant's 1994 Annual Report to Shareholders
and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
The information concerning directors required under this item is
incorporated herein by reference from the material contained under the
caption "Election of Directors" in the Registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission pursuant
to Regulation 14A, not later than 120 days after the close of the fiscal
year. The information concerning delinquent filers pursuant to Item 405 of
Regulation S-K is incorporated herein by reference from the material
contained under the heading "Disclosure of Certain Late Filings" under the
caption "Stock Ownership" in the Registrant's definitive proxy statement to
be filed with the Securities and Exchange Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year.
Item 11. Executive Compensation
The information required under this item is incorporated herein by
reference from the material contained under the caption "Executive
Compensation" in the Registrant's definitive proxy statement to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A, not
later than 120 days after the close of the fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required under this item is incorporated herein by
reference from the material contained under the caption "Stock Ownership"
in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later
than 120 days after the close of the fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required under this item is incorporated herein by
reference from the material contained under the caption "Relationship with
Affiliates" in the Registrant's definitive proxy statement to be filed with
the Securities and Exchange Commission pursuant to Regulation 14A, not
later than 120 days after the close of the fiscal year.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a), (d) Financial Statements and Schedules.
(1) The consolidated financial statements set forth in the list
below are filed as part of this Report.
(2) The consolidated financial statement schedule set forth in
the list below is filed as part of this Report.
(3) Exhibits filed herewith or incorporated herein by reference
are set forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this
Item 14.
Information incorporated by reference from Exhibit 13 filed
herewith:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Certain Financial Statement Schedules filed herewith:
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or not required, or because the required information is shown
either in the financial statements or the notes thereto.
(b) Reports on Form 8-K.
During the quarter ended December 31, 1994, the Registrant was
not required to file, and did not file, any Current Report on
Form 8-K. On March 6, 1995, the Company filed a Current Report on
Form 8-K pertaining to its pending acquisition of Fisons plc.
(c) Exhibits.
See Exhibit Index on the page immediately preceding exhibits.
14PAGE
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 7, 1995 THERMO INSTRUMENT SYSTEMS INC.
By: Arvin H. Smith
------------------------------
Arvin H. Smith
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of March 7, 1995.
Signature Title
By: Arvin H. Smith President, Chief Executive Officer
Arvin H. Smith and Director
By: John N. Hatsopoulos Vice President, Chief Financial Officer
John N. Hatsopoulos and Director
By: Paul F. Kelleher Chief Accounting Officer
Paul F. Kelleher
By: Marshall J. Armstrong Director
Marshall J. Armstrong
By: Frank Borman Director
Frank Borman
By: Elias P. Gyftopoulos Director
Elias P. Gyftopoulos
By: George N. Hatsopoulos Chairman of the Board and Director
George N. Hatsopoulos
By: Robert C. Howard Director
Robert C. Howard
By: Frank Jungers Director
Frank Jungers
By: Robert A. McCabe Director
Robert A. McCabe
By: Polyvios C. Vintiadis Director
Polyvios C. Vintiadis
15PAGE
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors of
Thermo Instrument Systems Inc.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo
Instrument Systems Inc.'s Annual Report to Shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 10, 1995 (except with respect to the matters discussed in Note 14
as to which the date is March 1, 1995). Our audits were made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14 on page 14 is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic consolidated
financial statements and, in our opinion, fairly states, in all material
respects, the financial data required to be set forth therein in relation
to the basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
February 10, 1995
16PAGE
<PAGE>
SCHEDULE II
THERMO INSTRUMENT SYSTEMS INC.
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Bad Less:
Charged Debts Ac-
Balance at to Costs Re- counts Balance
Beginning and Acquisi- Disposi- cover- Written at End
Description of Year Expenses tions(a) tions(a) ed Off of Year
--------------------------------------------------------------------------
Year Ended
December 31, 1994
Allowance for
Doubtful
Accounts $8,456 $ 733 $4,763 $(2,696) $ 259 $(2,736) $8,779
Year Ended
January 1, 1994
Allowance for
Doubtful
Accounts $7,276 $ 970 $1,322 $ (586) $1,241 $(1,767) $8,456
Year Ended
January 2, 1993
Allowance for
Doubtful
Accounts $7,096 $ 666 $ 985 $ - $ (42) $(1,429) $7,276
(a) As described in Notes 3 and 4 to Consolidated Financial Statements in
the Registrant's 1994 Annual Report to Shareholders.
17PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- --------------------------------------------------------- ----
2.1 Asset and Stock Purchase Agreement between Thermo
Electron Corporation and Baker Hughes Incorporated dated
January 28, 1994 (filed as Exhibit 2.1 to the
Registrant's Current Report on Form 8-K relating to
events occurring on March 16, 1994 [File No. 1-9786] and
incorporated herein by reference).
2.2 Assignment and Assumption Agreement dated March 16, 1994
among Thermo Electron Corporation, Thermedics Inc. and
the Registrant (filed as Exhibit 2.2 to the Registrant's
Current Report on Form 8-K relating to events occurring
on March 16, 1994 [File No. 1-9786] and incorporated
herein by reference).
2.3 Asset and Stock Purchase Agreement among the Registrant,
Thermo Electron Corporation and Fisons plc dated March
1, 1995. Pursuant to Item 601(b)(2) of Regulation S-K,
schedules to this Agreement have been omitted. The
Company hereby undertakes to furnish supplementally a
copy of such schedules to the Commission upon request.
3.1 Restated Certificate of Incorporation of the Registrant,
as amended (filed as Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994 [File No. 1-9786] and incorporated
herein by reference).
3.2 By-Laws of the Registrant (filed as Exhibit 3(b) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993 [File No. 1-9786] and
incorporated herein by reference).
4.1 Fiscal Agency Agreement dated as of August 2, 1991 among
the Registrant, Thermo Electron Corporation, and
Chemical Bank as fiscal agent, relating to $86,250,000
principal amount of 6 5/8% subordinated convertible
debentures due 2001 (filed as Exhibit 4(a) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991 [File No. 1-9786] and
incorporated herein by reference).
4.2 Fiscal Agency Agreement dated as of September 15, 1993,
among the Registrant, Thermo Electron Corporation and
Chemical Bank as fiscal agent, relating to the
$70,000,000 principal amount of 3 3/4% senior
convertible debentures due 2000 (filed as Exhibit 4 to
the Registrant's Quarterly Report on Form 10-Q for the
quarter ended October 2, 1993 [File No. 1-9786] and
incorporated by reference).
18PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
-------- ------------------------------------------------------- ----
4.3 Subordinated convertible note purchase agreement by and
between the Registrant and Thermo Electron Corporation
as of August 2, 1991 (filed as Exhibit 10(h) to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 28, 1991 [File No. 1-9786] and
incorporated herein by reference).
4.4 Senior convertible note purchase agreement by and
between the Registrant and Thermo Electron Corporation
as of September 15, 1993 (filed as Exhibit 10(a) to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended October 2, 1993 [File No. 1-9786] and
incorporated by reference).
4.5 Master Guarantee Reimbursement Agreement dated January
1, 1994 by and among the Registrant and Thermo Electron
Corporation.
The Registrant hereby agrees, pursuant to Item 601(b)
(4) (iii) (A) of Regulation S-K, to furnish to the
Commission upon request, a copy of each instrument with
respect to other long-term debt of the Registrant or its
subsidiaries.
10.1 Amended and Restated Corporate Services Agreement, dated
as of January 3, 1993, between Thermo Electron
Corporation and the Registrant (filed as Exhibit 10(a)
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993 [File No. 1-9786] and
incorporated herein by reference).
10.2 Tax Allocation Agreement dated as of May 29, 1986,
between Thermo Electron and the Registrant (filed as
Exhibit 10(b) to the Registrant's Registration Statement
on Form S-1 [Reg. No. 33-6762] and incorporated herein
by reference).
10.3 Thermo Electron Corporate Charter, as amended and
restated effective January 3, 1993 (filed as Exhibit
10(f) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended January 2, 1993 [File No. 1-9786]
and incorporated herein by reference).
10.4 Form of Indemnification Agreement with Directors and
Officers (filed as Exhibit 10(g) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 29, 1990 [File No. 1-9786] and incorporated
herein by reference).
10.5 Asset and Stock Purchase Agreement dated January 14,
1993 among the Registrant, Spectra-Physics Analytical,
Inc. and Spectra-Physics, Inc. (filed as Exhibit 10(j)
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993 [File No. 1-9786] and
incorporated herein by reference).
19PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
-------- --------------------------------------------------------- ----
10.6 Plan for sale of shares by the Registrant to Thermo
Electron Corporation (filed as Exhibit 10(dd) to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended July 3, 1993 [File No. 1-9786] and
incorporated herein by reference).
10.7 Master Repurchase Agreement dated January 1, 1994
between the Registrant and Thermo Electron Corporation
(filed as Exhibit 10.7 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 1, 1994
[File No. 1-9786] and incorporated herein by reference).
10.8-10.15 Reserved.
10.16 Deferred Compensation Plan for Directors of the
Registrant (filed as Exhibit 10(f) to the Registrant's
Registration Statement on Form S-1 [Reg. No. 33-6762]
and incorporated herein by reference).
10.17 Directors' Stock Option Plan of the Registrant.
10.18 Incentive Stock Option Plan of the Registrant (filed as
Exhibit 10(c) to the Registrant's Registration Statement
on Form S-1 [Reg. No. 33-6762] and incorporated herein
by reference). (Maximum number of shares issuable in the
aggregate under this plan and the Registrant's
Nonqualified Stock Option Plan is 1,500,000 shares,
after adjustment to reflect share increase approved in
1990 and 3-for-2 stock splits effected in January 1988
and July 1993).
10.19 Nonqualified Stock Option Plan of the Registrant (filed
as Exhibit 10(d) to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-6762] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Registrant's Incentive Stock Option Plan is 1,500,000
shares, after adjustment to reflect share increase
approved in 1990 and 3-for-2 stock splits effected in
January 1988 and July 1993).
10.20 Equity Incentive Plan of the Registrant (filed as
Appendix A to the Proxy Statement dated April 27, 1993
of the Registrant [File No. 1-9786] and incorporated
herein by reference). (Maximum number of shares issuable
is 2,150,000 shares, after adjustment to reflect share
increase approved in December 1993 and 3-for-2 stock
split effected in July 1993).
10.21 Finnigan Corporation 1979 Long-term Incentive Stock
Option Plan.
20PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
-------- --------------------------------------------------------- ----
10.22 Former Thermo Environmental Corporation Incentive Stock
Option Plan (filed as Exhibit 10(d) to Thermo
Environmental's Registration Statement on Form S-1 [Reg.
No. 33-329] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate
under this plan and the Former Thermo Environmental
Corporation Nonqualified Stock Option Plan is 618,750
shares, after adjustment to reflect share increase
approved in 1987 and 3-for-2 stock split effected in
July 1993).
10.23 Former Thermo Environmental Corporation Nonqualified
Stock Option Plan (filed as Exhibit 10(e) to Thermo
Environmental's Registration Statement on Form S-1 [Reg.
No. 33-329] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate
under this plan and the Former Thermo Environmental
Corporation Incentive Stock Option Plan is 618,750
shares, after adjustment to reflect share increase
approved in 1987 and 3-for-2 stock split effected in
July 1993).
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may
be granted awards under stock-based compensation plans
of the Registrants' parent, Thermo Electron Corporation,
and its subsidiaries, for services rendered to the
Registrant or to such affiliated corporations. Such
plans are listed under Exhibits 10.24-10.69.
10.24 Thermo Electron Corporation Incentive Stock Option Plan
(filed as Exhibit 4(d) to Thermo Electron's Registration
Statement on Form S-8 [Reg. No. 33-8993] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Electron Nonqualified Stock Option Plan is
6,023,437 shares, after adjustment to reflect share
increases approved in 1984 and 1986, and share decrease
approved in 1989, and 3-for-2 stock splits effected in
October 1986 and October 1993).
10.25 Thermo Electron Corporation Nonqualified Stock Option
Plan (filed as Exhibit 4(e) to Thermo Electron's
Registration Statement on Form S-8 [Reg. No. 33-8993]
and incorporated herein by reference). (Plan amended in
1984 to extend expiration date to December 14, 1994;
maximum number of shares issuable in the aggregate under
this plan and the Thermo Electron Incentive Stock Option
Plan is 6,023,437 shares, after adjustment to reflect
share increases approved in 1984 and 1986, and share
decrease approved in 1989, and 3-for-2 stock splits
effected in October 1986 and October 1993).
21PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
-------- --------------------------------------------------------- ----
10.26 Thermo Electron Corporation Equity Incentive Plan (filed
as Exhibit A to Thermo Electron's Proxy Statement dated
April 12, 1989 [File No. 1-8002] and incorporated herein
by reference). (Plan amended in 1989 to restrict
exercise price for SEC reporting persons to not less
than 50% of fair market value or par value; maximum
number of shares issuable is 4,700,000 shares, after
adjustment to reflect 3-for-2 stock split effected in
October 1993 and share increase approved in 1994).
10.27 Thermo Electron Corporation - Thermedics Inc.
Nonqualified Stock Option Plan (filed as Exhibit 4 to a
Registration Statement on Form S-8 of Thermedics [Reg.
No. 2-93747] and incorporated herein by reference).
(Maximum number of shares issuable is 450,000 shares,
after adjustment to reflect share increase approved in
1988, 5-for-4 stock split effected in January 1985,
4-for-3 stock split effected in September 1985, and
3-for-2 stock splits effected in October 1986 and
November 1993).
10.28 Thermo Electron Corporation - Thermo Instrument Systems
Inc. (formerly Thermo Environmental Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 4(c) to
the Registrant's Registration Statement on Form S-8
[Reg. No. 33-8034] and incorporated herein by
reference). (Maximum number of shares issuable is
225,000 shares, after adjustment to reflect 3-for-2
stock split effected in July 1993).
10.29 Thermo Electron Corporation - Thermo Instrument Systems
Inc. Nonqualified Stock Option Plan (filed as Exhibit
10.12 to Thermo Electron's Annual Report on Form 10-K
for the fiscal year ended January 3, 1987 [File No.
1-8002] and incorporated herein by reference). (Maximum
number of shares issuable is 320,152 shares, after
adjustment to reflect share increase approved in 1988
and 3-for-2 stock splits effected in January 1988 and
July 1993).
10.30 Thermo Electron Corporation - Thermo Process Systems
Inc. Nonqualified Stock Option Plan (filed as Exhibit
10.13 to Thermo Electron's Annual Report on Form 10-K
for the fiscal year ended January 3, 1987 [File No.
1-8002] and incorporated herein by reference). (Maximum
number of shares issuable is 108,000 shares, after
adjustment to reflect 6-for-5 stock splits effected in
July 1988 and March 1989, and 3-for-2 stock split
effected in September 1989).
22PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- -------------------------------------------------------- ----
10.31 Thermo Electron Corporation - Thermo Power Corporation
(formerly Tecogen Inc.) Nonqualified Stock Option Plan
(filed as Exhibit 10.14 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 3,
1987 [File No. 1-8002] and incorporated herein by
reference).
10.32 Thermo Electron Corporation - Thermo Cardiosystems Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.11
to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 [File No. 1-8002]
and incorporated herein by reference). (Maximum number
of shares issuable is 130,500 shares, after adjustment
to reflect share increases approved in 1990 and 1992,
3-for-2 stock split effected in January 1990, 5-for-4
stock split effected in May 1990 and 2-for-1 stock split
effected in November 1993).
10.33 Thermo Electron Corporation - Thermo Ecotek Corporation
(formerly Thermo Energy Systems Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 10.12
to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 [File No. 1-8002]
and incorporated herein by reference).
10.34 Thermo Electron Corporation - ThermoTrex Corporation
(formerly Thermo Electron Technologies Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 10.13
to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 [File No. 1-8002]
and incorporated herein by reference). (Maximum number
of shares issuable is 180,000 shares, after adjustment
to reflect 3-for-2 stock split effected in October
1993).
10.35 Thermo Electron Corporation - Thermo Fibertek Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.14
to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 28, 1991 [File No. 1-8002]
and incorporated herein by reference). (Maximum number
of shares issuable is 400,000 shares, after adjustment
to reflect 2-for-1 stock split effected in September
1992).
10.36 Thermo Electron Corporation - Thermo Voltek Corp.
(formerly Universal Voltronics Corp.) Nonqualified Stock
Option Plan (filed as Exhibit 10.17 to Thermo Electron's
Annual Report on Form 10-K for the fiscal year ended
January 2, 1993 [File No. 1-8002] and incorporated
herein by reference). (Maximum number of shares issuable
is 7,500 shares, after adjustment to reflect 3-for-2
stock split effected in November 1993).
23PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- --------------------------------------------------------- ----
10.37 Thermo Ecotek Corporation (formerly Thermo Energy
Systems Corporation) Incentive Stock Option Plan (filed
as Exhibit 10.18 to Thermo Electron's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993
[File No. 1-8002] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate
under this plan and the Thermo Ecotek Nonqualified Stock
Option Plan is 900,000 shares, after adjustment to
reflect share increase approved in December 1993).
10.38 Thermo Ecotek Corporation (formerly Thermo Energy
Systems Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10.19 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 2,
1993 [File No. 1-8002] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermo Ecotek
Incentive Stock Option Plan is 900,000 shares, after
adjustment to reflect share increase approved in
December 1993).
10.39 Thermo Ecotek Corporation (formerly Thermo Energy
Systems Corporation) Equity Incentive Plan.
10.40 Thermedics Inc. Incentive Stock Option Plan (filed as
Exhibit 10(d) to Thermedics' Registration Statement on
Form S-1 [Reg. No. 33-84380] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermedics
Nonqualified Stock Option Plan is 1,931,923 shares,
after adjustment to reflect share increases approved in
1986 and 1992, 5-for-4 stock split effected in January
1985, 4-for-3 stock split effected in September 1985,
and 3-for-2 stock split effected in November 1993).
10.41 Thermedics Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10(e) to Thermedics' Registration Statement on
Form S-1 [Reg. No. 33-84380] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermedics Incentive
Stock Option Plan is 1,931,923 shares, after adjustment
to reflect share increases approved in 1986 and 1992,
5-for-4 stock split effected in January 1985, 4-for-3
stock split effected in September 1985, and 3-for-2
stock split effected in November 1993).
10.42 Thermedics Inc. Equity Incentive Plan (filed as Appendix
A to the Proxy Statement dated May 10, 1993 of
Thermedics [File No. 1-9567] and incorporated herein by
reference). (Maximum number of shares issuable is
1,500,000 shares, after adjustment to reflect 3-for-2
stock split effected in November 1993).
24PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
-------- --------------------------------------------------------- ----
10.43 Thermedics Inc. - Thermedics Detection Inc. Nonqualified
Stock Option Plan (filed as Exhibit 10.20 to Thermo
Electron's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993 [File No. 1-8002] and
incorporated herein by reference).
10.44 Thermo Cardiosystems Inc. Incentive Stock Option Plan
(filed as Exhibit 10(f) to Thermo Cardiosystems'
Registration Statement on Form S-1 [Reg. No. 33-25144]
and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and
the Thermo Cardiosystems Nonqualified Stock Option Plan
is 1,143,750 shares, after adjustment to reflect share
increase approved in 1992, 3-for-2 stock split effected
in January 1990, 5-for-4 stock split effected in May
1990 and 2-for-1 stock split effected in November 1993).
10.45 Thermo Cardiosystems Inc. Nonqualified Stock Option Plan
(filed as Exhibit 10(g) to Thermo Cardiosystems'
Registration Statement on Form S-1 [Reg. No. 33-25144]
and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and
the Thermo Cardiosystems Incentive Stock Option Plan is
1,143,750 shares, after adjustment to reflect share
increase approved in 1992, 3-for-2 stock split effected
in January 1990, 5-for-4 stock split effected in May
1990 and 2-for-1 stock split effected in November 1993).
10.46 Thermo Cardiosystems Inc. Equity Incentive Plan.
10.47 Thermo Voltek Corp. (formerly Universal Voltronics
Corp.) 1985 Stock Option Plan (filed as Exhibit 10.14 to
Thermo Voltek's Annual Report on Form 10-K for the
fiscal year ended June 30, 1985 [File No. 0-8245] and
incorporated herein by reference). (Maximum number of
shares issuable is 200,000 shares, after adjustment to
reflect 1-for-3 reverse stock split effected in November
1992 and 3-for-2 stock split effected in November 1993).
10.48 Thermo Voltek Corp. (formerly Universal Voltronics
Corp.) 1990 Stock Option Plan (filed as Exhibit 10.2 to
Thermo Voltek's Annual Report on Form 10-K for the
fiscal year ended June 30, 1990 [File No. 1-10574] and
incorporated herein by reference). (Maximum number of
shares issuable is 400,000 shares, after adjustment to
reflect share increases in 1993 and 1994, 1-for-3
reverse stock split effected in November 1992, and
3-for-2 stock split effected in November 1993).
10.49 Thermo Voltek Corp. Equity Incentive Plan.
10.50 Reserved.
25PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- --------------------------------------------------------- ----
10.51 Thermo Instrument Systems Inc. - ThermoSpectra
Corporation Nonqualified Stock Option Plan.
10.52 ThermoSpectra Corporation Equity Incentive Plan.
10.53 ThermoTrex Corporation (formerly Thermo Electron
Technologies Corporation) Incentive Stock Option Plan
(filed as Exhibit 10(h) to ThermoTrex's Registration
Statement on Form S-1 [Reg. No. 33-40972] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoTrex Nonqualified Stock Option Plan is 1,945,000
shares, after adjustment to reflect share increases
approved in 1992 and 1993, and 3-for-2 stock split
effected in October 1993).
10.54 ThermoTrex Corporation (formerly Thermo Electron
Technologies Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10(i) to ThermoTrex's Registration
Statement on Form S-1 [Reg. No. 33-40972] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoTrex Incentive Stock Option Plan is 1,945,000
shares, after adjustment to reflect share increases
approved in 1992 and 1993, and 3-for-2 stock split
effected in October 1993).
10.55 ThermoTrex Corporation - ThermoLase Corporation
(formerly ThermoLase Inc.) Nonqualified Stock Option
Plan (filed as Exhibit 10.53 to ThermoTrex's Annual
Report on Form 10-K for the fiscal year ended January 1,
1994 [File No. 1-10791] and incorporated herein by
reference).
10.56 ThermoLase Corporation (formerly ThermoLase Inc.)
Incentive Stock Option Plan (filed as Exhibit 10.55 to
ThermoTrex's Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 [File No. 1-10791] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoLase Nonqualified Stock Option Plan is 1,400,000
shares, after adjustment to reflect share increase
approved in 1993 and 2-for-1 stock split effected in
March 1994.)
10.57 ThermoLase Corporation (formerly ThermoLase Inc.)
Nonqualified Stock Option Plan (filed as Exhibit 10.54
to ThermoTrex's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994 [File No. 1-10791] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoLase Incentive Stock Option Plan is 1,400,000
shares, after adjustment to reflect share increase
approved in 1993 and 2-for-1 stock split effected in
March 1994).
26PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- --------------------------------------------------------- ----
10.58 Thermo Fibertek Inc. Incentive Stock Option Plan (filed
as Exhibit 10(k) to Thermo Fibertek's Registration
Statement on Form S-1 [Reg. No. 33-51172] and
incorporated herein by reference).
10.59 Thermo Fibertek Inc. Nonqualified Stock Option Plan
(filed as Exhibit 10(l) to Thermo Fibertek's
Registration Statement on Form S-1 [Reg. No. 33-51172]
and incorporated herein by reference).
10.60 Thermo Fibertek Inc. Equity Incentive Plan.
10.61 Thermo Power Corporation (formerly Tecogen Inc.)
Incentive Stock Option Plan (filed as Exhibit 10(h) to
Thermo Power's Registration Statement on Form S-1 [Reg.
No. 33-14017] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate
under this plan and the Thermo Power Nonqualified Stock
Option Plan is 950,000 shares, after adjustment to
reflect share increases approved in 1990, 1992 and
1993).
10.62 Thermo Power Corporation (formerly Tecogen Inc.)
Nonqualified Stock Option Plan (filed as Exhibit 10(i)
to Thermo Power's Registration Statement on Form S-1
[Reg. No. 33-14017] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermo Power Incentive
Stock Option Plan is 950,000 shares, after adjustment to
reflect share increases approved in 1990, 1992 and
1993).
10.63 Thermo Power Corporation Equity Incentive Plan.
10.64 Thermo Process Systems Inc. Incentive Stock Option Plan
(filed as Exhibit 10(h) to Thermo Process' Registration
Statement on Form S-1 [Reg. No. 33-6763] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Process Nonqualified Stock Option Plan is
1,850,000 shares, after adjustment to reflect share
increases approved in 1987, 1989 and 1992, 6-for-5 stock
splits effected in July 1988 and March 1989, and 3-for-2
stock split effected in September 1989).
10.65 Thermo Process Systems Inc. Nonqualified Stock Option
Plan (filed as Exhibit 10(i) to Thermo Process'
Registration Statement on Form S-1 [Reg. No. 33-6763]
and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and
the Thermo Process Incentive Stock Option Plan is
1,850,000 shares, after adjustment to reflect share
increases approved in 1987, 1989 and 1992, 6-for-5 stock
splits effected in July 1988 and March 1989, and 3-for-2
stock split effected in September 1989).
27PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- --------------------------------------------------------- ----
10.66 Thermo Process Systems Inc. Equity Incentive Plan [filed
as Exhibit 10.63 to Thermedics' Annual Report on Form
10-K for the fiscal year ended January 1, 1994 [File No.
1-9567] and incorporated herein by reference.) (Maximum
number of shares issuable is 1,750,000 shares, after
adjustment to reflect share increase approved in 1994).
10.67 Thermo Process Systems Inc. - Thermo Remediation Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10(l)
to Thermo Process' Quarterly Report on Form 10-Q for the
fiscal quarter ended January 1, 1994 [File No. 1-9549]
and incorporated herein by reference).
10.68 Thermo Remediation Inc. Equity Incentive Plan (filed as
Exhibit 10.7 to Thermo Remediation's Registration
Statement on Form S-1 [Reg. No. 33-70544] and
incorporated herein by reference).
10.69 Thermedics Detection Inc. Equity Incentive Plan.
11 Statement re: Computation of earnings per share.
13 Annual Report to Shareholders for the year ended
December 31, 1994 (only those portions incorporated
herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
28<PAGE>
Exhibit 2.3
TABLE OF CONTENTS
Page
1. GENERAL .......................................
1.1 Definitions ................................
1.2 Schedules and Exhibits .....................
1.3 Pounds Sterling ............................
2. PURCHASE AND SALE .................................
2.1 Agreement to Sell and to Purchase ..........
2.2 Transfer of Shares .........................
2.3 Transfer of Assets .........................
2.4 Payment of Purchase Price ..................
2.5 Assets Not Transferred .....................
2.6 Documents of Transfer ......................
2.7 Further Assurances .........................
2.8 Restricted Assets ..........................
2.9 U.K. Real Property .........................
2.10 Intercompany Accounts and Cash .............
3. ASSUMPTION OF CERTAIN LIABILITIES .................
3.1 Liabilities Assumed ........................
3.2 Liabilities Not Assumed ....................
3.3 Documents of Assumption ....................
3.4 Risk of Loss ...............................
4. PURCHASE PRICE MATTERS ............................
4.1 Post Closing Adjustment ....................
4.2 Allocation of Purchase Price ...............
4.3 Transaction Taxes ..........................
5. REPRESENTATIONS AND WARRANTIES BY THE SELLER ......
5.1 Organization, Good Standing and Qualification
5.2 Capital Stock and Ownership ................
5.3 Authority ..................................
5.4 No Conflict; No Consents or Approvals ......
5.5 Undisclosed Liabilities ....................
5.6 No Termination of Relationships ............
5.7 Financial Statements .......................
5.8 Tax Matters ................................
5.9 Title to Properties ........................
5.10 Real Estate ................................
5.11 Real Property Leases .......................
5.12 Equipment Leases ...........................
5.13 Assets Used in the Business ................
5.14 Accounts Receivable ........................
5.15 Intellectual Property ......................
5.16 Insurance Policies .........................
5.17 Contracts ..................................
5.18 Inventory ..................................
5.19 Litigation .................................
PAGE
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5.20 Compliance with Law ........................
5.21 Absence of Subsequent Actions ..............
5.22 No Material Adverse Change .................
5.23 Labor Matters ..............................
5.24 U.S. Employee Benefit Plans ................
5.25 Foreign Employee Benefit Plans .............
5.26 Indebtedness and Guaranties ................
5.27 Product Warranty ...........................
5.28 Environmental Matters ......................
5.29 Permits ....................................
5.30 Certain Business Relationships .............
5.31 Books and Records ..........................
5.32 Customers and Suppliers ....................
5.33 Government Contracts .......................
5.34 Recalls ....................................
5.35 Broker's and Finder's Fees .................
5.36 Disclosure .................................
6. REPRESENTATIONS AND WARRANTIES BY THE BUYER .......
6.1 Organization and Good Standing .............
6.2 Authority ..................................
6.3 No Conflict; No Consents or Approvals ......
6.4 Broker's and Finder's Fees .................
6.5 Solvency of Buyer ..........................
6.6 No Additional Warranties ...................
6.7 Investment Intent ..........................
7. OTHER AGREEMENTS ..................................
7.1 Conduct of Business ........................
7.2 Full Access and Supplying of Information ...
7.3 Filings and Authorizations .................
7.4 Exclusivity ................................
7.5 Bulk Sales .................................
7.6 Employment of Business Work Force ..........
7.7 Employee Benefits Matters ..................
7.8 Retention of Records and Sharing of Data ...
7.9 Tax Matters ................................
7.10 Certain Trademark Matters ..................
7.11 Notices of Breaches; Updates ...............
7.12 Proprietary Information ....................
7.13 Solicitation ...............................
7.14 Non-Competition ............................
7.15 Cooperation in Litigation ..................
7.16 Collection of Accounts Receivable ..........
7.17 Approval of Seller's Shareholders ..........
7.18 Bank Accounts ..............................
7.19 Transition Services ........................
7.20 Guarantee ..................................
7.21 Employee Notices ...........................
7.22 Seller's Disclosure ........................
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE BUYER TO CLOSE ................................
8.1 Fulfillment of the Seller's Covenants ......
8.2 Accuracy of the Seller's Representations ...
8.3 Authorizations and Consents ...............
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8.4 No Litigation ..............................
8.5 Seller's Certificates ......................
8.6 Resignations ...............................
8.7 HSR Act and Similar Matters ................
8.8 U.K Merger Issues ..........................
8.9 Legal Opinions .............................
8.10 Seller's Shareholder Approval ..............
9. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION
TO CLOSE .......................................
9.1 Fulfillment of the Buyer's Covenants .......
9.2 Accuracy of the Buyer's Representations ....
9.3 No Litigation ..............................
9.4 Buyer's Certificates .......................
9.5 HSR Act and Similar Matters ................
9.6 Shareholder Approval .......................
9.7 Legal Opinions .............................
10. CLOSING .......................................
11. INDEMNIFICATION ...................................
11.1 By the Seller ..............................
11.2 By the Buyer and the Parent ................
11.3 Limitations on Indemnification .............
11.4 Third-Party Claims .........................
12. TERMINATION. ......................................
12.1 Termination Events .........................
12.2 Effect of Termination ......................
12.3 Reimbursement of Expenses ..................
13. MISCELLANEOUS .....................................
13.1 Amendments .................................
13.2 Notices ....................................
13.3 Expenses ...................................
13.4 Waiver .....................................
13.5 Headings ...................................
13.6 Severability ...............................
13.7 Entire Agreement ...........................
13.8 Assignment .................................
13.9 Governing Law; Time of the Essence .........
13.10 Counterparts ...............................
13.11 Conditions and Documents ...................
13.12 Publicity ..................................
13.13 Confidential Information ...................
13.14 Submission to Jurisdiction and Venue .......
13.15 Construction ...............................
PAGE
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EXHIBITS
Exhibit A - Definitions
Exhibit B - Terms Applicable to UK Property
Exhibit C - Financial Statements
Exhibit D - Terms Regarding Foreign Plans
SCHEDULES
Schedule 1.1 - Definitions
Schedule 2.5 - Assets Not Transferred
Schedule 4.2 - Allocation of Purchase Price
Schedule 5.1 - Jurisdictions of incorporation
or organization
Schedule 5.2 - Capital stock and ownership
Schedule 5.4 - Conflicts with material
contracts; required
governmental consents
Schedule 5.8 - Tax matters
Schedule 5.10 - Owned Real Estate
Schedule 5.11 - Leased Real Estate
Schedule 5.11A- Consents to Assignment of Leases
Schedule 5.12 - Equipment leases
Schedule 5.12A- Consents to Assignment of Equipment Leases
Schedule 5.15 - Intellectual Property Matters
Schedule 5.15A- Third Party Intellectual Property
Schedule 5.16 - Insurance Policies
Schedule 5.17 - Material contracts
Schedule 5.17A Consents to Assignment of Material Contracts
Schedule 5.19 - Litigation
Schedule 5.20 - Compliance with laws
Schedule 5.21 - Subsequent Actions
Schedule 5.23 - Labor matters
Schedule 5.23A- Employees planning to terminate
PAGE
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Schedule 5.24 - U.S. employee benefit
plans
Schedule 5.25 - Foreign employee benefit
plans
Schedule 5.26 - Indebtedness and guaranties
Schedule 5.28 - Environmental matters
Schedule 5.29 - Permits
Schedule 5.30 - Certain business relationships
Schedule 5.32 - Customer and supplier matters
Schedule 5.33 - Government contract matters
Schedule 6.3 - Required governmental notices
and filings
Schedule 7.22- Law Firms
Schedule 7.22A- Certain Disclosed Documents
Schedule 8.3 - Consents to Assignment of Restricted Assets required
as condition to closing
Schedule 8.7- HSR Act and Similar Matters
Schedule 9.5- HSR Act and Similar Matters
PAGE
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ASSET AND STOCK PURCHASE AGREEMENT
ASSET AND STOCK PURCHASE AGREEMENT (this "Agreement") dated as of
March 1, 1995, between Fisons plc, a company organized under the laws of
England (the "Seller"), Thermo Instrument Systems Inc., a corporation
organized under the laws of Delaware, U.S.A. (the "Buyer") and Thermo
Electron Corporation, a Delaware corporation ("Parent").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell, transfer and assign the business
and operations of its Instruments Division;
WHEREAS, the Seller desires to sell or cause to be sold, and the Buyer
desires to acquire, the Business, as hereinafter defined; and
WHEREAS, the Business will be transferred to the Buyer pursuant hereto
by means of a sale and purchase of Assets and Shares, as hereinafter
defined.
NOW, THEREFORE, the parties hereto agree as follows:
1. GENERAL.
1.1 Definitions. The terms defined in Exhibit A, whenever used in
this Agreement, shall have the meanings provided in such Exhibit for all
purposes of this Agreement.
1.2 Schedules and Exhibits. A "Schedule" is a Schedule attached
hereto and made a part hereof . An "Exhibit" is an agreement or other
document attached hereto and made a part hereof.
1.3 Pounds Sterling. Unless otherwise indicated herein or on the
Schedules, all references to amounts in pounds shall mean English pounds
sterling. For purposes of determining the application of the terms of
Section 5, 6 and 11 to items denominated in a currency other than English
pounds sterling, the relevant currency shall be converted to English pounds
sterling at the applicable exchange rate published in the currency
crossrate table of The Wall Street Journal (New York edition) on the date
of this Agreement (or, with respect to amounts referred to in Section 11,
on the date on which notice of a claim is given or, if no notice is given
because a Loss is not indemnifiable, on the first day of the month during
which an estimate of the amount of the claim can reasonably be made).
2. PURCHASE AND SALE.
2.1 Agreement to Sell and to Purchase. In reliance upon the
representations and warranties of the Buyer contained herein, and on the
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terms and subject to the conditions herein set forth, the Seller agrees to
sell, convey, assign, transfer and deliver, or cause to be sold, conveyed,
assigned, transferred and delivered, the Shares and the Assets to the
Buyer. In reliance upon the representations and warranties of the Seller
contained herein, and on the terms and subject to the conditions herein set
forth, the Buyer agrees to purchase, or cause to be purchased, at the
Closing the Shares and the Assets and to assume, or cause to be assumed, at
the Closing, the Assumed Liabilities. In reliance upon the representations
and warranties of the Seller contained herein, on the terms and subject to
the conditions herein set forth, and in consideration of the sale of the
Shares and the Assets, the Buyer agrees to pay, at the Closing, an
aggregate purchase price of 202,000,000 English pounds sterling (or such
lower or higher amount as is equal to (i) 202,000,000 English pounds
sterling less (ii) the excess of (a) 138,000,000 English pounds sterling,
over (b) the Net Book Value (as defined below) shown on the most recent
internal financial statements of the Seller prior to the Closing Date (the
"Interim Net Book Value") or plus the deficit of 138,000,000 English pounds
sterling over Interim Net Book Value), subject to adjustment as provided in
Section 4.1 (the "Purchase Price"), and to assume, at the Closing, the
Assumed Liabilities.
2.2 Transfer of Shares. At the Closing, the Seller shall, or shall
cause each Share Seller to, execute and deliver to the Buyer a certificate
or certificates representing the Shares (in the case of certificated
Shares) together with duly executed stock powers, share transfer forms,
transfer deeds or other documents of transfer sufficient to convey the
Shares to the Buyer, and such other instruments of conveyance as the Buyer
may reasonably request in order to effect the sale, transfer, conveyance
and assignment to the Buyer of good title to the Shares free and clear of
all Encumbrances other than Permitted Encumbrances.
2.3 Transfer of Assets. At the Closing, subject to the proviso
contained in Section 2.6(a), the Seller shall, or shall cause each Asset
Seller to, execute and deliver to the Buyer a bill of sale and such other
instruments of conveyance as the Buyer may reasonably request in order to
effect the sale, transfer, conveyance and assignment to the Buyer of good
title to the Assets, free and clear of all Encumbrances other than
Permitted Encumbrances.
2.4 Payment of Purchase Price. At the Closing, the Buyer shall
deliver the Purchase Price in immediately available funds by wire transfer
to an account designated by the Seller, acting on behalf of the Share
Sellers and the Asset Sellers.
2.5 Assets Not Transferred. Notwithstanding the foregoing, the
Assets to be transferred shall not include the following (the "Excluded
Assets"):
(a) all of the rights, properties and assets used in the
Business which shall have been transferred or disposed of prior to the
Closing in transactions conducted in the Ordinary Course of Business
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or as described on Schedule 2.5;
(b) all assets in the possession of the Business but owned by
third parties, other than third party owned assets that, under GAAP,
are appropriate to be reflected on the Closing Balance Sheet as
Assets, subject to any third party rights in respect of the same being
reflected thereon as liabilities of the Business;
(c) all intercompany receivables, notes or loans with respect to
the Business between (i) the Seller and its subsidiaries and
affiliates which are not constituents of the Business and (ii) the
Asset Sellers, in each case except for trade payables or receivables
related to the provision of goods or services to or by the Business in
the Ordinary Course of Business;
(d) Restricted Assets that are not assignable to the Buyer as a
matter of law;
(e) the name "Fisons" and any derivation thereof and the
stylized logo "Fisons" (collectively, the "Retained Names and Logos");
provided, however, that the Buyer shall be entitled to the use thereof
pursuant to Section 7.10(a);
(f) assets reflected on the balance sheet of the Laboratory
Supplies and the Pharmaceuticals Divisions of the Seller, none of
which assets are used primarily in the Business or will be reflected
on the Closing Balance Sheet;
(g) any shares of capital stock of any of the Dormant Shells
designated in writing by the Buyer to the Seller not later than 10
days prior to the Closing;
(h) any assets described on Schedule 2.5; and
(i) any foreign currency agreement to which any Asset Seller is
a party.
2.6 Documents of Transfer. At the Closing, in addition to the
documents of transfer described in Sections 2.2 and 2.3, the Seller will,
or will cause each respective Share Seller or Asset Seller to:
(a) execute, acknowledge and deliver to the Buyer such deeds,
bills of sale, endorsements, assignments, stock powers, share transfer
forms and other good and sufficient instruments of conveyance, sale,
transfer and assignment as shall be reasonably requested by the Buyer,
and , subject to Section 4.3, with all required federal, state, local,
foreign and other documentary and revenue stamps affixed where
customarily paid or provided by a seller, as shall be required in
order to effectively vest, subject only to any required recordation or
similar filing, in the Buyer all of the Share Sellers' and Asset
Sellers' right, title and interest in and to the Assets or the Shares,
as the case may be, provided that (i) where the Buyer is satisfied
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that title to any of the Assets located in England can effectively
pass by way of physical delivery without the use of any document of
transfer, the Seller will deliver or cause to be delivered such Assets
to the Buyer at Closing, such delivery to take place by means of the
relevant Assets being retained at the places at which they are
physically located at the Closing to the order of the Buyer and (ii)
where title to such Assets can pass only by way of document of
transfer, subject to Section 4.3, the Buyer shall be responsible for
any stamp duty or other tax liable to be paid thereon; and
(b) deliver or make available to the Buyer all of the files,
documents, papers, contracts, agreements, legal descriptions, open
books of account or ledgers and documentation in support thereof, and
all other information appearing in writing and relating primarily to
the Business and which is in any Share Seller's or Asset Seller's
possession and the minute books and share registers of the Companies
(it being understood that, subject to the provisions of Section 7.12,
the Asset Sellers and the Share Sellers shall be entitled to retain
copies of any of the foregoing, but only to the extent the retention
of such copies is reasonably necessary for the Asset Sellers and the
Share Sellers to comply with applicable tax, securities, accounting or
other laws, rules or regulations and their obligations hereunder).
2.7 Further Assurances. At the Closing and at any time or from time
to time thereafter, at the request of the Buyer and without further
consideration, the Seller shall, and shall cause each Share Seller and
Asset Seller to: (i) take such action as the Buyer may reasonably
determine is necessary to put the Buyer in actual possession and operating
control of the Business and (ii) execute, acknowledge and deliver such
further instruments of conveyance, sale, transfer and assignment as the
Buyer may reasonably request, and take such other action as the Buyer may
reasonably request, in order to convey, sell, transfer and assign to the
Buyer the Assets and the Shares, to evidence the Buyer's rights to, title
in and ownership of the Assets and the Shares and to consummate the
transactions contemplated hereby. At the Closing and at any time and from
time to time after the Closing, at the request of the Seller and without
further consideration, the Buyer shall, and shall cause each of its
Subsidiaries to, take such action and execute, acknowledge and deliver such
further instruments as the Seller may reasonably determine is necessary to
consummate the transactions contemplated hereby.
2.8 Restricted Assets.
(a) The Seller shall use all reasonable efforts, and the Buyer
shall cooperate reasonably with the Seller, (i) to promptly obtain
the consents and waivers necessary to convey or cause to be conveyed
to the Buyer all of the Restricted Assets, and (ii) as of and subject
to the occurrence of the Closing, to promptly convey or cause to be
conveyed to the Buyer the Restricted Assets for which the Seller has
received the necessary consents and waivers; provided, however, that
the Seller shall not, and shall cause the Asset Sellers not to, amend
or change any Restricted Asset without the prior written consent of
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the Buyer unless the Seller reasonably deems it necessary to preserve
the value of the Restricted Asset. The Seller shall, and shall cause
the Asset Sellers to, cooperate with the Buyer in making applications
and filings or taking any other action necessary for the Buyer to
obtain such franchises, licenses, permits or other instruments or
agreements, if any, as are substantially equivalent to any Restricted
Assets that are not assignable to Buyer as a matter of law. In no
event shall the Buyer's cooperation hereunder require the Buyer to
make any payments or incur any out-of-pocket expenses, except that
the Buyer shall reimburse the Seller on an equitable basis for any
consideration paid, with the prior approval of the Buyer, to any
person from whom a consent or waiver is requested.
(b) To the extent that the consents and waivers necessary to
assign, transfer, sublease or sublicense any of the Restricted Assets
are not obtained, the Seller shall, commencing on the Closing Date
and continuing for the duration of each such Restricted Asset, use
reasonable efforts to (i) provide to the Buyer the benefits of any
such Restricted Asset not assigned, transferred or subleased due to
the Seller's failure or inability to obtain such consent or waiver,
(ii) cooperate with the Buyer to reach a reasonable and lawful
arrangement designed to provide such benefits to the Buyer during
such period and (iii) enforce at the request of the Buyer, or allow
the Buyer to enforce (and, solely for such purpose, the Seller hereby
constitutes and appoints the Buyer as its true and lawful
attorney-in-fact until revoked in a writing delivered by the Seller
to the Buyer), any rights of the Seller under any such Restricted
Asset against the issuer thereof or the other party or parties
thereto (including the right to elect to terminate such of the
foregoing in accordance with the terms thereof upon the request of
the Buyer); provided, however, that the reasonable costs and expenses
of the Seller (including reasonable professional fees and expenses)
incurred at the Buyer's request with respect to any of the actions
contemplated under (iii) above shall be promptly paid or reimbursed
by the Buyer to the Seller. At the end of each such period, the
Seller shall have no further duties or obligations under this
Section 2.8 with respect to such Restricted Asset and the failure or
inability to obtain any necessary consent or waiver with respect
thereto shall not be a
breach of this Agreement so long as the Seller has carried out its
obligations under this Section 2.8.
(c) To the extent that the Buyer is provided the benefits of any
Restricted Asset pursuant to clause (b) of this Section 2.8, the Buyer
shall perform for the benefit of the issuer thereof, or the other
party or parties thereto, the obligations of any Asset Seller
thereunder or in connection therewith, but only to the extent that (i)
such action by the Buyer would not result in any default thereunder or
in connection therewith and (ii) such obligation would have been an
Assumed Liability but for the non-assignability or non-transferability
thereof; provided, however, that if the Buyer shall fail to perform to
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the extent required herein, the Seller shall thereafter cease to be
obligated under this Section 2.8 to provide the Buyer with any
benefits in respect of the Restricted Asset which is the subject of
such failure to perform unless and until such situation is remedied
or, at the sole option of the Seller, the Buyer shall promptly pay or
reimburse the Seller to remedy such failure to perform during such
period of failure of performance.
2.9 UK Property. In addition to the terms and conditions hereof, the
terms and conditions set forth on Exhibit B shall apply to the sale of the
UK Property.
2.10 Intercompany Accounts. Prior to or on the Closing Date, the
Seller shall, and shall cause its Subsidiaries to, eliminate, to the extent
legally possible, all intercompany accounts related to the Business between
(a) the Seller and its subsidiaries and affiliates which are not
constituents of the Business and (b) the Asset Sellers or the Companies,
except for trade payables or receivables related to the provision of goods
or services to or by the Business in the Ordinary Course of Business.
3. ASSUMPTION OF CERTAIN LIABILITIES.
3.1 Liabilities Assumed. On the Closing Date, subject to the terms
and conditions herein set forth, the Seller shall assign or cause to be
assigned to the Buyer, and the Buyer shall assume all liabilities of each
Asset Seller of any nature, known or unknown, fixed, contingent or
otherwise, arising out of or relating primarily to the Business, except for
the Excluded Liabilities (collectively, the "Assumed Liabilities").
3.2 Liabilities Not Assumed. The Buyer shall not assume any
liabilities or obligations of any Asset Seller of any nature, known or
unknown, fixed, contingent or otherwise, arising out of or relating to the
following, all of which shall remain obligations of such Asset Seller (the
"Excluded Liabilities"):
(a) any Environmental Liability;
(b) any legal suit, action or proceeding of any kind filed and
commenced against any Asset Seller prior to the Closing Date, or the
commencement of which was, to the Seller's Knowledge, threatened in
writing prior to the Closing Date, including, without limitation,
those described on Schedule 5.15 or Schedule 5.19 (regardless of
whether or not threatened in writing);
(c) any and all Taxes with respect to Pre-Closing Periods to the
extent the Seller is liable for such Taxes under Section 7.9;
(d) any overdraft facility, bank credit line or third party
indebtedness for money borrowed to the extent not reflected on the
Closing Balance Sheet or listed on Schedule 5.26;
(e) Subject to Section 7.7(b), (i) any claims against, or
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liabilities or obligations of or in connection with, any Plans or
Foreign Plans not specifically assumed by the Buyer pursuant to this
Agreement, (ii) any claims for severance pay, termination pay,
redundancy pay, pay in lieu of notice or any other claim for similar
compensation or damages relating to the termination of any employee
prior to the Closing Date or (iii) any claims for compensation by any
employee for services rendered prior to the Closing Date; provided
that the foregoing clauses (ii) and (iii) shall not include claims for
severance, termination or redundancy pay or pay in lieu of notice
relating to the termination of any Continuing Employee on or after the
Closing Date;
(f) any product liability claims asserted on or prior to the
fifth anniversary of the Closing Date arising out of or related to the
sale of any products of the Business prior to the Closing Date to the
extent such claims exceed the accruals and reserves therefor on the
Closing Balance Sheet;
(g) liabilities and obligations under Restricted Assets to the
extent the Seller does not obtain the consents and waivers necessary
to assign, transfer, sublease or sublicense such Restricted Assets to
the Buyer and the Seller does not provide to the Buyer the benefits
of such Restricted Assets pursuant to Section 2.8(b);
(h) any claim, suit or proceeding relating to the actual or
alleged infringement by any of the Asset Sellers of the Proprietary
Rights of any third party commencing prior to the Closing Date,
including, without limitation, any claim, suit or proceeding relating
to any of the matters described in Schedule 5.15;
(i) any liabilities or obligations arising out of or relating to
the violation of any Laws and Regulations that occurred prior to the
Closing Date;
(j) the cost of fulfilling any bona fide warranty obligations
undertaken by the Asset Sellers with respect to products sold prior to
the Closing Date, except to the extent of warranty reserves on the
Closing Balance Sheet;
(k) liabilities or obligations under foreign currency contracts
to which any Asset Seller is a party;
(l) any liability of any Asset Seller to the Seller or any of
its Subsidiaries that is not a constituent of the Business, except for
trade payables or receivables related to the provision of goods or
services to or by the Business in the Ordinary Course of Business; and
(m) agreements relating to the sale or other disposition of any
business or real property prior to the Closing Date.
3.3 Documents of Assumption. At the Closing, the assumption of the
Assumed Liabilities by the Buyer shall be evidenced by the execution and
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delivery to the Asset Sellers of instruments of assumption and such other
instruments as the Seller may reasonably request in order to effect the
assumption by the Buyer of the Assumed Liabilities. After the Closing,
the Buyer shall, at the written request of Seller, use reasonable efforts
to arrange over time for the substitution of the Buyer for the Seller and
its Subsidiaries and Affiliates that are not constituents of the Business
on the agreements, obligations and liabilities in respect of the Business
which are obligations of the Seller and its Subsidiaries and Affiliates
that are not constituents of the Business, including, without limitation,
those agreements, obligations and liabilities listed on Schedule 5.26.
3.4 Risk of Loss. The risk of loss of any of the Assets or the
Company Assets shall be the responsibility of the Buyer as of the Closing
Date. All casualty or other losses of Assets or Company Assets or to the
Business occurring after such time shall be the responsibility of the
Buyer, whether or not the Buyer has purchased or obtained any insurance
coverage.
4. PURCHASE PRICE MATTERS.
4.1 Post-Closing Adjustment. The Purchase Price set forth in Section
2.1 shall be subject to adjustment after the Closing Date as follows:
(a) Within 60 days after the Closing Date, the Seller shall prepare
and deliver to the Buyer a consolidated balance sheet of the Business
reflecting the assets and liabilities of the Business as of the Closing
Date without giving effect to the transactions contemplated by this
Agreement, which shall consist only of the Assets, the Company Assets, the
Assumed Liabilities and the Company Liabilities (the "Draft Closing Balance
Sheet"). The Seller shall prepare the Draft Closing Balance Sheet in
accordance with English generally accepted accounting principles ("GAAP")
and the Accounting Principles and in such detail as the Buyer shall
reasonably request. The Draft Closing Balance Sheet shall include
appropriate accruals for (x) liabilities of the Business incurred prior to
the Closing Date but for which invoices have not been received as of the
Closing Date and (y) prepayments in respect of the Business.
(b) The Buyer shall deliver to the Seller within 60 days after
receiving the Draft Closing Balance Sheet a detailed statement describing
its objections (if any) thereto. Failure of the Buyer so to object to the
Draft Closing Balance Sheet shall constitute acceptance thereof, whereupon
the Draft Closing Balance Sheet shall be deemed to be the "Closing Balance
Sheet". The Buyer and the Seller shall use reasonable efforts to resolve
any such objections, but if they do not reach a final resolution within 30
days after the Seller has received the statement of objections, the Buyer
and the Seller shall select an accounting firm mutually acceptable to them
(the "Neutral Auditors") to resolve any remaining objections. If the Buyer
and the Seller are unable to agree on the choice of Neutral Auditors, they
shall select as Neutral Auditors an internationally-recognized accounting
firm by lot (after excluding their respective regular independent
accounting firms). The Draft Closing Balance Sheet shall be adjusted by
the Neutral Auditors only to conform to GAAP and the Accounting Principles
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and, as so adjusted, shall be the Closing Balance Sheet. Such
determination by the Neutral Auditors shall be conclusive and binding upon
the Buyer and the Seller, absent fraud or manifest error.
(c) During the preparation of the Draft Closing Balance Sheet by the
Seller and the period of any dispute referred to above, the Buyer shall
promptly disclose to the Seller, the Seller's independent accountants and,
if applicable, the Neutral Auditors all relevant facts and information,
give them full access to books, records, facilities and employees of the
Business and cooperate fully with the Seller, the Seller's accountants and,
if applicable, the Neutral Auditors in order to prepare the Draft Closing
Balance Sheet or the Closing Balance Sheet, as the case may be; provided,
however, that any such access shall be allowed only in such manner as not
to interfere unreasonably with the operation of the Business.
(d) The Buyer and the Seller shall share equally the fees and
expenses of the Neutral Auditors.
(e) If the Net Book Value (as defined below) as shown on the Closing
Balance Sheet is less than the Interim Net Book Value, the Seller shall pay
to the Buyer, by wire transfer or other delivery of immediately available
funds, within three business days after the date on which the Closing
Balance Sheet is finally determined pursuant to this Section 4.1, an amount
equal to such deficiency (plus interest thereon from the Closing Date at
the interest rate equal to 1% above LIBOR as in effect from time to time).
"Net Book Value" shall mean the excess of the combined tangible Assets and
Company Assets (and for the avoidance of doubt shall include accounts
receivable, cash, bank balances and similar assets) over the combined
Assumed Liabilities and Company Liabilities.
(f) If the Net Book Value as shown on the Closing Balance Sheet
exceeds the Interim Net Book Value, the Buyer shall pay to the Seller, by
wire transfer or other delivery of immediately available funds, within
three business days after the date on which the Closing Balance Sheet is
finally determined pursuant to this Section 4.1, an amount equal to such
excess (plus interest thereon from the Closing Date at the interest rate
equal to 1% above LIBOR as in effect from time to time).
4.2 Allocation of Purchase Price. The parties shall use reasonable
efforts to agree prior to the Closing on an allocation of the Purchase
Price (and all other capitalizable costs).
4.3 Transaction Taxes. Any and all federal, state, county, local or
foreign sales, use, value added, excise, stamp, transfer and other taxes
not in the nature of income taxes, fees and duties (including any
interest, additions to tax and penalties with respect thereto) and any and
all transfer, recording or similar fees and charges (collectively,
"Transaction Taxes") imposed in connection with the consummation of the
transactions contemplated hereunder shall be borne equally by the Buyer and
the Seller, provided, however, that this Section 4.3 shall not apply to any
VAT, which shall be borne by the Buyer, subject to Section 7.9(h).
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5. REPRESENTATIONS AND WARRANTIES BY THE SELLER.
The Seller, on behalf of itself, each Share Seller and each Asset
Seller, represents and warrants to the Buyer as set forth in this Section
5. The Buyer may rely upon the representations and warranties contained
herein, notwithstanding any investigation of the Business made by the
Buyer prior to the Closing or the knowledge of the officers, directors,
stockholders, employees or agents of the Buyer. OTHER THAN AS EXPRESSLY
SET FORTH HEREIN, NO ASSET SELLER OR SHARE SELLER MAKES ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE WARRANTIES
CONTAINED IN THIS SECTION 5 ARE THE ONLY WARRANTIES, EXPRESSED OR IMPLIED,
GIVEN WITH RESPECT TO THE BUSINESS.
5.1 Organization, Good Standing and Qualification. The Seller, each
Share Seller, each Asset Seller and each Company is a corporation or other
form of limited liability company duly incorporated or otherwise duly
organized, validly existing and in good standing (in such jurisdictions
where such concept is applicable) under the laws of its respective
jurisdiction of incorporation or organization as set forth on
Schedule 5.1. Each Share Seller, each Asset Seller and each Company has
all requisite corporate power and authority to own or lease its properties
and carry on its business as presently conducted. Each Asset Seller and
each Company is in good standing as a foreign corporation and licensed or
qualified to transact business in each jurisdiction in which the nature of
the properties owned or leased by it or the business transacted by it
requires it to be so licensed or qualified, except those jurisdictions, if
any, in which the failure so to qualify would not result in a Material
Adverse Effect.
5.2 Capital Stock and Ownership.
(a) The total number of shares of capital stock, and the
classes and par values thereof, which each Company is authorized to
issue, the number of such shares which are issued and outstanding and
the number of such outstanding shares owned, directly or indirectly,
legally or beneficially by the Seller (or any subsidiary or affiliate
of the Seller, including without limitation, the Share Sellers), the
number of shares owned by the other stockholders and the identities
of the such stockholders, are as set forth in Schedule 5.2.
(b) Except as set forth in Schedule 5.2, there are not
outstanding any (i) securities of any Company convertible into or
exchangeable for any shares of capital stock or other securities of
any such Company; (ii) subscriptions, options, warrants or other
rights, contingent or otherwise, obligating any Company to issue or
purchase or entitling any third party to acquire from any Company any
shares of capital stock or other securities of such Company, other
than directors' qualifying shares or shares required to be held by
foreign nationals, if any; or (iii) agreements or understandings with
respect to the voting, sale, transfer or other restriction on shares
of capital stock of any Company to which any Share Seller, any Asset
Seller or any Company is a party, other than this Agreement and
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Permitted Encumbrances.
(c) The shares of capital stock of each Company that are owned,
directly or indirectly, by each Share Seller have been duly authorized
and validly issued, are fully paid, non-assessable and free of
preemptive rights.
(d) Each Share Seller holds good title to the Shares being sold
by it, free and clear of all Encumbrances other than Permitted
Encumbrances. The transfer of the Shares to the Buyer pursuant to
this Agreement will vest, subject only to recordation on the books of
the respective Companies, in the Buyer good title to the Shares, free
and clear of all Encumbrances (other than Permitted Encumbrances),
except for any Encumbrances resulting from any action taken or omitted
to be taken by Buyer or any of its Subsidiaries or Affiliates.
(e) Except as set forth in Schedule 5.2, no Company holds any
direct or indirect equity interest in any other corporation or other
entity, except for another Company.
5.3 Authority.
(a) Except for the Seller's Shareholder Resolution, the Seller
has all requisite corporate right, power, capacity and authority to
enter into, deliver and perform this Agreement, each Share Seller
and each Asset Seller has all requisite corporate right, power,
capacity and authority to consummate the transactions contemplated
hereby; and this Agreement has been, and any agreement, instrument or
document executed pursuant to Section 2.6(a) will be as of the Closing
Date, duly and validly executed and delivered by the Seller (or each
Share Seller or Asset Seller, as applicable) pursuant to all
necessary corporate action on the part of the Seller (or each Share
Seller or Asset Seller, as applicable).
(b) This Agreement is, and any agreement, instrument or document
executed pursuant to Section 2.6(a) will be as of the Closing Date,
legal, valid and binding upon and enforceable against the Seller (or
each Share Seller or Asset Seller, as applicable) in accordance with
its terms.
5.4 No Conflict; No Consents or Approvals.
(a) The execution and delivery by the Seller of this Agreement,
the execution and delivery by any Asset Seller or Share Seller of any
agreement, instrument or document contemplated hereby, the
consummation of the transactions contemplated herein or therein by
any Share Seller or any Asset Seller and the compliance by any
Share Seller or any Asset Seller with any of the provisions hereof or
thereof will not (i) conflict with, result in a violation or breach
of or constitute a default under (or would result in a violation,
breach or default with the giving of notice or the passage of time or
both) (A) the certificate of incorporation or bylaws (or other
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similar charter or governing documents) of any Share Seller, any
Asset Seller or any Company, (B) except as set forth in Schedule 5.4,
any contract, understanding, commitment or agreement referred to in
Schedule 5.17, except any such violation, breach or default of any
such contract, understanding, commitment or agreement which (together
with all other such violations, breaches or defaults) would not have a
Material Adverse Effect, or (C) any law, statute, ordinance, writ,
injunction, decree, rule, regulation or court or administrative order
by which any Share Seller, any Asset Seller or any Company (or any of
the Assets or the Company Assets) is subject or bound; (ii) result in
the creation or imposition of, or give any party the right to create
or impose, any Encumbrance (other than Permitted Encumbrances) upon
any of the Shares, the Assets or the Company Assets, (iii) terminate,
modify or cancel, or give any other party the right to terminate,
modify or cancel, or require any notice, consent or waiver under, any
contract, understanding, commitment or agreement referred to in
Schedule 5.17 or (iv) entitle any employee of the Business to any
severance or other payment or benefit except as provided by applicable
law.
(b) Except as set forth on Schedule 5.4, no consent or approval
of any Governmental Body or waiting period imposed by law is required
in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated
hereby by any Share Seller, any Asset Seller or any Company.
(c) No litigation, claim, administrative proceeding or other
proceeding or governmental investigation or inquiry is pending or, to
the Seller's Knowledge, has been threatened which would prevent or
delay the execution, delivery or performance of this Agreement or the
consummation by any Share Seller or any Asset Seller of the
transactions contemplated hereby (except for any such litigation,
claim, administrative proceeding or other proceeding or governmental
investigation or inquiry that also relates to the Buyer's ability to
execute, deliver or perform this Agreement or consummate the
transactions contemplated hereby).
(d) To Seller's Knowledge, there are no Restricted Assets as to
which the failure to obtain all necessary consents and waivers for the
assignment, transfer, sublease or sublicense thereof as of the Closing
would have a Material Adverse Effect.
5.5 Undisclosed Liabilities. To the Seller's Knowledge, no Company
or, with respect to the Business, Asset Seller or Share Seller has any
liability or obligation of any nature, fixed, contingent, accrued or
otherwise, liquidated or unliquidated, and whether due or to become due,
except for:
(a) liabilities and obligations reflected on the Balance Sheet,
other than those discharged since the Balance Sheet Date;
(b) liabilities and obligations incurred in the Ordinary Course
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of Business since the Balance Sheet Date and that have not been
discharged;
(c) liabilities and obligations under any contract, lease or
other agreement to which a Company is a party (except for any
liabilities or obligations resulting from any breach thereof by such
Company);
(d) liabilities and obligations under any contract, lease or
other agreement which is part of the Assets (except for any
liabilities or obligations resulting from any breach thereof by any
Asset Seller);
(e) the Excluded Liabilities; and
(f) the Excluded Company Liabilities.
5.6 No Termination of Relationships. To the Seller's Knowledge, the
relationship of any material distributor, agent, representative, customer
or supplier of the Business will not be terminated or adversely affected as
a result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
5.7 Financial Statements. Attached hereto as Exhibit C are the
Financial Statements. The Financial Statements present fairly the
financial condition and results of operations of the Business as of the
date and for the period indicated, have been prepared in accordance with
GAAP and the Accounting Principles applied on a basis consistent with
prior periods, and are consistent with the books and records of the
Business.
5.8 Tax Matters. Except as set forth in Schedule 5.8:
(a) Each Company and, with respect to the Business, each Asset
Seller, has accurately prepared and duly and timely filed all material
Tax Returns that it was required to file. All such material Tax
Returns were correct and complete in all material respects. All
material Taxes owed by a Company and, with respect to the Business,
any Asset Seller, (whether or not shown on any Tax Return) have been
paid when due, other than those for which adequate reserves have been
established on the Balance Sheet. No Company is currently the
beneficiary of any extension of time within which to file any material
Tax Return. No written claim or inquiry with respect to any material
amount of Taxes has ever been made by an authority in a jurisdiction
where any Company or, with respect to the Business, any Asset Seller,
did not file Tax Returns that such Company or, with respect to the
Business, such Asset Seller, is or may be subject to any Tax by that
jurisdiction. There are no liens or other security interests (other
than Permitted Encumbrances) on any of the Assets or the Company
Assets that arose in connection with any failure (or alleged failure)
to pay any Tax.
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(b) All Taxes of any Company attributable to Tax periods or
portions thereof ending on or prior to the Balance Sheet Date,
including Taxes that may become payable by any such Company in future
periods in respect of any transactions or sales occurring on or prior
to the Balance Sheet Date, that have not yet been paid have, in the
aggregate, been adequately reflected as a liability on the Balance
Sheet in accordance with GAAP consistently applied.
(c) Without limiting the generality of the foregoing, each
Company has withheld or collected and duly paid all material Taxes
required to have been withheld or collected and paid in connection
with amounts paid or owing to or from any employee, independent
contractor, creditor, stockholder, or other third party.
(d) To the Seller's Knowledge, there is no dispute or claim
concerning any material Tax liability of any of the Companies pending.
Schedule 5.8 lists all income Tax Returns filed with respect to any of
the Companies for taxable periods ended on or after December 31, 1990,
indicates those Tax Returns that have been audited, and indicates
those Tax Returns that are currently the subject of audit. To the
Seller's Knowledge, the Seller (or its Affiliate) has delivered or
made available to the Buyer (or the Buyer's representative) true and
complete copies of the material income, franchise, excise, sales, use,
property and employment Tax Returns (or relevant portions thereof)
filed by any of the Companies or, with respect to the Business, any
Asset Seller, together with all material examination reports (or
relevant portions thereof) and statements of deficiencies assessed,
proposed in writing to be assessed against, or agreed to with respect
thereto by any such Company or, with respect to the Business, such
Asset Seller, since January 1, 1988.
(e) None of the Companies has made a currently effective waiver
of any statute of limitations in respect of material Taxes or agreed
to any currently effective extension of time with respect to a
material Tax assessment or deficiency.
(f) None of the Companies has filed a consent under Code Section
341(f) concerning collapsible corporations. None of the Companies has
made any payments, is obligated to make any payments, or is a party to
any agreement that could obligate it to make any payments that will be
an "excess parachute payment" under Code Section 280G. None of the
Companies has been a United States real property holding corporation
within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii). None of the
Companies has any liability for any Taxes of any person (other than
such Company) under Treas. Reg. S 1.1502-6 (or any similar provision
of federal, state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(g) To the Seller's Knowledge, Schedule 5.8 sets forth the
following information with respect to each of the Companies as of
December 31, 1994: (i) the tax basis of the Company in the Company
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Assets, and (ii) the amount of any net operating loss carryforward of
the Company.
(h) To the Seller's Knowledge, while an Affiliate of the Seller,
none of the Companies is or has ever been: resident for purposes of
United Kingdom legislation in the United Kingdom; engaged in any trade
or other business within the United Kingdom; in receipt of any income
that is or should have been subject to United Kingdom taxation; in the
position of having a "tax presence" in the United Kingdom as that
expression is understood for the purposes of United Kingdom Laws and
Regulations relating to Taxes.
5.9 Title to Properties.
(a) The Asset Sellers and Companies are the true and lawful
owners of, and have good title to, the Assets and the Company Assets,
respectively, in each case free and clear of all Encumbrances other
than Permitted Encumbrances. Upon execution and delivery by the
Seller to the Buyer of the instruments of conveyance referred to in
Sections 10(b)(iii) and (iv), or, where applicable, physical delivery
of Assets pursuant to Section 2.6(a), the Buyer will receive all of
Seller's title to, and interest in, the Assets and the Company Assets,
free and clear of all Encumbrances other than Permitted Encumbrances.
(b) Other than the Leased Real Estate and equipment held under
leases entered into in the Ordinary Course of Business, none of the
assets in possession of the Business but owned by third parties is
material to the Business.
5.10 Real Estate. Schedule 5.10 lists and describes the location of
all owned real property included in the Assets or the Company Assets.
Except as set forth on Schedule 5.10 or Exhibit B, with respect to each
parcel of Owned Real Estate:
(a) the identified owner has good title to such parcel,
insurable by a recognized national title insurance company (in the
U.S. and such other jurisdictions where the concept of title insurance
is applicable) at standard rates, free and clear of all Encumbrances,
except for Permitted Encumbrances which do not impair the use,
occupancy or value of such parcel as heretofore used by the Seller and
its Subsidiaries;
(b) there are no (i) condemnation proceedings pending or, to the
Seller's Knowledge, threatened in writing relating to such parcel, or
(ii) litigation or administrative actions pending or, to the Seller's
Knowledge, threatened in writing relating to such parcel;
(c) to the Seller's Knowledge, the legal description for such
parcel contained in the deed thereof describes such parcel fully and
adequately; the buildings and improvements located thereon are located
within the boundary lines of the described parcels of land, are not in
violation of current setback requirements, zoning laws and ordinances
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and do not encroach on any easement which may materially burden the
land; the land does not serve any adjoining property for any purpose
inconsistent with the use of the land as heretofore used; and such
parcel is not subject to any restriction for which any permits or
licenses necessary to the use thereof as heretofore used have not been
obtained;
(d) there are no leases, subleases, licenses or agreements
granting to any party or parties the right of use or occupancy of any
portion of such parcel;
(e) there are no outstanding options or rights of first refusal
to purchase such parcel, or any portion thereof or interest therein;
(f) all facilities located on such parcel are supplied with
utilities and other services necessary for the operation of such
facilities as heretofore operated, including gas, electricity, water,
telephone, sanitary sewer and storm sewer, all of which services are
adequate for their current uses and, to Seller's Knowledge, are in
accordance with all applicable Laws and Regulations;
(g) such parcel has direct access to a public road or access to
a public road via an easement benefiting such parcel;
(h) there is no pending or, to the Seller's Knowledge, any
threatened proceeding to change or redefine the zoning classification
of all or any portion of the parcel in a manner that would materially
interfere with the use of such parcel as heretofore used;
(i) All of the material buildings and improvements constructed
on the parcel are in serviceable condition and repair, subject to
ordinary wear and tear, and are free of material construction defects,
and all mechanical and utility systems servicing such improvements are
in serviceable condition and repair, subject to ordinary wear and tear,
and are free of material defects;
(j) to the Seller's Knowledge, each parcel is an independent
unit which does not rely on any facilities (other than the facilities
of public utility and water companies) located on any other property
(i) to fulfill any zoning, building code or other municipal or
governmental requirement; (ii) for structural support or the
furnishing of any essential building systems or utilities, including
but not limited to electric, plumbing, mechanical, heating,
ventilating, and air conditioning systems; or (iii) to fulfill the
requirements of any lease. To the Seller's Knowledge, no building or
other improvement not included in the parcel relies on any part of the
parcel to fulfill any zoning, building code or other municipal or
governmental requirement or for structural support or the furnishing
of any essential building systems or utilities. Such parcel is
assessed by local property assessors as a tax parcel or parcels
separate from all other tax parcels; and
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(k) there are no pending agreements relating to any material
construction or alteration of any buildings on any parcel.
5.11 Real Property Leases. Schedule 5.11 lists all real property
leased or subleased as of the date hereof to a Company or, in the conduct
of the Business, to an Asset Seller. The Seller has delivered to the Buyer
correct and complete copies of the leases and subleases (as amended to
date) listed in Schedule 5.11. With respect to each lease and sublease
of Leased Real Estate:
(a) the lease or sublease is legal, valid, binding, enforceable
and in full force and effect with respect to each Asset Seller and each
Company which is a party thereto;
(b) except as set forth on Schedule 5.11A or Exhibit B, each lease or
sublease to which an Asset Seller is a party is assignable by the Asset
Seller to the Buyer without the consent or approval of or any payment to
any party, no lease or sublease to which a Company is a party requires any
permission or consent upon a change in control of such company, all such
leases or subleases (whether the lessee is an Asset Seller or Company)
will continue to be legal, valid, binding, enforceable and in full force
and effect immediately following the Closing in accordance with the terms
thereof as in effect immediately prior to the Closing, and the
consummation of the transactions contemplated herein will not conflict
with, result in a violation or breach of or constitute a default under (or
would result in a violation, breach or default with the giving of notice
or the passage of time or both) any such lease or sublease;
(c) neither any Asset Seller nor any Company is in breach or
default in any material respect under any such lease or sublease, and
no event has occurred which, with notice and/or lapse of time, would
constitute such a breach or default;
(d) to the Seller's Knowledge, there are no disputes or
forbearance programs in effect as to the lease or sublease;
(e) neither any Asset Seller nor any Company has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold;
(f) to the Seller's Knowledge, all facilities leased or
subleased thereunder are supplied with utilities and other services
necessary for the operation of said facilities; and
(g) with respect to each parcel of Leased Real Estate located in
a jurisdiction that recognizes leasehold interests in land as distinct
ownership interests (including, without limitation, England and
Australia), all of the statements set forth in Section 5.10 are true.
5.12 Equipment Leases. Schedule 5.12 contains a list of all
equipment leases involving an annual expense per lease in excess of
100,000 English pounds sterling to which a Company is a lessee or an Asset
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Seller is a lessee with respect to a lease which is part of the Assets, and
(other than with respect to motor vehicle leases) lists the term of such
lease and the rent payable thereunder. With respect to each equipment
lease listed in Schedule 5.12:
(a) the lease is legal, valid, binding, enforceable and in full
force and effect with respect to each Asset Seller and each Company
which is a party thereto;
(b) except as set forth in Schedule 5.12A, each lease to which
an Asset Seller is a party is assignable by the Asset Seller to the
Buyer without the consent or approval of or any payment to any party,
no lease or sublease to which a Company is a party requires any
permission or consent upon a change in control of such Company, all
such leases (whether the lessee is an Asset Seller or Company) will
continue to be legal, valid, binding, enforceable and in full force
and effect immediately following the Closing in accordance with the
terms thereof as in effect immediately prior to the Closing, and the
consummation of the transactions contemplated herein will not conflict
with, result in a violation or breach of or constitute a default under
(or would result in a violation, breach or default with the giving of
notice or the passage of time or both) any such lease; and
(c) neither any Asset Seller nor any Company is in breach or
default in any material respect under any such lease, and no event has
occurred which, with notice and/or lapse of time, would constitute
such a breach or default.
5.13 Assets Used in the Business. The Assets and the Company Assets
are sufficient for the conduct of the Business as heretofore conducted by
the Companies and the Asset Sellers. The Assets and the Company Assets
are in good operating condition and repair (subject to normal wear and
tear).
5.14 Accounts Receivable. All accounts receivable of the Business
reflected on the Balance Sheet are valid receivables, arose in the
Ordinary Course of Business, are collectible and, to the Seller's
Knowledge, are subject to no setoffs or counterclaims, net, in the
aggregate, of an applicable reserve for doubtful accounts shown on the
Balance Sheet. All accounts receivable reflected in the financial or
accounting records of the Business that have arisen since the Balance
Sheet Date are valid receivables, arose in the Ordinary Course of
Business, are collectible and, to the Seller's Knowledge, are subject to no
setoffs or counterclaims net, in the aggregate, of a reserve for doubtful
accounts proportionate to that shown on the Balance Sheet.
5.15 Intellectual Property.
(a) Schedule 5.15 contains a list of all of the following that
are owned by any Company or, in the conduct of the Business, by any
Asset Seller: (i) patents and patent applications; (ii) registered
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trademarks, registered tradenames and registered service marks and
applications therefor; and (iii) registered licenses relating to any of
the foregoing. Schedule 5.15 identifies the owner of each item
listed thereon and, in the case of registrations and applications, the
application or registration number and date.
(b) The Asset Sellers and the Companies own or have the right to
use all Proprietary Rights used in the operation of the Business as
heretofore conducted or necessary for the operation of the Business as
heretofore conducted (collectively, "Intellectual Property"). Upon
execution and delivery by the Seller to the Buyer of the instruments
of conveyance referred to in Sections 10(b)(iii) and 10(b)(iv), each
item of Intellectual Property owned or used by the Asset Sellers and
the Companies in the operation of the Business as of the Closing will
be owned or available for use by the Buyer or the Companies on
substantively identical terms and conditions immediately following the
Closing, except as otherwise indicated on Schedule 5.15. Each of the
Asset Sellers and the Companies has taken reasonable measures to
protect the proprietary nature of the Intellectual Property and to
maintain in confidence the trade secrets and confidential information
that it owns or uses in, and that are material to, the Business. No
other person or entity has any rights to any of the Intellectual
Property owned or used by the Asset Sellers or the Companies that are
material to the Business, except that the Intellectual Property
identified on Schedule 5.15 as licensed to the Companies or, in the
conduct of the Business, to the Asset Sellers, is owned by the
respective owners identified on Schedule 5.15. Except as set forth
on Schedule 5.15, to the Seller's Knowledge, no person or entity is
infringing, violating or misappropriating any of the Intellectual
Property. Except as set forth on Schedule 5.15, no Asset Seller or
Company has agreed, except in the Ordinary Course of Business in
conjunction with product sales, to indemnify any person or entity for
or against any infringement, misappropriation or other conflict with
any Intellectual Property.
(c) Except as set forth on Schedule 5.15, to the Seller's
Knowledge, none of the activities or business presently conducted by
the Business infringes or violates, or constitutes a misappropriation
of, any Proprietary Rights of any other person or entity (including,
without limitation, the Seller or any Subsidiary or Affiliate of the
Seller). Except as set forth on Schedule 5.15, no Company, or, in the
conduct of the Business, Asset Seller, has received since January 1,
1992, any complaint, claim or notice in writing alleging any such
infringement, violation or misappropriation, which complaint, claim or
notice has not been resolved to the mutual satisfaction of the parties
involved in a manner which involves no future obligations of the
Seller.
(d) Except as set forth on Schedule 5.15A, with respect to each
item of Intellectual Property owned by a third party and used by a
Company or, in the conduct of the Business, an Asset Seller:
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(i) the license, sublicense or other agreement covering
such item is legal, valid, binding, enforceable and in full force
and effect with respect to the Asset Seller or Company which is
a party thereto;
(ii) such license, sublicense or other agreement to which an
Asset Seller is a party is assignable by the Asset Seller to
the Buyer without the consent or approval of or any payment to
any party and the consummation of the transactions contemplated
herein will not conflict with, result in a violation or breach
of or constitute a default under (or would result in a
violation, breach or default with the giving of notice or the
passage of time or both) any such license, sublicense or other
agreement which violation, breach or default (together with all
other such violations, breaches or defaults) would have a
Material Adverse Effect;
(iii) neither any Asset Seller or Company nor, to the
Seller's Knowledge, any other party is in breach or default
under any such license, sublicense or other agreement, and no
event has occurred which, with notice and/or lapse of time,
would constitute such a breach or default or permit a
termination, modification or acceleration thereunder;
(iv) to the Seller's Knowledge, the underlying item of
Intellectual Property is not subject to any outstanding
judgment, order, decree, stipulation or injunction; and
(v) no Asset Seller or Company has agreed, except in the
Ordinary Course of Business in conjunction with product sales,
to indemnify any person or entity for or against any
interference, infringement, misappropriation or other conflict
with respect to such item.
5.16 Insurance Policies.
(a) Schedule 5.16 sets forth a list (including the name of the
insurer, the amount of total annual premiums, and the type and amount
of coverages) of all material policies of fire, theft, casualty,
liability, burglary, fidelity, workers compensation, business
interruption, environmental, product liability, automobile and other
forms of insurance under which any Company or, with respect to the
Business, an Asset Seller, is a named insured or otherwise the
beneficiary of coverage. Neither any Share Seller, any Asset Seller
nor any Company has, with respect to the Business, received any notice
from the insurer under any such policy disclaiming coverage, reserving
rights with respect to a particular claim or such policy in general,
or canceling or materially amending any such policy.
(b) All premiums due and payable for such insurance policies
have been duly paid, and such policies or extensions or renewals
thereof in the amounts described will be outstanding and duly in full
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force without interruption until the Closing Date.
5.17 Contracts. Schedule 5.17 contains a list of the following
written contracts, understandings, commitments and agreements relating to
the Business:
(a) all contracts, leases, understandings or commitments,
whether in the Ordinary Course of Business or not: (i) involving a
present or future obligation to purchase, lease or deliver goods or
services of an amount or value in excess of 200,000 English pounds
sterling each; or (ii) which limit or restrict the ability of the
Business to compete anywhere in the world; or (iii) which establish a
partnership or joint venture;
(b) all bonus, incentive or deferred compensation arrangements
relating to the Business, all profit sharing, pension, multi-employer
pension, vacation, group insurance or employee welfare plans or other
similar plans or fringe benefits which could result in a cost to the
Business of more than 100,000 English pounds sterling per annum;
(c) all collective bargaining agreements or other contracts or
commitments to or with any labor union, employee representative or
group of employees, and the Seller has made available to the Buyer all
employment manuals, booklets and the like setting forth the terms of
employment and labor policies and practices (whether or not legally
binding) that are of general application to employees or employees of a
certain type of the Business or of any section or part of the Business;
(d) any changes since February 1, 1995 to each employment
contract, and each other contract, agreement or commitment to or with
an individual employee, agent, representative or consultant for a
remuneration which exceeds or will exceed in accordance with its terms
50,000 English pounds sterling per annum or which cannot be terminated
at any time without liability to the employer, upon no more than six
months notice;
(e) any arrangement under which any Company or, in the conduct
of the Business, any Asset Seller, has created, incurred, assumed or
guaranteed indebtedness for borrowed money involving more than 200,000
English pounds sterling;
(f) each sales representative, distributorship or other
agreement providing for the distribution or marketing of products
(i) under which revenue to the Business during its year ended December
31, 1994 exceeded 200,000 English pounds sterling or (ii) which is not
terminable by the constituent of the Business which is a party thereto
without penalty or breach upon no more than six months prior notice to
the other party thereto;
(g) any agreement concluded within the past five years relating
to the acquisition or disposition of significant assets, businesses or
companies other than in the Ordinary Course of Business (whether by
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sale of assets, sale of stock, merger or otherwise); and
(h) any other arrangement under which the consequences of a
default or termination would have a Material Adverse Effect, or which
gives or could give any other party thereto the right to cause the
transactions contemplated by this Agreement to be rescinded following
consummation, or which involves more than 300,000 English pounds
sterling in the aggregate.
The Seller has delivered or made available to the Buyer a correct and
complete copy of (i) each written arrangement (as amended to date) listed
in Schedule 5.17 and (ii) a list as of February 1, 1995 of each employment
contract, and each other contract, agreement or commitment to or with an
individual employee, agent, representative or consultant for a
remuneration which exceeds or will exceed in accordance with its terms
50,000 English pounds sterling per annum or which cannot be terminated at
any time without liability to the employer, upon no more than six months
notice. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full
force and effect with respect to each Asset Seller and Company which is a
party thereto and, to the Seller's Knowledge, with respect to every other
party thereto; (ii) each written arrangement to which an Asset Seller is a
party is assignable by the Asset Seller to the Buyer without the consent
or approval of or any payment to any party (except as set forth in Schedule
5.17A), and the consummation of the transactions contemplated herein will
not conflict with, result in a violation or breach of or constitute a
default under (or would result in a violation, breach or default with the
giving of notice or the passage of time or both) any such written
arrangement which violation, breach or default (together with all other
such violations, breaches or defaults) would have a Material Adverse
Effect; and (iii) neither any Asset Seller or Company nor, to the Seller's
Knowledge, any other party thereto is in breach or default, and no event
has occurred which, with notice and/or lapse of time, would constitute
such a breach or default or permit a termination, modification or
acceleration, under the written arrangement, which breach or default would
have a Material Adverse Effect. No Asset Seller or Company is a party to
any oral contract, agreement or other arrangement which, if reduced to
written form, would be required to be listed in Schedule 5.17 under the
terms of this Section 5.17. None of the contracts, understandings,
commitments and agreements listed on Schedule 5.17 is (or would be if
entered into today and if the Seller's only business were the Business and
the Seller's only assets were the Shares and the Assets): such as to
require an announcement as a Super Class 1 transaction under Chapter 10 of
the London Stock Exchange Listing Rules (the "Yellow Book"); or a material
contract not entered into in the ordinary course of business under
paragraph 6.C.20 of the Yellow Book.
5.18 Inventory. The value of the inventory as stated on the Balance
Sheet reflects the lower of cost or market for such inventory as applied
in accordance with GAAP and the Accounting Principles. All inventory
reflected on the Balance Sheet consists of a quality and quantity usable
and salable in the Ordinary Course of Business, except for scrap, excess
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or obsolete items and items that are of below-standard quality or broken
before completion of final manufacture, all of which have been written-off
or written-down to net realizable value on the Balance Sheet. All
inventory of the Business purchased since the Balance Sheet Date consists
of a quality and quantity usable and salable in the Ordinary Course of
Business, except for scrap, excess or obsolete items and items that are of
below-standard quality or are broken before completion of final
manufacture, all of which have been written-off or written-down to net
realizable value on the books of the Business.
5.19 Litigation. Schedule 5.19 describes all suits, actions,
proceedings, investigations, inquiries, claims, complaints and accusations
pending or, to the Seller's Knowledge, threatened in writing against the
Business, the Assets, the Company Assets or the Shares and to which any
Asset Seller or Company is or would be a party, in any court or before any
industrial tribunal or arbitration panel of any kind or before or by any
federal, provincial, state, local, foreign, regulatory or other
government, governmental agency, department, commission, board, bureau,
instrumentality, authority or body ("Governmental Body"). There is no
outstanding (i) injunction, decree, judgment, award, fine or penalty by any
court, arbitration panel, industrial tribunal or Governmental Body against
or affecting the Business, the Assets, the Company Assets or the Shares or
(ii) writ or order of any such entity against or affecting the Business,
the Assets, the Company Assets or the Shares which would have a Material
Adverse Effect.
5.20 Compliance with Law. Except as set forth in Schedule 5.20,
(a) each Company and, with respect to the Business, each Asset Seller and
Share Seller has complied, in all material respects, and is in compliance,
in all material respects, with all U.S. and foreign laws (including
without limitation the U.S. Foreign Corrupt Practices Act and the U.S.
Occupational Safety and Health Act and regulations thereunder), rules,
decrees, regulations, ordinances and orders ("Laws and Regulations") that
affect or relate to this Agreement, the transactions contemplated hereby
or the conduct of the Business, the Assets, the Company Assets or the
Shares; (b) each Share Seller, each Asset Seller and each Company has
filed with the proper authorities all material statements and reports
required by all applicable Laws and Regulations relating to the Business,
the Assets, the Company Assets or the Shares; (c) none of the Share
Sellers, Asset Sellers or Companies has received notice or inquiry relating
to any actual or alleged violation of any material Laws and Regulations
relating to the Business, the Assets, the Company Assets or the Shares and
(d) no Company or, with respect to the Business, Asset Seller is party to
any agreement or arrangement (whether or not intended to be legally
binding) or is in the pursuit of any course of conduct which is registrable
under the United Kingdom Restrictive Trade Practices Acts 1976 and 1977 or
prohibited by or capable of giving rise to an investigation by the United
Kingdom Director-General of Fair Trading or a reference to the United
Kingdom Monopolies and Mergers Commission or is in material contravention
or breach of any of the following European Union or United Kingdom Laws and
Regulations: The Treaty of Rome 1957; the Fair Trading Act 1973; the
Consumer Credit Act 1974; the Health and Safety at Work etc Act 1974; the
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Trade Descriptions Acts 1968 and 1972; the Restrictive Trade Practices Act
1976 and 1977; the Competition Act 1980; the Data Protection Act 1984 or
any regulations, orders, notices or directions made under any of the
foregoing.
5.21 Absence of Subsequent Actions. Except as set forth in
Schedule 5.21, since the Balance Sheet Date, no Company or, with respect to
the Business, Asset Seller, has:
(a) incurred any liability, including without limitation any
liability for or in respect of borrowed money, in excess of 200,000
English pounds sterling in the aggregate, except current liabilities
incurred, and liabilities under contracts entered into, in the
Ordinary Course of Business;
(b) purchased any shares of capital stock or other equity
securities of any party unaffiliated with the Seller;
(c) mortgaged, pledged or subjected to any material claim any
portion of its assets, tangible or intangible, other than Permitted
Encumbrances;
(d) acquired or sold, assigned, transferred or otherwise disposed
of a material amount of tangible assets, except in each case in the
Ordinary Course of Business or as contemplated by Section 2.5;
(e) sold, assigned, licensed, sublicensed or transferred any
material Intellectual Property, except for licenses of Intellectual
Property in the Ordinary Course of Business in conjunction with product
sales;
(f) made any single capital expenditure or commitment therefor in
excess of 200,000 English pounds sterling;
(g) suffered any non-operating loss in excess of 100,000 English
pounds sterling;
(h) made any change in compensation of any director or executive
officer (or employee of similar station) except for increases which
are in the Ordinary Course of Business;
(i) changed its credit policy as to sale of inventories or
collection of receivables;
(j) decreased in any material respect expenditures with respect
to promotion and advertising or maintenance and repairs;
(k) entered into any joint venture, partnership or similar
arrangement;
(l) amended, modified or terminated any contract, understanding,
commitment or agreement referred to in Schedule 5.17 other than in the
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Ordinary Course of Business, except for any such item that terminated
in accordance with its terms;
(m) authorized or issued any recall notice for any of its
products or initiated any safety inquiry or investigation other than
in the Ordinary Course of Business;
(n) received notice of any warranty claim (other than in the
Ordinary Course of Business) or any products liability claim;
(o) experienced any material reduction in the rate of, or gross
margins associated with, firm bookings or orders for the products and
services of the Business, or any material deterioration in the backlog
level of the Business;
(p) changed its accounting methods, principles or practices other
than as required by GAAP;
(q) taken any of the other actions set forth in Section 7.1(a);
or
(r) agreed to do any of the things listed in clauses (a) through
(q) of this Section 5.21.
5.22 No Material Adverse Change. Since the Balance Sheet Date, there
has not been any material adverse change in the business, results of
operations or prospects of the Business as heretofore conducted.
5.23 Labor Matters.
(a) The Seller has provided to the Buyer a list of all employees
of the Business as of December 31, 1994. To the Seller's Knowledge,
except as listed on Schedule 5.23A, no employee of any Company and no
employee of any Asset Seller employed in the Business has any plans to
terminate employment (other than for the purpose of accepting
employment with the Buyer following the Closing). Except as set forth
in Schedule 5.23, no Company or, in the conduct of the Business, Asset
Seller, has, since December 31, 1992, experienced any strikes, material
grievances, material claims of unfair labor practices or other
collective bargaining disputes. To the Seller's Knowledge, there is no
organizational effort presently being made or threatened by or on
behalf of any labor union with respect to any employees of the
Business.
(b) With respect to the Companies and, in the conduct of the
Business, the Asset Sellers, there are not in existence and, to the
Seller's Knowledge, there are not threatened any material (i) work
stoppages or strikes, (ii) grievance, arbitration proceedings or
proceedings before any industrial tribunal arising out of collective
bargaining agreements, national labor union agreements or otherwise
covering employees of the Business, or (iii) unfair labor practice
complaints.
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(c) No Asset Seller or Company recognizes (expressly or
impliedly) any trade union. No claims are being made by any trade
union for recognition and no claim for recognition of which Seller has
received written notice has been referred to the United Kingdom
Advisory Conciliation & Arbitration Service or to the United Kingdom
Central Arbitration Committee.
(d) The Seller has not made any representations or statements
to any of its employees or any employee engaged in the Business in any
way connected with or concerning employment with the Buyer or any of
the Buyer's Affiliates which representation or statement conflicts
with, or is additional to, the terms of this Agreement.
(e) Except as set forth on Schedule 5.23, there are no
requirements or arrangements (whether or not intended to be legally
binding) on the part of any Asset Seller or Company to pay any employee
of the Business any sums on redundancy other than under any applicable
Laws and Regulations.
5.24 U.S. Employee Benefit Plans.
(a) Schedule 5.24 lists all employee benefit plans (as defined
in Section 3(3) of ERISA), and all compensation plans, agreements or
arrangements, including without limitation insurance coverage,
disability benefits, bonus, deferred compensation, incentive
compensation, severance or termination pay, post-retirement
compensation, change in control compensation, death benefit, stock
purchase, phantom stock, stock appreciation and stock option plans or
arrangements and vacation, which obligate, or may reasonably be
expected to obligate, the Business to provide a value of more than
100,000 English pounds sterling annually, maintained or contributed to
by or on behalf of the Asset Sellers, the Share Sellers or the
Companies applicable to employees of the Business employed in the U.S.
(the "Plans"). The Fisons Scientific Equipment Savings Incentive Plan
including the related trust (the "Savings Plan") has received a
favorable determination letter from the IRS and, to the Seller's
Knowledge, no event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such
determination. Each of the Plans has been administered in compliance
with its terms and the requirements of all applicable Laws and
Regulations, including without limitation ERISA and the Code, and all
required contributions to each Plan have been made, in each case,
except where the failure to do so would not have a Material Adverse
Effect. The Seller has heretofore delivered or made available to the
Buyer true and complete copies of all of the Plans and, where
applicable, related trusts and contracts, including all amendments.
(b) Except as described in Schedule 5.24, there are no inquiries
or investigations by the IRS, the U.S. Department of Labor, no
termination proceedings and no actions, suits or claims (other than
claims for benefits in the Ordinary Course of Business) pending or, to
the Seller's Knowledge, threatened against the Savings Plan (or any
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Company, Share Seller or Asset Seller with respect thereto) or the
assets thereof which would have a Material Adverse Effect.
(c) No Company has ever maintained an employee benefit plan
subject to Section 412 of the Code or Title IV of ERISA.
(d) Neither any Asset Seller, any Share Seller, any Company nor
any ERISA Affiliate contributes to, has within the past five years had
an obligation to contribute to, or is subject to a liability to, a
"multi-employer plan" as defined in Section 4001(a)(3) of ERISA.
(e) Except as set forth in Schedule 5.24, there are no unfunded
obligations under any Plan providing benefits after termination of
employment to any employee or former employee of the Business (or to
any beneficiary of any such employee or former employee), including
but not limited to retiree health coverage and deferred compensation,
but excluding continuation of health coverage required to be continued
under Section 4980B of the Code and insurance conversion privileges
under state law.
(f) Except as set forth in Schedule 5.24, no act or omission has
occurred and no condition exists with respect to any employee benefit
plan maintained by any Asset Seller, any Share Seller, any Company or
any ERISA Affiliate that would subject any Company or the Assets to
any fine, penalty, tax or liability of any kind imposed under ERISA or
the Code, in each case, that would have a Material Adverse Effect.
(g) Schedules 5.24 and 5.25 disclose each: (i) agreement, plan
or arrangement under which any person may receive payments from a
Company or from any Share Seller or Asset Seller with respect to any
employee of the Business, that may be subject to the tax imposed by
Section 4999 of the Code or included in the determination of such
person's "parachute payment" under Section 280G of the Code; and
(ii) agreement or plan binding any Company or, with respect to any
employee of the Business, any Share Seller or Asset Seller, including
without limitation any stock option plan, stock appreciation right
plan, restricted stock plan, stock purchase plan, severance benefit
plan or employee benefit plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by
this Agreement.
5.25 Foreign Employee Benefit Plans. Schedule 5.25 lists (i) each
retirement plan that is not statutorily required (disregarding for this
purpose the United Kingdom Statutory requirement for any contracted-out
schemes to provide guaranteed minimum pensions under the United Kingdom
Pension Schemes Act 1993) that is maintained or contributed to by or on
behalf of any Asset Seller, Share Seller or Company applicable to
employees of the Business located outside of the U.S. (a "Foreign
Retirement Plan") and (ii) each welfare benefit plan that is not required
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by statute or applicable national industry-wide agreement maintained or
contributed to by or on behalf of any Asset Seller, Share Seller or Company
applicable to employees of the Business located outside of the U.S. and
which, in the case of clause (ii), obligates or may reasonably be expected
to obligate the Business to provide a value of more than 100,000 English
pounds sterling annually (a "Foreign Welfare Plan"). Except as set forth
in Schedule 5.25, each such Foreign Retirement Plan and Foreign Welfare
Plan (collectively, the "Foreign Plans") is fully funded, has been
administered, in all material respects, in compliance with its terms and
the requirements of all applicable Laws and Regulations (including,
without limitation, Article 119 of the Treaty of Rome), and all required
contributions to each Foreign Plan have been made. The books and records
of the Companies and, with respect to the Business, the Asset Sellers,
accurately reflect the obligations and liabilities of the Companies and the
Asset Sellers under the Foreign Plans. The Seller has heretofore delivered
to the Buyer true and complete copies of all of the written Foreign Plans
and written summaries of the oral Foreign Plans and, where applicable,
related trusts and contracts, including all amendments. There are no
inquiries or investigations by any foreign Governmental Body, no
termination proceedings and no actions, suits or claims (other than claims
for benefits) pending or, to the Seller's Knowledge, threatened against
any Foreign Plan (or any Company, Share Seller or Asset Seller with respect
thereto) or the assets thereof. Except as set forth in Schedule 5.25,
there are no unfunded obligations under any Foreign Plan providing
benefits after termination of employment to any employee or former
employee of the Business (or to any beneficiary of any such employee or
former employee), including but not limited to retiree health coverage and
deferred compensation, but excluding insurance conversion privileges under
applicable foreign law. No Foreign Plan, plan documentation or agreement,
summary plan description or other written communication distributed
generally to employees of the Business by its terms prohibits the
amendment or termination of any such Foreign Plan. All reports, forms and
other documents required to be filed or advisable to be filed with any
governmental entity with respect to each Foreign Plan have been timely
filed and are complete and accurate in all material respects.
5.26 Indebtedness and Guaranties. Schedule 5.26 sets forth a true
and complete list (indicating the obligor, the beneficiary, the amount and
the date of maturity or expiration), including the names of the parties
thereto, of all debt instruments, loan agreements, indentures, guaranties
or other written obligations which relate to (i) indebtedness for borrowed
money or (ii) money loaned to others, provided that the Seller shall not be
required to list any such obligations which (a) include less than 100,000
English pounds sterling or (b) are general corporate obligations of the
Seller, which are not secured by any of the Assets, the Company Assets or
the Shares and which do not constitute an Assumed Liability or Company
Liability. All of the aforesaid items were entered into in the Ordinary
Course of Business, are valid and binding, in full force and effect and
are enforceable in accordance with their respective terms; there exists no
breach or default, or any event which with notice or lapse of time or
both, would constitute a breach or default by any party thereto; and there
are no prepayment penalties associated therewith.
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5.27 Product Warranty. The standard terms and conditions of sale or
lease of each Division, Business Seller and Company have been provided by
the Seller to the Buyer.
5.28 Environmental Matters.
(a) Except as set forth in Schedule 5.28, each Share Seller,
each Asset Seller and each Company is in compliance in all material
respects with all Environmental Laws applicable to the Business.
Except as set forth in Schedule 5.28, there is no pending or, to the
Seller's Knowledge, threatened civil or criminal litigation, written
notice of violation, formal administrative proceeding or
investigation, inquiry or information request by any Governmental Body
under any Environmental Law involving or relating to the Business.
For purposes of this Agreement, "Environmental Law" means any federal,
state, foreign or local law or statute, or any rule or regulation
implementing such law or statute, in each case existing and in effect
on the date hereof relating to pollution or protection of the
environment, including without limitation any statute or regulation
pertaining to (i) treatment, storage, disposal, generation or
transportation of Materials of Environmental Concern; (ii) air, water
and noise pollution; (iii) groundwater and soil contamination;
(iv) the release or threatened release into the environment of
hazardous substances, or solid or hazardous waste, including without
limitation emissions, discharges, injections, spills, escapes or
dumping of Materials of Environmental Concern; (v) the protection of
wildlife, marine sanctuaries and wetlands, including without
limitation all endangered and threatened species; (vi) above ground or
underground storage tanks, vessels and containers; (vii) abandoned,
disposed or discarded barrels, tanks, vessels, containers and other
closed receptacles; and (viii) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling
of Materials of Environmental Concern. As used herein, the terms
"release" and "environment" shall have the meaning set forth in the
federal Comprehensive Environmental Compensation, Liability and
Response Act of 1980, as amended ("CERCLA").
(b) Except as set forth in Schedule 5.28, to the Seller's
Knowledge, there has been no release of any Materials of Environmental
Concern in amounts above reportable quantities under applicable
Environmental Laws into the environment at any parcel of real property
or any facility (i) currently owned or operated by any Share Seller or
any Asset Seller relating to the Business, (ii) currently owned or
operated by any Company, (iii) formerly owned, operated or controlled
by any Share Seller or any Asset Seller in the conduct of the Business
during the period of its ownership, operation or control or (iv)
formerly owned, operated or controlled by any Company during the period
of its ownership, operation or control, that, in each case, would have
a Material Adverse Effect. For purposes of this Agreement, "Materials
of Environmental Concern" means any pollutants or contaminants,
hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the
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federal Resources Conservation and Recovery Act of 1976, as amended),
radioactive materials, toxic materials, oil or petroleum and petroleum
products.
(c) To the Seller's Knowledge, set forth in Schedule 5.28 is a
list of all environmental reports, investigations and audits relating
to premises (i) currently owned or operated by any Share Seller or any
Asset Seller in the conduct of the Business or (ii) currently owned
or operated by any Company, in each of the foregoing cases whether
conducted by or on behalf of any Share Seller, Asset Seller, any
Company or a third party, and whether done at the initiative of the
Seller, any Share Seller, any Asset Seller or any Company or directed
by a Governmental Body or other third party. Copies of each such
report, or the results of each such report, investigation or audit in
the possession of any Asset Seller, Share Seller or Company, have been
provided or made available to the Buyer (except that only summaries of
the results of statistical information resulting from physical
monitoring or testing have been provided to the Buyer).
(d) The Seller has provided or made available to the Buyer a
list of, to the Seller's Knowledge, all of the solid and hazardous
waste transporters and treatment, storage and disposal facilities that
have been utilized by any Share Seller or any Asset Seller in the
conduct of the Business since January 1, 1980 or by any Company at any
time. Neither any Share Seller, any Asset Seller nor any Company has
received written notice of any liability under any Environmental Law
of any such transporter or facility which would have a Material
Adverse Effect.
(e) Without limiting the generality of the foregoing paragraphs
of this Section 5.28, none of the Companies or, with respect to the
Business, the Asset Sellers or Share Sellers is, except as set forth in
Schedule 5.28, in violation in any material respect of any of the
following United Kingdom Laws and Regulations: the Clean Air Acts 1956
and 1968; the Control of Pollution Act 1974; the Health and Safety at
Work etc Act 1974; the Water Act 1989; and the Environmental Protection
Act 1990; and all statutory instruments, regulations and orders made
under each of the foregoing.
(f) To the Seller's Knowledge, none of the Companies or, with
respect to the Business, Asset Sellers or Share Sellers produces or
uses any substances, or uses any processes in the manufacture or
processing of its products, which are currently proscribed by the
United Kingdom Secretary of State for the Environment, the United
Kingdom Inspectorate of Pollution, the United Kingdom National Rivers
Authority or any United Kingdom local authority under any applicable
Environmental Law.
5.29 Permits. The Companies, Asset Sellers and Share Sellers
currently hold all permits that are required for the operation of the
Companies as heretofore operated or for the conduct of the Business as
heretofore conducted, except for any such permits the failure to hold which
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would not have a Material Adverse Effect (all of such permits being
referred to herein as "Material Permits"). Each Material Permit is in full
force and effect and no suspension or cancellation of such Permit has
been, to the Seller's Knowledge, threatened in writing. Except as set
forth in Schedule 5.29, each such Material Permit held by an Asset Seller
is assignable by the Asset Seller to the Buyer without the consent or
approval of or any payment to any party, all such Material Permits
(whether held by an Asset Seller or Company) will continue to be in full
force and effect immediately following the Closing in accordance in all
substantive respects with the terms thereof as in effect immediately prior
to the Closing, and the consummation of the transactions contemplated
herein will not conflict with, result in a violation or breach of or
constitute a default under (or would result in a violation, breach or
default with the giving of notice or the passage of time or both) any such
Material Permit. To the Seller's Knowledge, there is no proposed or
contemplated change in the terms of any Material Permit.
5.30 Certain Business Relationships. Except as set forth on Schedule
5.30, no Affiliate of the Seller (other than any Asset Seller, Share
Seller or Company) (a) owns any property or right, tangible or intangible,
which is necessary to operate the Business or is reflected on the Balance
Sheet, (b) has any claim or cause of action against the Assets, any Company
or any Company Assets other than with respect to receivables related to the
provision of goods or services to the Business in the Ordinary Course of
Business, or (c) other than with respect to trade payables related to the
provision of goods or services by the Business in the Ordinary Course of
Business, owes any money to any Company or, in connection with the
Business, to any Asset Seller.
5.31 Books and Records. The books, records, accounts, ledgers and
files of each Asset Seller with respect to the Business and each Company
are accurate and complete in all material respects and have been
maintained in accordance with good business and bookkeeping practices in
all material respects. The minute books and other similar records of
each Company of actions taken at any meetings of such Company's
stockholders, Board of Directors, Managing Board, Supervisory Board or any
committee thereof and of all written consents executed in lieu of the
holding of any such meeting are true and complete in all material
respects. The stock certificate books, stock ledgers and/or share
registers of each Company are complete and correct in all material
respects.
5.32 Customers and Suppliers. No unfilled customer orders or
commitments obligating any Division, Business Seller or Company to process,
manufacture or deliver products or perform services, which orders or
commitments are material, individually or in the aggregate, to the Business
will result in a material loss to the Business upon completion of
performance. To the Sellers' Knowledge, no purchase orders or commitments
of any Division, Business Seller or Company, which orders or commitments
are material, individually or in the aggregate, to the Business are
materially in excess of normal requirements of the Business, nor are
prices provided therein materially in excess of current market prices for
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the products or services to be provided thereunder. No material supplier
of the Business has indicated within the past year that it will stop, or
materially decrease the rate of, supplying materials, products, or
services to the Business and no material customer of the Business has
indicated within the past year that it will stop, or materially decrease
the rate of, buying materials, products or services from the Business.
Schedule 5.32 sets forth a list of (a) each customer that accounted for
more than 1% of the combined revenues of the Business during the 1994
fiscal year and (b) each supplier that is the sole supplier of any
significant product or component to the Business. Except as set forth on
Schedule 5.32, there are no suppliers to the Business of significant goods
or services with respect to which practical alternative sources of supply,
or comparable products, are not available on comparable terms and
conditions.
5.33 Government Contracts. No Division, Business Seller or Company
is, or since December 31, 1992 has been, suspended or debarred from
bidding on contracts or subcontracts with any Governmental Body; no such
suspension or debarment has been initiated or, to the Seller's Knowledge,
threatened in writing; and the consummation of the transactions
contemplated by this Agreement will not result in any such suspension or
debarment (assuming that no such suspension or debarment will result
solely from the identity of the Buyer). Except as set forth on
Schedule 5.33, no Division, Business Seller or Company has, since December
31, 1992, been audited or investigated or is now being audited or, to the
Seller's Knowledge, has been threatened in writing with an investigation
by the U.S. Government Accounting Office, the U.S. Department of Defense
or any of its agencies, the Defense Contract Audit Agency, the U.S.
Department of Justice, the Inspector General of any U.S. Governmental
Body, any similar agencies or instrumentalities of any foreign
Governmental Body, or any prime contractor with a Governmental Body nor,
to the Seller's Knowledge, has any such audit or investigation been
threatened in writing. To the Seller's Knowledge, there is no valid basis
for (a) the suspension or debarment of any Division, Business Seller or
Company from bidding on contracts or subcontracts with any Governmental
Body or (b) any claim pursuant to any audit by any Governmental Body in
connection with any contracts or subcontracts relating to the provision of
products or services to or for the benefit of a Governmental Body. Except
as set forth on Schedule 5.33, no Division, Business Seller or Company has
any agreements, contracts or commitments which require it to obtain or
maintain a security clearance with any Governmental Body.
5.34 Recalls. To the Seller's Knowledge, there is no basis for the
recall, withdrawal or suspension of any approval by any Governmental Body
with respect to any product or service sold by the Business. None of the
products or services of the Business is subject to any recall proceedings
and, to the Seller's Knowledge, no such proceedings have been threatened
in writing. Since January 1, 1990 no product or service of the Business
has been recalled.
5.35 Broker's or Finder's Fees. The Seller has no knowledge of, and
has taken no action which would give rise to, any claim (or the reasonable
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basis therefor) for a broker's or finder's fee to be paid by the Buyer or
the Parent in connection with the consummation of the transactions
contemplated hereby.
5.36 Disclosure. No statement contained in the Schedules contains
any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was made, in
order to make such statements not misleading.
6. REPRESENTATIONS AND WARRANTIES BY THE BUYER.
Each of the Parent and the Buyer, jointly and severally, represents
and warrants to the Seller as set forth in this Section 6. The Seller may
rely upon the representations and warranties contained herein,
notwithstanding any investigation of the Buyer or the Parent made by the
Seller prior to the Closing or the knowledge of the officers, directors,
stockholders, employees or agents of the Seller.
6.1 Organization and Good Standing. Each of the Parent and the Buyer
is a corporation duly incorporated, validly existing and in good standing
under the laws of Delaware. As of the Closing Date, each Designated
Transferee of the Buyer will be a corporation duly incorporated and
validly existing and, where such concept exists will, be in good standing
under the laws of its jurisdiction of incorporation.
6.2 Authority.
(a) Each of the Parent and the Buyer has all requisite corporate
right, power, capacity and authority to enter into, deliver and
perform this Agreement and each of the Parent and the Buyer has, and
each Designated Transferee as of the Closing Date will have, all
requisite right, power, capacity and authority to consummate the
transactions contemplated hereby. This Agreement has been, and any
agreement, instrument or document executed pursuant to Section 3.3
will be as of the Closing Date, duly and validly executed and
delivered by each of the Buyer and the Parent, pursuant to all
necessary corporate action on the part of each of the Buyer and the
Parent.
(b) This Agreement is legal, valid and binding upon and
enforceable against each of the Parent and the Buyer in accordance
with its terms.
6.3 No Conflict; No Consents or Approvals.
(a) The execution and delivery by each of the Parent and the
Buyer of this Agreement, the execution and delivery by the Parent and
the Buyer of any agreement, instrument or document contemplated
hereby, the consummation of the transactions contemplated herein or
therein by each of the Parent and the Buyer and the compliance by each
of the Parent and the Buyer with any of the provisions hereof will not
conflict with, result in a violation or breach of or constitute a
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default under (or would result in a violation, breach or default with
the giving of notice or the passage of time or both) (i) the
certificate of incorporation or bylaws (or other similar charter or
governing documents) of the Parent or the Buyer or any Designated
Transferee, (ii) any material contract, agreement, indenture, note,
license or other instrument or obligation of the Parent or the Buyer
or any Designated Transferee or (iii) any law, statute, ordinance,
writ, injunction, decree, rule, regulation or court or administrative
order by which the Parent or the Buyer or any Designated Transferee
(or any of the properties or assets of the Parent, the Buyer or any
Designated Transferee) is subject or bound.
(b) Except as set forth on Schedule 5.4, no consent or approval
of any Governmental Body or waiting period imposed by law is required
in connection with the execution, delivery or performance of this
Agreement by the Parent or the Buyer and the consummation of the
transactions contemplated hereby by the Parent , the Buyer or any
Designated Transferee.
(c) No litigation, claim, administrative proceeding or other
proceeding or governmental investigation or inquiry is pending or, to
the actual knowledge of any executive officer of the Buyer or the
Parent after reasonable inquiry, has been threatened which would
prevent or delay the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby
by the Parent, the Buyer or any Designated Transferee (except for any
such litigation, claim, administrative proceeding or other proceeding
or governmental investigation or inquiry that also relates to the
Seller's ability to execute, deliver or perform this Agreement or
consummate the transactions contemplated hereby).
6.4 Broker's or Finder's Fees. The Buyer has no knowledge of, and
has taken no action which would give rise to, any claim (or the reasonable
basis therefor) for a broker's or finder's fee to be paid by any Asset
Seller, any Share Seller or any Company in connection with the consummation
of the transactions contemplated hereby.
6.5 Solvency of Buyer. On the Closing Date upon consummation of the
transactions contemplated hereby, the Buyer will be solvent and will have
adequate working capital to pay, discharge or perform the Assumed
Liabilities as such become due and payable.
6.6 No Additional Warranties. Except for the express
representations, warranties and undertakings of the Asset Sellers and Share
Sellers in this Agreement, the Buyer is relying for purposes of acquiring
the Business upon its own independent investigation and examination, and
not upon any other representation, warranty, covenant or agreement of any
Asset Seller or any Share Seller, whether express or implied.
6.7 Investment Intent. The Buyer is acquiring the Shares not with a
view to, for resale in connection with, or with an intent to participate,
directly or indirectly, in, any distribution of such securities within the
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meaning of foreign, federal or state securities laws, if applicable.
7. OTHER AGREEMENTS.
7.1 Conduct of Business.
(a) Except to the extent waived or consented to in writing by
the Buyer, during the period from the date of this Agreement to the
Closing, the Seller shall, and shall cause each Share Seller, each
Asset Seller and each Company to, conduct the Business only in the
Ordinary Course of Business and in compliance with all applicable
Laws and Regulations and, to the extent consistent therewith, use all
reasonable efforts to preserve intact the current business
organization of the Business, keep the physical assets of the
Business in serviceable condition, keep available the services of the
current officers and employees of the Business and preserve the
relationships of the Business with customers, suppliers and others
having business dealings with the Business. Without limiting the
generality of the foregoing, prior to the Closing, without the
written consent of the Buyer, the Seller shall not, and shall cause
each Share Seller, each Asset Seller and each Company not to, with
respect to the Business:
(i) acquire, sell, lease, encumber or dispose of any assets
or any shares or other equity interests in or securities of any
corporation, partnership, association or other business
organization or division thereof, other than purchases and sales
of assets in the Ordinary Course of Business;
(ii) except in the Ordinary Course of Business: (A) create,
incur or assume any debt not currently outstanding (including
obligations in respect of capital leases); (B) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the
obligations of any other person; or (C) make any loans, advances
or capital contributions to, or investments in, any other
person;
(iii) enter into, adopt or amend any Plan or Foreign Plan or
any employment or severance agreement or arrangement of the type
described in Section 5.24(i) (other than such amendments as are
required to comply with applicable law) or increase in any manner
the compensation or fringe benefits of, or modify the employment
terms of, its directors, officers or employees, generally or
individually, or pay any benefit not required by the terms in
effect on the date hereof of any existing Plan or Foreign Plan
or, except in the Ordinary Course of Business, hire any new
employees or consultants;
(iv) change its accounting methods, principles or practices,
except insofar as may be required by a change in GAAP;
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(v) mortgage or pledge any of its property or assets
relating to the Business or subject any such assets to any
Encumbrance other than Permitted Encumbrances;
(vi) sell, assign, transfer or license any Intellectual
Property, except for licenses of Intellectual Property in the
Ordinary Course of Business in conjunction with product sales;
(vii) enter into, amend, terminate, take or omit to take any
action that would constitute a violation of or default under, or
waive any rights under, any contract or agreement listed on
Schedule 5.17 or any Material Permit;
(viii) make or commit to make any capital expenditure in
excess of 500,000 English pounds sterling; or
(ix) take any action or fail to take any reasonable action
permitted by this Agreement if such action or failure to take
action would result in (a) any of the representations and
warranties of the Seller set forth in this Agreement becoming
untrue in any material respect or (b) any of the conditions to
the Closing set forth in Section 8 not being satisfied.
(b) The Seller shall promptly notify the Buyer of any lawsuits,
claims, proceedings, investigations or inquiries against the Business,
any Share Seller, any Asset Seller or any Company or their respective
stockholders, officers or directors between the date of this
Agreement and the Closing Date which (i) to the Seller's Knowledge,
are commenced or threatened and may affect the transactions
contemplated by this Agreement or (ii) to the Seller's Knowledge, are
commenced or threatened in writing and may have a Material Adverse
Effect.
(c) During the period from the date of this Agreement to the
Closing, the Seller shall, and shall cause each Share Seller, Asset
Seller and Company to, (i) unless instructed otherwise by the Buyer,
accept customer orders in the Ordinary Course of Business, and
(ii) cooperate with the Buyer in communicating with suppliers and
customers to accomplish the transfer of the Assets to and the
purchase of the Business by the Buyer on the Closing Date.
7.2 Full Access and Supplying of Information. Prior to the Closing,
the Seller shall (and shall cause each Share Seller, each Asset Seller and
each Company to) permit representatives of the Buyer to have full access
to all premises, properties, financial, tax and accounting records,
contracts, other records and documents and personnel of or pertaining to
the Business; provided, however, that such access shall be allowed only
during normal business hours, with reasonable advance notice and in such
manner as not to interfere unreasonably with the normal business
operations of the Business. Prior to the Closing, the Seller shall also
furnish to the Buyer or its representatives such information as the Buyer
may reasonably request in connection with any review, investigation or
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examination of the books and records, accounts, contracts, properties,
assets, operations and facilities of or relating to the Business. In
connection therewith, the Seller shall direct and authorize its
independent public accountants to make available to the Buyer and to the
independent public accountants representing the Buyer all working papers
pertaining to the examination and audit by such accountants of the
Business. Costs reasonably incurred by the Seller to third parties at the
Buyer's request arising from or due to the Buyer's review of the Business
shall be paid by the Buyer.
7.3 Filings and Authorizations.
(a) Each of the Seller and the Buyer, as promptly as practicable
after the date hereof, (i) shall make, or cause to be made, all such
filings and submissions required under Laws and Regulations applicable
to it, or to its Subsidiaries and Affiliates, as may be required for
it to consummate the purchase and sale of the Assets and the Shares
in accordance with the terms of this Agreement, including, without
limitation, the filings and submissions listed on Schedules 5.4 and
6.3 hereof; (ii) shall use its best efforts to obtain, or cause to be
obtained, all authorizations, approvals, consents and waivers from
all persons and Governmental Bodies necessary to be obtained by it,
or its Subsidiaries or Affiliates, in order for it so to consummate
such transfer; and (iii) shall use its best efforts to take or cause
to be taken all other actions necessary, proper or advisable in order
for it to fulfill its obligations hereunder. Notwithstanding the
foregoing, the Buyer shall not be required to (i) sell or dispose of
or hold separately (through a trust or otherwise) any assets or
businesses of the Buyer, its Affiliates or the Business, or make any
other change in any portion of its business or incur any other
limitation on the Buyer's conduct of its business to obtain such
authorizations, approvals, consents and waivers, (ii) incur
out-of-pocket expenses of third parties of more than 500,000 English
pounds sterling in performing its obligations under this Section
7.3(a) or (iii) respond to formal requests for additional information
or documentary material pursuant to 16 C.F.R. 803.20 under the HSR Act
or other similar Laws or Regulations, provided, however, that the
Buyer shall, after any such request, use its best efforts to seek to
limit the scope and amount of information that the relevant
Governmental Body is seeking to a level acceptable to the Buyer and
shall provide such limited level of information informally to such
Governmental Body in lieu of complying with the formal request. The
Seller and the Buyer will coordinate and cooperate with one another
in exchanging information relating to the foregoing and supplying such
reasonable assistance as may be reasonably requested by each in
connection with the foregoing. If (w) the Buyer elects not to comply
with any such formal request under the HSR Act, (x) the conditions to
Closing specified in Section 8.7 and 9.5 with respect to the HSR Act
have not been satisfied as of the Termination Date and (y) all other
conditions to Closing specified in Section 8 and 9 have been
satisfied, except for any such conditions that would have been
satisfied but for a breach by the Buyer of this Agreement, then the
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Buyer shall reimburse the Seller for its out-of-pocket expenses to
third parties incurred in connection with the transactions
contemplated hereby up to a maximum of 500,000 English pounds
sterling.
(b) With respect to the filings and actions, if any, necessary
to comply with all applicable provisions and requirements of the
Industrial Site Recovery Act, N.J.S.A. C.13:1K-6 ("ISRA"), pertaining
to any Assets located in the State of New Jersey that are subject to
ISRA requirements, such actions and filings shall include, but are
not limited to, submission of (i) a notice to the New Jersey
Department of Environmental Protection and Energy ("NJDEPE")
regarding the transfer of ownership and operations of Assets or
Company Assets located in the State of New Jersey, and (ii) a
remediation agreement, including a demonstration that a remediation
funding source has been established. Such submissions shall be made
unless the Seller reasonably demonstrates that an alternative method
of compliance with ISRA's requirements will ensure an earlier Closing
Date. Regardless of the method of ISRA compliance chosen, the Seller
shall obtain from the NJDEPE, prior to the Closing, all consents,
approvals, authorizations and waivers required by ISRA covering the
transactions contemplated by this Agreement. Notwithstanding any
other provision of this Agreement, the Seller shall retain, at its
sole cost and expense, all responsibility for compliance with any and
all ISRA obligations required by the NJDEPE for the transfer of the
Assets or Company Assets located in the State of New Jersey from and
after the Closing, except to the extent that any cost, expense or
obligation is attributable to acts or omissions of the Buyer
subsequent to the Closing.
(c) Subject to Section 7.3(a), the Buyer and the Seller shall
cooperate in taking such actions as shall be necessary or desirable to
satisfy the Buyer that the United Kingdom Secretary of State for Trade
and Industry will not refer the proposed acquisition of the Shares and
the Assets by the Buyer hereunder to the United Kingdom Monopolies and
Mergers Commission.
7.4 Exclusivity. Prior to the termination of this Agreement pursuant
to Section 12 hereof, except as may be required by fiduciary duties of the
Board of Directors of the Seller under applicable law, the Seller shall not
and shall cause the Asset Sellers, the Share Sellers, the Companies and the
Seller's other Affiliates not to, and shall cause each of its and their
respective officers, directors, employees, representatives and agents not
to, directly or indirectly, (a) encourage, solicit, initiate, engage or
participate in discussions or negotiations with any person or entity
(other than the Buyer) concerning any merger, consolidation, sale of
assets, tender offer, recapitalization, accumulation of shares of stock,
proxy solicitation or other business combination involving the Business,
any Division, any Business Seller or any Company or any material portion
thereof or (b) except as may otherwise be required by applicable law or
Governmental Body, provide any non-public information concerning the
Business to any person or entity (other than the Buyer, the Seller and the
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Seller's Subsidiaries). Except as may otherwise by required by applicable
law or Governmental Body, the Seller shall immediately notify the Buyer of,
and shall disclose to the Buyer all details of, any inquiries,
discussions or negotiations of the nature described in this Section 7.4.
7.5 Bulk Sales. It may not be practicable to comply or attempt to
comply with the procedures of the bulk sales or bulk transfers acts or
laws of any or all of the states or other jurisdictions in which the
Assets are situated (or of any state or jurisdiction) which may be
asserted to be applicable to the transactions contemplated hereby. The
Buyer and the Seller therefore waive any requirements for compliance with
any or all of such laws.
7.6 Employment of Business Work Force.
(a) Prior to the Closing, but effective as of and conditioned on
the occurrence of the Closing, the Buyer shall make an offer of
employment to each employee of the Asset Sellers employed in the
Business (except the UK Employees employed in that part of the
Business that is situated in the United Kingdom (the "UK Business"))
who on the Closing Date is actively at work or absent due to
short-term disability (as defined in the plan covering the employee),
parental leave, jury duty, vacation, military service, or similar
short-term leave and, upon acceptance by such employee, enter into an
at will employer-employee relationship with such employee. The
terms of said offer of the Buyer to each such employee shall include
the payment of cash compensation which is substantially equivalent to
that provided to such employee immediately prior to the Closing Date,
and benefits, in the aggregate, on a basis substantially consistent
with the Buyer's normal practices for its existing comparable
employees; provided, however, that the Buyer shall have complete
discretion to change any of the terms or conditions of employment,
compensation or benefits at any time after the Closing Date.
(b) (i) The Seller and the Buyer anticipate that the United
Kingdom Transfer of Undertakings (Protection of Employment) Regulation
1981 (the "Transfer Regulations") will apply to the sale and purchase
under this Agreement of the UK Business; the Seller and the Buyer
acknowledge and agree that under the Transfer Regulations, the
contracts of employment between the Seller and the UK Employees will
have effect after the Closing Date as if originally made between the
Buyer and the UK Employees.
(c) The Buyer agrees that the service of Continuing Employees
with the Seller or its Affiliates or predecessors prior to the Closing
Date shall be taken into account for all relevant purposes under the
Buyer's employee benefit plans, including credit for eligibility,
vesting and benefit accrual. The Seller shall provide the Buyer with
copies of records reasonably required to establish each such
employee's service prior to the Closing Date. The Buyer shall (i)
allocate to such employees a number of days of vacation equal to the
number of accrued and deferred vacation days that would be due such
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employees as of the Closing Date if such employees were voluntarily
terminating their employment with the Seller as of the Closing Date
and (ii) pay such employees who terminate their employment with the
Buyer for their accrued and deferred vacation allocations existing at
the time of their termination. The Seller shall provide the Buyer
with records showing the amount of accrued and deferred vacation due
and owing to each such employee as of the Closing Date and an accrual
therefor will be recorded on the Closing Balance Sheet.
(d) The parties hereto do not intend to create any third-party
beneficiary rights respecting any employee as a result of the
provisions herein and specifically hereby negate any such intention.
(e) The Seller and each Asset Seller hereby consent to the
hiring by the Buyer of employees of the Asset Sellers as contemplated
by this Section 7.6 and waive, with respect to the employment of such
employees, any claims or rights that the Seller or any Asset Seller
may have against the Buyer or any such employee under any
non-competition, confidentiality or employment agreement.
(f) Except as specifically required by applicable law
(including, without limitation, the Transfer Regulations) or as
provided in this Section 7.6, the Buyer shall not have any obligation
to employ or offer employment to any employees of the Asset Sellers
employed in the Business.
7.7 Employee Benefit Matters. Contingent upon the occurrence of the
Closing:
(a) Transition Period for Foreign Retirement Plans. The Seller shall
make such arrangements as may be necessary and possible for the Continuing
Employees located outside of the U.S. to remain in the Foreign Retirement
Plans for such period as the Buyer shall elect, of up to one year after the
Closing Date (the "Foreign Transition Period"), and the Buyer shall bear
the cost of such coverage for the Continuing Employees during the Foreign
Transition Period at the contribution rate for each such Foreign
Retirement Plan being paid by the Seller on the date of this Agreement,
unless such rate is changed (upward or downward) by the Buyer after the
date hereof, in which event the Buyer shall bear the cost of such
coverage for the Continuing Employees during the Foreign Transition Period
at the changed contribution rate. Notwithstanding the foregoing sentence,
continued coverage of those Continuing Employees who are UK Employees in
the Fisons UK Pension Fund shall be as set forth in Exhibit D. In the
event of any conflict between the terms and conditions hereof and the terms
and conditions set forth in Exhibit D, the terms and conditions set forth
in Exhibit D shall prevail. The Seller and the Buyer shall observe and
perform the provisions of Exhibit D to be performed by the Seller and the
Buyer, respectively, in relation to the Fisons UK Pension Fund. The
foregoing provision of this Section 7.7(a) shall not apply to those Foreign
Retirement Plans maintained by a Company solely for its employees.
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(b) Welfare Plans.
(i) Benefits Continuation. Except as provided in Sections
7.7 (b)(ii), (iii), (iv), (v), (vi), (vii) and (viii) below,
effective as of the Closing, (A) the Seller shall cause each
Continuing Employee to cease to participate in each welfare
benefit plan sponsored by the Asset Sellers, the Share Sellers
and/or their affiliates (the "Seller's Welfare Plans") and
(B) the Buyer shall cause each such Continuing Employee to be
covered by Buyer's welfare benefit plans.
(ii) Disability and Certain Other Benefits. The Seller
shall be liable for claims for benefits (other than for
short-term disability, workers' compensation and medical
(including vision care and prescription drugs) and dental
benefits) by employees of the Business (active or inactive) and
by terminated employees previously employed in the Business
under the Seller's Welfare Plans arising out of occurrences
prior to the Closing Date. In this regard, but not by way of
limiting the foregoing, the Seller shall be liable for the
long-term disability benefits for those employees of the Business
receiving or qualified to receive long- term disability benefits
under the Seller's disability programs as of the Closing Date,
including without limitation those employees of the Business in
the long-term disability elimination period (which employees
shall receive long-term disability benefits from the Seller upon
the conclusion of the applicable elimination period); provided,
however, that the Seller's obligation to provide long-term
disability benefits shall cease with respect to any such employee
of the Business who subsequently becomes employed by the Buyer.
(iii) Workers' Compensation Benefits. The Seller shall
be liable for claims for workers' compensation benefits under
the Seller's Welfare Plans by employees of the Business (active
or inactive) and by terminated employees previously employed in
the Business with respect to injuries or illnesses prior to the
Closing Date. The Buyer shall be liable for claims for workers'
compensation benefits by Continuing Employees with respect to
claims for injuries or illnesses that occur on or after the
Closing Date.
(iv) Short-Term Disability Benefits. The Seller shall be
liable for claims for short-term disability benefits under the
Seller's Welfare Plans by employees of the Business (active or
inactive) with respect to payments due prior to the Closing Date
and by terminated employees previously employed in the Business.
The Buyer shall be liable for claims for short-term disability
benefits under the Buyer's welfare plans by Continuing Employees
with respect to payments due on or after the Closing Date.
(v) Medical and Dental Benefits. The Seller shall be
liable for claims for medical (including vision care and
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prescription drugs) and dental benefits incurred by employees of
the Business (active or inactive) and their respective covered
dependents with respect to services and treatment rendered prior
to the Closing Date under the Seller's Welfare Plans; provided,
however, that the preceding provisions shall not alter any
deadlines for submission of claims set forth in the Seller's
Welfare Plans or increase any benefits, rights or remedies of the
Continuing Employees under the Seller's Welfare Plans. The Buyer
shall be liable for claims for medical (including vision care and
prescription drugs) and dental benefits incurred by Continuing
Employees and their respective covered dependents under the
Buyer's welfare plans with respect to services and treatment
rendered on or after the Closing Date. The Buyer shall cause
each of the Continuing Employees to be granted credit under the
Buyer's medical and dental plans, for the year during which the
Closing Date occurs, with any deductibles or copayments already
incurred by such Continuing Employees for such year under the
plans of the Asset Sellers, the Share Sellers and/or their
affiliates, but only if and to the extent that the amount of such
incurred deductibles or copayments has been provided to the
Buyer within 180 days after the Closing Date, and the Buyer shall
cause to be waived any pre-existing condition restrictions under
the Buyer's medical and dental plans to the extent necessary to
provide immediate coverage under the Buyer's medical and dental
plans. The Buyer shall make available to the Continuing
Employees (and their covered dependents) a group health plan (or
plans) having a level of benefits such that the actual coverage
of a Continuing Employee (or any of his or her covered
dependents) under such group health plan (or plans) would, if the
Continuing Employee had made an election under Section 4980B(f)
of the Code or Part 6 of Title I of ERISA with respect to any
group health plan maintained by any Asset Seller or any Share
Seller, constitute an event described in Section
4980B(f)(2)(B)(iv) of the Code and Section 602(2)(D) of ERISA.
The Buyer shall have no obligation to provide health benefits to
any Continuing Employee who declines to be covered under such
group health plan (or plans) and, if the Buyer complies with the
requirements of the preceding sentence, the Buyer shall have no
further obligation or responsibility to any Asset Seller or any
Share Seller under Section 4980B of the Code or Part 6 of Title I
of ERISA with respect to the transactions contemplated by this
Agreement.
(vi) Transition Period. Notwithstanding the
foregoing, the Seller shall make such arrangements as may be
necessary for the UK Employees to remain as participants of the
Seller's private health insurance scheme after the Closing for a
period of up to 90 days after the Closing Date (as the Buyer
shall elect) and the Buyer shall pay the premium cost for the
participating UK Employees (and their covered dependents)
incurred and paid after the Closing Date under the Seller's
private health insurance scheme plus an administrative fee of 5%
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of such cost.
(vii) Retiree Medical, Dental and Life Benefits. The
Seller shall be liable for medical, dental and life insurance
coverage under the Seller's Welfare Plans after termination of
employment to employees of the Business whose employment
terminated prior to the Closing Date and to those employees of
the Business who are eligible therefor as of the Closing Date.
Prior to the Closing Date, the Seller agrees to notify all
employees of the Business that such coverage (including coverage
under the Fisons Post-Retirement Medical Savings Plan) for all
employees of the Business will be terminated upon the Closing
Date and it will notify Continuing Employees who are eligible as
of the Closing Date for retiree medical coverage under the ARL
retiree medical plan which provides for medicare supplemental
coverage that coverage for such Continuing Employees under such
plan as in effect from time to time will be provided by the
Seller upon retirement from the Buyer and/or its affiliates.
The Buyer agrees to provide notice to the Seller of such
retirements for purposes of the preceding sentence.
(viii) COBRA. The Seller shall be responsible
for providing benefits pursuant to Section 4980B of the Code to
employees of the Business who cease to be employed by any
Company or Asset Seller prior to the Closing Date.
(ix) Limitation on Buyer's Liability. Except as
provided in this Section 7.7(b), the Buyer shall have no
liability with respect to any claims for benefits under the
Seller's Welfare Benefit Plans. The Seller shall have no
liability with respect to claims for benefits under the Buyer's
welfare benefit plans.
(c) Multi-employer Plans. The Buyer, the Companies and/or their
affiliates shall not assume any obligation or liability imposed under
Section 4201 of ERISA. The Buyer, the Companies and/or their
affiliates shall not be obligated under any agreement described in
Section 4204 of ERISA.
(d) Savings Plans. The Buyer shall allow U.S. Continuing
Employees to make direct cash rollovers under Section 402(c) of the
Code of their account balances from the Savings Plan to a savings plan
intended to be qualified under Section 401(a) of the Code maintained
by the Buyer. The parties agree to take such action as is reasonably
necessary to establish an arrangement under which any U.S. Continuing
Employee may provide for payroll withholding for the purpose of
repaying any loan made prior to the Closing Date to such Continuing
Employee by the Savings Plan, in lieu of payment of the loan in full
as a result of the transactions contemplated by this Agreement.
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(e) Information. The Buyer agrees that, commencing no later
than sixty (60) days after the Closing Date, it will forward to the
Seller (ATTN: Manager, Retirement Programs) within ten (10) days
after the end of each month a written list, prepared by the Buyer's
payroll department of all Continuing Employees who have terminated
employment during the month. The list shall contain the Continuing
Employee's name, last known address, Social Security Number and date
of termination.
7.8 Retention of Records and Sharing of Data.
(a) The Buyer shall retain for a period of seven years after the
Closing Date (or longer if required by any applicable statute of
limitations) the books and records relating to the Business
transferred pursuant to this Agreement (unless the Seller requests a
longer period, in which case such books and records shall be stored
by the Buyer at the Seller's expense), and, during normal business
hours, with reasonable advance notice and in such manner as not to
interfere unreasonably with the normal business operations of the
Buyer, shall (i) give the Seller and its authorized representatives
reasonable access to the books, records, offices and other facilities
and properties relating to the operation of the Business prior to the
Closing Date, (ii) permit the Seller to make such inspections (and
copies of any documents at the Seller's expense) thereof as the
Seller may reasonably request, and (iii) furnish the Seller with such
financial and operating data and other information relating to the
Business as the Seller may from time to time reasonably request, in
order to comply with applicable securities, tax, environmental,
employment or other Laws and Regulations.
(b) The Seller shall and shall cause each Share Seller and Asset
Seller to retain for a period of seven years after the Closing Date
(or longer if required by any applicable statute of limitations) the
books and records relating to the Business that are retained by the
Seller, any Share Seller or any Asset Seller pursuant to the terms of
this Agreement (unless the Buyer requests a longer period, in which
case such books and records shall be stored by the Seller at the
Buyer's expense), and, during normal business hours, with reasonable
advance notice and in such manner as not to interfere unreasonably
with the normal operations of the business of the Seller, Share
Sellers and Asset Sellers, shall (i) give the Buyer and its
authorized representatives reasonable access to (A) such books,
records, offices and other facilities and properties and (B) the work
papers of its accountants relating to the operation of the Business
prior to the Closing Date, (ii) permit the Buyer to make such
inspections (and copies of any documents at the Buyer's expense)
thereof as the Buyer may reasonably request, and (iii) furnish the
Buyer with such financial and operating data and other information as
the Buyer may from time to time reasonably request in order to comply
with its obligations under applicable securities, tax, environmental,
employment or other Laws and Regulations. Without limiting the
generality of the foregoing, the Seller shall make available to the
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Buyer such financial information and reasonable assistance with
respect to the Business as is reasonably necessary for the Buyer to
prepare on a timely basis the financial statements required by Item 2
of Form 8-K to be filed by Buyer under the U.S. Securities Exchange
Act of 1934 with respect to the transactions contemplated by this
Agreement, which shall include audited financial statements prepared
in accordance with U.S. generally accepted accounting principles for
the fiscal years of the Business ended December 31, 1993 and 1994.
(c) Promptly upon request by the Buyer made at any time during
the three-year period following the Closing Date, the Seller shall
authorize the release to the Buyer of all files pertaining to the
Business held by any Governmental Body.
7.9 Tax Matters.
(a) Any and all agreements among any Company and any Seller, Asset
Seller, Share Seller or Company regarding allocation or payment of
Taxes or amounts in lieu of Taxes with respect to the Business shall
be terminated at and as of, or prior to, the Closing.
(b) Except as provided in Sections 4.3 and 7.9(c) hereof:
(i) The Seller shall be liable for any and all claims, losses,
liabilities, obligations, damages, impositions, assessments,
demands, judgments, settlements, costs and expenses (including
reasonable attorneys', accountants' and experts' fees and
expenses and any applicable assessments of interest and
penalties) with respect to Taxes attributable to the Business or
for which any Company may be liable with respect to any and all
periods, or portions thereof, ending before the Closing Date
("Pre-Closing Periods"); provided, however, that Seller shall
only be liable for any such Taxes to the extent that the
aggregate amount of such Taxes exceeds the aggregate amount of
the reserves and accruals for Taxes set forth on the Closing
Balance Sheet.
(ii) The Buyer shall be liable for any and all claims, losses,
liabilities, obligations, damages, impositions, assessments,
demands, judgments, settlements, costs and expenses (including
reasonable attorneys', accountants' and experts' fees and
expenses and any applicable assessments of interest and
penalties) with respect to (A) Taxes attributable to the Business
or for which any Company may be liable with respect to any and
all periods, or portions thereof, beginning on or after the
Closing Date ("Post-Closing Periods"), and (B) Taxes attributable
to the Business or for which any Company may be liable with
respect to any and all Pre-Closing Periods to the extent that the
aggregate amount of such Taxes is equal to or less than the
aggregate amount of the reserves and accruals for Taxes set forth
on the Closing Balance Sheet.
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(iii) For purposes of this Section 7.9, any and all
transactions or events contemplated by this Agreement that occur
at or prior to the Closing shall be deemed to have occurred in
the Pre-Closing Period.
(c) In the case of any Tax that is attributable to a taxable period
which begins before the Closing Date and ends on or after the Closing
Date, the amount of Taxes attributable to the Pre-Closing Period shall
be determined as follows:
(i) In the case of ad valorem Taxes imposed on the Assets or any
Asset Seller or any Company and franchise or similar Taxes
imposed on any Company based on capital (including net worth or
long-term debt) or number of shares of stock authorized, issued
or outstanding, the portion attributable to the Pre-Closing
Period shall be the amount of such Taxes for the entire taxable
period multiplied by a fraction, the numerator of which is the
number of days in the Pre-Closing Period and the denominator of
which is the number of days in the entire taxable period.
(ii) In the case of all other Taxes, the portion attributable to
the Pre-Closing Period shall be determined on the basis of an
interim closing of the books of the Company or Asset Seller as of
the Closing, and the determination of the hypothetical Tax for
such Pre-Closing Period, determined on the basis of such interim
closing of the books, without annualization. The hypothetical
Tax for any period shall in no case be less than zero.
(d) The Buyer and the Seller shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of Tax Returns and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention
and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder; provided that the
party requesting assistance shall pay the reasonable out-of-pocket
expenses incurred by the party providing such assistance; and provided
further that no party shall be required to provide assistance at times
or in amounts that would interfere unreasonably with the business and
operations of such party. The Buyer agrees to retain all books and
records with respect to Tax matters pertinent to the Companies or the
Business relating to any Tax periods ending on or prior to the Closing
Date and any Tax periods beginning before the Closing Date and ending
after the Closing Date until the expiration of any applicable statute
of limitations or extensions thereof. The Seller and Buyer
acknowledge the difficulty of providing such cooperation; accordingly,
the Seller and Buyer agree to use reasonable efforts to request any
assistance pursuant to this Section 7.9(d) within the first six months
following the Closing Date. Without limiting the generality of the
foregoing provisions of this Section 7.9(d), the Seller (and each
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Share Seller and Asset Seller) and the Buyer shall cooperate and
consult in good faith with each other during the course of the
preparation of foreign, federal, state and local income Tax Returns
which include Pre-Closing Periods and to the extent appropriate shall
use their best efforts to agree on the inclusion of items of income,
deduction, gain, loss and credit for each Pre-Closing Period so as to
properly reflect such items attributable to such Pre-Closing Period in
a manner consistent with past practices.
(e) The Buyer and Seller agree that to the maximum extent
permitted by applicable law, neither the Buyer nor any of the Buyer's
affiliates or subsidiary corporations (including, with respect to
Post-Closing Periods, the Companies) will carry back to any taxable
period of the Seller or any of its Subsidiaries or Affiliates
(including, with respect to Pre-Closing Periods, the Companies) any
loss, credit or deduction incurred or generated in, or attributable
to, any Post-Closing Period that would affect any Tax Return of the
Seller or any of its Subsidiaries or Affiliates, and the Buyer agrees
to make or exercise, or cause to be made or exercised, any and all
necessary or permitted elections or options available under applicable
law to avoid any such carryback.
(f) Notice and indemnification in connection with Taxes shall be
governed by Section 11 of this Agreement.
(g) All indemnification payments under Section 11 shall be
deemed adjustments to the Purchase Price.
(h) United Kingdom Value Added Tax
(i) The Seller and the Buyer intend that article 5 of the United
Kingdom Value Added Tax (Special Provisions) Order 1992 (the "VAT
Order") shall apply to the sale of the Assets located in the
United Kingdom (the "UK Assets") under this Agreement, so that
the sale is treated as neither a supply of goods nor a supply of
services.
(ii) If nevertheless any United Kingdom VAT ("UK VAT") is
chargeable on any supply by the Seller under this Agreement, the
Buyer shall pay to the Seller the amount of that UK VAT (and
indemnify it for any related interest and penalties) and the
Seller shall issue to the Buyer a proper tax invoice in respect
of that UK VAT.
(iii) Without limiting clause (ii) above, UK VAT shall be
treated as chargeable if HM Customs & Excise rule that it is
chargeable. If they have done so before Closing, the UK VAT
shall be payable by the Buyer on Closing subject to delivery at
Closing by the Seller to the Buyer of the appropriate tax
invoice. If they do so on or after Closing, the UK VAT shall be
payable by the Buyer within five days after the Seller gives the
Buyer notice of the ruling together with the appropriate tax
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invoice.
(iv) If the Buyer fails to pay the amount of the UK VAT on the
due date under clause (iii) above, it shall pay interest on that
amount from the due date until actual payment (excluding any
period for which interest indemnified under clause (ii) runs) at
an interest rate equal to one percent above LIBOR, as in effect
from time to time.
(v) With a view to ensuring that article 5 of the VAT Order
applies, the Buyer:
(a) shall ensure that the Buyer is registered in the United
Kingdom for UK VAT not later than the Closing Date;
(b) warrants that the UK Assets are to be used by the Buyer
in carrying on the same kind of business as that carried on
by the Seller in relation to the UK Assets; and
(c) warrants that the Buyer has, or will by the relevant
date have, properly made an election to waive exemption in
respect of Unit TX, Churchfields Industrial Estate, Sydney
Little Road, East Sussex, England, United Kingdom, with
effect from a day not later than the relevant date (having
obtained the written permission of HM Customs and Excise if
necessary) which it will not revoke within three months of
the Closing Date and has, or will by that date have, duly
given to HM Customs and Excise the written notification of
the election required to make the election effective. In
this paragraph "relevant date" has the same meaning as
article 5(2) of the VAT Order.
(vi) In respect of each property mentioned in clause (v)(c),
without prejudice to that subclause, the Buyer shall on or before
the Closing give to the Seller evidence reasonably satisfactory
to the Seller that the election has been made and written
notification duly given in accordance with that subclause.
(vii) References in clauses (v)(a) and (c) to the Buyer shall
be construed as references to the transferee within the meaning
of the corresponding provision of article 5 of the VAT Order.
(viii) The Seller and the Buyer intend that Section 49 of the
Value Added Tax Act 1994 shall apply to the sale of the Assets
under this Agreement. The Buyer will allow the Seller access to
and copies of any UK VAT records of the Business which are
preserved by the Buyer pursuant to Section 49(1)(b) of the United
Kingdom Value Added Tax Act 1994 in accordance with Section 7.8
of this Agreement.
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7.10 Certain Trademark Matters.
(a) The Buyer shall not, and shall cause its Subsidiaries not
to, put into use after the Closing Date any products, signs, purchase
orders, invoices, sales orders, labels, letterheads, shipping
documents and other materials not in existence on the Closing Date
that bear any of the Retained Names and Logos or any name, mark or
logo similar thereto. The Buyer shall be entitled to use any
products, signs, purchase orders, invoices, sales orders, labels,
letterheads, shipping documents or other materials in existence as of
the Closing Date that bear any of the Retained Names and Logos or any
name, mark or logo similar thereto for such period after the Closing
Date, not exceeding 180 days, as the Buyer reasonably requires in
order to (i) sell, in the Ordinary Course of Business, the inventory
purchased by the Buyer hereunder and (ii) effect an orderly transition
of the Business; provided, however, that (x) any such use shall be
subject to such control policies and mechanisms as the Seller may
reasonably impose and (y) the Seller shall be entitled to conduct such
investigations of such use as it may reasonably deem necessary to
protect its interests in the Retained Names and Logos and to satisfy
itself of the Buyer's compliance with the provisions of this Section
7.10(a). The Buyer agrees that the Seller shall have no
responsibility for claims by third parties arising out of, or relating
to, the use by the Buyer or any successor thereof of any of the
Retained Names and Logos after the Closing Date.
(b) The Seller agrees, for itself and on behalf of its
Subsidiaries and Affiliates, not to use, after the Closing Date, any
trademark (other than the Retained Names and Logos) conveyed by the
Seller to the Buyer hereunder or any trademark or name confusingly
similar to any of the foregoing. The Seller shall promptly amend the
certificate of incorporation and other corporate records of its
Subsidiaries as necessary to comply with this provision or, in the
United Kingdom, change the name of such Subsidiaries.
7.11 Notice of Breaches; Updates.
(a) The Seller shall promptly deliver to the Buyer written
notice of any event or development that would (i) render any
statement, representation or warranty of the Seller in this Agreement
(including exceptions set forth in the Schedules) inaccurate or
incomplete in any material respect, or (ii) constitute or result in a
breach by the Seller of, or a failure by the Seller to comply in any
material respect with, any agreement or covenant in this Agreement
applicable to the Seller. No such disclosure shall be deemed to
avoid or cure any such misrepresentation or breach.
(b) The Buyer shall promptly deliver to the Seller written
notice of any event or development that would (i) render any
statement, representation or warranty of the Buyer in this Agreement
inaccurate or incomplete in any material respect, or (ii) constitute
or result in a breach by the Buyer of, or a failure by the Buyer to
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comply with, any agreement or covenant in this Agreement applicable
to the Buyer. No such disclosure shall be deemed to avoid or cure
any such misrepresentation or breach.
(c) The Seller shall deliver to the Buyer, as promptly as
practicable following the end of each calendar month ending after the
date of this Agreement and prior to the Closing Date, an unaudited
combined statement of operations of the Business, and such other
internal financial information as is ordinarily prepared by the
Seller with respect to the Business, for such month, in each case
prepared in accordance with past practices.
7.12 Proprietary Information. From and after the Closing, the Seller
shall, and shall cause the Asset Sellers, the Share Sellers and its other
Subsidiaries and Affiliates to, hold in confidence all knowledge,
information and documents of a confidential nature or not generally known
to the public with respect to the Business or the Buyer or the Buyer's
business (including without limitation the financial information,
technical information or data relating to the products of the Business and
the names of customers of the Business) and shall not disclose or make use
of the same without the written consent of the Buyer, except (i) as may be
required by applicable law, (ii) that the Seller may disclose any such
information to its professional advisors who need to know such information
to assist Seller in complying with applicable tax, accounting, securities
or other laws, rules or regulations and who agree to be bound by the
provisions of this Section 7.12, (iii) as may be required by reporting
requirements of any stock exchange or any lawful proceeding of a
Governmental Body, provided that the Seller shall provide the Buyer with
notice of any such disclosure as far in advance of such disclosure as is
reasonable under the circumstances and that the Seller will cooperate
reasonably with the Buyer to minimize the scope of such disclosure, and
(iv) to the extent that such knowledge, information or documents shall
have become public knowledge other than through a breach of this Agreement
by the Seller, its Subsidiaries or Affiliates.
7.13 Solicitation. For a period of two years after the Closing Date,
the Seller shall not, and shall cause its Subsidiaries and Affiliates not
to, either directly or indirectly as a stockholder, investor, partner,
director, officer, employee or otherwise, solicit or attempt to induce any
Restricted Employee to terminate his or her employment with the Buyer or
any Affiliate of the Buyer; provided, however, that it shall not be a
breach of this Section 7.13 for the Seller to solicit Restricted Employees
by means of general public advertisements or recruitment through an
employment agency. For purposes of this Agreement, a "Restricted Employee"
shall mean any person, other than employees terminated involuntarily by
the Buyer, who (i) either (A) hold or have access to trade secrets or
other confidential information relating to the Business or (B) had annual
base salary in 1994 of at least 75,000 English pounds sterling, and (ii)
either (X) was an employee of the Buyer or any Affiliate of the Buyer on
either the date of this Agreement or the Closing Date or (Y) was an
employee of any Asset Seller (employed primarily in the Business) or
Company on either the date of this Agreement or the Closing Date and who
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is employed by the Buyer immediately after the Closing.
7.14 Non-Competition.
(a) For a period of five years after the Closing Date, the
Seller shall not, and shall cause its Subsidiaries not to, either
directly or indirectly as a stockholder, investor, partner, director,
officer, employee, consultant or otherwise, engage in a Competitive
Business in any territory. For purposes of this Agreement, a
"Competitive Business" means (i) the development, manufacture,
marketing or sale of any product which is competitive with any product
manufactured, sold or developed (or under development) by the
Business on or prior to the Closing Date or (ii) the rendering of or
marketing of any service which is competitive with any service
rendered or marketed (or proposed to be rendered or marketed) by the
Business on or prior to the Closing Date; provided, however, that the
Seller shall not be prohibited from (1) the acquisition by asset
purchase, stock purchase, merger, consolidation or otherwise of any
Person partially engaged in a Competitive Business if the Seller uses
its best efforts to dispose of the portion of such Person engaged in
the Competitive Business within 12 months after such acquisition and,
if such portion has not been disposed of within such 12-month period,
the Seller continues to use all reasonable efforts to dispose of such
portion, (2) the ownership of not more than 10% of any class of debt
or equity securities of any Person engaged in a Competitive Business
or (3) continuing to conduct and develop its Pharmaceuticals and
Laboratory Supplies Divisions, the latter of which distributes or may
distribute products for third parties that are or may be competitive
with products manufactured or sold by the Business, provided, however,
that such Divisions shall not in any event manufacture instruments of
the type manufactured by the Business as of the Closing.
(b) The Seller agrees that the duration and geographic scope of
the non-competition provision set forth in this Section 7.14 are
reasonable. In the event that any court determines that the
duration or the geographic scope, or both, are unreasonable and that
such provision is to that extent unenforceable, the parties agree
that the provision shall remain in full force and effect for the
greatest time period and in the greatest area that would not render
it unenforceable. The parties intend that this non-competition
provision shall be deemed to be a series of separate covenants, one
for each and every county of each and every state of the U.S. and
each and every political subdivision of each and every country
outside the U.S. where this provision is intended to be effective.
7.15 Cooperation in Litigation. From and after the Closing Date,
each party shall fully cooperate with the other in the defense or
prosecution of any litigation or proceeding already instituted or which
may be instituted hereafter against or by such other party relating to or
arising out of the conduct of the Business by the Seller or the Buyer or
their respective Affiliates prior to or after the Closing Date (other than
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litigation among the Seller and the Buyer and/or their respective
Subsidiaries, Affiliates or parent companies arising out the transactions
contemplated by this Agreement). The party requesting such cooperation
shall pay the reasonable out-of-pocket expenses incurred in providing such
cooperation (including legal fees and disbursements) by the party
providing such cooperation and by its officers, directors, employees and
agents, but shall not be responsible for reimbursing such party or its
officers, directors, employees and agents for their time spent in such
cooperation.
7.16 Collection of Accounts Receivable.
(a) The Seller agrees that it shall, and shall cause the Share
Sellers and the Asset Sellers to, forward promptly to the Buyer any
moneys, checks or instruments received by any of them after the
Closing Date with respect to the accounts receivable purchased by the
Buyer pursuant to this Agreement. The Seller shall, and shall cause
the Share Sellers and the Asset Sellers to, provide to the Buyer
such reasonable assistance as the Buyer may request with respect to
the collection of any such accounts receivable, provided the Buyer
pays the reasonable out-of-pocket expenses of the Seller and its
officers, directors and employees incurred in providing such
assistance.
(b) For a period of 12 months after the Closing Date (the
"Collection Period"), the Buyer shall use its reasonable efforts to
collect the accounts receivable shown on the Closing Balance Sheet
(the "Accounts Receivable"). The Buyer may, but shall not be
obligated to, use a collection agency or commence legal actions in
connection with such collection efforts. Promptly after the
expiration of the Collection Period, the Buyer shall give notice to
the Seller designating those Accounts Receivable which have not been
collected as of the end of the Collection Period and which the Buyer
wishes the Seller to purchase. Within ten days after the receipt of
such notice from the Buyer, the Seller shall purchase (without
recourse to the Buyer) such designated Accounts Receivable then
remaining unpaid for a purchase price equal to the value of such
Accounts Receivable recorded on the Closing Balance Sheet less the
reserve for doubtful accounts shown on the Closing Balance Sheet.
References to Seller shall include, for purposes of Sections
7.16(b)-(f), an Affiliate of Seller nominated by Seller.
(c) Upon the Seller's repurchase of any unpaid Account
Receivable pursuant to this Section 7.16, the Buyer shall promptly
deliver to the Seller any tangible evidence of such Account Receivable
then in the possession of the Buyer or under its control but in any
event the Buyer shall preserve and make available to the Seller all
documentation in relation to such Account Receivables received by the
Buyer from the Seller at Closing.
(d) In the event that any payment received by the Buyer during
the Collection Period is remitted by a customer which is indebted
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under both Accounts Receivable and an account receivable arising out
of the sale of inventory in the Ordinary Course of Business after the
Closing Date (a "New Receivable"), such payments shall first be
applied to the Accounts Receivable due from such customer and the
balance remaining after payment in full of all Accounts Receivable due
from such customer shall be applied to the New Receivable; provided,
however, that (i) with respect to any Account Receivable being
contested or disputed by the payor thereof, no portion of the amount
in dispute shall be deemed to have been collected by the Buyer in
respect of such Account Receivable (unless otherwise directed by the
customer) until all amounts owed by such customer to the Buyer for New
Receivables have been paid or such dispute has been resolved,
whichever occurs first (it being understood that undisputed amounts of
Accounts Receivable shall be applied in accordance with the priorities
set forth above) and (ii) the foregoing priorities shall not apply to
sums received by the Buyer which are specifically identified by the
customer as being tendered in payment of a New Receivable. The Buyer
agrees not to induce any customer to identify any payment as being in
respect of a New Receivable, except in the event the Buyer reasonably
determines to sell to said customer on a C.O.D. basis only.
(e) The Buyer will reasonably cooperate, at the Seller's
expense, with the Seller in collecting any Accounts Receivable which
are repurchased by the Seller pursuant to this Section 7.16; provided,
however, that the foregoing shall not require the Buyer to be a party
to any action brought by the Seller to collect such Accounts
Receivable unless the conveyance of the Account Receivable to Seller
is ineffective and Buyer is deemed to hold title thereto.
(f) Any sums received by the Buyer in respect of Accounts
Receivable after their repurchase by the Seller pursuant to this
Section 7.16 shall be promptly transmitted by the Buyer to the Seller.
In addition, if receipt by the Buyer of unidentified sums of money
from an account debtor who owes any Account Receivable repurchased by
the Seller pursuant to this Section 7.16 results in such account
debtor having an aggregate credit balance with the Buyer, the Buyer
shall promptly transmit to the Seller an amount of money equal to the
lesser of (a) such aggregate credit balance or (b) the remaining
unpaid balance of all Accounts Receivable which have been repurchased
by the Seller and are payable by such account debtor to the Seller.
7.17 Approval of Seller's Shareholders. The Seller shall convene a
general meeting of its shareholders for the purpose of considering and, if
thought fit, passing a resolution (the "Seller's Shareholder Resolution")
approving the sales of the Assets and the Shares pursuant to the terms of
this Agreement. Such meeting shall be held not later than 35 days after
the date of this Agreement. Notice of such meeting shall be accompanied by
a recommendation of the Board of Directors of the Seller in favor of the
Seller's Shareholder Resolution. The Seller shall ensure that such
recommendation is not changed or withdrawn prior to the vote upon the
Seller's Shareholder Resolution unless the failure to change or withdraw
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such recommendation would be a breach by the directors of the Seller of
their fiduciary duty as directors under applicable law. Seller shall
provide Buyer with a reasonable opportunity to review and comment upon the
content of any circular or other shareholder communication insofar as it
relates to the Buyer or the transactions contemplated hereby.
7.18 Bank Accounts. Prior to Closing, Seller shall provide Buyer with
a complete list and description of all bank accounts, brokerage accounts,
marketable securities, lines of credit, guaranties, foreign exchange option
or forward contracts, and letters of credit held by any of the Companies
or, in the conduct of the Business, the Asset Sellers or to which the
Companies, or in the conduct of the Business, the Asset Seller are parties.
Buyer and Seller will cooperate so that, as of the Closing, Buyer shall
have the benefit of any such assets and, except as otherwise provided
herein, shall (if permitted) be substituted for the Asset Sellers on any
such contracts or agreements.
7.19 Transition Services. At and conditioned upon the Closing, the
Buyer and the Seller (or one of its Affiliates) shall enter into an
agreement (the "Transition Services Agreement") that shall identify
specifically the transition services to be provided (for a maximum period
of six months unless mutually agreed otherwise) by the Seller or its
Affiliates in each jurisdiction in which the Business is conducted. The
Buyer shall pay the Seller a fee for such services equal to the fully
allocated cost of such services to the Seller, plus an administrative fee
of 5% of such costs, within 30 days of billing thereof.
7.20 Guarantee. The Parent hereby guarantees the prompt and complete
performance by the Buyer of all of the Buyer's covenants and conditions
hereunder, which guarantee shall continue until all of the terms of this
Agreement to be performed by the Buyer have been performed or otherwise
discharged.
7.21 Employee Notices. The Seller shall make or shall cause the
Companies and Asset Sellers to make, such notices to employees as shall be
required by applicable law or agreement (including any notices required to
be given to any union, works council or similar representative body).
7.22 Seller's Disclosure. The Seller has provided the Buyer with
reasonable access to (i) copies of all agreements or documents described in
the Schedules and (ii) reasonably detailed descriptions of all claims,
proceedings or other matters described in the Schedules (any such
agreement, document or description being referred to herein as a "Disclosed
Item"). For purposes of the preceding sentence, the Seller shall be deemed
to have provided Buyer with reasonable access to a Disclosed Item if such
Disclosed Item was (a) physically provided to the Buyer, its Subsidiaries,
Affiliates or representatives not later than February 24, 1995, or (b) held
and available for review as of February 24, 1995 at the law firm listed on
the attached Schedule 7.22 located in the same country as the Asset Seller
or Company to which such Disclosure Item relates. Notwithstanding the
foregoing, the Seller shall not in any event be deemed to have provided
Buyer with reasonable access to any Disclosed Item located at any law firm
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outside of the U.S., England, Germany, Switzerland and Italy if such
Disclosed Item is not listed on the attached Schedule 7.22A or has not
physically been provided to Buyer, its Subsidiaries, Affiliates or
representatives not later than February 24, 1995. The effect of any
failure by Seller to provide Buyer access to a Disclosed Item as provided
in this Section 7.22 shall be that such Disclosed Item shall be deemed not
to be disclosed on the Schedules, notwithstanding its appearance on the
Schedules.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER TO CLOSE.
The obligation of the Buyer to close the transactions contemplated by
this Agreement shall be subject to the satisfaction of each of the
following conditions precedent (it being understood that any such condition
may be waived by the Buyer in whole or in part at any time and from time to
time at its sole discretion):
8.1 Fulfillment of the Seller's Covenants. The Seller shall have
fulfilled or complied in all material respects with each covenant,
obligation and agreement required to be fulfilled or complied with by it
prior to the Closing Date under this Agreement.
8.2 Accuracy of the Seller's Representations. No event shall have
occurred at any time and no condition shall exist which makes any of the
representations or warranties of the Seller contained in this Agreement
untrue or incorrect on the date when made or on the Closing Date (or if a
representation or warranty is made as of a specific date, untrue or
incorrect as of such date) except any such event or condition that would
not (together with all other such events or conditions) be a Material
Event; provided, however, that if any event or condition shall exist which
makes any of the representations or warranties of the Seller contained in
this Agreement untrue or incorrect on the date when made or on the Closing
Date (or, if a representation or warranty is made as of a specific date,
untrue or incorrect as of such date), and such event or condition would not
(together with all other such events or conditions) be a Material Event,
then the Seller shall indemnify the Buyer for any Loss resulting from such
event or condition pursuant to Section 11.
8.3 Authorizations and Consents. The Seller, each Company, each
Asset Seller and each Share Seller shall have obtained all necessary
consents and waivers for the assignment, transfer, sublease or sublicense
of the Restricted Assets listed on Schedule 8.3.
8.4 No Litigation. No injunction shall be outstanding which would
prevent consummation of the transactions contemplated by this Agreement.
No legal action, suit, proceeding, investigation or inquiry shall be
pending wherein an unfavorable judgment, order, decree, stipulation,
ruling, decision or injunction would (i) prevent consummation of the sale
of any material portion of the Assets or Shares as contemplated by this
Agreement, (ii) cause the sale of any material portion of the Assets or
Shares as contemplated by this Agreement to be rescinded following
consummation, or (iii) be a Material Event.
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8.5 Seller's Certificate. The Seller shall have delivered to the
Buyer a certificate dated the Closing Date and executed by an executive
officer of the Seller to the effect that each of the conditions specified
in Sections 8.1, 8.2, 8.3, and 8.4 is satisfied in all respects to the
knowledge of such executive officer.
8.6 Resignations. The Buyer shall have received the resignations of
each of the directors and officers of each Company whose resignation has
been requested by the Buyer at least ten business days prior to the
Closing Date.
8.7 HSR Act and Similar Matters. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or
otherwise been terminated, and all authorizations, approvals, consents,
permits or waivers listed on Schedule 8.7 shall have been obtained.
8.8 U.K. Merger Issues. The Buyer or the Seller shall have received
notice (a copy of which shall have been provided to the other party) that
the United Kingdom Secretary of State for Trade and Industry does not
intend to refer the proposed acquisition of the Shares and/or the Assets by
the Buyer hereunder to the United Kingdom Monopolies and Mergers
Commission; or the period (including any extension or extensions thereof)
for considering any merger notice (as defined in Section 75E of the United
Kingdom Fair Trading Act 1973 ("FTA")) given to the United Kingdom Director
General of Fair Trading with respect to the proposed acquisition of the
Shares and Assets shall have expired without any reference being made to
the United Kingdom Monopolies and Mergers Commission with respect to the
notified arrangements; or the United Kingdom Director General of Fair
Trading has given notice pursuant to Section 75 B(5) of the FTA with
respect to such proposed acquisition of Shares and Assets, the United
Kingdom Secretary of State for Trade and Industry having accepted one or
more undertakings under Section 75G of such Act.
8.9 Legal Opinions. The Buyer shall have received such
opinions from counsel to the Seller in the U.S., U.K., Germany, Switzerland
and Italy as the Buyer shall reasonably request.
8.10 Seller's Shareholder Approval. The Seller's Shareholder
Resolution shall have been passed by the Seller's shareholders in a general
meeting.
9. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO CLOSE.
The obligation of the Seller to close the transactions contemplated by
this Agreement shall be subject to the satisfaction of each of the
following conditions precedent (it being understood that any such condition
may be waived by the Seller in whole or in part at any time and from time
to time at is sole discretion):
9.1 Fulfillment of the Buyer's Covenants. The Buyer shall have
fulfilled or complied in all material respects with each covenant,
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obligation and agreement required to be fulfilled or complied with by it
prior to the Closing Date under this Agreement.
9.2 Accuracy of the Buyer's Representations. No event shall have
occurred at any time and no condition shall exist which makes any of the
representations or warranties of the Buyer or the Parent contained in this
Agreement untrue or incorrect on the date when made or on the Closing Date
(or if a representation or warranty is made as of a specific date, untrue
or incorrect as of such date), except any such event or condition that
would not reasonably be expected to have a material adverse effect on the
ability of either the Buyer or the Parent to consummate the transactions
contemplated hereby.
9.3 No Litigation. No injunction shall be outstanding which would
prevent consummation of the transactions contemplated by this Agreement.
No legal action, suit or proceeding, investigation or inquiry shall be
pending wherein an unfavorable judgment, order, decree, stipulation,
ruling, decision or injunction would (i) prevent the consummation of the
sale of any material portion of the Assets or Shares as contemplated hereby
or (ii) cause the sale of any material portion of the Assets or Shares as
contemplated by this Agreement to be rescinded following consummation.
9.4 Buyer's Certificate. The Buyer shall have delivered to the
Seller a certificate dated the Closing Date and executed by an executive
officer of the Buyer to the effect that each of the conditions specified
in Sections 9.1 through 9.3 is satisfied in all respects to the knowledge
of such executive officer.
9.5 HSR Act and Similar Matters. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or
otherwise been terminated, and all authorizations, approvals, consents,
permits or waivers listed on Schedule 9.5 shall have been obtained.
9.6 Shareholder Approval. The Seller's Shareholder Resolution shall
have been passed by the Seller's shareholders in a general meeting.
9.7 Legal Opinions. The Seller shall have received an opinion from
(i) the General Counsel of the Buyer and the Parent, and (ii) Warner
Cranston, counsel to the Buyer in the United Kingdom, each of which shall
be in such form as the Seller shall reasonably request.
10. CLOSING.
(a) Subject to the conditions set forth in Sections 8 and 9, the
consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Cahill Gordon & Reindel,
80 Pine Street, New York, New York, 10005 at 10:00 a.m., local time, on
the later of (i) April 13, 1995 or (ii) the fifth business day
following satisfaction or waiver of each of the conditions contained
in this Agreement, or on such other date as the Buyer and the Seller
may mutually agree (such date being herein called the "Closing Date").
Failure to close on such date shall not relieve either party hereto
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of its obligations under this Agreement. All transactions at the
Closing shall be deemed to take place simultaneously at 12:01 a.m.
U.S. Eastern Time on the Closing Date, and no transaction shall be
deemed to have been completed and no document or certificate shall be
deemed to have been delivered until all other transactions are
completed and all other documents and certificates are delivered.
(b) At the Closing:
(i) the Seller shall deliver to the Buyer the various
certificates, instruments and documents referred to in Section 8;
(ii) the Buyer shall deliver to the Seller the various
certificates, instruments and documents referred to in Section 9;
(iii) the Seller shall cause each Share Seller to execute and
deliver to the Buyer the certificates, stock powers, share
transfer forms, deeds of transfer and other documents referred to
in Sections 2.2 and 2.6(a);
(iv) the Seller shall cause each Asset Seller to execute and
deliver to the Buyer the Bills of Sale and other documents
referred to in Sections 2.3 and 2.6(a) or, as applicable, effect
physical delivery pursuant to Section 2.6(a);
(v) the Buyer shall execute and deliver to the Seller the
instruments of assumption and other documents referred to in
Section 3.3;
(vi) the Buyer and the Seller shall execute and deliver the
Transition Services Agreement;
(vii) the Buyer shall pay to the Seller the Purchase Price as
specified in Section 2.1;
(viii) the Seller shall deliver to the Buyer, or otherwise put
the Buyer in possession and control of, all of the assets of the
Business of a tangible nature; and
(ix) the Buyer and the Seller shall execute and deliver to
each other a cross-receipt evidencing the transactions referred
to above.
11. INDEMNIFICATION.
11.1 By the Seller. The Seller shall indemnify the Buyer in respect
of, and hold the Buyer harmless against, any and all liabilities, damages,
losses and expenses (including without limitation amounts paid in
settlement, interest, court costs, costs of investigators, reasonable fees
and expenses of attorneys, accountants, financial advisors and other
experts, and other expenses of litigation, investigations, inquiries by
Governmental Bodies or related proceedings) ("Losses") incurred or suffered
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by the Buyer or any Affiliate of the Buyer resulting from, relating to or
constituting:
(a) any breach of any representation or warranty of the Seller
contained in this Agreement;
(b) any failure to perform any covenant or agreement of the
Seller contained in this Agreement;
(c) any Excluded Liabilities;
(d) any Excluded Company Liabilities;
(e) any and all Taxes to the extent specified in Section
7.9(b)(i);
(f) the German reorganization, consisting of the liquidation of
Haake Verwaltung GmbH & Co. KG and transfer of those entities' assets
related to the Business to Gebruder Haake GmbH; and
(g) any underfunding of any Foreign Retirement Plan other than
the Fisons UK Pension Fund.
11.2 By the Buyer and the Parent. The Buyer and the Parent, jointly
and severally, shall indemnify the Seller in respect of, and hold the
Seller harmless against, any and all Losses incurred or suffered by the
Seller or any Affiliate thereof resulting from, relating to or
constituting:
(a) any breach of any representation or warranty of the Buyer or
the Parent contained in this Agreement;
(b) any failure to perform any covenant or agreement of the
Buyer or the Parent contained in this Agreement;
(c) any Assumed Liabilities;
(d) the use of the Retained Names and Logos by the Buyer or the
Parent or any Subsidiary or successor thereof, whether or not in
accordance with this Agreement;
(e) any and all Taxes to the extent specified in Section
7.9(b)(ii) hereof;
(f) any claim for severance pay, termination pay, redundancy
pay, pay in lieu of notice or any other claim for similar compensation
or damages relating to the termination of any Continuing Employee on or
after the Closing Date; however, this paragraph (f) shall not apply to
any Loss pertaining to the Fund (as defined in Exhibit A); and
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(g) (expressions used in this paragraph (g) have the same
meanings as in Exhibit D) any claim which arises in consequence of
Regulation 7 of the Transfer Regulations causing liabilities relating
to the Fund not to transfer to the Buyer as mentioned in that
Regulation and which relate to a UK Employee (or to any spouse or
dependent of a UK Employee) who has not been provided with the whole or
any part of any benefit as provided under the Fund (whether in relation
to employment before or after the Closing Date) or any claim relating
to the cost of such benefit, but excluding any claim arising out of (i)
a breach of contract by the Seller (other than a claim in consequence
of the Buyer not providing benefits which are equivalent to those
provided under the Fund); (ii) a breach of trust in relation to the
Fund; and (iii) any claim by a Consenting Member in relation to the
amount of the Transfer Amount determined by the Seller's Actuary as
attributable to him. To the extent that a claim relates to a period of
employment before the Closing Date, this indemnity is subject to
payment of the Transfer Amount in accordance with Exhibit D.
11.3 Limitations on Indemnification.
(a) Except as provided in Section 11.3(c)(ii) or Section 8.2,
each party's obligation to indemnify the other for Losses arising under
Section 11.1(a) or Section 11.2(a), as the case may be, shall be
limited as to amount, as follows:
(i) The Indemnitor shall not be required to indemnify the
Indemnitee for any Loss except to the extent that the amount of
such Loss, when added to the aggregate amount of all other Losses
indemnifiable under this Section 11, exceeds 2,000,000 English
pounds sterling (the "Indemnification Threshold");
(ii) The Indemnitor shall not be required to indemnify the
Indemnitee for any Losses which, when added to the aggregate
amount of all other Losses indemnifiable under this Section 11,
exceed one-half (1/2) of the Purchase Price in the aggregate; and
(iii) The Indemnitor shall not be required to indemnify the
Indemnitee for Losses indemnifiable under this Section 11 if the
claim for indemnification involves less than 100,000 English
pounds sterling (the "Minimum Claim Amount"); provided, however,
that (W) until the Indemnification Threshold is exceeded, the
Minimum Claim Amount shall be reduced to 5,000 English pounds
sterling for purposes of the application of otherwise
indemnifiable Losses toward the Indemnification Threshold, (X)
for purposes of determining whether the Minimum Claim Amount has
been exceeded, all claims arising out of the same or similar
circumstances shall be treated as a single claim, and (Y) after
the Indemnification Threshold has been exceeded, with respect to
any indemnifiable claim that exceeds the Minimum Claim Amount,
the entire claim (not just the amount in excess of 100,000
English pounds sterling) shall be indemnifiable.
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(b) Except as provided in Section 11.3(c)(i), neither the Seller
nor the Buyer shall be entitled to make any claim for indemnification
arising under Section 11.1(a) or Section 11.2(a), as the case may be,
after the date that is 18 calendar months after the Closing Date,
unless the Seller or the Buyer, as the case may be, shall have asserted
such claim for indemnification prior to such date, stating with
reasonable specificity the nature, facts and circumstances of such
claim in which event such claim shall survive until the resolution
thereof. If a claim for indemnification is asserted prior to the
applicable expiration date, then (notwithstanding the expiration of
such time period) the representation or warranty applicable to such
claim shall survive until the resolution of such claim.
(c) Notwithstanding any other provision to the contrary herein:
(i) the representations contained in Section 5.2,
Section 5.3, Section 5.4 (to the extent that any breach of
representation or warranty arising under Section 5.4 relates to
the right of any person or entity, including, without limitation,
any Governmental Body, to cause the transactions completed by
this Agreement to be rescinded following consummation) and
Section 5.9(a) shall survive without time limit;
(ii) none of the provisions of Section 11.3(a) shall apply
with respect to Losses arising from breaches of the
representations described in Section 11.3(c)(i), and the maximum
amount of Losses for which an Indemnitor shall be liable with
respect to such Losses shall be equal to the Purchase Price; and
(iii) the Buyer and the Parent shall not be required to
indemnify the Seller and its Affiliates under Section 11.2(g) for
Losses, when added to the aggregate amount of all other Losses
indemnifiable under Section 11.2(g), exceeds 1,000,000 English
pounds sterling.
(d) Except with respect to claims based on actual fraud, the
rights of the Buyer and the Seller under this Section 11 shall be the
exclusive remedy of the Buyer and the Seller, respectively, with
respect to claims resulting from or relating to (X) any breach of
representation or warranty or failure to perform any covenant or
agreement of the Seller or the Parent or Buyer, respectively, contained
in this Agreement, or (Y) any Excluded Liabilities.
11.4 Third-Party Claims.
(a) In the event that any legal proceedings shall be instituted
or any claim or demand shall be asserted by any Person other than a
party hereto or any Affiliate of a party hereto (other than an officer,
director or holder of more than 10% of the stock of such party) (a
"Third-Party Claim") in respect of which indemnification may be sought
by any party or parties from any other party or parties under the
provisions of this Section 11, the party or parties that may seek
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indemnification (collectively, the "Indemnitee") shall cause written
notice in reasonable detail of the assertion of any Third-Party Claim
of which it has knowledge that is covered by this indemnity to be
forwarded promptly to the party from which indemnification may be
sought (the "Indemnitor"); provided that, if any taxing authority
proposes an adjustment, questions the treatment of any item, or
commences an examination or audit, which adjustment, question,
examination or audit could, if pursued successfully, reasonably be
expected to give rise to a claim relating to Section 5.8 or Section
7.9 (a "Tax Dispute"), then such Tax Dispute shall constitute a
Third-Party Claim under this Section 11.4, and the party hereto first
receiving notice of such Tax Dispute shall promptly notify in writing
the other party hereto; provided further that the failure of an
Indemnitee to give timely notice shall not affect rights to
indemnification hereunder except to the extent that the Indemnitor has
been damaged by such failure. The Indemnitor shall have the right, at
its option and at its own expense, to be represented by counsel of its
choice and to participate in the defense, negotiation and/or
settlement of any Third-Party Claim.
(b) In connection with any Third-Party Claim, the Indemnitor, at
the sole cost and expense of the Indemnitor, may, upon written notice
to the Indemnitee, assume the defense of any such Third-Party Claim if
(i) the Indemnitor acknowledges in writing the obligation of the
Indemnitor to indemnify in accordance with the terms of this Agreement
the Indemnitee with respect to such Third-Party Claim, (ii) the
Third-Party Claim seeks monetary damages solely or is a Tax Dispute and
(iii) an adverse resolution of the Third-Party Claim would not have a
material adverse effect on the goodwill or reputation of or the future
conduct of the business of the Indemnitee; provided, however, that the
Indemnitee may participate in any such proceeding with counsel of its
choice and at its own expense; and provided further, however, that if
the Indemnitor assumes control of such defense and the Indemnitee
reasonably concludes that the Indemnitor and the Indemnitee have
conflicting interests or different defenses available with respect to
such action, suit or proceeding, or if the Indemnitor elects not to
assume such defense, then the reasonable fees and expenses of counsel
to the Indemnitee shall be considered "Losses" for purposes of this
Agreement. The party controlling such defense shall keep the other
party advised of the status of such action, suit or proceeding and
the defense thereof and shall consider in good faith recommendations
made by the other party with respect thereto.
(c) The Indemnitee shall not agree to any settlement of such
action, suit or proceeding without the prior written consent of the
Indemnitor, which shall not be unreasonably withheld, unless the
Indemnitee waives any right to indemnity therefor by the Indemnitor.
Notwithstanding the foregoing, if a customer or a supplier of the
Business asserts that the Buyer is liable to such customer or supplier
for a monetary or other obligation which may constitute or result in
Losses for which the Buyer may be entitled to indemnification
pursuant to this Section 11 and the Buyer reasonably determines that
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it has a valid business reason to fulfill such obligations, then (i)
the Buyer shall be entitled to satisfy such obligation without prior
notice to or consent from the Seller, (ii) the Buyer may make a claim
for indemnification pursuant to this Section 11 and (iii) the Buyer
shall be reimbursed, in accordance with the provisions of this
Section 11, for any such Losses for which it is entitled to
indemnification pursuant to the provisions of this Section 11;
provided, however, that if the Buyer makes a claim for indemnification
in accordance with this sentence the Seller shall not be deemed to
have waived any defense to such claim by the Buyer, notwithstanding
the Buyer's prior satisfaction of the obligation for which
indemnification is sought, and it shall not be a defense to the
Buyer's claim for indemnification that the Buyer has satisfied the
obligation for which indemnification is sought.
(d) After final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement shall have been consummated, or the
Indemnitee and the Indemnitor shall have arrived at a mutually binding
agreement with respect to each separate matter indemnified by the
Indemnitor, the Indemnitee shall forward to the Indemnitor notice of
any sums due and owing hereunder by the Indemnitor with respect to
such matter and the Indemnitor shall pay all of the sums so owing to
the Indemnitee by check within 30 days after the date of such notice.
Any payment not made when due under this Section 11 shall bear
interest, compounded monthly on the last day of each calendar month,
from the due date, at an interest rate equal to one percent above
LIBOR, as in effect from time to time.
12. TERMINATION.
12.1 Termination Events. Subject to the other provisions of this
Section 12, this Agreement may, by written notice given at or prior to the
Closing in the manner hereinafter provided, be terminated and abandoned:
(a) By either the Seller or the Buyer if a material default or
breach shall be made by the other with respect to (i) the due and
timely performance of any of its covenants and agreements contained
herein, or (ii) the due compliance with any of its representations and
warranties contained in Sections 5 or 6, as the case may be, except
(in the case of Seller) for any lack of compliance that arises from an
event or condition that (together with all other events or conditions)
would not be a Material Event, and such breach or default has not been
(i) cured within 15 days after notice thereof is given to the breaching
party or (ii) waived by the non-breaching party;
(b) (i) by the Buyer if all of the conditions set forth in
Section 8 shall not have been satisfied on or before the Termination
Date, other than through failure of the Buyer to fully comply with its
obligations hereunder, or shall not have been waived by it on or
before such dates; or (ii) by the Seller, if all of the conditions set
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forth in Section 9 shall not have been satisfied on or before the
Termination Date, other than through failure of the Seller to fully
comply with its obligations hereunder, or shall not have been waived
by it on or before such dates; or
(c) by mutual written consent of the Seller and the Buyer.
12.2 Effect of Termination. In the event this Agreement is
terminated pursuant to Section 12.1, all further obligations of the
parties hereunder shall terminate; provided, however, that if this
Agreement is so terminated by one party pursuant to Section 12.1(a) or
12.1(b)(i) or (ii) because one or more of the conditions to such party's
obligations hereunder is not satisfied as a result of the other party's
failure to comply with its obligations under any provision of this
Agreement, it is expressly agreed and understood that such party's right
to pursue all legal remedies for breach of contract or otherwise,
including, without limitation, damages relating thereto, shall also
survive such termination unimpaired. No termination of this Agreement
shall act to terminate or otherwise impair the obligations set forth in
Sections 13.3, 13.12 and 13.13.
12.3 Reimbursement of Expenses. Notwithstanding the foregoing, in the
event that this Agreement is terminated due to the failure of Seller to
obtain the Seller's Shareholder Resolution, the Seller shall promptly
reimburse the Buyer for its costs and expenses reasonably incurred in
connection with the transactions contemplated hereby up to a maximum of
500,000 English pounds sterling.
13. MISCELLANEOUS.
13.1 Amendments. This Agreement may be amended only by a written
agreement signed by the Seller, the Buyer and the Parent.
13.2 Notices. All notices, requests, demands and other
communications made in connection with this Agreement shall be in writing
and shall be deemed to have been duly given on the date delivered if
delivered personally or sent by facsimile to the persons identified below,
or three days after mailing if mailed by certified or registered U.S
mail, postage prepaid, return receipt requested, addressed as follows, or
two business days after mailing by nationally recognized express courier,
addressed as follows:
(a) if to the Buyer:
Thermo Instrument Systems Inc.
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
Facsimile: (617) 622-1283
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(b) if to the Parent:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
Facsimile (617) 622-1283
(c) if to the Seller:
Fisons plc
Fison House Princes Street
Ipswich Suffolk IP1 1QH
England
Attention: John M. Bailey
Facsimile: (44)-0473-231540
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: John P. Mitchell, Esq.
Facsimile: (212) 269-5420
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 13.2.
13.3 Expenses. Except as otherwise provided herein (including,
without limitation, Sections 4.3 and 12.3), each party to this Agreement
shall pay its own costs and expenses (including all legal, accounting,
broker, finder and investment banker fees) relating to this Agreement, the
negotiations leading up to this Agreement and the transactions
contemplated by this Agreement.
13.4 Waiver. Waiver of any term or condition of this Agreement by
any party shall only be effective if in writing and shall not be construed
as a waiver of any subsequent breach or failure of the same term or
condition, or a waiver of any other term or condition of this Agreement.
13.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.6 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term
or provision in any other situation or in any other jurisdiction. If the
final judgment of a court of competent jurisdiction declares that any term
or provision hereof is invalid or unenforceable, the parties agree that
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the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration or area of the term or
provision, to delete specific words or phrases, or to replace any invalid
or unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which
the judgment may be appealed.
13.7 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, constitutes the entire agreement, and supersedes all
other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof,
including, without limitation, the confidentiality undertaking dated as of
October 3, 1994, as amended.
13.8 Assignment. This Agreement shall not be assigned by the Parent,
the Buyer or the Seller or by operation of law or otherwise, except that
the Buyer may assign some or all of its rights, interests and/or
obligations hereunder to one or more affiliates of the Buyer ("Designated
Transferees"); provided, however, that any such assignment shall not
relieve either the Buyer or the Parent of its respective obligations
hereunder. If the Buyer assigns any of its rights, interests and/or
obligations hereunder to one or more Designated Transferees, then, unless
the context otherwise requires, all references herein to the Buyer shall
mean and include the respective Designated Transferees.
13.9 Governing Law; Time of the Essence. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
New York (without regard to principles of conflicts of law) as to all
matters and issues relating to the transactions contemplated by this
Agreement, including but not limited to, matters and issues of validity,
construction, effect, performance and remedies; provided, however, that
the terms and conditions set forth in Exhibit B and Exhibit D shall be
governed by the law of England. Time is of the essence in the performance
of this Agreement.
13.10 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original but all of which shall constitute one and the same agreement.
13.11 Conditions and Documents. All parties shall use their best
efforts to satisfy the conditions to Closing and otherwise consummate the
transactions contemplated by this Agreement, including the execution of
such documents as may be reasonably necessary to effectuate the purposes
of this Agreement. Without limiting the generality of the foregoing, the
Seller shall cause each Share Seller and Asset Seller to execute such
documents, and to take such actions, as may be necessary to enable the
Seller to carry out its obligations hereunder and to consummate the
transactions contemplated hereby.
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13.12 Publicity. Until the business day after the Closing Date and
except for any public disclosure which the Buyer or the Seller in good
faith believes is required by law or applicable stock exchange rules,
neither party shall issue any press release or make any other public
announcement regarding the transactions contemplated hereby, without the
prior written approval of the other party, which shall not be
unreasonably withheld. The parties hereto shall issue a mutually
acceptable press release as soon as practicable after the execution of
this Agreement and as soon as practicable after the Closing.
13.13 Confidential Information. In connection with the negotiation of
this Agreement and the consummation of the transactions contemplated
hereby, each party hereto will have access to data and confidential
information relating to the other party. Each party hereto shall treat
such data and information as confidential, preserve the confidentiality
thereof and not duplicate or use such data or information, except in
connection with the transactions contemplated hereby, and in the event of
the termination of this Agreement for any reason whatsoever, each party
hereto shall return to the other all documents, work papers and other
material (including all copies thereof) obtained in connection with the
transactions contemplated hereby and will use reasonable efforts,
including instructing its employees who have had access to such
information, to keep confidential and not to use any such data or
information; provided, however, that such obligations shall not apply to
any data and information (i) which, at the time of disclosure, is
available publicly, (ii) which, after disclosure, becomes available
publicly through no fault of the receiving party, (iii) which the receiving
party knew or to which the receiving party had access (without violating
any right of the disclosing party) prior to disclosure by the disclosing
party, (iv) which is required by law, regulation or stock exchange rule, or
in connection with legal process, to be disclosed, or (v) which is
disclosed by a receiving party to its attorneys or accountants, who shall
respect the above restrictions.
13.14 Submission to Jurisdiction and Venue. Any legal suit, action, or
proceeding arising out of or relating in any way to this Agreement, any
other agreement or instrument contemplated herein or the transactions
contemplated hereby, including but not limited to actions seeking specific
performance of the terms of this Agreement, actions for indemnity, actions
seeking declaratory relief regarding the terms of this Agreement or actions
for breach of this Agreement, shall be institute exclusively in the United
States District Court for the Southern District of New York, United States
of America (the "Southern District Court"), or if such court shall not have
subject matter jurisdiction over such action, a court of general
jurisdiction of the State of New York located in the City of New York,
Borough of Manhattan (a "New York Court"). Each party hereby waives any
objection whatsoever that it may have now or hereafter to the laying of the
venue of any such suit, action or proceeding exclusively in the Southern
District Court or a New York Court, as the case may be, and irrevocably
submits to the exclusive jurisdiction of the Southern District Court in any
such suit, action or proceeding or, if such court shall not have subject
matter jurisdiction over such action, the New York Courts. In the event
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that any legal suit, action or proceeding of any kind is commenced in or
brought in any court other than in the Southern District Court (or, if the
Southern District Court shall not have subject matter jurisdiction over
such action, a New York Court), the parties agree to, and shall cause their
respective Subsidiaries and Affiliates that they control to, transfer
and/or remove any such legal suit, action or proceeding to the Southern
District Court (or, if the Southern District Court shall not have subject
matter jurisdiction over such action, a New York Court), or to immediately
dismiss without prejudice such legal suit, action or proceeding. Each of
the Seller and the Buyer hereby designates CT Corporation System (the
"Agent") as its authorized agent to accept and acknowledge on its behalf
service of any and all process that may be served in any such suit, action
or proceeding in any such court. Each of the Seller and the Buyer agrees
that service of process upon the Agent at its office at 1633 Broadway, New
York, New York 10009 (or at such other address in New York County, New York
as such agent may designate by written notice to the parties) and written
notice of said service air mailed or delivered to a party hereto at the
address for notice established pursuant to Section 13.2 shall be deemed in
every respect effective service of process upon such party in any such
suit, action or proceeding and shall be taken and held to be valid personal
service upon such party whether or not such party shall then be doing, or
at any time shall have done, business within the State of New York, and
that any such service of process shall be of the same force and validity as
if service were made upon such party according to the laws governing the
validity and requirements of such service in such State, and waives all
claim of error by reason of any such service. Nothing in this Section
13.14, however, shall affect the right of either party to serve legal
process in any other manner permitted by law.
13.15 Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against
either party. Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
THERMO INSTRUMENT
SYSTEMS INC.
By: ______________________________
Name: ____________________________
Title: _____________________________
THERMO ELECTRON CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
FISONS plc
By:____________________________
Name:__________________________
Title:_________________________
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Exhibit A
"Accounting Principles" means the accounting principles set forth
on Schedule 5.7A.
"Accounts Receivable" shall have the meaning given such term in
Section 7.16(b).
"Affiliate" shall mean, with respect to any Person, any other
Person that directly, or indirectly, through one or more
intermediaries, is controlled by such Person.
"Agent" shall have the meaning given such term in Section 13.14.
"Assets" means all of the assets, properties and rights, whether
real, personal, tangible or intangible, of every kind, nature and
description, owned or held by the Asset Sellers relating primarily to
the Business, including without limitation (i) all trade and other
accounts receivable and notes receivable; (ii) all inventories of raw
materials, work in process, finished goods, supplies, packaging
materials, spare parts and similar items; (iii) all machinery,
equipment, tools and tooling, furniture, fixtures, leasehold
improvements and motor vehicles; (iv) all real property, leaseholds
and subleaseholds in real property, and easements, rights-of-way and
other appurtenants thereto; (v) all Proprietary Rights and associated
goodwill; (vi) all rights under contracts, agreements or instruments
(including without limitation the Restricted Assets to the extent
provided in Section 2.8); (vii) all claims, prepayments, refunds,
causes of action, choices in action, rights of recovery, rights of
setoff and rights of recoupment, including all rights under
warranties but excluding any such items relating to Taxes for which
the Seller is liable pursuant to Section 7.9; (viii) all permits;
(ix) all books, records, accounts, ledgers, files, documents,
correspondence, lists (customer or otherwise), product and sales
literature, drawings or specifications, employment records,
manufacturing and technical manuals, advertising and promotional
materials, studies, reports and other printed or written materials;
provided, however, that the Seller and its Subsidiaries shall be
permitted to retain copies of all Tax Returns and other records and
documents that may reasonably be required to comply with tax law
requirements, and (x) all claims and defenses to the extent relating
to any of the foregoing or to the Assumed Liabilities, but excluding
the Excluded Assets and any of the Shares.
"Asset Seller" and "Asset Sellers" mean, respectively, each of,
and all of, the Seller, the Business Sellers and the Division Sellers.
"Assumed Liabilities" shall have the meaning given such term in
Section 3.1.
"Balance Sheet" means the audited combined balance sheet of the
Business as of December 31, 1994 derived from the audited financial
statements of the Seller prepared by the Seller, which balance sheet
shall be accompanied by an unqualified opinion of Price Waterhouse.
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"Balance Sheet Date" means December 31, 1994.
"Business" means the business of the Instruments Division of the
Seller, which comprises the business and operations conducted by the
Business Sellers, the Divisions and the Companies as of the Closing
Date.
"Business Seller" and "Business Sellers" mean, respectively, each
of, and all of, the Companies designated as such on Schedule 1, which
comprise those Subsidiaries of the Seller whose sole business is the
Business, and which are selling assets to the Buyer.
"Buyer" means Thermo Instrument Systems Inc., a Delaware
corporation and/or, as the context requires, any Designated
Transferee.
"Buyer's Foreign Actuary" means any actuary, benefit consultant
or similar qualified person retained by the Buyer for purposes of
evaluating the funding of any Foreign Plan.
"CERCLA" shall have the meaning given such term in Section 5.28.
"Closing" shall have the meaning given such term in Section 10.
"Closing Date" shall have the meaning given such term in
Section 10.
"Closing Balance Sheet" shall have the meaning given such term in
Section 4.1(b).
"Code" means the U.S. Internal Revenue Code of 1986, as amended
and in effect.
"Collection Period" shall have the meaning given such term in
Section 7.16(b)
"Company" and "Companies" mean, respectively, each of, and all
of, the companies designated as such on Schedule 1, which comprise
those Subsidiaries of the Seller whose sole business is the Business,
and the shares of which are to be sold to Buyer pursuant to the terms
of this Agreement.
"Company Assets" means all of the assets, properties and rights,
whether real, personal, tangible or intangible, of every kind, nature
and description, owned or held by the Companies.
"Company Liabilities" means all liabilities of each Company of
any nature, known or unknown, fixed, contingent or otherwise, arising
out of or relating to the conduct of the Business prior to the Closing
Date, except for Excluded Company Liabilities.
"Competitive Business" shall have the meaning given such term in
Section 7.14(a).
"Continuing Employee" means each employee (i) employed in the
Business by any of the Asset Sellers who accepts employment with the
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Buyer pursuant to Section 7.6 or (ii) who remains an employee of any
of the Companies immediately following the Closing.
"Covenants" means agreements, stipulations, restrictions, rights
and other matters affecting the U.K. Properties whether or not the
same are referred to in the registers maintained in relation to the
U.K. Properties by the English Land Registry and its Land Charges
Department, but "Covenants" does not include any mortgage, charge,
lien or other security interest whatsoever.
"Designated Transferees" shall have the meaning given such term
in Section 13.8.
"Division Seller" and "Division Sellers" mean, respectively, each
of, and all of , the entities designated as such on Schedule 1, which
comprise those companies affiliated with the Seller (including the
Seller) that carry on both the Business and other businesses and that
are selling all of their assets used primarily in the business to the
Buyer.
"Division" and "Divisions" mean, respectively, each of, and all
of, the Divisions conducting the Business within the Division Sellers.
"Dormant Shell" and "Dormant Shells" mean, respectively, each of,
and all of, the companies designated as such on Schedule 1, which
comprise those Subsidiaries of the Seller that have no assets or
operations.
"Draft Closing Balance Sheet" shall have the meaning given such
term in Section 4.1(a).
"Encumbrances" means claims, liens, pledges, charges,
encumbrances, equities, options, calls, voting trusts, agreements,
commitments, restrictions and any other security interests whatsoever.
"Environmental Law" shall have the meaning given such term in
Section 5.28(a).
"Environmental Liabilities" means any and all Losses incurred by
the Buyer arising out of (i) any actual or alleged release of any
Materials of Environmental Concern into the environment relating to
the operation of the Business prior to the Closing Date, (ii) any
actual or alleged release of any Materials of Environmental Concern
into the environment commencing prior to the Closing Date at any site
owned or operated by any of the Asset Sellers prior to the Closing
Date or to which any Materials of Environmental Concern were actually
or allegedly transported by or on behalf of any of the Asset Sellers
prior to the Closing Date, or (iii) the actual or alleged violation of
any Environmental Law by any Asset Seller commencing prior to the
Closing Date; provided, however, that Environmental Liabilities shall
not include (a) with respect to any actual or alleged release of any
Materials of Environmental Concern or any violation of any
Environmental Law commencing prior to the Closing Date and continuing
after the Closing Date at any site owned or operated by the Buyer
after the Closing and owned or operated by any Asset Seller prior to
the Closing, any Loss incurred by the Buyer arising from the portion
of such release or violation occurring after the earlier of (1) 30
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days after the Buyer's discovery of such release or violation or (2)
the first anniversary of the Closing Date, or (b) any Loss incurred by
the Buyer arising from the performance of any remediation, or the
giving of any notice to a Governmental Body, to the extent not
required by any applicable Environmental Law or not in response to any
Third Party Claim, it being understood that the cost of performing any
study, assessment or other action in connection with any such
non-required remediation shall not be a Loss.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any entity which is a member of (i) a
controlled group of corporations (as defined in Section 414(b) of the
Code), (ii) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (iii) an affiliated
service group (as defined in Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes
the Seller, any Share Seller, any Asset Seller or any Company.
"Excluded Assets" shall have the meaning given such term in
Section 2.5.
"Excluded Company Liabilities" means any liabilities that would
be Excluded Liabilities, or would not be Assumed Liabilities, if the
Companies were Asset Sellers hereunder.
"Excluded Liabilities" shall have the meaning given such term in
Section 3.2.
"FTA" shall have the meaning given such term in Section 8.8.
"Financial Statements" means the Balance Sheet and the combined
statements of operations of the Business for the year ended December
31, 1994 prepared by the Seller and derived from the audited financial
statements of the Seller, to which is attached an unqualified opinion
of Price Waterhouse.
"Foreign Plans" shall have the meaning given such term in
Section 5.25.
"Foreign Retirement Plan" shall have the meaning given such term
in Section 5.25.
"Foreign Transition Period" shall have the meaning given such
term in Section 7.7(a).
"Foreign Welfare Plan" shall have the meaning given such term in
Section 5.25.
"GAAP" shall have the meaning given such term in Section 4.1(a).
"Governmental Body" shall have the meaning given such term in
Section 5.19.
"HSR Act" shall have the meaning given such term in
Section 5.4(b).
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"Income Taxes" means any Taxes assessable on, or measured with
respect to, net income.
"Indemnification Threshold" shall have the meaning given such
term in Section 11.3(a)(i).
"Indemnitee" shall have the meaning given such term in
Section 11.4.
"Indemnitor" shall have the meaning given such term in
Section 11.4.
"Intellectual Property" shall have the meaning given such term
in Section 5.15.
"Interim Net Book Value" shall have the meaning given such term
in Section 2.1.
"IRS" means the U.S. Internal Revenue Service.
"ISRA" shall have the meaning given such term in Section 7.3(c).
"Laws and Regulations" shall have the meaning given such term in
Section 5.20.
"Leased Real Estate" means the real property listed on
Schedule 5.11.
"Losses" shall have the meaning given such term in Section 11.1.
"Material Adverse Effect" shall mean a Loss to the Business of
more than 100,000 English pounds sterling (except to the extent such
Loss results from the actions or omissions of Buyer or its
Subsidiaries).
"Material Event" means any event or condition that would be
reasonably likely to result in a Loss to the Business of at least
7,500,000 English pounds sterling.
"Material Permits" shall have the meaning given such term in
Section 5.29.
"Materials of Environmental Concern" shall have the meaning
given such term in Section 5.28(b).
"Minimum Claim Amount" shall have the meaning given such term in
Section 11.3(a)(iii).
"Net Book Value" shall have the meaning given such term in
Section 4.1(e).
"New Receivable" shall have the meaning given such term in
Section 7.16(d).
"New York Court" shall have the meaning given such term in
Section 13.14.
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"Neutral Auditors" shall have the meaning given such term in
Section 4.1(d).
"NJDEPE" shall have the meaning given such term in
Section 7.3(c).
"Occupation Leases" means, in respect of the U.K. Properties, the
leases, tenancy agreements, licenses and other rights of occupation to
which the U.K Properties are subject as referred to in Part B of
Schedule 5.10, and "Occupation Lease" means any of them, and, in
relation to an Occupation Lease, references to the landlord include
the person on which a license or rights of occupation are binding and
references to the tenant include the licensee or person with the
benefit of those rights.
"Ordinary Course of Business" means the ordinary course of
business of the Business consistent with past practice and custom.
"Owned Real Estate" means the real property listed on
Schedule 5.10.
"Parent" means Thermo Electron Corporation.
"Permitted Encumbrances" means any of the following, but only to
the extent relating solely to Assumed Liabilities: (a) liens for
current Taxes and assessments not yet delinquent or Taxes the
validity of which are being contested in good faith by appropriate
proceedings, (b) such restrictions, easements and customary utility
easements, if any, as do not materially impair the utility of the
affected properties in their current uses in the Business, (c) liens
of employees, laborers, carriers, warehousemen, mechanics and
materialmen for current wages or accounts payable not yet delinquent,
(d) liens and charges incident to construction or maintenance, which
have either not been filed of record or have been filed of record and
are being contested in good faith by appropriate action diligently
pursued and have not yet proceeded to judgment, (e) liens or security
interests created in the Ordinary Course of Business, (f) liens or
security interests created as a result of deposits for workers'
compensation, unemployment insurance, surety bonds and leases,
(g) landlord liens for rent not yet due and payable, (h) liens or
security interests created as a result of capitalized lease
obligations and (i) restrictions on transfer imposed by applicable
securities laws; provided that any judicial proceedings intended to
be referred to in subsections (a) and (d) are set forth in
Schedule 5.19.
"Person" means an individual, firm, corporation, division,
partnership, joint venture, unincorporated association, government
agency or political subdivision thereof, or other entity.
"Plans" shall have the meaning given it in Section 5.24(a).
"Post-Closing Periods" shall have the meaning ascribed to such
term in Section 7.9(b).
"Pre-Closing Periods" shall have the meaning given such term in
Section 7.9(b).
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"Proprietary Rights" means all (A) patents, patent applications,
patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, re-examination, utility,
model, certificate of invention and design patents, patent
applications, registrations and applications for registrations,
(B) trademarks, service marks, trade dress, logos, tradenames and
corporate names and registrations and applications for registration
thereof, (C) copyrights and registrations and applications for
registration thereof, (D) mask works and registrations and
applications for registration thereof, (E) computer software, data
and documentation, (F) trade secrets and confidential business
information, whether patentable or nonpatentable and whether or not
reduced to practice, know-how, manufacturing and product processes
and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier
lists and information, (G) other proprietary rights relating to any
of the foregoing (including without limitation remedies against
infringements thereof and rights of protection of interest therein
under the laws of all jurisdictions) and (H) copies and tangible
embodiments thereof.
"Property Transfer" means the document of conveyance, assignment
or transfer of a U.K. Property to the Buyer.
"Purchase Price" shall have the meaning given such term in
Section 2.1.
"Restricted Asset" means (i) any lease required to be listed on
Schedule 5.11, any equipment lease required to be listed on Schedule
5.12, any license required to be listed on Schedule 5.15, or any
contract required to be listed on Schedule 5.17, which lease,
equipment lease, license, or contract cannot be validly assigned,
transferred, subleased or sublicensed without the consent or waiver of
the issuer thereof or the other party thereto or a third person
(including a Governmental Body), or with respect to which such
assignment, transfer, sublease or sublicense or attempted assignment,
transfer, sublease or sublicense could reasonably be expected to (a)
constitute a breach thereof or a violation of any law, decree, order,
regulation, rule, ordinance or other governmental edict, or (b)
entitle the other party thereto to terminate such lease, equipment
lease, license, or contract or receive any additional payment
thereunder, or (ii) any Material Permit listed on Schedule 5.29; and
"Restricted Assets" means all of them collectively. For purposes of
this definition, "transfer" or similar word shall include a transfer
resulting or deemed to result under the terms of the Restricted Asset
as a consequence of the transfer of Shares to the Buyer.
"Restricted Employee" shall have the meaning given such term in
Section 7.13.
"Retained Names and Logos" shall have the meaning given such term
in Section 2.5(e).
"Savings Plan" means the Fisons Scientific Equipment Savings
Incentive Plan, including the related trust.
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"Seller" means Fisons plc, a company organized under the laws of
England.
"Seller's Knowledge" means the actual knowledge or awareness,
after reasonable inquiry, of any person listed on Schedule A, with
respect to the area or jurisdiction of their respective
responsibilities only as set forth on Schedule A.
"Seller's Shareholder Resolution" shall have the meaning given
such term in Section 7.17.
"Seller's Welfare Plans" shall have the meaning given such term
in Section 7.7(b).
"Shares" means the outstanding shares of capital stock of the
Companies owned by any Share Seller.
"Share Seller" and "Share Sellers" mean, respectively, each of,
and all of, the Seller and the subsidiaries of the Seller designated
as such on Schedule 1.
"Southern District Court" shall have the meaning given such term
in Section 13.14.
"Subsidiary" means (i) any corporation with respect to which
another corporation or entity, directly or indirectly, has the power
to vote or direct the voting of sufficient securities to elect a
majority of the directors or (ii) any corporation or other entity
with respect to which another corporation or entity, directly or
indirectly, owns 50% or more of the aggregate equity interests.
"Taxes" means any and all federal, state, provincial, local and
foreign income, profits, franchise, sales, value added, use,
employment, payroll, transfer, occupation, real property, personal
property, severance, production, excise, gross receipts, license,
stamp, premium, customs, duties, capital stock, windfall profit,
environmental, withholding, social security (or similar),
unemployment, disability, sales, use, transfer, registration,
national insurance, alternative or add-on minimum, estimated and
other taxes, assessments, imposts, fees or duties of any kind
whatsoever (including any interest, additions to tax and penalties
with respect to any such tax), whether disputed or undisputed.
"Tax Dispute" shall have the meaning given such term in Section
11.4(a).
"Tax Returns" means all reports, returns, declarations, claims
for refund or information returns or statements relating to Taxes, and
any schedule or attachment thereto and any amendment thereof.
"Termination Date" means June 30, 1995
"Third-Party Claim" shall have the meaning given such term in
Section 11.4.
"Transaction Taxes" shall have the meaning given such term in
Section 4.3.
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"Transferor" means the estate owner of a U.K. Property and shall
include the Seller where the context permits.
"Transfer Regulations" shall have the meaning given such term in
Section 7.6(b).
"Transition Services Agreement" shall have the meaning given such
term in Section 7.19.
"U.K. Assets" shall have the meaning given such term in Section
7.9(h)(i).
"U.K. Business" shall have the meaning given such term in Section
7.6(b).
"U.K. Employee" means any employee located in the United Kingdom
and employed by any of the Companies or the Asset Sellers primarily in
the Business.
"U.K. Freehold Properties" means the properties located in the
U.K. shortly described in Schedule 5.10 and "U.K. Freehold Property"
means any of them.
"U.K. Lease" means, in respect of a U.K. Leasehold Property, the
lease under which it is held as referred to in Schedule 5.11 and
includes every deed varying such lease that has been disclosed by the
Seller to the Buyer in a Schedule.
"U.K. Leasehold Properties" means the leasehold properties
located in the U.K. shortly described in Schedule 5.10 and "U.K.
Leasehold Property" means any of them.
"U.K. Properties" means the U.K. Freehold Properties and the U.K.
Leasehold Properties and "U.K. Property" means any of them.
"U.K. VAT" shall have the meaning given such term in Section
7.9(h)(ii).
"U.S." means the United States of America.
"VAT" shall mean value added taxes.
"VAT Order" shall have the meaning given such term in Section
7.9(h)(i).
"would have a Material Adverse Effect" means currently has or
ultimately has a Material Adverse Effect.
9<PAGE>
Exhibit 4.5
MASTER GUARANTEE REIMBURSEMENT AGREEMENT
This AGREEMENT is entered into as of the 1st day of January, 1994 by
and among Thermo Electron Corporation (the "Parent") and those of its
subsidiaries that join in this Agreement by executing the signature page
hereto (the "Majority Owned Subsidiaries").
WITNESSETH:
WHEREAS, the Majority Owned Subsidiaries in the past have entered
into, and wish to enter into in the future, various financial transactions,
such as convertible or nonconvertible debt, bank loans, and equity
offerings, and other contractual arrangements with third parties (the
"Underlying Obligations");
WHEREAS, the Majority Owned Subsidiaries acknowledge that they are
unable to enter into many kinds of Underlying Obligations without a
guarantee of their performance thereunder from the Parent (a "Parent
Guarantee");
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier Majority
Owned Subsidiaries ") are themselves 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 are often demanded and
given without the respective First Tier Majority Owned Subsidiary also
issuing a guarantee of such Underlying Obligation;
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If, after the date hereof, the Parent provides a Parent Guarantee of
an Underlying Obligation, and the beneficiary(ies) of the Parent
Guarantee enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority Owned
Subsidiary that is obligated under such Underlying Obligation shall
indemnify and save harmless the Parent from any liability, cost,
expense or damage (including reasonable attorneys' fees) suffered by
the Parent as a result of the Parent Guarantee. If the Underlying
Obligation is issued by a Second Tier Majority Owned Subsidiary, and
such Second Tier Majority Owned Subsidiary is unable to fully
indemnify the Parent (because of the poor financial condition of such
Second Tier Majority Owned Subsidiary, or for any other reason), then
the First Tier Majority Owned Subsidiary that owns the majority of the
stock of such Second Tier Majority Owned Subsidiary shall indemnify
and save harmless the Parent from any remaining liability, cost,
expense or damage (including reasonable attorneys' fees) suffered by
the Parent as a result of the Parent Guarantee.
2. For purposes of this Agreement, the term "guarantee" shall include not
only a formal guarantee of an obligation, but also any other
arrangement where the Parent is liable for the obligations of a
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Majority Owned Subsidiary. Such other arrangements include (a)
representations, warranties and/or covenants or other obligations
joined in by the Parent, whether on a joint or joint and several
basis, for the benefit of the Majority Owned Subsidiary and (b)
responsibility of the Parent by operation of law for the acts and
omissions of the Majority Owned Subsidiary, including controlling
person liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary of a
Parent Guarantee is seeking to enforce such Parent Guarantee, the
Parent shall notify the Majority Owned Subsidiary(s) obligated under
the relevant Underlying Obligation. Such Majority Owned Subsidiary(s)
shall have the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary is contesting the claim
of such beneficiary, the Parent will not perform under the relevant
Parent Guarantee unless and until, in the Parent's reasonable
judgment, the Parent is obligated under the terms of such Parent
Guarantee to perform. Subject to the foregoing, any dispute between a
Majority Owned Subsidiary and a beneficiary of a Parent Guarantee
shall not affect such Majority Owned Subsidiary's obligation to
promptly indemnify the Parent hereunder.
4. All payments required to be made by a Majority Owned Subsidiary shall
be made within two days after receipt of notice from the Parent.
5. 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.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above
written.
THERMO ELECTRON CORPORATION
By: __________________________
Title: _________________________
THERMO INSTRUMENT SYSTEMS INC.
By: __________________________
Title: _______________________
<PAGE>
Exhibit 10.17
THERMO INSTRUMENT SYSTEMS INC.
DIRECTORS STOCK OPTION PLAN
As amended and restated effective as of January 1, 1995
1. Purpose
The purpose of this Directors Stock Option Plan (the "Plan") of Thermo
Instrument Systems 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
two 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 seventy-five thousand (75,000) shares of the Company's $.10 par value
Common Stock (the "Common Stock"), and twenty-five thousand (25,000) shares
of the common stock of each Spinout Subsidiary (as defined in Section 5(B))
as of the date of the Annual Meeting of Stockholders on which options to
purchase such common stock are first granted to eligible Directors as
provided in Section 5(B), each 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
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Stockholders, commencing with the Annual Meeting of Stockholders held in
calendar year 1995, shall be granted an option to purchase 1,000 shares of
Company common stock at the close of business on the date of such Annual
Meeting. Options granted under this Subsection B shall be exercisable as
to 100% of the shares subject to the option as set forth in Section
5(C)(1), but shares acquired upon exercise are subject to repurchase by the
Company at the exercise price in the event that the Optionee ceases to
serve as a director of the Company, Thermo Electron Corporation ("Thermo
Electron") or any subsidiary of Thermo Electron, prior to the first
anniversary of the grant date, for any reason other than death.
B. Subsidiary Stock Option Grants.
Each Director of the Company who meets the requirements of Section 3
and this Section 5(B), from time to time in accordance with this Section
5(B), shall be granted an option to purchase shares of the common stock of
each majority-owned subsidiary of the Company, the common stock of which
shall have become publicly traded or a portion of which shall have been
sold primarily to third parties in a private placement or other arms-length
transaction (such transaction being referred to herein as a "Spinout
Transaction", and such subsidiary being referred to herein as a "Spinout
Subsidiary"), upon the following terms and conditions.
Each eligible Director who is not a Director of the Spinout Subsidiary
shall be granted an option to purchase 1,500 shares of common stock of the
Spinout Subsidiary as of the close of business on the date of the Company's
Annual Meeting of Stockholders that first occurs after the Spinout
Transaction, and also as of the close of business on the date of every
fifth Annual Meeting of Stockholders of the Company that occurs thereafter
during the duration of this Plan.
Options granted under this Section 5(B) shall vest and be exercisable
as to 100% of the shares of common stock subject to the option on the
fourth anniversary of the grant date of the option, unless, prior to such
anniversary, the underlying common stock shall have been registered under
Section 12 of the Securities and Exchange Act of 1934, as amended (referred
to herein as "Section 12 Registration"). From and after 90 days after the
effective date of Section 12 Registration, options granted hereunder shall
be immediately exercisable as to 100% of the shares subject to the option,
subject to the right of the Company to repurchase the shares at the
exercise price in the event the Optionee ceases to serve as a director of
the Company, or any subsidiary of the Company or Thermo Election during the
option term. The right of the Company to so repurchase the shares shall
lapse as to one-fourth of the shares granted on each of the first, second,
third and fourth anniversaries of the grant date of the option, provided
the Optionee has remained continuously a director of the Company, Thermo
Electron or any subsidiary of Thermo Electron since the grant date. In all
other respects, the option shall be subject to the general terms and
conditions applicable to all option grants as set forth below in Section
5(C), including the determination of the exercise price of such option.
No Director, who is otherwise eligible under Section 3, shall be
eligible under this Section 5(B) to receive grants of stock options in
Spinout Subsidiaries, if such Director also serves as a director of such
Spinout Subsidiary.
In the event any subsidiary shall become a "Spinout Subsidiary" as
defined herein, then there shall be immediately reserved for transfer
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hereunder, on the date options to purchase common stock of the Spinout
Subsidiary are first granted to eligible Directors and without further
action required by the Board of Directors or Stockholders of the Company,
twenty-five thousand (25,000) shares of the common stock of such Spinout
Subsidiary.
C. General Terms and Conditions Applicable to All Grants.
1. Except as otherwise provided in Section 5(B), options shall be
exercisable at any time from and after the six-month anniversary
of 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) and five years after the grant date for options
granted under Section 5(B), (b) three months after the later of
the date (i) the Optionee either ceases to meet the requirements
of Section 3 or (ii) otherwise ceases to serve as a director of
the Company, Thermo Electron or any subsidiary of Thermo Electron
(six months in the event the Optionee ceases to meet the
requirements of this Subsection by reason of his 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; provided, however, that such
exercise price per share shall not be lower than the par value
per share or less than 50% of the fair market value of the Common
Stock until such time as the Company elects to be subject to Rule
16b-3 as amended by SEC Rel. No. 33-28869.
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 (as to options to purchase Company Common Stock) or
the Spinout Subsidiary (as to options to purchase common stock of the
Spinout Subsidiary, but only if the common stock is then publicly traded)
(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
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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
Options shall not be transferable, otherwise than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations
order as defined in the Internal Revenue Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder (a "Qualified
Domestic Relations Order"). Options may be exercised during the life of
the Optionee only by the Optionee or a transferee pursuant to a Qualified
Domestic Relations Order.
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. Changes in Common Stock
If the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number or kind of shares or other securities, or
if additional shares or new or different shares or other securities are
distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all
of the assets of the Company, reorganization, recapitalization,
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reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such shares of Common Stock, or other
securities, an appropriate proportionate adjustment may be made in the
maximum number or kind of shares reserved for issuance under the Plan. No
fractional shares will be issued under the Plan on account of any such
adjustments.
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.
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13. Change in Control
13.1 Impact of Event
In the event of a "Change in Control" as defined in Section 13.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options awarded under the Plan that were not previously
exercisable and vested shall become fully exercisable and vested.
(b) Shares purchased upon the exercise of options subject to
restrictions and to the extent not fully vested, shall become fully
vested and all such restrictions shall lapse so that shares issued
pursuant to such options shall be free of restrictions.
13.2 Definition of "Change in Control"
"Change in Control" means any one of the following events: (i) when,
any Person is or becomes the beneficial owner (as defined in Section 13(d)
of the Exchange Act and the Rules and Regulations thereunder), together
with all Affiliates and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common Stock of
the Company, or the beneficial owner of 25% or more of the outstanding
common stock of Thermo Electron Corporation ("Thermo Electron"), without
the prior approval of the Prior Directors of the Company or Thermo
Electron, as the case may be, (ii) the failure of the Prior Directors to
constitute a majority of the Board of the Company or of the Board of
Directors of Thermo Electron, as the case may be, at any time within two
years following any Electoral Event, or (iii) any other event that the
Prior Directors shall determine constitutes an effective change in the
control of the Company or Thermo Electron. As used in the preceding
sentence, the following capitalized terms shall have the respective
meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is
defined in Rule 405 under the Securities Act of 1933 and any "group"
(within the meaning of such term in Rule 13d-5 under the Exchange
Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's
or Thermo Electron's Board of Directors, as the case may be,
immediately prior to any Electoral Event (or, if there has been no
Electoral Event, those persons sitting on the applicable Board of
Directors on the date of this Agreement) and any future director of
the Company or Thermo Electron who has been nominated or elected by a
majority of the Prior Directors who are then members of the Board of
Directors of the Company or Thermo Electron, as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's or Thermo Electron's
Common Stock, not approved by the Prior Directors, by any Person other
than the Company, Thermo Electron or a subsidiary of Thermo Electron.
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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 Secretary 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 State of Delaware.
<PAGE>
Exhibit 10.21
APPENDIX B
FINNIGAN CORPORATION
APPENDIX TO PROSPECTUS RELATING TO
1979 LONG-TERM INCENTIVE PLAN
ON FORM S-8
1979 LONG-TERM INCENTIVE PLAN OF FINNIGAN CORPORATION
(as amended through February 11, 1987)
1. Purpose of the Plan
The purpose of the 1979 Long-Term Incentive Plan (the "Plan") of
Finnigan Corporation (the "Company") is to provide an incentive to eligible
employees and consultants whose present and potential contributions are
important to the continued success of the Company, to afford them an
opportunity to acquire a proprietary interest in the Company, and to enable
the Company to enlist and retain in its employ the best available talent
for the successful conduct of its business. It is intended that this
purpose will be effected through the granting of (a) incentive stock
rights, (b) stock options, and (c) stock appreciation rights upon surrender
by a holder of all or a portion of his option rights. It is further
intended that options granted pursuant to this Plan may be either incentive
stock options under Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code") or options which are not incentive stock options
(herein after called "nonstatutory stock options").
2. Eligible Participants
Option and/or rights may be granted to salaried employees who are
officers or who are employed by the Company or its subsidiaries and who are
deemed to have the potential to contribute to the future success of the
Company. Options and/or rights may be granted to a director of the Company
provided that the director is also an officer or salaried employee.
Options may be granted to consultants to the Company or its subsidiaries.
The term "subsidiary" as used in the Plan means any corporation (other than
the Company) in a unbroken chain of corporations beginning with the Company
if , at the time of the granting of any options hereunder, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
3. Stock Subject to the Plan
The shares that may be issued under the Plan shall not exceed in the
aggregate 1,120,000* Adjusted to give effect to a two-for-one stock split
in February 1981. Shares of the Common Stock of the Company, as adjusted
to give effect to the antidilution provisions contained in Section 10 and
11 thereof. Such shares may be authorized and unissued shares or shares
purchased in the open market by the Company for the Plan. If an option or
right for any reason expires or is terminated without having been exercised
in full, the remaining shares shall become available for the granting of
options or rights under the Plan.
* Adjusted to give effect to a two-for-one stock split in February 1981.
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4. Awards Under the Plan
Awards under the Plan may be of three types, namely "incentive stock
rights," "stock Options," and "stock appreciation rights." "Incentive
stock rights" are composed of incentive stock units which give the holder
the right to receive, without payment of cash to the Company, shares of
Common Stock, subject to the terms, conditions, and restrictions described
in Section 7 hereof. An "Option" is a right to purchase Common Stock of
the Company at a fair market value as of the date the option is granted. A
"stock appreciation right" is a right given to a holder of an option to
receive, upon surrender of all or a portion of his option, without payment
to the company, a number of shares of Common Stock of the Company, and/or
cash, determined pursuant to a formula in lieu of the purchase of shares
under the related Option.
5. Administration
The Plan shall be administered by the Board of Directors or, if
established by the Board of Directors, by a committee (the "Committee")
consisting of not less than three persons, all of whom shall be directors
of the Company, to be appointed by the Company's Board of Directors. The
Human Resources Committee of the Company may be designated by the Board of
Directors to be the administrative committee for the Plan provided its
members are otherwise eligible to serve as members of the Committee. No
member of the Board of Directors who is at the time or for one year prior
thereto was eligible to receive an option or right under the Plan (or to
participate in a similar plan of the Company or any subsidiary) shall be a
member of the Committee. Committee members shall serve for such term as
the Board of Directors may in each case determine, and shall be subject to
removal at any time by the Board of Directors. Vacancies on the Committee,
however caused, shall be filled by the Board of Directors. The Committee
shall select one of its members as chairman, and shall hold meetings at
such times and places as it may determine. A majority of the Committee
shall constitute quorum, and acts of the Committee approved at a meeting at
which a quorum is present, or acts approved in writing by all of the
members of the Committee, shall be valid acts of the Committee. Subject to
the general purposes, terms, and conditions of the Plan, and to the
direction of the Board of Directors, the Committee, if there be one, shall
have full power to implement and carry out the Plan including, but not
limited to, the following: to construe and interpret the Plan; to
prescribe, amend, and rescind rules and regulations relating to the Plan;
and to make all other determinations necessary or advisable for the
administration of the Plan. Awards shall be made upon approval by the
Board of Directors, or if the Committee is given general authority to do so
by the Board of Directors, upon approval by the Committee without review by
the Board of Directors; provided, however, that awards to any member of the
Board of Directors must be recommended or approved by the Committee, if
any, or, if there is no Committee, by the Board of Directors provided that
a majority of the Board of Directors and a majority of the Directors
approving such grant are eligible to serve as members of the Committee. As
used herein, except in Sections 11 and 18, reference to the Board of
Directors shall mean such Board or the Committee, whichever is then acting
with respect to the Plan.
6. Duration of the Plan
The Plan shall remain in effect until all options and rights granted
under the Plan have been satisfied by the issuance of shares or the payment
B - 2PAGE
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of cash, or terminated under the terms of the Plan, provided that options
and rights under the Plan shall not be granted after ten (10) years from
the effective date of the Plan. In no event may incentive stock options be
granted under the Plan later than March 27, 1989, ten (10) years from the
date the Plan was adopted by the Board of Directors.
7. Incentive Stock Rights
(a) Incentive Stock Rights
The Board of Directors, in its discretion, may grant to eligible
participants incentive stock rights composed of incentive stock units.
Incentive stock rights shall be evidenced by incentive stock right
agreements in such form and not inconsistent with the Plan as the Board of
Directors shall approve from time to time, which agreements shall contain
in substance the following terms and conditions:
(i) Incentive Stock Units. An incentive stock rights agreement
shall specify the number of incentive stock units to which it
pertains. Each incentive stock unit shall be equivalent to one share
of Common Stock of the Company. Each incentive stock unit shall
entitle the holder to receive, without payment of cash to the Company,
one share of Common Stock of the Company in consideration for services
performed for the Company or for its benefit by the person receiving
the right subject to the lapse of the incentive periods (hereinafter
defined).
(ii) Incentive Period. The holder of incentive stock rights
shall be entitled to receive shares of Common Stock of the Company
only after the lapse of such incentive periods, and in such manner, as
shall be fixed by the Board of Directors at the time of grant of
incentive stock rights to an employee. (Such period or periods so
fixed is or are herein referred to as an "incentive period".) To the
extent the holder of incentive stock rights receives shares of Common
Stock of the Company on the lapse of an incentive period, and
equivalent number incentive stock units subject to such rights shall
be deemed to have been discharged.
(iii) Termination of Employment by Reason of Death or
Disability. In the event that an employee to whom incentive stock
rights have been issued under the Plan terminates employment due to
death or permanent disability (as determined by the Board of
Directors), each incentive period established pursuant to Subsection
7(a)(ii) shall lapse on the date of such termination as to the number
of full incentive stock units determined by multiplying the total
number of incentive stock units applicable to such incentive period by
a fraction, the numerator of which shall be the number of full
calendar months between the date of grant of the incentive stock
rights and the date of such termination and the denominator of which
shall be the number of full calendar months between the date of grant
of the incentive stock rights and the date such incentive period for
such units would, but for such termination, have lapsed. Units upon
which the incentive period does not lapse pursuant to the foregoing
sentence shall terminate on the termination date of employment.
(iv) Termination of Employment for any other Reason. In the
event that an employee to whom incentive stock rights have been issued
under the Plan terminates his employment for any reason (including
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dismissal by the Company with or without cause), other than death or
permanent disability, such rights as to which the incentive period has
not lapsed shall terminate on termination of employment.
(v) Leave of Absence, Other. For Plan purposes, a transfer of
an employee from the Company to a Subsidiary or vice versa, or from
one Subsidiary to another, or a leave of absence duly authorized by
the Company shall not be deemed a termination of employment or a break
in the incentive period. In the case of any employee on an approved
leave of absence, the Board of Directors may make such provision
respecting continuance of the incentive stock right while on leave
from the employ of the Company or a Subsidiary as it may deem
equitable.
(vi) Issuance of Shares. Upon the lapse of an incentive
period, the Company shall, without transfer or issue tax to the person
entitled to receive the shares, deliver to such person a certificate
or certificates for a number of shares of Common Stock of the Company
equal to the number of incentive stock units as to which an incentive
period has lapsed.
(b) Dividend Equivalents
The holder of an incentive stock right shall be entitled to receive
from the Company cash payments at the same time and in the same amounts
that the holder of record of a number of shares of Common Stock equal to
the number of incentive stock units covered by such right would be entitled
to receive as dividends on such Common Stock of the Company. Such right to
cash payment on an incentive stock unit shall apply to all dividends the
record date for which occurs at any time during the period commencing on
the date the incentive stock unit is granted and ending on the date that
the holder of such incentive stock unit becomes a shareholder of record
with respect to such unit as a result of the lapse of an incentive period
or the date the incentive stock right otherwise terminates, whichever
occurs first.
8. Options
The Board of Directors, in its discretion, may grant stock options to
eligible participants and shall determine whether such options shall be
incentive stock options or nonstatutory stock options. Each option shall
be evidenced by a written Stock Option Agreement which shall expressly
identify the options as incentive stock options or as nonstatutory stock
options, and be in such form and contain such provisions as the Board or
the Committee shall from time to time deem appropriate, provided, however,
that the grant of a nonstatutory stock option pursuant to this Plan shall
in no way be construed to be an alternative to the right of an employee to
purchase stock pursuant to any incentive stock option heretofore or
hereafter granted to an employee pursuant to any stock option plans now in
existence or hereafter adopted by the Corporation. Stock Option Agreements
shall contain the following terms and conditions:
(a) Option Price; Number of Shares
The Option Price, which shall be approved by the Board of Directors
shall in no event be less than one hundred percent (100%) of the fair
market value of the Company's stock at the time the option is granted,
which shall be for purposes of the Plan: (i) the last sales price per
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share of stock as reported by NASDAQ (or successor system ) or by the Wall
Street Journal for the date the option is granted, or if there is no
trading on such date, then on the last preceding business day on which
there was trading; (ii) if the stock of the Company is listed on any stock
exchange, the most recent closing price for such stock as quoted on such
exchange for the date the option is granted (or if there are no sales for
such date of grant, then for the last preceding business day on which there
were sales); or (iii) the fair market value thereof, as determined in any
other manner adopted in good faith by the Board of Directors which is in
accordance with the applicable provisions of the Code.
The Option agreement shall specify the number of shares to which it
pertains.
(b) Waiting Period and Exercise Dates
At the time an option is granted, the Board of Directors will
determine the terms and conditions to be satisfied before shares may be
purchased, including the dates on which shares subject to the option may
first be purchased. In no event may an option be exercised for the
purchase of any shares until the completion of the service period ending on
the anniversary date of the grant. (Such period is referred to herein as
the "waiting period.") At the time an option is granted, the Board of
Directors shall fix the period within which it may be exercised which shall
not be less than one (1) year nor more than ten (10) years from the date of
grant. (Such period is referred to herein as the "exercise period.")
To the extent that an option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but
shall be carried forward and shall be exercisable until the expiration of
the exercise period. Partial exercise will be permitted from time to time
to the extent shares subject to the option may than be purchasable,
provided that no partial exercise may be for less than 20 full shares of
Common Stock or its equivalent.
(c) Form and Time of Payment
Stock purchased pursuant to an option agreement shall be paid for in
full at the time of purchase either (i) in cash or (ii) in the discretion
of the Board of Directors or the Committee, through the delivery of shares
of Common Stock of the Company with a value equal to the total option
price, or (iii) by a combination of the methods described in (i) and (ii).
Provision for payment by delivery of shares of Common Stock may be made in
the original option agreement at the time of grant. Upon receipt of
payment, the Company shall, without transfer or issue tax to the optionee
or other person entitled to exercise the option, deliver to the optionee
(or other person entitle to exercise the option) a certificate or
certificates for such shares.
(d) Effect of Termination of Employment or Death
In the event that an optionee during his or her lifetime ceases to be
an employee of the Company or of any Subsidiary for any reason, including
retirement, any option, including any unexercised portion thereof, which
was otherwise exercisable on the date of termination of employment, shall
expire unless exercised within a period of 90 days from the date on which
the optionee ceased to be an employee, but in no event after the expiration
of the exercise period; provided, however, that, if the Board of Directors
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shall determine that an employee shall have been discharged for misconduct
or unsatisfactory work, such employee shall not hereafter have any rights
under the Plan or any option that shall have been granted to him or her
under the Plan. In the event of the death of an optionee during this
90-day period, the option shall be exercisable by his or her personal
representatives, heirs, or legatees for 90 days from the date of death, but
in no event after the expiration of the exercise period, to the same extent
that the optionee could have exercised the option if he or she had not
died. In the event of the death of an optionee while an employee of the
Company or any Subsidiary, that portion of the option which had become
exercisable on the date of death shall be exercisable by his or her
personal representatives, heirs, or legatees at any time prior to the
expiration of one (1) year from the date of death of the optionee, but in
no event after the expiration of the exercise period. In the event that an
optionee ceases to be an employee of the Company or of any Subsidiary for
any reason, including death or retirement, prior to the lapse of the
waiting period, his or her option shall terminate and be null and void.
(e) Leave of Absence
In the case of any employee on an approved leave of absence, the Board
of Directors may make such provision respecting continuance of the option
while on leave from the employ of the Company or a Subsidiary as it may
deem equitable, except that in no event shall an option be exercised after
the expiration of the exercise period.
(f) Acceleration of Option Period
The Board of Directors may accelerate the earliest date on which
outstanding options (or any installments thereof ) are exercisable, but not
to a date earlier than the expiration of the waiting period.
(g) Options granted under the Plan which are intended to be incentive
stock options under Section 422A of the code shall be subject to the
following additional terms and conditions:
(i) Prior Outstanding Option. Except to the extent now or
hereafter permitted by Section 422A of the Code, no incentive stock
option granted prior to January 1, 1987 shall be exercisable while
there remains outstanding (within the meaning of Section 422A(c)(7) of
the Code) any other incentive stock option which was granted at an
earlier date to the optionee to purchase stock in the Corporation or
any other corporation which is, on the date of grant of the later
option, either a "parent corporation" or "subsidiary corporation" of
the Corporation or a predecessor corporation of any of such
corporations (as defined in Section 425 of the Internal Revenue Code
of 1986).
(ii) Dollar Limitation. In the case of an incentive stock
option granted after January 1, 1982, but before January 1, 1987, the
aggregate fair market value (determined as of the time the option is
granted) for which any employee may be granted incentive stock options
in any calendar year (under all stock option plans of the Corporation
and its subsidiaries) shall not exceed $100,000 plus any unused limit
carryover (determined pursuant to Section 422A of the Internal Revenue
Code, as amended) to such year. After December 31, 1986, no incentive
stock option may be granted to any employee which, when aggregated
with all other incentive stock options granted to such employee by the
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Corporation or any other corporation which is either a "parent
corporation" or "subsidiary corporation" of the Corporation, would
result in shares of common stock having an aggregate fair market value
(determined for each such share) as of the date of grant of the option
in excess of $100,000 becoming first available for purchase upon
exercise of one or more incentive stock options during any calendar
year.
(iii) 10% Shareholder. If any optionee to whom an incentive
stock option is to be granted pursuant to the provisions of the Plan
is, on the date of grant, the owner of stock (as determined under
Section 425(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation or
any one of its subsidiaries, then the following special provisions
shall be applicable to the option granted to such individual:
(A) The Option price per share of the Common Stock subject to
such incentive stock option shall be less than 110% of the
fair market value of one share of Common Stock on the date
of grant; and
(B) The option shall not have a term in excess of five (5)
years from the date of grant. Except as modified by the
preceding provisions of this Subsection
8(g), all the provisions of the Plan shall be applicable
to the incentive stock options granted hereunder.
(h) Other Provisions
Each option granted under the Plan may contain such other terms,
provisions, and conditions not inconsistent with the Plan as may be
determined by the Board of Directors.
(i) Options to Consultants
Options granted to consultants shall not be subject to paragraphs 8(b)
and 8(d) of the Plan, but shall have such terms and conditions pertaining
to waiting period (if any), exercise date, and effect of termination of the
consulting relationship as the Board of Directors or Committee shall
determine in each case.
9. Stock Appreciation Rights
The Board of Directors, in its discretion, may grant stock
appreciation rights to employees who are granted options under the Plan.
Such rights shall be evidenced by stock appreciation rights agreements in
such form and not inconsistent with this Plan as the Board of Directors
shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:
(a) Grant
Each right shall relate to a specific option granted under the Plan
and shall be granted to the optionee concurrently with the grant of an
incentive stock option or at such later time as determined by the Board of
Directors if the right relates to a nonstatutory stock option.
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(b) Exercise
A stock appreciation right may only be exercised when the fair market
value of the Common Stock of the Company exceeds the option price of the
related option. A right shall entitle an optionee, to the extent he or she
so designates from time to time, to receive a number of shares, without
payment to the company, cash, or cash and shares, as elected by the Board
of Directors as determined under Subsection 9(c). Such shares and/or cash
shall be issued or paid in consideration of services performed for the
Company or for its benefit by the optionee. Unless otherwise determined by
the Board of Directors, a right shall be exercisable to no greater extent
nor upon any more favorable conditions than its related option is
exercisable under Subsection 8(b). An optionee wishing to exercise a right
in accordance with the foregoing shall give written notice of such exercise
to the Company. Upon receipt of such notice, the company shall; (i)
without transfer or issue tax to the optionee or other person entitled to
exercise the right, deliver to the person exercising the right a
certificate or certificates for shares; and/or (ii) pay cash. The date the
Company receives written notice of an exercise hereunder is referred to
herein as the exercise date.
(c) Number of Shares or Amount of Cash
The number of shares which shall be issued pursuant to the exercise of
a right shall be determined by dividing (i) that portion, as elected by the
optionee, of the total number of shares which the optionee is eligible to
purchase pursuant to Subsection 9(b) (as adjusted pursuant to Subsection
8(b) and Section 10 and 11), multiplied by the amount by which the fair
market value of a share of Common Stock of the Company on the exercise date
exceeds the option price of the related option; by (ii) the fair market
value of a share of Common Stock of the Company on the date the optionee
exercises the stock appreciation right. In lieu of issuing shares on the
exercise of a right, the Board of Directors may elect to pay the cash
equivalent of the fair market value, on the date the optionee exercises the
stock appreciation right, of any or all the shares which would otherwise be
issuable. No fractional shares shall be issued under this Subsection 9(c).
Instead, the optionee shall be entitled to receive a cash adjustment equal
to the same fraction of the fair market value per share of Common Stock on
the date the Board of Directors makes its election.
(d) Effect of Exercise
Shares under an option to which a right is related shall be used not
more than once to calculate the number of shares or cash to be received
pursuant to an exercise of such right. Shares used to calculate the
benefits under a right will no longer be available for exercise by the
optionee nor for regrant to other employees under the Plan.
(e) Effect of Termination of Employment or Death
In the event that the recipient of a right ceases to be an employee of
the Company or of any subsidiary of the Company for any reason, his or her
right shall be exercisable only to the extent and upon the conditions that
its related option is exercisable under Subsection 8(d).
(f) In the event that a stock appreciation right is granted that
relates to an incentive stock option, such right shall contain such
additional or different terms as may be necessary under applicable
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regulations to preserve treatment of the incentive stock option under
Section 422A of the Code.
10. Recapitalization
In the event that dividends are payable in Common Stock of the Company
or in the event there are splits, subdivisions, or combinations of shares
of Common Stock of the Company, the number of shares available under the
Plan shall be increased or decreased proportionately, as the case may be,
and the number of shares deliverable upon the exercise thereafter of any
option or stock appreciation right or upon distribution pursuant to
incentive stock rights theretofore granted shall be increased or decreased
proportionately, as the case may be, without change in the aggregate
purchase price (where applicable).
11. Reorganization
In case the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or in case the property
or stock of the Company is acquired by another corporation, or in case of a
separation, reorganization, or liquidation of the Company, the Board of
Directors of the Company, or the board of directors of any corporation
assuming the obligations of the Company hereunder, shall, as to outstanding
options, stock appreciation rights, or incentive stock rights, either (a)
make appropriate provision for the protection of any such outstanding
options, stock appreciation rights or incentive stock rights by the
substitution on an equitable basis of appropriate stock of the Company or
of the merged, consolidated, or otherwise reorganized corporation which
will be issuable in respect to the shares of Common Stock of the Company,
provided only that the excess of the aggregate fair market value of the
shares subject to the options and rights immediately after such
substitution over the purchase price thereof is not more than the excess of
the aggregate fair market value of the shares subject to such options and
rights immediatley before such substitution over the purchase price
thereof, or (b) upon written notice to the employee, provide that the
option of right must be exercised within sixty (60) days of the date of
such notice or it will be terminated. In any such case, the Board of
Directors may, in its discretion, advance the lapse of incentive periods,
waiting periods, and exercise dates.
12. Employment Relationship
Nothing in the Plan or any award made thereunder shall interfere with
or limit in any way the right of the Company or of any of its Subsidiaries
to terminate any recipient's employment or consulting relationship at any
time, nor confer upon any recipient any right to continue in the employ or
service of the Company or any of its Subsidiaries.
13. General Restriction
Each option and right shall be subject to the requirement that, if ,
at any time, the Board of Directors shall determine, in its discretion,
that the listing, registration, or qualification of the shares subject to
such option or right upon any securities exchange or under any state or
Federal law, or the consent or approval of any government regulatory body,
is necessary or desirable as a condition of, or in connection with, the
granting of such option or right or the issue or purchase of shares
thereunder, such option or right may not be exercised in whole or in part
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unless such listing registration, qualification, consent, or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board of Directors.
14. Rights as a Shareholder
The holder of an option or right shall have no rights as a shareholder
with respect to any shares covered by the option or right until the date of
issuance of a stock certificate to him or her for such shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date
such stock certificate is issued.
15. Nonassignability of Incentive Stock Rights, Options, and Stock
Appreciation Rights
No incentive stock right, option, or stock appreciation right shall be
assignable or transferable by the recipient except by will or by the laws
of descent and distribution. During the life of the recipient, the
incentive stock right, option, or stock appreciation right shall be
exercisable only by him or her.
16. Withholding Taxes
Whenever, under the Plan, shares are to be issued in satisfaction of
options or rights granted thereunder, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to
satisfy Federal, state, and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. Whenever,
under the Plan, payments are to be made in cash, such payment shall be net
of an amount sufficient to satisfy Federal, state, and local withholding
tax requirements.
17. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board of Directors, the
submission of the Plan to the stockholders of the Company for approval, nor
any provision of the Plan shall be construed as creating any limitations on
the power of the Board to adopt such additional compensation arrangements
as it may deem desirable, including, without limitation, the granting of
stock options otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
18. Amendment, Suspension, or Termination of the Plan
The Board of Directors may at any time amend, alter, suspend, or
discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any grantee
under any grant theretofore made, without his or her consent, or which,
without the approval of the stockholders, would:
(a) Except as is provided in Section 10 and 11 of the Plan,
increase the total number of shares of stock reserved for
the purposes of the Plan;
(b) Extend the duration of the Plan;
(c) Extend the period during and over which options may be
exercised under the Plan; or
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(d) Change the class of persons eligible to participate in the
Plan under Section 2.
Without limiting the foregoing, the Board of Directors may, at any
time or from time to time, authorize the Company, with the consent of the
respective recipients, to issue new options or options in exchange for the
surrender and cancellation of any or all outstanding options or rights.
19. Effective Date of the Plan
The Plan shall become effective upon approval of the Board of
Directors and by stockholders holding a majority of the shares entitled to
vote. Options may be granted and exercised under the Plan only after there
has been compliance with all applicable Federal and state securities laws.
The amendments to the Plan adopted by the Board of Directors on
February 17, 1982, shall become null and void if they are not approved by
August 13, 1982, by the stockholders of the Corporation holding a majority
of the shares entitled to vote. Such amendments, unless otherwise
provided, are specifically intended to apply to previously granted options
to the extent necessary to permit such options to qualify for treatment as
incentive stock options. Notwithstanding the foregoing, no amendment shall
apply to any option if such amendment would constitute a modification,
extension, or renewal of the option under Section 425(h) of the Code, as
qualified by Section 251(c) of the Economic Recovery Tax Act of 1981.
The Corporation is authorized to enter into such amending agreements
with optionees, and to file such elections with the Internal Revenue
Service, as may be necessary or appropriate to convert previously granted
options into incentive stock options.
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Exhibit 10.39
THERMO ENERGY SYSTEMS CORPORATION
EQUITY INCENTIVE PLAN
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to secure
for Thermo Energy Systems Corporation (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 March 17, 1994, 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.
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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 400,000 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 1% of the shares of Common Stock outstanding at the
beginning of such calendar year.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board
and shall conform to the general rules applicable under the Plan as well as
any special rules then applicable under federal tax laws or regulations or
the federal securities laws relating to the type of Award granted.
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").
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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
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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.
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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.
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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
theparticipant not to exceed an amount equal to (a) the amount of any
federal, state and local income tax or ordinary income for which the
Participant will be liable with respect to the Award, plus (b) an
additional amount on a grossed-up basis necessary to make him or her whole
after tax, discharging all the participant's income tax liabilities arising
from all payments under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the
Plan that were not previously exercisable and vested shall become
fully exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully
vested and all such restrictions shall lapse so that shares issued
pursuant to such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the
passage of time, continued employment or affiliation, will be waived
and removed as to deferred stock Awards and performance Awards.
Performance of other conditions (other than conditions relating solely
to the passage of time, continued employment or affiliation) will
continue to apply unless otherwise provided in the agreement
evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means any one of the following events: (i) when,
any Person is or becomes the beneficial owner (as defined in Section 13(d)
of the Exchange Act and the Rules and Regulations thereunder), together
with all Affiliates and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common Stock of
the Company, or the beneficial owner of 25% or more of the outstanding
common stock of Thermo Electron Corporation ("Thermo Electron"), without
the prior approval of the Prior Directors of the Company or Thermo
Electron, as the case may be, (ii) the failure of the Prior Directors to
constitute a majority of the Board of the Company or of the Board of
Directors of Thermo Electron, as the case may be, at any time within two
years following any Electoral Event, or (iii) any other event that the
Prior Directors shall determine constitutes an effective change in the
control of the Company or Thermo Electron. As used in the preceding
sentence, the following capitalized terms shall have the respective
meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is
defined in Rule 405 under the Securities Act of 1933 and any "group"
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(within the meaning of such term in Rule 13d-5 under the Exchange
Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's
or Thermo Electron's Board of Directors, as the case may be,
immediately prior to any Electoral Event (or, if there has been no
Electoral Event, those persons sitting on the applicable Board of
Directors on the date of this Agreement) and any future director of
the Company or Thermo Electron who has been nominated or elected by a
majority of the Prior Directors who are then members of the Board of
Directors of the Company or Thermo Electron, as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's or Thermo Electron's
Common Stock, not approved by the Prior Directors, by any Person other
than the Company, Thermo Electron or a subsidiary 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.
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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 Nontransferability of Awards
Except as otherwise specifically provided by the Board in the case of
participants who are not reporting persons under Section 16 of the Exchange
Act, 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 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).
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization,
or other distribution with respect to common Stockholders 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) The Board may also make appropriate adjustments to take into
account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions, repurchases or similar
corporate transactions, or any other event, if it is determined by the
Board that adjustments are appropriate to avoid distortion in the operation
of the Plan, but no such adjustments other than those required by law may
adversely affect the rights of any Participant (without the Participant's
consent) under any Award previously granted.
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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, unless approved by
the Stockholders, shall be effective if it would cause the Plan to fail to
satisfy the requirements of the federal tax law or regulation relating to
incentive stock options or the requirements of Rule 16b-3 (or any successor
rule) of the Exchange Act. No amendment of the Plan or any agreement
evidencing Awards under the Plan may adversely affect the rights of any
participant under any Award previously granted without such participant's
consent.
<PAGE>
Exhibit 10.46
THERMO CARDIOSYSTEMS INC.
EQUITY INCENTIVE PLAN
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to secure
for Thermo Cardiosystems 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 February 28, 1994, subject to the
approval of the Plan by the Company's Stockholders at the next annual
meeting of 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.
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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 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 1% of the shares of Common Stock outstanding at the
beginning of such calendar year.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board
and shall conform to the general rules applicable under the Plan as well as
any special rules then applicable under federal tax laws or regulations or
the federal securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the following forms
and shall be subject to the following rules and conditions:
6.1 Options
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under
the Plan may be either incentive stock options ("incentive stock options")
that meet the requirements of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), or options that are not intended to meet the
requirements of Section 422A ("non-statutory options").
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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
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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.
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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.
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In connection with any Award, the Board may at the time such Award is
made or at a later date, provide for and make a cash payment to the
participant not to exceed an amount equal to (a) the amount of any federal,
state and local income tax or ordinary income for which the Participant
will be liable with respect to the Award, plus (b) an additional amount on
a grossed-up basis necessary to make him or her whole after tax,
discharging all the participant's income tax liabilities arising from all
payments under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the
Plan that were not previously exercisable and vested shall become fully
exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully vested
and all such restrictions shall lapse so that shares issued pursuant to
such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the
passage of time, continued employment or affiliation, will be waived and
removed as to deferred stock Awards and performance Awards. Performance of
other conditions (other than conditions relating solely to the passage of
time, continued employment or affiliation) will continue to apply unless
otherwise provided in the agreement evidencing the Awards or in any other
agreement between the Participant and the Company or unless otherwise
agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means any one of the following events: (i) when,
any Person is or becomes the beneficial owner (as defined in Section 13(d)
of the Exchange Act and the Rules and Regulations thereunder), together
with all Affiliates and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common Stock of
the Company or the beneficial owner of 25% or more of the outstanding
common stock of Thermo Electron Corporation ("Thermo Electron"), without
the prior approval of the Prior Directors of the Company or Thermo
Electron, as the case may be, (ii) the failure of the Prior Directors to
constitute a majority of the Board of the Company or of the Board of
Directors of Thermo Electron, as the case may be, at any time within two
years following any Electoral Event, or (iii) any other event that the
Prior Directors shall determine constitutes an effective change in the
control of the Company or Thermo Electron. As used in the preceding
sentence, the following capitalized terms shall have the respective
meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is defined in
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Rule 405 under the Securities Act of 1933 and any "group" (within the
meaning of such term in Rule 13d-5 under the Exchange Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's
or Thermo Electron's Board of Directors, as the case may be, immediately
prior to any Electoral Event (or, if there has been no Electoral Event,
those persons sitting on the applicable Board of Directors on the date of
this Agreement) and any future director of the Company or Thermo Electron
who has been nominated or elected by a majority of the Prior Directors who
are then members of the Board of Directors of the Company or Thermo
Electron, as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's or Thermo Electron's
Common Stock, not approved by the Prior Directors, by any Person other than
the Company, Thermo Electron or a subsidiary 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
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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 Nontransferability of Awards
Except as otherwise specifically provided by the Board in the case of
participants who are not reporting persons under Section 16 of the Exchange
Act, 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 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).
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization,
or other distribution with respect to common Stockholders 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) The Board may also make appropriate adjustments to take into
account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions, repurchases or similar
corporate transactions, or any other event, if it is determined by the
Board that adjustments are appropriate to avoid distortion in the operation
of the Plan, but no such adjustments other than those required by law may
adversely affect the rights of any Participant (without the Participant's
consent) under any Award previously granted.
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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, unless approved by
the Stockholders, shall be effective if it would cause the Plan to fail to
satisfy the requirements of the federal tax law or regulation relating to
incentive stock options or the requirements of Rule 16b-3 (or any successor
rule) of the Exchange Act. No amendment of the Plan or any agreement
evidencing Awards under the Plan may adversely affect the rights of any
participant under any Award previously granted without such participant's
consent.
<PAGE>
Exhibit 10.49
THERMO VOLTEK CORP.
EQUITY INCENTIVE PLAN
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to secure
for Thermo Voltek Corp. (the "Company") and its Stockholders the benefits
arising from capital stock ownership by employees, officers and Directors
of, and consultants to, the Company and its subsidiaries or other persons
who are expected to make significant contributions to the future growth and
success of the Company and its subsidiaries. The Plan is intended to
accomplish these goals by enabling the Company to offer such persons
equity-based interests, equity-based incentives or performance-based stock
incentives in the Company, or any combination thereof ("Awards").
2. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). The Board shall have full power to interpret and administer
the Plan, to prescribe, amend and rescind rules and regulations relating to
the Plan and Awards, and full authority to select the persons to whom
Awards will be granted ("Participants"), determine the type and amount of
Awards to be granted to Participants (including any combination of Awards),
determine the terms and conditions of Awards granted under the Plan
(including terms and conditions relating to events of merger,
consolidation, dissolution and liquidation, change of control, vesting,
forfeiture, restrictions, dividends and interest, if any, on deferred
amounts), waive compliance by a participant with any obligation to be
performed by him or her under an Award, waive any term or condition of an
Award, cancel an existing Award in whole or in part with the consent of a
Participant, grant replacement Awards, accelerate the vesting or lapse of
any restrictions of any Award and adopt the form of instruments evidencing
Awards under the Plan and change such forms from time to time. Any
interpretation by the Board of the terms and provisions of the Plan or any
Award thereunder and the administration thereof, and all action taken by
the Board, shall be final, binding and conclusive on all parties and any
person claiming under or through any party. No Director shall be liable
for any action or determination made in good faith. The Board may, to the
full extent permitted by law, delegate any or all of its responsibilities
under the Plan to a committee (the "Committee") appointed by the Board and
consisting of 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.
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4. Shares Subject to the Plan
Subject to adjustment as provided in Section 10.6, the total number of
shares of the common stock, $.05 par value per share, of the Company (the
"Common Stock"), reserved and available for distribution under the Plan
shall be 200,000 shares. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
If any Award of shares of Common Stock requiring exercise by the
Participant for delivery of such shares terminates without having been
exercised in full, is forfeited or is otherwise terminated without a
payment being made to the Participant in the form of Common Stock, or if
any shares of Common Stock subject to restrictions are repurchased by the
Company pursuant to the terms of any Award or are otherwise reacquired by
the Company to satisfy obligations arising by virtue of any Award, such
shares shall be available for distribution in connection with future Awards
under the Plan.
5. Eligibility
Employees, officers and Directors of, and consultants to, the Company
and its subsidiaries, or other persons who are expected to make significant
contributions to the future growth and success of the Company and its
subsidiaries shall be eligible to receive Awards under the Plan. The
Board, or other appropriate committee or person to the extent permitted
pursuant to the last sentence of Section 2, shall from time to time select
from among such eligible persons those who will receive Awards under the
Plan.
6. Types of Awards
The Board may offer Awards under the Plan in any form of equity-based
interest, equity-based incentive or performance-based stock incentive in
Common Stock of the Company or any combination thereof. The type, terms
and conditions and restrictions of an Award shall be determined by the
Board at the time such Award is made to a Participant; provided however
that the maximum number of shares permitted to be granted under any Award
or combination of Awards to any Participant during any one calendar year
may not exceed 1% of the shares of Common Stock outstanding at the
beginning of such calendar year.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board
and shall conform to the general rules applicable under the Plan as well as
any special rules then applicable under federal tax laws or regulations or
the federal securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the following forms
and shall be subject to the following rules and conditions:
6.1 Options
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under
the Plan may be either incentive stock options ("incentive stock options")
that meet the requirements of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), or options that are not intended to meet the
requirements of Section 422A ("non-statutory options").
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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 422A of the Code or any
statutory provision that may replace such Section, and any provisions
thereof that cannot be so construed shall be disregarded. Instruments
evidencing incentive stock options must contain such provisions as are
required under applicable provisions of the Code. Incentive stock options
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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.
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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.
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In connection with any Award, the Board may at the time such Award is
made or at a later date, provide for and make a cash payment to the
participant not to exceed an amount equal to (a) the amount of any federal,
state and local income tax or ordinary income for which the Participant
will be liable with respect to the Award, plus (b) an additional amount on
a grossed-up basis necessary to make him or her whole after tax,
discharging all the participant's income tax liabilities arising from all
payments under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the
Plan that were not previously exercisable and vested shall become
fully exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully
vested and all such restrictions shall lapse so that shares issued
pursuant to such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the
passage of time, continued employment or affiliation, will be waived
and removed as to deferred stock Awards and performance Awards.
Performance of other conditions (other than conditions relating solely
to the passage of time, continued employment or affiliation) will
continue to apply unless otherwise provided in the agreement
evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means any one of the following events: (i) when,
any Person is or becomes the beneficial owner (as defined in Section 13(d)
of the Exchange Act and the Rules and Regulations thereunder), together
with all Affiliates and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common Stock of
the Company or its parent corporation, Thermedics Inc. ("Thermedics"), or
the beneficial owner of 25% or more of the outstanding common stock of
Thermo Electron Corporation ("Thermo Electron"), without the prior approval
of the Prior Directors of the applicable issuer, (ii) the failure of the
Prior Directors to constitute a majority of the Board of Directors of the
Company, Thermedics or Thermo Electron, as the case may be, at any time
within two years following any Electoral Event, or (iii) any other event
that the Prior Directors shall determine constitutes an effective change in
the control of the Company, Thermedics or Thermo Electron. As used in the
preceding sentence, the following capitalized terms shall have the
respective meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is
defined in Rule 405 under the Securities Act of 1933 and any "group"
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(within the meaning of such term in Rule 13d-5 under the Exchange
Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's,
Thermedics' or Thermo Electron's Board of Directors, as the case may
be, immediately prior to any Electoral Event (or, if there has been no
Electoral Event, those persons sitting on the applicable Board of
Directors on the date of this Agreement) and any future director of
the Company, Thermedics or Thermo Electron who has been nominated or
elected by a majority of the Prior Directors who are then members of
the Board of Directors of the Company, Thermedics or Thermo Electron,
as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's, Thermedics' or
Thermo Electron's Common Stock, not approved by the Prior Directors,
by any Person other than the Company, Thermedics, Thermo Electron or a
majority-owned subsidiary 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
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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 Nontransferability of Awards
Except as otherwise specifically provided by the Board in the case of
participants who are not reporting persons under Section 16 of the Exchange
Act, 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 the laws of descent and distribution, except pursuant to the
terms of a qualified domestic relations order as defined in the Code, 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).
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization,
or other distribution with respect to common Stockholders 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) The Board may also make appropriate adjustments to take into
account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions, repurchases or similar
corporate transactions, or any other event, if it is determined by the
Board that adjustments are appropriate to avoid distortion in the operation
of the Plan, but no such adjustments other than those required by law may
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adversely affect the rights of any Participant (without the Participant's
consent) under any Award previously granted.
10.7 Employment Rights
Neither the adoption of the Plan nor the grant of Awards will confer
upon any person any right to continued employment with the Company or any
subsidiary or interfere in any way with the right of the Company or
subsidiary to terminate any employment relationship at any time or to
increase or decrease the compensation of such person. Except as
specifically provided by the Board in any particular case, the loss of
existing or potential profit in Awards granted under the Plan will not
constitute an element of damages in the event of termination of an
employment relationship even if the termination is in violation of an
obligation of the Company to the employee.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Board at the time. For purposes of this Plan, transfer
of employment between the Company and its subsidiaries shall not be deemed
termination of employment.
10.8 Other Employee Benefits
The value of an Award granted to a Participant who is an employee, and
the amount of any compensation deemed to be received by an employee as a
result of any exercise or purchase of Common Stock pursuant to an Award or
sale of shares received under the Plan, will not constitute "earnings" or
"compensation" with respect to which any other employee benefits of such
employee are determined, including without limitation benefits under any
pension, stock ownership, stock purchase, life insurance, medical, health,
disability or salary continuation plan.
10.9 Legal Holidays
If any day on or before which action under the Plan must be taken
falls on a Saturday, Sunday or legal holiday, such action may be taken on
the next succeeding day not a Saturday, Sunday or legal holiday.
10.10 Foreign Nationals
Without amending the Plan, Awards may be granted to persons who are
foreign nationals or employed outside the United States or both, on such
terms and conditions different from those specified in the Plan, as may, in
the judgment of the Board, be necessary or desirable to further the purpose
of the Plan.
11. Termination and Amendment
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 11, the Board may at
any time or times amend the Plan or any outstanding Award for any purpose
that may at the time be permitted by law, or may at any time terminate the
Plan as to any further grants of Awards. No amendment, unless approved by
the Stockholders, shall be effective if it would cause the Plan to fail to
satisfy the requirements of the federal tax law or regulation relating to
incentive stock options or the requirements of Rule 16b-3 (or any successor
rule) of the Exchange Act. No amendment of the Plan or any agreement
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evidencing Awards under the Plan may adversely affect the rights of any
participant under any Award previously granted without such participant's
consent.
<PAGE>
Exhibit 10.51
THERMO INSTRUMENT SYSTEMS INC.
THERMOSPECTRA NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended to
encourage ownership of Common Stock, $0.01 par value (the "Common Stock"),
of ThermoSpectra Corporation ("ThermoSpectra"), a subsidiary of Thermo
Instrument Systems 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, its parent corporation and their subsidiaries, and to provide
additional incentive for them to promote the success of the business of the
Company and ThermoSpectra. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective on October 25, 1994.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock then
outstanding which are attributable to the exercise of options granted under
the Plan plus the number of shares then issuable upon the exercise of
outstanding options granted under the Plan exceed 200,000 shares, however,
to the provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
ThermoSpectra 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 shall be administered by a committee (the "Committee")
composed of the members of the Board of Directors of the Company, no member
of which shall act upon any matter exclusively affecting any option granted
or to be granted to himself or herself under the Plan. Subject to the
provisions of the Plan, the Committee 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 of the option and form of option agreement (which need not be
identical, but which shall conform to the applicable terms and conditions
of the Plan and contain such other provisions as the Board of Directors
deems advisable and not inconsistent with the Plan). In making such
determinations, the Committee 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 Committee in its discretion
shall deem relevant. Subject to the provisions of the Plan, the Committee
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
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identical), and to make all other determinations necessary or advisable for
the administration of the Plan. The Committee's determinations on the
matters referred to in this paragraph 4 shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the Committee in
its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time specified by
the Committee. Only if expressly so provided by the Committee 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 any affiliated corporation or to continue as a director or
consultant of the Company and/or any affiliated corporation, and that it
does not interfere in any way with the right of the Company or any such
affiliated corporation to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a director
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 Committee 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
ThermoSpectra 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,
ThermoSpectra 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
Options shall not be transferable, otherwise than by will or the laws
of descent and distribution, except pursuant to the terms of a qualified
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domestic relations order as defined in the Internal Revenue Code. Options
may be exercised during the life of the Optionee only by the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, 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 of Directors 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. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event of any
stock dividend payable in the Common Stock or any split-up or contraction
in the number of shares of the Common Stock occurring after the date of the
agreement and prior to the exercise in full of the option, the number of
shares for which the option may thereafter be exercised shall be
proportionately adjusted and the price to be paid for each share subject to
the option shall be proportionately adjusted. Each such agreement shall
also provide that in case of any reclassification or change of outstanding
shares of the Common Stock or in case of any consolidation or merger of
ThermoSpectra with or into another company or in case of any sale or
conveyance to another company or entity of the property of ThermoSpectra as
a whole or substantially as a whole, the Optionee shall, upon exercise of
the option, be entitled to receive shares of stock or other securities in
its place equivalent in kind and value to those shares which he would have
received if he had exercised the option in full immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with all other
shares, stock and securities thereafter issued in respect thereof) to the
time of the exercise of the option; provided, that if any recapitalization
is to be effected through an increase in the par value of the Common Stock
without an increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the Company shall
notify the Optionee of such proposed recapitalization, and the Optionee
shall then have the right, exercisable at any time prior to such
recapitalization becoming effective, to purchase all of the shares subject
to the option which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee fails to
exercise such right before such recapitalization becomes effective, the
option price under such agreement shall be appropriately adjusted. Each
such agreement shall further provide that upon dissolution or liquidation
of ThermoSpectra, the option shall terminate, but the Optionee (if at the
time an employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such dissolution
or liquidation, to exercise the option to the full extent not theretofore
exercised; that no adjustment provided for above shall apply to any share
with respect to which the option has been exercised prior to the effective
date of such adjustment; and that no fraction of a share or fractional
shares shall be purchasable or deliverable under such agreement, but in the
event any adjustment thereunder of the number of shares covered by the
option shall cause such number to include a fraction of a share, such
fraction shall be adjusted to the nearest smaller whole number of shares.
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In the event of changes in the outstanding Common Stock by reason of any
stock dividend, split-up, contraction, reclassification, or change of
outstanding shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for the
purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. 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.
13. 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.
14. 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.
15. Tax Withholding
The Company will withhold from any cash payment made pursuant to an
exercise of an option an amount sufficient to satisfy all federal, state
and local withholding tax requirements (the "withholding requirements").
The Committee 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
Committee 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 Committee may permit the Optionee or such
other person to elect at such time and in such manner as the Committee
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.
16. Termination and Amendment of Plan
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
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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.
Notwithstanding any other provisions hereof, the Plan shall terminate
October 25, 2004 and no options shall be granted hereunder thereafter.
<PAGE>
Exhibit 10.52
THERMOSPECTRA CORPORATION
EQUITY INCENTIVE PLAN
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to secure
for ThermoSpectra Corporation (the "Company") and its Stockholders the
benefits arising from capital stock ownership by employees, officers and
Directors of, and consultants to, the Company and its subsidiaries or other
persons who are expected to make significant contributions to the future
growth and success of the Company and its subsidiaries. The Plan is
intended to accomplish these goals by enabling the Company to offer such
persons equity-based interests, equity-based incentives or
performance-based stock incentives in the Company, or any combination
thereof ("Awards").
2. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). The Board shall have full power to interpret and administer
the Plan, to prescribe, amend and rescind rules and regulations relating to
the Plan and Awards, and full authority to select the persons to whom
Awards will be granted ("Participants"), determine the type and amount of
Awards to be granted to Participants (including any combination of Awards),
determine the terms and conditions of Awards granted under the Plan
(including terms and conditions relating to events of merger,
consolidation, dissolution and liquidation, change of control, vesting,
forfeiture, restrictions, dividends and interest, if any, on deferred
amounts), waive compliance by a participant with any obligation to be
performed by him or her under an Award, waive any term or condition of an
Award, cancel an existing Award in whole or in part with the consent of a
Participant, grant replacement Awards, accelerate the vesting or lapse of
any restrictions of any Award and adopt the form of instruments evidencing
Awards under the Plan and change such forms from time to time. Any
interpretation by the Board of the terms and provisions of the Plan or any
Award thereunder and the administration thereof, and all action taken by
the Board, shall be final, binding and conclusive on all parties and any
person claiming under or through any party. No Director shall be liable
for any action or determination made in good faith. The Board may, to the
full extent permitted by law, delegate any or all of its responsibilities
under the Plan to a committee (the "Committee") appointed by the Board and
consisting of 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.
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4. Shares Subject to the Plan
Subject to adjustment as provided in Section 10.6, the total number of
shares of the common stock, $.01 par value per share, of the Company (the
"Common Stock"), reserved and available for distribution under the Plan
shall be 700,000 shares. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
If any Award of shares of Common Stock requiring exercise by the
Participant for delivery of such shares terminates without having been
exercised in full, is forfeited or is otherwise terminated without a
payment being made to the Participant in the form of Common Stock, or if
any shares of Common Stock subject to restrictions are repurchased by the
Company pursuant to the terms of any Award or are otherwise reacquired by
the Company to satisfy obligations arising by virtue of any Award, such
shares shall be available for distribution in connection with future Awards
under the Plan.
5. Eligibility
Employees, officers and Directors of, and consultants to, the Company
and its subsidiaries, or other persons who are expected to make significant
contributions to the future growth and success of the Company and its
subsidiaries shall be eligible to receive Awards under the Plan. The
Board, or other appropriate committee or person to the extent permitted
pursuant to the last sentence of Section 2, shall from time to time select
from among such eligible persons those who will receive Awards under the
Plan.
6. Types of Awards
The Board may offer Awards under the Plan in any form of equity-based
interest, equity-based incentive or performance-based stock incentive in
Common Stock of the Company or any combination thereof. The type, terms
and conditions and restrictions of an Award shall be determined by the
Board at the time such Award is made to a Participant.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board
and shall conform to the general rules applicable under the Plan as well as
any special rules then applicable under federal tax laws or regulations or
the federal securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the following forms
and shall be subject to the following rules and conditions:
6.1 Options
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under
the Plan may be either incentive stock options ("incentive stock options")
that meet the requirements of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), or options that are not intended to meet the
requirements of Section 422A ("non-statutory options").
6.1.1 Option Price. The price at which Common Stock may be purchased
upon exercise of an option shall be determined by the Board, provided
however, the exercise price shall not be less than the par value per share
of Common Stock.
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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 422A of the Code or any
statutory provision that may replace such Section, and any provisions
thereof that cannot be so construed shall be disregarded. Instruments
evidencing incentive stock options must contain such provisions as are
required under applicable provisions of the Code. Incentive stock options
may be granted only to employees of the Company and its subsidiaries. The
exercise price of an incentive stock option shall not be less than 100%
(110% in the case of an incentive stock option granted to a more than ten
percent Stockholder of the Company) of the fair market value of the Common
Stock on the date of grant, as determined by the Board. An incentive stock
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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
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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,
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discharging all the participant's income tax liabilities arising from all
payments under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the
Plan that were not previously exercisable and vested shall become
fully exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully
vested and all such restrictions shall lapse so that shares issued
pursuant to such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the
passage of time, continued employment or affiliation, will be waived
and removed as to deferred stock Awards and performance Awards.
Performance of other conditions (other than conditions relating solely
to the passage of time, continued employment or affiliation) will
continue to apply unless otherwise provided in the agreement
evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means any one of the following events: (i) when,
any Person is or becomes the beneficial owner (as defined in Section 13(d)
of the Exchange Act and the Rules and Regulations thereunder), together
with all Affiliates and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common Stock of
the Company or its parent corporation, Thermo Instrument Systems Inc.
("Thermo Instrument"), or the beneficial owner of 25% or more of the
outstanding common stock of Thermo Electron Corporation ("Thermo
Electron"), without the prior approval of the Prior Directors of the
applicable issuer, (ii) the failure of the Prior Directors to constitute a
majority of the Board of Directors of the Company, Thermo Instrument or
Thermo Electron, as the case may be, at any time within two years following
any Electoral Event, or (iii) any other event that the Prior Directors
shall determine constitutes an effective change in the control of the
Company, Thermo Instrument or Thermo Electron. As used in the preceding
sentence, the following capitalized terms shall have the respective
meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is
defined in Rule 405 under the Securities Act of 1933 and any "group"
(within the meaning of such term in Rule 13d-5 under the Exchange
Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's,
Thermo Instrument's or Thermo Electron's Board of Directors, as the
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case may be, immediately prior to any Electoral Event (or, if there
has been no Electoral Event, those persons sitting on the applicable
Board of Directors on the date of this Agreement) and any future
director of the Company, Thermo Instrument or Thermo Electron who has
been nominated or elected by a majority of the Prior Directors who are
then members of the Board of Directors of the Company, Thermo
Instrument or Thermo Electron, as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's, Thermo Instrument's
or Thermo Electron's Common Stock, not approved by the Prior
Directors, by any Person other than the Company, Thermo Instrument,
Thermo Electron or a majority-owned subsidiary of Thermo Electron.
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.
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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 Nontransferability of Awards
Except as otherwise specifically provided by the Board in the case of
participants who are not reporting persons under Section 16 of the Exchange
Act, 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 the laws of descent and distribution, except pursuant to the
terms of a qualified domestic relations order as defined in the Code, 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).
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization,
or other distribution with respect to common Stockholders 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) The Board may also make appropriate adjustments to take into
account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions, repurchases or similar
corporate transactions, or any other event, if it is determined by the
Board that adjustments are appropriate to avoid distortion in the operation
of the Plan, but no such adjustments other than those required by law may
adversely affect the rights of any Participant (without the Participant's
consent) under any Award previously granted.
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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, unless approved by
the Stockholders, shall be effective if it would cause the Plan to fail to
satisfy the requirements of the federal tax law or regulation relating to
incentive stock options or the requirements of Rule 16b-3 (or any successor
rule) of the Exchange Act. No amendment of the Plan or any agreement
evidencing Awards under the Plan may adversely affect the rights of any
participant under any Award previously granted without such participant's
consent.
<PAGE>
Exhibit 10.60
THERMO FIBERTEK INC.
EQUITY INCENTIVE PLAN
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to secure
for Thermo Fibertek 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 February 22, 1994, subject to the
approval of the Plan by the Company's Stockholders at the next annual
meeting of 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.
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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 1,000,000 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 1% of the shares of Common Stock outstanding at the
beginning of such calendar year.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board
and shall conform to the general rules applicable under the Plan as well as
any special rules then applicable under federal tax laws or regulations or
the federal securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the following forms
and shall be subject to the following rules and conditions:
6.1 Options
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under
the Plan may be either incentive stock options ("incentive stock options")
that meet the requirements of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), or options that are not intended to meet the
requirements of Section 422A ("non-statutory options").
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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
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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.
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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.
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In connection with any Award, the Board may at the time such Award is
made or at a later date, provide for and make a cash payment to the
participant not to exceed an amount equal to (a) the amount of any federal,
state and local income tax or ordinary income for which the Participant
will be liable with respect to the Award, plus (b) an additional amount on
a grossed-up basis necessary to make him or her whole after tax,
discharging all the participant's income tax liabilities arising from all
payments under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the
Plan that were not previously exercisable and vested shall become
fully exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully
vested and all such restrictions shall lapse so that shares issued
pursuant to such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the
passage of time, continued employment or affiliation, will be waived
and removed as to deferred stock Awards and performance Awards.
Performance of other conditions (other than conditions relating solely
to the passage of time, continued employment or affiliation) will
continue to apply unless otherwise provided in the agreement
evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means any one of the following events: (i) when,
any Person is or becomes the beneficial owner (as defined in Section 13(d)
of the Exchange Act and the Rules and Regulations thereunder), together
with all Affiliates and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common Stock of
the Company or the beneficial owner of 25% or more of the outstanding
common stock of Thermo Electron Corporation ("Thermo Electron"), without
the prior approval of the Prior Directors of the Company or Thermo
Electron, as the case may be, (ii) the failure of the Prior Directors to
constitute a majority of the Board of the Company or the Board of Directors
of Thermo Electron, as the case may be, at any time within two years
following any Electoral Event, or (iii) any other event that the Prior
Directors shall determine constitutes an effective change in the control of
the Company or Thermo Electron. As used in the preceding sentence, the
following capitalized terms shall have the respective meanings set forth
below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is
defined in Rule 405 under the Securities Act of 1933 and any "group"
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(within the meaning of such term in Rule 13d-5 under the Exchange
Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's
or Thermo Electron's Board of Directors, as the case may be,
immediately prior to any Electoral Event (or, if there has been no
Electoral Event, those persons sitting on the applicable Board of
Directors on the date of this Agreement) and any future director of
the Company or Thermo Electron who has been nominated or elected by a
majority of the Prior Directors who are then members of the Board of
Directors of the Company or Thermo Electron, as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's or Thermo Electron's
Common Stock, not approved by the Prior Directors, by any Person other
than the Company Thermo Electron or a subsidiary 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
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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 Nontransferability of Awards
Except as otherwise specifically provided by the Board in the case of
participants who are not reporting persons under Section 16 of the Exchange
Act, 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 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).
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization,
or other distribution with respect to common Stockholders 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) The Board may also make appropriate adjustments to take into
account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions, repurchases or similar
corporate transactions, or any other event, if it is determined by the
Board that adjustments are appropriate to avoid distortion in the operation
of the Plan, but no such adjustments other than those required by law may
adversely affect the rights of any Participant (without the Participant's
consent) under any Award previously granted.
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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, unless approved by
the Stockholders, shall be effective if it would cause the Plan to fail to
satisfy the requirements of the federal tax law or regulation relating to
incentive stock options or the requirements of Rule 16b-3 (or any successor
rule) of the Exchange Act. No amendment of the Plan or any agreement
evidencing Awards under the Plan may adversely affect the rights of any
participant under any Award previously granted without such participant's
consent.
<PAGE>
Exhibit 10.63
THERMO POWER CORPORATION
EQUITY INCENTIVE PLAN
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to secure
for Thermo Power Corporation (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 December 10, 1993, subject to the
approval of the Plan by the Corporation's Stockholders at the next annual
meeting of 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.
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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 750,000 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 1% of the shares of Common Stock outstanding at the
beginning of such calendar year.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board
and shall conform to the general rules applicable under the Plan as well as
any special rules then applicable under federal tax laws or regulations or
the federal securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the following forms
and shall be subject to the following rules and conditions:
6.1 Options
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under
the Plan may be either incentive stock options ("incentive stock options")
that meet the requirements of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), or options that are not intended to meet the
requirements of Section 422A ("non-statutory options").
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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 422A of the Code or any
statutory provision that may replace such Section, and any provisions
thereof that cannot be so construed shall be disregarded. Instruments
evidencing incentive stock options must contain such provisions as are
required under applicable provisions of the Code. Incentive stock options
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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
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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
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a grossed-up basis necessary to make him or her whole after tax,
discharging all the participant's income tax liabilities arising from all
payments under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the
Plan that were not previously exercisable and vested shall become
fully exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully
vested and all such restrictions shall lapse so that shares issued
pursuant to such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the
passage of time, continued employment or affiliation, will be waived
and removed as to deferred stock Awards and performance Awards.
Performance of other conditions (other than conditions relating solely
to the passage of time, continued employment or affiliation) will
continue to apply unless otherwise provided in the agreement
evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means any one of the following events: (i) when,
any Person is or becomes the beneficial owner (as defined in Section 13(d)
of the Exchange Act and the Rules and Regulations thereunder), together
with all Affiliates and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common Stock of
the Company, or the beneficial owner of 25% or more of the outstanding
common stock of Thermo Electron Corporation ("Thermo Electron"), without
the prior approval of the Prior Directors of the Company or Thermo
Electron, as the case may be, (ii) the failure of the Prior Directors to
constitute a majority of the Board of the Company or of the Board of
Directors of Thermo Electron, as the case may be, at any time within two
years following any Electoral Event, or (iii) any other event that the
Prior Directors shall determine constitutes an effective change in the
control of the Company or Thermo Electron. As used in the preceding
sentence, the following capitalized terms shall have the respective
meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is
defined in Rule 405 under the Securities Act of 1933 and any "group"
(within the meaning of such term in Rule 13d-5 under the Exchange
Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's
or Thermo Electron's Board of Directors, as the case may be,
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immediately prior to any Electoral Event (or, if there has been no
Electoral Event, those persons sitting on the applicable Board of
Directors on the date of this Agreement) and any future director of
the Company or Thermo Electron who has been nominated or elected by a
majority of the Prior Directors who are then members of the Board of
Directors of the Company or Thermo Electron, as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's or Thermo Electron's
Common Stock, not approved by the Prior Directors, by any Person other
than the Company, Thermo Electron or a subsidiary 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.
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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 Nontransferability of Awards
Except as otherwise specifically provided by the Board in the case of
participants who are not reporting persons under Section 16 of the Exchange
Act, 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 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).
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization,
or other distribution with respect to common Stockholders 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) The Board may also make appropriate adjustments to take into
account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions, repurchases or similar
corporate transactions, or any other event, if it is determined by the
Board that adjustments are appropriate to avoid distortion in the operation
of the Plan, but no such adjustments other than those required by law may
adversely affect the rights of any Participant (without the Participant's
consent) under any Award previously granted.
10.7 Employment Rights
Neither the adoption of the Plan nor the grant of Awards will confer
upon any person any right to continued employment with the Company or any
subsidiary or interfere in any way with the right of the Company or
subsidiary to terminate any employment relationship at any time or to
increase or decrease the compensation of such person. Except as
specifically provided by the Board in any particular case, the loss of
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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, unless approved by
the Stockholders, shall be effective if it would cause the Plan to fail to
satisfy the requirements of the federal tax law or regulation relating to
incentive stock options or the requirements of Rule 16b-3 (or any successor
rule) of the Exchange Act. No amendment of the Plan or any agreement
evidencing Awards under the Plan may adversely affect the rights of any
participant under any Award previously granted without such participant's
consent.
<PAGE>
Exhibit 10.69
THERMEDICS DETECTION INC.
EQUITY INCENTIVE PLAN
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to secure
for Thermedics Detection Inc. (the "Company") and its Stockholders the
benefits arising from capital stock ownership by employees, officers and
Directors of, and consultants to, the Company and its subsidiaries or other
persons who are expected to make significant contributions to the future
growth and success of the Company and its subsidiaries. The Plan is
intended to accomplish these goals by enabling the Company to offer such
persons equity-based interests, equity-based incentives or
performance-based stock incentives in the Company, or any combination
thereof ("Awards").
2. Administration
The Plan will be administered by the Board of Directors of the Company
(the "Board"). The Board shall have full power to interpret and administer
the Plan, to prescribe, amend and rescind rules and regulations relating to
the Plan and Awards, and full authority to select the persons to whom
Awards will be granted ("Participants"), determine the type and amount of
Awards to be granted to Participants (including any combination of Awards),
determine the terms and conditions of Awards granted under the Plan
(including terms and conditions relating to events of merger,
consolidation, dissolution and liquidation, change of control, vesting,
forfeiture, restrictions, dividends and interest, if any, on deferred
amounts), waive compliance by a participant with any obligation to be
performed by him or her under an Award, waive any term or condition of an
Award, cancel an existing Award in whole or in part with the consent of a
Participant, grant replacement Awards, accelerate the vesting or lapse of
any restrictions of any Award and adopt the form of instruments evidencing
Awards under the Plan and change such forms from time to time. Any
interpretation by the Board of the terms and provisions of the Plan or any
Award thereunder and the administration thereof, and all action taken by
the Board, shall be final, binding and conclusive on all parties and any
person claiming under or through any party. No Director shall be liable
for any action or determination made in good faith. The Board may, to the
full extent permitted by law, delegate any or all of its responsibilities
under the Plan to a committee (the "Committee") appointed by the Board and
consisting of 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.
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4. Shares Subject to the Plan
Subject to adjustment as provided in Section 10.6, the total number of
shares of the common stock, $.10 par value per share, of the Company (the
"Common Stock"), reserved and available for distribution under the Plan
shall be 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, officers and Directors of, and consultants to, the Company
and its subsidiaries, or other persons who are expected to make significant
contributions to the future growth and success of the Company and its
subsidiaries shall be eligible to receive Awards under the Plan. The
Board, or other appropriate committee or person to the extent permitted
pursuant to the last sentence of Section 2, shall from time to time select
from among such eligible persons those who will receive Awards under the
Plan.
6. Types of Awards
The Board may offer Awards under the Plan in any form of equity-based
interest, equity-based incentive or performance-based stock incentive in
Common Stock of the Company or any combination thereof. The type, terms
and conditions and restrictions of an Award shall be determined by the
Board at the time such Award is made to a Participant; provided however
that the maximum number of shares permitted to be granted under any Award
or combination of Awards to any participant during any one calendar year
may not exceed 1% of the shares of Common Stock outstanding at the
beginning of such calendar year.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board
and shall conform to the general rules applicable under the Plan as well as
any special rules then applicable under federal tax laws or regulations or
the federal securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the following forms
and shall be subject to the following rules and conditions:
6.1 Options
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under
the Plan may be either incentive stock options ("incentive stock options")
that meet the requirements of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), or options that are not intended to meet the
requirements of Section 422A ("non-statutory options").
PAGE
<PAGE>
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 422A of the Code or any
statutory provision that may replace such Section, and any provisions
thereof that cannot be so construed shall be disregarded. Instruments
evidencing incentive stock options must contain such provisions as are
required under applicable provisions of the Code. Incentive stock options
PAGE
<PAGE>
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.
PAGE
<PAGE>
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.
PAGE
<PAGE>
In connection with any Award, the Board may at the time such Award is
made or at a later date, provide for and make a cash payment to the
participant not to exceed an amount equal to (a) the amount of any federal,
state and local income tax or ordinary income for which the Participant
will be liable with respect to the Award, plus (b) an additional amount on
a grossed-up basis necessary to make him or her whole after tax,
discharging all the participant's income tax liabilities arising from all
payments under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the
Plan that were not previously exercisable and vested shall become
fully exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully
vested and all such restrictions shall lapse so that shares issued
pursuant to such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the
passage of time, continued employment or affiliation, will be waived
and removed as to deferred stock Awards and performance Awards.
Performance of other conditions (other than conditions relating solely
to the passage of time, continued employment or affiliation) will
continue to apply unless otherwise provided in the agreement
evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means any one of the following events: (i) when,
any Person is or becomes the beneficial owner (as defined in Section 13(d)
of the Exchange Act and the Rules and Regulations thereunder), together
with all Affiliates and Associates (as such terms are used in Rule 12b-2 of
the General Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common Stock of
the Company or its parent corporation, Thermedics Inc. ("Thermedics"), or
the beneficial owner of 25% or more of the outstanding common stock of
Thermo Electron Corporation ("Thermo Electron"), without the prior approval
of the Prior Directors of the applicable issuer, (ii) the failure of the
Prior Directors to constitute a majority of the Board of Directors of the
Company, Thermedics or Thermo Electron, as the case may be, at any time
within two years following any Electoral Event, or (iii) any other event
that the Prior Directors shall determine constitutes an effective change in
the control of the Company, Thermedics or Thermo Electron. As used in the
preceding sentence, the following capitalized terms shall have the
respective meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is
defined in Rule 405 under the Securities Act of 1933 and any "group"
PAGE
<PAGE>
(within the meaning of such term in Rule 13d-5 under the Exchange
Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's,
Thermedics' or Thermo Electron's Board of Directors, as the case may
be, immediately prior to any Electoral Event (or, if there has been no
Electoral Event, those persons sitting on the applicable Board of
Directors on the date of this Agreement) and any future director of
the Company, Thermedics or Thermo Electron who has been nominated or
elected by a majority of the Prior Directors who are then members of
the Board of Directors of the Company, Thermedics or Thermo Electron,
as the case may be; and
(c) "Electoral Event" shall mean any contested election of Directors,
or any tender or exchange offer for the Company's, Thermedics' or
Thermo Electron's Common Stock, not approved by the Prior Directors,
by any Person other than the Company, Thermedics, Thermo Electron or a
majority-owned subsidiary 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
PAGE
<PAGE>
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 Nontransferability of Awards
Except as otherwise specifically provided by the Board in the case of
participants who are not reporting persons under Section 16 of the Exchange
Act, 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 the laws of descent and distribution, except pursuant to the
terms of a qualified domestic relations order as defined in the Code, 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).
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization,
or other distribution with respect to common Stockholders 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) The Board may also make appropriate adjustments to take into
account material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions, repurchases or similar
corporate transactions, or any other event, if it is determined by the
Board that adjustments are appropriate to avoid distortion in the operation
of the Plan, but no such adjustments other than those required by law may
PAGE
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adversely affect the rights of any Participant (without the Participant's
consent) under any Award previously granted.
10.7 Employment Rights
Neither the adoption of the Plan nor the grant of Awards will confer
upon any person any right to continued employment with the Company or any
subsidiary or interfere in any way with the right of the Company or
subsidiary to terminate any employment relationship at any time or to
increase or decrease the compensation of such person. Except as
specifically provided by the Board in any particular case, the loss of
existing or potential profit in Awards granted under the Plan will not
constitute an element of damages in the event of termination of an
employment relationship even if the termination is in violation of an
obligation of the Company to the employee.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Board at the time. For purposes of this Plan, transfer
of employment between the Company and its subsidiaries shall not be deemed
termination of employment.
10.8 Other Employee Benefits
The value of an Award granted to a Participant who is an employee, and
the amount of any compensation deemed to be received by an employee as a
result of any exercise or purchase of Common Stock pursuant to an Award or
sale of shares received under the Plan, will not constitute "earnings" or
"compensation" with respect to which any other employee benefits of such
employee are determined, including without limitation benefits under any
pension, stock ownership, stock purchase, life insurance, medical, health,
disability or salary continuation plan.
10.9 Legal Holidays
If any day on or before which action under the Plan must be taken
falls on a Saturday, Sunday or legal holiday, such action may be taken on
the next succeeding day not a Saturday, Sunday or legal holiday.
10.10 Foreign Nationals
Without amending the Plan, Awards may be granted to persons who are
foreign nationals or employed outside the United States or both, on such
terms and conditions different from those specified in the Plan, as may, in
the judgment of the Board, be necessary or desirable to further the purpose
of the Plan.
11. Termination and Amendment
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 11, the Board may at
any time or times amend the Plan or any outstanding Award for any purpose
that may at the time be permitted by law, or may at any time terminate the
Plan as to any further grants of Awards. No amendment, unless approved by
the Stockholders, shall be effective if it would cause the Plan to fail to
satisfy the requirements of the federal tax law or regulation relating to
incentive stock options or the requirements of Rule 16b-3 (or any successor
rule) of the Exchange Act. No amendment of the Plan or any agreement
PAGE
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evidencing Awards under the Plan may adversely affect the rights of any
participant under any Award previously granted without such participant's
consent.
<PAGE>
EXHIBIT 11
THERMO INSTRUMENT SYSTEMS INC.
COMPUTATION OF EARNINGS PER SHARE
1994 1993 1992
----------- ----------- -----------
Computation of Fully
Diluted Earnings per Share:
Income:
Net income $60,220,000 $44,764,000 $33,130,000
Add: Convertible obligation
interest, net of tax 6,315,000 4,016,000 3,905,000
----------- ----------- -----------
Income applicable to common
stock assuming full
dilution (a) $66,535,000 $48,780,000 $37,035,000
----------- ----------- -----------
Shares:
Weighted average shares
outstanding 47,025,628 44,909,660 43,261,257
Add: Shares issuable from
assumed conversion of
convertible obligations 9,354,267 6,589,803 6,279,297
Shares issuable from
assumed exercise of
options (as determined
by the application of
the treasury stock method) 218,956 365,345 661,225
----------- ----------- -----------
Weighted average shares
outstanding, as adjusted (b) 56,598,851 51,864,808 50,201,779
----------- ----------- -----------
Fully Diluted Earnings per Share
(a) / (b) $ 1.18 $ .94 $ .74
=========== =========== ===========
<PAGE>
Exhibit 13
Thermo Instrument Systems Inc.
1994 Financial Statements
PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Income
(In thousands except per share amounts) 1994 1993 1992
--------------------------------------------------------------------------
Revenues:
Instruments $649,992 $529,014 $368,289
Services (Note 3) 12,195 55,162 54,910
-------- -------- --------
662,187 584,176 423,199
-------- -------- --------
Costs and Expenses:
Cost of instrument revenues 335,341 269,318 187,543
Cost of service revenues (Note 3) 9,493 42,714 44,136
Selling, general and administrative
expenses (Note 10) 176,467 148,150 106,241
Research and development expenses 42,924 34,510 26,138
-------- -------- --------
564,225 494,692 364,058
-------- -------- --------
Operating Income 97,962 89,484 59,141
Interest Income 5,935 3,644 6,994
Interest Expense (includes $5,384,
$4,327, and $1,415 related to notes
to parent company) (15,761) (14,384) (11,389)
Gain on Issuance of Stock by
Subsidiary (Note 12) 6,469 - -
Gain on Sale of Investments (includes
$2,000 on sale of related party
investments in 1994) (Note 10) 2,000 - 2,072
Equity in Income of Unconsolidated
Subsidiaries, Net (Note 3) 2,889 129 94
Other Income, Net - - 253
-------- -------- --------
Income Before Provision for Income Taxes
and Minority Interest Expense 99,494 78,873 57,165
Provision for Income Taxes (Note 8) 39,162 34,109 24,035
Minority Interest Expense 112 - -
-------- -------- --------
Net Income $ 60,220 $ 44,764 $ 33,130
======== ======== ========
Earnings per Share:
Primary $ 1.28 $ 1.00 $ .77
======== ======== ========
Fully diluted $ 1.18 $ .94 $ .74
======== ======== ========
Weighted Average Shares:
Primary 47,026 44,910 43,261
======== ======== ========
Fully diluted 56,599 51,865 50,202
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Balance Sheet
(In thousands) 1994 1993
---------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 152,933 $ 177,442
Available-for-sale investments, at quoted market
value (amortized cost of $15,385) (includes
$2,904 of related party investments)
(Notes 2 and 10) 15,931 -
Short-term related party investments,
at cost (quoted market value of $9,138) - 6,145
Accounts receivable, less allowances of $8,779
and $8,456 159,615 129,184
Unbilled contract costs and fees 5,903 6,907
Inventories 121,353 97,552
Prepaid expenses 5,388 5,131
Prepaid income taxes (Note 8) 28,533 24,212
---------- ----------
489,656 446,573
---------- ----------
Property, Plant and Equipment, at Cost, Net 126,924 121,287
---------- ----------
Investment in Thermo Terra Tech Joint
Venture (Note 3) 34,265 -
---------- ----------
Patents and Other Assets 22,224 27,820
---------- ----------
Cost in Excess of Net Assets of Acquired
Companies (Note 4) 338,848 295,461
---------- ----------
$1,011,917 $ 891,141
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
3PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Balance Sheet (continued)
(In thousands except share amounts) 1994 1993
--------------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Notes payable (Note 11) $ 45,953 $ 37,516
Accounts payable 38,594 29,658
Accrued payroll and employee benefits 33,085 22,737
Accrued income taxes 29,175 18,653
Accrued installation and warranty expenses 16,545 14,111
Customer deposits 11,115 9,699
Other accrued expenses (Note 4) 70,884 70,079
Due to parent company 13,999 6,067
---------- ----------
259,350 208,520
---------- ----------
Deferred Income Taxes (Note 8) 21,347 19,542
---------- ----------
Other Deferred Items 19,261 18,863
---------- ----------
Long-term Obligations (Note 11):
Senior obligations, including $140,000 due to
parent company 210,000 210,000
Subordinated obligations, including $1,334 and
$2,734 due to parent company 38,196 52,303
Other 15,363 23,858
---------- ----------
263,559 286,161
---------- ----------
Minority Interest 7,637 -
---------- ----------
Commitments and Contingencies (Note 9)
Shareholders' Investment (Notes 5 and 6):
Common stock, $.10 par value, 125,000,000
shares authorized; 48,156,101 and 47,078,660
shares issued 4,816 4,708
Capital in excess of par value 233,765 219,703
Retained earnings 212,584 152,364
Treasury stock at cost, 683,742 and 867,087 shares (12,736) (15,850)
Cumulative translation adjustment 1,991 (2,870)
Net unrealized gain on available-for-sale
investments (Note 2) 343 -
---------- ----------
440,763 358,055
---------- ----------
$1,011,917 $ 891,141
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Cash Flows
(In thousands) 1994 1993 1992
--------------------------------------------------------------------------
Operating Activities:
Net income $ 60,220 $ 44,764 $ 33,130
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 22,810 20,719 13,680
Provision for losses on accounts
receivable 733 970 666
Increase (decrease) in deferred
income taxes 1,816 (497) 7,485
Gain on issuance of stock by
subsidiary (Note 12) (6,469) - -
Gain on sale of investments (2,000) - (2,072)
Equity in income of unconsolidated
subsidiaries, net (Note 3) (2,889) (129) (94)
Other noncash expenses 3,252 3,636 2,352
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (2,586) (27,716) 2,814
Inventories 6,422 6,916 (5,219)
Other current assets (12) 7,482 2,343
Accounts payable 7,745 (11,143) (9,429)
Other current liabilities (8,315) 7,530 (7,304)
Other 28 132 (397)
--------- --------- ---------
Net cash provided by operating
activities 80,755 52,664 37,955
--------- --------- ---------
Investing Activities:
Acquisitions, net of cash acquired
(Note 4) (101,336) (102,048) (205,488)
Sale of Nicolet Biomedical (Note 4) - 67,900 -
Purchases of available-for-sale
investments (23,105) - -
Proceeds from sale and maturities of
available-for-sale investments 16,250 - -
(Increase) decrease in short-term
investments - (60) 64,289
Purchases of property, plant and
equipment (8,190) (9,063) (6,538)
Other 1,214 4,990 (2,513)
--------- --------- ---------
Net cash used in investing
activities (115,167) (38,281) (150,250)
--------- --------- ---------
5PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Cash Flows (continued)
(In thousands) 1994 1993 1992
--------------------------------------------------------------------------
Financing Activities:
Proceeds from issuance of long-term
obligations - 68,727 -
Proceeds from issuance of obligations
to parent company (Note 11) - 229,000 94,913
Repayment and repurchase of long-term
obligations (7,948) (4,482) (11,189)
Repayment of obligations to parent
company - (157,485) (18,786)
Proceeds from issuance of Company and
subsidiary common stock (Note 12) 17,446 2,678 4,432
Purchases of Company common stock - (836) (16,898)
--------- --------- ---------
Net cash provided by financing
activities 9,498 137,602 52,472
--------- --------- ---------
Exchange Rate Effect on Cash 405 (482) (782)
--------- --------- ---------
Increase (Decrease) in Cash and Cash
Equivalents (24,509) 151,503 (60,605)
Cash and Cash Equivalents at Beginning
of Year 177,442 25,939 86,544
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 152,933 $ 177,442 $ 25,939
========= ========= =========
Cash Paid For:
Interest $ 14,782 $ 12,493 $ 13,074
Income taxes $ 24,913 $ 7,607 $ 17,413
Noncash Activities:
Conversions of convertible obligations $ 14,107 $ 37,371 $ 9,635
Transfer of services businesses to
Thermo Terra Tech joint venture $ 31,301 $ - $ -
Fair value of assets of
acquired companies $ 147,696 $ 151,886 $ 327,887
Cash paid for acquired companies (100,855) (102,861) (206,713)
--------- --------- ---------
Liabilities assumed of acquired
companies $ 46,841 $ 49,025 $ 121,174
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
6PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Shareholders' Investment
Net Un-
realized
Gain on
Common Avail-
Stock, Capital in Cumulative able-for-
(In thou- $.10 Par Excess of Retained Treasury Translation sale In-
sands) Value Par Value Earnings Stock Adjustment vestments
--------------------------------------------------------------------------
Balance
December
28, 1991 $ 2,879 $168,749 $ 76,957 $ (36) $ 2,405 $ -
Net income - - 33,130 - - -
Purchases of
Company
common
stock - - - (16,898) - -
Issuance of
stock under
employees'
and directors'
stock plans 36 2,958 - (193) - -
Tax benefit
related to
employees'
and directors'
stock plans - 1,631 - - - -
Conversions of
convertible
obligations 59 9,250 - - - -
Effect of
purchase
of Nicolet
shares from
parent
company
(Note 4) - - (3,730) - - -
Cumulative
translation
adjustment - - - - (4,474) -
--------- --------- --------- -------- -------- --------
Balance
January 2,
1993 2,974 182,588 106,357 (17,127) (2,069) -
7PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Shareholders' Investment (continued)
Net Un-
realized
Gain on
Common Avail-
Stock, Capital in Cumulative able-for-
(In thou- $.10 Par Excess of Retained Treasury Translation sale In-
sands) Value Par Value Earnings Stock Adjustment vestments
--------------------------------------------------------------------------
Net income - - 44,764 - - -
Purchases of
Company
common
stock - - - (887) - -
Issuance of
stock under
employees'
and directors'
stock plans 16 498 - 2,164 - -
Tax benefit
related to
employees'
and directors'
stock plans - 1,815 - - - -
Conversions of
convertible
obligations 189 36,331 - - - -
Effect of
three-for-
two stock
split 1,529 (1,529) - - - -
Effect of sale
of Nicolet
Biomedical
(Note 4) - - 1,243 - - -
Cumulative
translation
adjustment - - - - (801) -
-------- -------- -------- -------- -------- --------
Balance
January 1,
1994 4,708 219,703 152,364 (15,850) (2,870) -
8PAGE
<PAGE>
Thermo Instrument Systems Inc.
Consolidated Statement of Shareholders' Investment (continued)
Net Un-
realized
Gain on
Common Avail-
Stock, Capital in Cumulative able-for-
(In thou- $.10 Par Excess of Retained Treasury Translation sale In-
sands) Value Par Value Earnings Stock Adjustment vestments
---------------------------------------------------------------------------
Net income - - 60,220 - - -
Issuance of
stock under
employees'
and directors'
stock plans 4 (785) - 3,114 - -
Tax benefit
related to
employees'
and directors'
stock plans - 1,120 - - - -
Conversions of
convertible
obligations 104 13,727 - - - -
Effect of change
in accounting
principle
(Note 2) - - - - - 1,885
Change in net
unrealized loss
on available-
for-sale
investments
(Note 2) - - - - - (1,542)
Cumulative
translation
adjustment - - - - 4,861 -
-------- -------- -------- -------- -------- --------
Balance
December 31,
1994 $ 4,816 $233,765 $212,584 $(12,736) $ 1,991 $ 343
======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
9PAGE
<PAGE>
Thermo Instrument Systems Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Relationship with Thermo Electron Corporation
Thermo Instrument Systems Inc. (the Company) was incorporated on May 28,
1986, as a wholly owned subsidiary of Thermo Electron Corporation (Thermo
Electron). As of December 31, 1994, Thermo Electron owned 39,634,271 shares
of the Company's common stock, representing 83% of such stock outstanding.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company,
its wholly owned subsidiaries, and its 86%-owned subsidiary, ThermoSpectra
Corporation (ThermoSpectra). All material intercompany accounts and
transactions have been eliminated. The Company accounts for investments in
businesses in which it owns between 20% and 50% using the equity method
(Note 3).
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 1994, 1993, and 1992 are for the fiscal years ended
December 31, 1994, January 1, 1994, and January 2, 1993, respectively.
Fiscal years 1994 and 1993 each included 52 weeks; 1992 included 53 weeks.
Revenue Recognition
For substantially all of its operations, the Company recognizes revenues
upon shipment of its products. The Company provides a reserve for its
estimate of warranty and installation costs at the time of shipment.
Revenues and profits on substantially all contracts are recognized using
the percentage-of-completion method. Revenues recorded under the
percentage-of-completion method were $15,421,000 in 1994, $23,218,000 in
1993, and $27,448,000 in 1992. Revenues earned on contracts in process in
excess of billings are classified as "Unbilled contract costs and fees" in
the accompanying balance sheet. There are no significant amounts included
in the accompanying balance sheet that are not expected to be recovered
from existing contracts at current contract values, or that are not
expected to be collected within one year, including amounts that are billed
but not paid under retainage provisions.
Gain on Issuance of Stock by Subsidiary
At the time a subsidiary sells its stock to third parties at a price in
excess of its book value, the Company's net investment in that subsidiary
increases. If at that time the subsidiary is an operating entity and not
engaged principally in research and development, the Company records the
increase as a gain.
If gains have been recognized on issuances of a subsidiary's stock and
shares of the subsidiary are subsequently repurchased either by the
subsidiary, the Company, or Thermo Electron, gain recognition does not
occur on issuances subsequent to the date of a repurchase until such time
as shares have been issued in an amount equivalent to the number of
repurchased shares.
Income Taxes
The Company and Thermo Electron have a tax allocation agreement under which
the Company is included in the consolidated federal and state income tax
returns filed by Thermo Electron. The agreement provides that in years in
which the Company has taxable income, it will pay to Thermo Electron
10PAGE
<PAGE>
Thermo Instrument Systems Inc.
amounts comparable to the taxes the Company would have paid if it had filed
separate tax returns. In years in which the Company incurs a loss, Thermo
Electron will reimburse the Company the amount the Company would have
received if it had filed separate tax returns. If Thermo Electron's equity
ownership of the Company were to drop below 80%, the Company would be
required to file its own income tax returns. As of December 31, 1994, the
Company owed $11,275,000 to Thermo Electron for estimated federal and state
income tax payments. This amount is included in "Accrued income taxes" in
the accompanying 1994 balance sheet.
In accordance with Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," the Company recognizes deferred income
taxes based on the expected future tax consequences of differences between
the financial statement basis and the tax basis of assets and liabilities,
calculated using enacted tax rates in effect for the year in which the
differences are expected to be reflected in the tax return.
Earnings per Share
Primary earnings per share have been computed based on the weighted average
number of shares outstanding during the year. Because the effect of the
exercise of stock options would be immaterial, they have been excluded from
the primary earnings per share calculation. Fully diluted earnings per
share assumes the exercise of stock options and conversion of the Company's
dilutive convertible obligations and elimination of the related interest
expense.
Stock Split
All share and per share information was restated in 1993 to reflect a
three-for-two stock split, effected in the form of a 50% stock dividend,
which was distributed in July 1993.
Cash and Cash Equivalents
As of December 31, 1994, $65,955,000 of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Company in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralizes with investments principally
consisting of corporate notes, U.S. government agency securities, money
market funds, commercial paper, and other marketable securities, in the
amount of at least 103% of such obligation. The Company's funds subject to
the repurchase agreement are readily convertible into cash by the Company
and have an original maturity of three months or less. The repurchase
agreement earns a rate based on the Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter. As of December 31,
1994, the Company's cash equivalents also include investments in short-term
certificates of deposit of the Company's foreign subsidiaries, which have
an original maturity of three months or less. Cash and cash equivalents are
carried at cost, which equals fair market value at year-end 1994 and 1993.
Available-for-sale Investments
Pursuant to SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," effective January 2, 1994, the Company's debt and
marketable equity securities are accounted for at market value (Note 2).
Prior to 1994, these investments were carried at the lower of cost or
market value. The fair market value of investments is determined based on
quoted market prices for those investments.
11PAGE
<PAGE>
Thermo Instrument Systems Inc.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out or
weighted average basis) or market value and include materials, labor, and
manufacturing overhead. The components of inventories are as follows:
(In thousands) 1994 1993
--------------------------------------------------------------------------
Raw materials and supplies $ 65,441 $ 53,322
Work in process 27,879 22,356
Finished goods 28,033 21,874
-------- --------
$121,353 $ 97,552
======== ========
Property, Plant and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the
estimated useful lives of the property as follows: buildings -- 20 to 40
years, machinery and equipment -- 3 to 10 years, and leasehold improvements
-- the shorter of the term of the lease or the life of the asset. Property,
plant and equipment consist of the following:
(In thousands) 1994 1993
--------------------------------------------------------------------------
Land $ 23,374 $ 22,015
Buildings 76,789 69,302
Machinery, equipment and leasehold improvements 70,744 69,155
-------- --------
170,907 160,472
Less: Accumulated depreciation and amortization 43,983 39,185
-------- --------
$126,924 $121,287
======== ========
Patents and Other Assets
"Patents and other assets" in the accompanying balance sheet includes the
costs of acquired trademarks, patents, and other specifically identifiable
intangible assets. These assets are amortized using the straight-line
method over their estimated useful lives, which range from 4 to 15 years.
These assets were $17,032,000 and $18,056,000, net of accumulated
amortization of $10,501,000 and $7,937,000, at year-end 1994 and 1993,
respectively.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired businesses
is amortized using the straight-line method over 40 years. Accumulated
amortization was $28,245,000 and $19,780,000 at year-end 1994 and 1993,
respectively. The Company assesses the future useful life of this asset
whenever events or changes in circumstances indicate that the current
useful life has diminished. The Company considers the future undiscounted
cash flows of the acquired businesses in assessing the recoverability of
this asset.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are
translated at average exchange rates for the year in accordance with SFAS
12PAGE
<PAGE>
Thermo Instrument Systems Inc.
No. 52, "Foreign Currency Translation." Resulting translation adjustments
are reflected as a separate component of shareholders' investment titled
"Cumulative translation adjustment." Foreign currency transaction gains and
losses are included in the accompanying statement of income and are not
material for the three years presented.
Presentation
Certain amounts in 1993 and 1992 have been reclassified to conform to the
1994 financial statement presentation.
2. Available-for-sale Investments
Effective January 2, 1994, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." In accordance with
SFAS No. 115, the Company's debt and marketable equity securities are
considered "Available-for-sale investments" in the accompanying balance
sheet and are carried at market value, with the difference between cost and
market value, net of related tax effects, recorded currently as a component
of shareholders' investment titled "Net unrealized gain on available-for-
sale investments." "Effect of change in accounting principle" in the
accompanying statement of shareholders' investment represents the
unrealized gain, net of related tax effects, pertaining to available-
for-sale investments held by the Company on January 2, 1994.
Available-for-sale investments in the accompanying 1994 balance sheet
represent investments in corporate bonds of $13,027,000 with contractual
maturities of one year or less and $2,904,000 with contractual maturities
of more than one year through five years. Actual maturities may differ from
contractual maturities as a result of the Company's intent to sell these
securities prior to maturity and as a result of put and call options that
enable either the Company and/or the issuer to redeem these securities at
an earlier date. The difference between the market value and the cost basis
of available-for-sale investments at December 31, 1994, was $546,000, which
represents gross unrealized gains of $607,000 and gross unrealized losses
of $61,000 on those investments.
The cost of available-for-sale investments that were sold was based on
specific identification in determining realized gains recorded in the
accompanying statement of income. Gain on sale of investments in 1994
resulted from gross realized gains relating to the sale of available-for-
sale investments.
3. Joint Venture
Effective April 4, 1994, the Company formed an environmental services joint
venture with Thermo Process Systems Inc. (Thermo Process), another public
subsidiary of Thermo Electron. The joint venture operates under the name
Thermo Terra Tech. The Company contributed the analytical laboratories and
the nuclear health physics and environmental science and engineering
services businesses that comprised its Services segment. Thermo Process
contributed its environmental laboratory business, which specializes in
fast-response testing of petroleum-contaminated soils and groundwater, and
approximately $31 million in cash and short-term investments.
The Company owns 49% of Thermo Terra Tech and accounts for its interest in
the joint venture using the equity method. Under the terms of the joint
13PAGE
<PAGE>
Thermo Instrument Systems Inc.
venture agreement, 66.67% of income earned by the joint venture after April
4, 1994, will be allocated to the Company until the first to occur of (a)
the joint venture has accumulated $5.1 million in net profits, (b) April 1,
1995, or (c) the date on which at least 70% of Thermo Process' cash
contribution to the joint venture is first invested in one or more
additional businesses. Thereafter, the Company's share of the joint
venture's income will be 49%. The Company recorded $2,965,000 of income in
1994 related to its investment in Thermo Terra Tech, which is included in
"Equity in income of unconsolidated subsidiaries, net" in the accompanying
statement of income.
4. Acquisitions and Disposition
In March 1994, the Company acquired several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes Incorporated
(Baker Hughes) for a purchase price of $89.7 million in cash. The Company
acquired the EnviroTech Controls, NORAN Instruments (NORAN), TN
Technologies, and Tremetrics businesses, which collectively design,
manufacture, and market a variety of process control, process measurement,
and laboratory analytical products for use in a wide range of industrial,
energy, environmental, and research applications. The Company contributed
the assets acquired and liabilities assumed from NORAN to the Company's
ThermoSpectra subsidiary. During 1994, the Company made several other
acquisitions for an aggregate $11.2 million in cash.
In February 1993, the Company acquired Spectra-Physics Analytical, a
manufacturer of liquid chromatography and capillary electrophoresis
analytical instruments, for $67.3 million in cash. The Company funded the
acquisition of Spectra-Physics Analytical through the issuance of a $69
million promissory note to Thermo Electron that was repaid in May 1993.
During 1993, the Company made several other acquisitions for an aggregate
$35.6 million in cash. The Company funded these acquisitions through the
issuance of a $20 million promissory note to Thermo Electron that was
repaid in 1993, and through short-term borrowings from Thermo Electron.
These acquisitions have been accounted for using the purchase method of
accounting, and their results of operations have been included in the
accompanying financial statements from their respective dates of
acquisition. The aggregate cost of these acquisitions exceeded the
estimated fair value of the acquired net assets by approximately $111
million, which is being amortized over 40 years. Allocation of the purchase
price for these acquisitions was based on estimates of the fair value of
the net assets acquired and, for acquisitions completed in fiscal 1994, is
subject to adjustment.
Effective April 5, 1993, the Company sold the biomedical instruments
products business of its Nicolet Instrument Corporation subsidiary (Nicolet
Biomedical) to Thermo Electron for $67.9 million in cash. The results of
operations of Nicolet Biomedical have been excluded from the accompanying
financial statements as of April 5, 1993.
Based on unaudited data, the following table presents selected financial
information for the Company (excluding Nicolet Biomedical), the EnviroTech
Measurements & Controls group of Baker Hughes, and Spectra-Physics
Analytical on a pro forma basis, assuming the companies had been combined
since the beginning of 1993. The effect on the Company's financial
14PAGE
<PAGE>
Thermo Instrument Systems Inc.
statements of the acquisitions not included in the pro forma data was not
significant.
(In thousands except per share amounts) 1994 1993
--------------------------------------------------------------------------
Revenues $683,871 $720,633
Net income 58,413 33,367
Earnings per share:
Primary 1.24 .74
Fully diluted 1.14 .72
The pro forma information includes the historical results for the
environmental services businesses that comprised the Company's Services
segment (Note 3). The pro forma results are not necessarily indicative of
future operations or the actual results that would have occurred had the
acquisitions been made at the beginning of 1993.
"Effect of purchase of Nicolet shares from parent company" in the
accompanying statement of shareholders' investment represents the
difference between the purchase price of Nicolet Instrument Corporation
(Nicolet) shares that were acquired by Thermo Electron in the open market
prior to the Company's tender offer of Nicolet in 1992 and the cash tender
offer price. Due to the related party nature of this purchase from Thermo
Electron, the excess of the purchase price paid by the Company over the
original purchase price paid by Thermo Electron was reflected as a
reduction in retained earnings. "Effect of sale of Nicolet Biomedical" in
the accompanying statement of shareholders' investment represents the
portion that relates to Nicolet Biomedical.
"Other accrued expenses" in the accompanying balance sheet includes
approximately $17 million and $25 million at year-end 1994 and 1993,
respectively, for estimated severance, relocation, and other reserves
associated with acquisitions.
5. Stock-based Compensation Plans
The Company has stock-based compensation plans for its key employees,
directors, and others. Two of these plans, adopted in 1986, permit the
grant of nonqualified and incentive stock options. A third plan, adopted in
1993, permits the grant of a variety of stock and stock-based awards as
determined by the human resources committee of the Company's Board of
Directors (the Board Committee), including restricted stock, stock options,
stock bonus shares, or performance-based shares. To date, only nonqualified
stock options have been awarded under these plans. The option recipients
and the terms of options granted under these plans are determined by the
Board Committee. Generally, options granted to date are exercisable
immediately, but are subject to certain transfer restrictions and the right
of the Company to repurchase shares issued upon exercise of the options at
the exercise price, upon certain events. The restrictions and repurchase
rights generally lapse ratably over periods ranging from four to ten years
after the first anniversary of the grant date, depending on the term of the
option, which may range from five to twelve years. Nonqualified stock
options may be granted at any price determined by the Board Committee,
although incentive stock options must be granted at not less than fair
market value of the Company's stock on the date of grant. Generally, all
options have been granted at fair market value. The Company also has a
directors' stock option plan, adopted in 1991, that provides for the grant
15PAGE
<PAGE>
Thermo Instrument Systems Inc.
of stock options to nonemployee directors pursuant to a formula approved by
the Company's shareholders. Options awarded under this plan are exercisable
six months after the date of grant and expire three or seven years after
the date of grant. In addition to the Company's stock-based compensation
plans, certain officers and key employees may also participate in the
stock-based compensation plans of Thermo Electron or its majority-owned
subsidiaries.
No accounting recognition is given to options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax
benefits realized, are credited to equity. A summary of the Company's stock
option information is as follows:
1994 1993 1992
------------------ ------------------ ------------------
Range of Range of Range of
(In thousands Number Option Number Option Number Option
except per of Prices of Prices of Prices
share amounts) Shares per Share Shares per Share Shares per Share
--------------------------------------------------------------------------
Options out-
standing,
beginning
of year 1,894 $ 5.35-$33.80 1,067 $ 3.33-$23.30 1,498 $ 3.33-$16.42
Granted 397 28.28- 31.08 1,185 23.70- 33.80 216 15.25- 23.30
Exercised (188) 5.35- 23.70 (295) 3.33- 16.99 (591) 3.33- 15.32
Lapsed or
cancelled (77) 5.35- 31.28 (63) 5.35- 23.70 (56) 5.35- 16.99
----- ----- -----
Options out-
standing, end
of year 2,026 $ 6.17-$33.80 1,894 $ 5.35-$33.80 1,067 $ 3.33-$23.30
===== ===== =====
Options
exercisable 2,022 $ 6.17-$33.80 1,889 $ 5.35-$31.28 1,020 $ 3.33-$16.89
===== ===== =====
Options avail-
able for grant 835 1,155 135
===== ===== =====
6. Common Stock
At December 31, 1994, the Company had reserved 12,341,714 unissued shares
of its common stock for possible issuance under stock-based compensation
plans and for issuance upon possible conversion of the Company's
convertible obligations.
7. Employee Benefit Plans
Employee Stock Purchase Plan
Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase plan sponsored by the Company.
Under this plan, shares of the Company's and Thermo Electron's common stock
may be purchased at the end of a 12-month plan year at 85% of the fair
market value at the beginning of the plan year, and the shares purchased
are subject to a one-year resale restriction. Shares are purchased through
payroll deductions of up to 10% of each participating employee's gross
16PAGE
<PAGE>
Thermo Instrument Systems Inc.
wages. During 1994, 1993, and 1992, the Company issued 51,800 shares,
101,273 shares, and 66,426 shares of its common stock, respectively, under
this plan.
401(k) Savings Plan and Employee Stock Ownership Plan
The majority of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan and employee stock
ownership plan. Contributions to the 401(k) savings plan are made by both
the employee and the Company. Company contributions are based upon the
level of employee contributions. For these plans, the Company contributed
and charged to expense $2,774,000, $2,239,000, and $1,728,000 in 1994,
1993, and 1992, respectively.
Postemployment Benefits
The Company provides certain postemployment benefits to former or inactive
employees. Effective January 2 1994, the Company adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." SFAS No. 112 requires
the recognition of the cost of postemployment benefits if certain criteria
are met and the amount of benefits can be reasonably estimated. The
adoption of this statement did not have a material impact on the Company's
financial statements.
8. Income Taxes
The components of income before provision for income taxes and minority
interest expense are as follows:
(In thousands) 1994 1993 1992
-------------------------------------------------------------------------
Domestic $81,454 $61,254 $49,225
Foreign 18,040 17,619 7,940
------- ------- -------
$99,494 $78,873 $57,165
======= ======= =======
The components of the provision for income taxes are as follows:
(In thousands) 1994 1993 1992
------------------------------------------------------------------------
Currently payable:
Federal $18,076 $14,196 $10,625
State 5,936 4,008 3,028
Foreign 7,977 6,909 3,791
------- ------- -------
31,989 25,113 17,444
------- ------- -------
Net deferred (prepaid):
Federal 6,219 6,691 5,694
State 1,292 1,147 (292)
Foreign (338) 1,158 1,189
------- ------- -------
7,173 8,996 6,591
------- ------- -------
$39,162 $34,109 $24,035
======= ======= =======
17PAGE
<PAGE>
Thermo Instrument Systems Inc.
The provision for income taxes that is currently payable does not reflect
$1,120,000, $1,815,000, and $1,631,000 of tax benefits allocated to
"Capital in excess of par value" in 1994, 1993, and 1992, respectively, or
$1,150,000 and $3,060,000 of tax benefits used to reduce "Cost in excess of
net assets of acquired companies" in 1993 and 1992, respectively.
"Provision for income taxes" in the accompanying statement of income
differs from the provision calculated by applying the statutory federal
income tax rate of 35% in 1994 and 1993 and 34% in 1992 to income before
provision for income taxes and minority interest expense due to the
following:
(In thousands) 1994 1993 1992
-------------------------------------------------------------------------
Provision for income taxes at statutory rate $34,823 $27,606 $19,436
Increases (decreases) resulting from:
State income taxes, net of federal tax 4,698 3,351 1,806
Net foreign losses not benefited and tax
rate differential 817 1,330 2,223
Tax benefit of foreign sales corporation (1,602) (1,134) (988)
Amortization of cost in excess of net
assets of acquired companies 2,135 2,338 1,139
Gain on issuance of stock by subsidiary (2,264) - -
Nondeductible expenses 427 585 159
Other, net 128 33 260
------- ------- -------
$39,162 $34,109 $24,035
======= ======= =======
"Deferred income taxes" and "Prepaid income taxes" in the accompanying
balance sheet consist of the following:
(In thousands) 1994 1993
---------------------------------------------------------------
Deferred income taxes:
Depreciation $13,321 $14,116
Intangible assets 5,490 4,402
Other 2,536 1,024
------- -------
$21,347 $19,542
======= =======
Prepaid income taxes:
Reserves and other accruals $10,588 $12,497
Inventory basis difference 10,412 6,462
Accrued compensation 4,460 3,956
Allowance for doubtful accounts 3,399 2,660
Net operating loss and tax
credit carryforwards 2,377 2,262
Other, net 1,078 41
------- -------
32,314 27,878
Less: Valuation allowance 3,781 3,666
------- -------
$28,533 $24,212
======= =======
The year-end 1994 valuation allowance reserves for the uncertainty
surrounding the realization of $1,406,000 of certain state tax-deferred
18PAGE
<PAGE>
Thermo Instrument Systems Inc.
assets and $2,375,000 for federal net operating loss and tax credit
carryforwards, the realization of which is limited to the future income of
certain subsidiaries. The net operating loss and tax credit carryforwards
expire in the years 2002 through 2005, and the resulting benefit will be
used to reduce "Cost in excess of net assets of acquired companies."
A provision has not been made for U.S. or additional foreign taxes on $39
million of undistributed earnings of foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company plans to
keep these amounts permanently reinvested overseas. The Company believes
that any additional U.S. tax liability due upon remittance of such earnings
would be immaterial due to available U.S. foreign tax credits.
9. Commitments and Contingencies
Operating Leases
The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $9,028,000, $8,172,000, and
$5,893,000 in 1994, 1993, and 1992, respectively. Future minimum payments
due under noncancellable operating leases at December 31, 1994, are
$7,791,000 in 1995; $6,136,000 in 1996; $4,581,000 in 1997; $3,668,000 in
1998; $2,673,000 in 1999; and $10,159,000 in 2000 and thereafter. Total
future minimum lease payments are $35,008,000.
Litigation
The Company is contingently liable with respect to lawsuits and other
matters that arose in the ordinary course of business. In the opinion of
management, these contingencies will not have a material effect upon the
financial position of the Company or its results of operations.
10. Related Party Transactions
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management,
certain employee benefit administration, tax advice and preparation of tax
returns, centralized cash management, and certain financial and other
services, for which the Company paid Thermo Electron annually an amount
equal to 1.25% of the Company's revenues in fiscal 1994 and 1993. Prior to
1993, the Company paid an annual fee equal to 1% of the Company's revenues.
Beginning in fiscal 1995, the Company will pay an annual fee equal to 1.20%
of the Company's revenues. The annual fee is reviewed and adjusted annually
by mutual agreement of the parties. For these services, the Company was
charged $8,277,000, $7,302,000, and $4,232,000 in 1994, 1993, and 1992,
respectively. Management believes that the service fee charged by Thermo
Electron is reasonable and that such fees are representative of the
expenses the Company would have incurred on a stand-alone basis. The
corporate services agreement is renewed annually but can be terminated upon
30 days' prior notice by the Company or upon the Company's withdrawal from
the Thermo Electron Corporate Charter (the Thermo Electron Corporate
Charter defines the relationship among Thermo Electron and its
majority-owned subsidiaries). For additional items such as employee benefit
plans, insurance coverage, and other identifiable costs, Thermo Electron
charges the Company based upon costs attributable to the Company.
19PAGE
<PAGE>
Thermo Instrument Systems Inc.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
Short-term Investments
At December 31, 1994, the Company's available-for-sale investments included
$2,904,000 (amortized cost of $2,298,000) of 6 1/2% subordinated
convertible debentures due 1998, which were purchased on the open market
for $2,297,000. The debentures have a par value of $2,323,000 and were
issued by Thermedics Inc. (Thermedics), which is a majority-owned
subsidiary of Thermo Electron, and are guaranteed on a subordinated basis
by Thermo Electron. During 1994, the Company sold $4,000,000 par value of
the Thermedics debentures for net proceeds of $5,890,000, which resulted in
a gain of $2,000,000.
Long-term Obligations
See Note 11 for long-term obligations of the Company held by Thermo
Electron.
11. Short- and Long-term Obligations
Short-term Obligations
"Notes payable" in the accompanying balance sheet represent bank borrowings
at several of the Company's foreign subsidiaries. The weighted average
interest rate for these borrowings was 5.83% and 6.53% at year-end 1994 and
1993, respectively.
Long-term Obligations
Long-term obligations of the Company are as follows:
(In thousands except per share amounts) 1994 1993
- ---------------------------------------------------------------------------
3 3/4% Senior convertible note, due 2000,
convertible at $31.75 per share (a) $140,000 $140,000
3 3/4% Senior convertible debentures, due 2000,
convertible at $31.75 per share (b) 70,000 70,000
7% Subordinated convertible note, due 1996,
convertible at $4.44 per share (a) 1,334 2,734
6 5/8% Subordinated convertible debentures, due 2001,
convertible at $17.58 per share (c) 36,862 49,569
10.23% Mortgage loan secured by property with a net
book value of $16,564, payable in monthly
installments with final payment in 2004 10,855 11,536
8 5/8% Note, payable in semi-annual installments,
due 1999 - 8,000
Other 6,276 11,176
-------- --------
265,327 293,015
Less: Current maturities of long-term obligations 1,768 6,854
-------- --------
$263,559 $286,161
======== ========
(a) Represents an obligation to Thermo Electron.
(b) Guaranteed on a senior basis by Thermo Electron.
(c) Guaranteed on a subordinated basis by Thermo Electron.
20PAGE
<PAGE>
Thermo Instrument Systems Inc.
In lieu of issuing shares of the Company's common stock upon conversion of
the 3 3/4% senior convertible debentures due 2000, the Company has the
option to pay holders of the debentures cash equal to the weighted average
market price of the Company's common stock on the trading date prior to
conversion.
During 1994, 1993, and 1992, convertible obligations of $14,107,000,
$37,371,000, and $9,635,000, respectively, were converted into common stock
of the Company.
The annual requirements for long-term obligations are as follows:
(In thousands)
--------------------------------------------------------------------------
1995 $ 1,768
1996 2,576
1997 1,337
1998 1,429
1999 1,356
2000 and thereafter 256,861
--------
$265,327
========
Based on quoted market prices and on borrowing rates currently available to
the Company for debt of the same remaining maturities, the fair market
value of the Company's long-term obligations at December 31, 1994 and
January 1, 1994 was approximately $320 million and $389 million,
respectively.
12. Transactions in Stock of Subsidiary
In 1994, the Company's ThermoSpectra subsidiary sold 1,505,000 shares of
its common stock in private placements at $10.00 per share. Net proceeds
from the private placements were $13,993,000, resulting in a gain of
$6,469,000. At year-end 1994, the Company owned 86% of ThermoSpectra's
outstanding common stock.
21PAGE
<PAGE>
Thermo Instrument Systems Inc.
13. Industry Segment and Geographical Data
--------------------------------------------------------------------------
The Company's principal business consists of developing, manufacturing, and
marketing analytical and environmental monitoring instruments. Prior to
April 4, 1994, the Company also provided environmental services including
laboratory-based testing, nuclear health physics, and environmental science
and engineering services. These services are now being provided by the
Thermo Terra Tech joint venture in which the Company has a 49% equity
interest (Note 3). Financial information pertaining to these segments is
set forth in the following table:
(In thousands) 1994 1993 1992
-------------------------------------------------------------------------
Revenues:
Instruments $ 650,114 $ 529,279 $ 368,533
Services 12,195 55,162 54,910
Intersegment sales elimination (a) (122) (265) (244)
---------- ---------- ----------
$ 662,187 $ 584,176 $ 423,199
========== ========== ==========
Operating income:
Instruments $ 107,400 $ 92,466 $ 60,089
Services 801 4,321 3,284
Corporate (b) (10,239) (7,303) (4,232)
---------- ---------- ----------
$ 97,962 $ 89,484 $ 59,141
========== ========== ==========
Identifiable assets:
Instruments $ 841,859 $ 679,151 $ 619,865
Services - 40,444 40,013
Corporate (c) 170,058 171,546 26,547
---------- ---------- ----------
$1,011,917 $ 891,141 $ 686,425
========== ========== ==========
Depreciation and amortization:
Instruments $ 22,070 $ 18,741 $ 11,588
Services 740 1,978 2,092
---------- ---------- ----------
$ 22,810 $ 20,719 $ 13,680
========== ========== ==========
Capital expenditures:
Instruments $ 7,400 $ 6,747 $ 4,901
Services 790 2,316 1,637
---------- ---------- ----------
$ 8,190 $ 9,063 $ 6,538
========== ========== ==========
Export revenues included above (d):
Europe $ 70,903 $ 72,161 $ 47,585
Other 82,661 63,327 40,466
---------- ---------- ----------
$ 153,564 $ 135,488 $ 88,051
========== ========== ==========
22PAGE
<PAGE>
Thermo Instrument Systems Inc.
(In thousands) 1994 1993 1992
-------------------------------------------------------------------------
Foreign operations included above:
Revenues:
Germany $ 77,535 $ 57,507 $ 49,109
Other Europe 85,980 59,110 41,891
Other 36,922 29,391 17,723
---------- ---------- ----------
$ 200,437 $ 146,008 $ 108,723
========== ========== ==========
Operating income:
Germany $ 3,168 $ 4,116 $ 3,363
Other Europe 10,502 7,572 4,246
Other 7,672 6,317 260
---------- ---------- ----------
$ 21,342 $ 18,005 $ 7,869
========== ========== ==========
Identifiable assets:
Germany $ 114,536 $ 100,042 $ 73,665
Other Europe 100,548 81,068 58,772
Other 37,947 32,807 30,334
---------- ---------- ----------
$ 253,031 $ 213,917 $ 162,771
========== ========== ==========
(a) Intersegment sales are accounted for at prices that are representative
of transactions with unaffiliated parties.
(b) Primarily corporate general and administrative expenses.
(c) Primarily cash, cash equivalents, short-term investments, and the
Company's investment in the Thermo Terra Tech joint venture.
(d) In general, export sales are denominated in U.S. dollars.
14. Subsequent Events
Potential Acquisition
On March 1, 1995, the Company entered into an Asset and Stock Purchase
Agreement (the Agreement) with Fisons plc (Fisons) under which the Company
agreed to acquire the Scientific Instruments Division (the Division) of
Fisons for 202 million British pounds sterling. The Division is principally
composed of operations that are involved in the research, development,
manufacture, and sale of analytical instruments to industrial and research
laboratories worldwide. For the fiscal year ended December 31, 1994, the
Division had unaudited revenues of approximately 262 million British pounds
sterling and an unaudited net loss of approximately 19 million British
pounds sterling. Consummation of the acquisition is subject to several
conditions, including approval by Fisons shareholders, regulatory
approvals, consent of certain third parties, and customary conditions to
closing. The Company intends to fund the purchase price from available cash
and through borrowings from Thermo Electron. Thermo Electron has guaranteed
the obligations of the Company under the Agreement. The purchase price is
subject to a post-closing adjustment based on the net asset value of the
Division as of the closing date.
23PAGE
<PAGE>
Thermo Instrument Systems Inc.
Stock Split
In February 1995, the Company declared a three-for-two stock split in the
form of a 50% stock dividend, payable on April 14, 1995, to shareholders of
record as of March 31, 1995. Common shares outstanding as of December 31,
1994, on a pro forma basis to reflect the stock split would have been
71,208,539 shares. The following table presents other selected financial
data on a pro forma basis to reflect the stock split.
(In thousands except per share amounts) 1994 1993 1992
------------------------------------------------------------------------
Earnings per share:
Primary $.85 $.66 $.51
Fully diluted $.78 $.63 $.49
Weighted average shares:
Primary 70,538 67,364 64,892
Fully diluted 84,898 77,797 75,303
Financial results for 1994 and prior periods will be restated in the first
quarter of 1995 to reflect the stock split.
24PAGE
<PAGE>
Report of Independent Public Accountants
--------------------------------------------------------------------------
To the Shareholders and Board of Directors
of Thermo Instrument Systems Inc.:
We have audited the accompanying consolidated balance sheets of Thermo
Instrument Systems Inc. (a Delaware corporation and 83%-owned subsidiary of
Thermo Electron Corporation) and subsidiaries as of December 31, 1994 and
January 1, 1994, and the related consolidated statements of income,
shareholders' investment, and cash flows for each of the three years in the
period ended December 31, 1994. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
Instrument Systems Inc. and subsidiaries as of December 31, 1994 and
January 1, 1994, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, effective
January 2, 1994, the Company changed its method of accounting for
investments in debt and marketable equity securities.
Arthur Andersen LLP
Boston, Massachusetts
February 10, 1995
(Except with respect to the matters discussed
in Note 14 as to which the date is March 1, 1995)
25PAGE
<PAGE>
Thermo Instrument Systems Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
--------------------------------------------------------------------------
Results of Operations
The Company's revenues were $662.2 million in 1994, compared with $584.2
million in 1993 and $423.2 million in 1992. Instruments segment revenues
increased 23% to $650.1 million in 1994, compared with the 44% increase
reported in 1993. The increase was due to acquisitions, which added
revenues of approximately $125 million in 1994 and $147 million in 1993.
The Company's acquisitions included several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes Incorporated
(Baker Hughes) in March 1994, the radiation safety measurement products and
radiometry process control divisions of FAG Kugelfischer Georg Shafer AG in
October 1993, Spectra-Physics Analytical in February 1993, and
Gamma-Metrics in January 1993. The 1993 and 1992 results included $12.6
million and $20.2 million, respectively, in revenues from the biomedical
instruments products business of the Company's Nicolet Instrument
Corporation subsidiary (Nicolet Biomedical), which was sold to Thermo
Electron Corporation (Thermo Electron) effective April 5, 1993. Services
segment revenues were $12.2 million for the three-month period ended April
2, 1994, $55.2 million in 1993, and $54.9 million in 1992. Effective April
4, 1994, the Company contributed the businesses that comprised its Services
segment to Thermo Terra Tech in exchange for a 49% ownership interest in
that joint venture. As a result, the Services segment operations are no
longer consolidated in the Company's financial statements (see Note 3 to
Consolidated Financial Statements).
The gross profit margin increased to 48% in 1994 from 47% in 1993 and 45%
in 1992. The increase in 1994 reflects the transfer of the lower-margin
businesses that comprised the Company's Services segment to the Thermo
Terra Tech joint venture as discussed above. The gross profit margin for
the Instruments segment remained relatively unchanged at 48% in 1994 and
49% in both 1993 and 1992. The gross profit margin for the Services segment
decreased one percentage point in 1994 to 22% and improved three percentage
points in 1993. The improvement in 1993 was due to cost reductions in the
Company's engineering services business and greater revenues contributed by
the higher-margin environmental laboratory and infrastructure business.
Selling, general and administrative expenses as a percentage of revenues
increased to 26.6% in 1994 from 25.4% in 1993, and 25.1% in 1992. The
increases resulted primarily from higher costs as a percentage of revenues
at acquired businesses.
Research and development expenses were 6.6% of Instruments segment revenues
in 1994, compared with 6.5% in 1993 and 7.1% in 1992. Research and
development expenses declined in 1993 primarily due to the Company's
completion of the development of its Magna-IR (TM) and Quantum (TM)
products, which were introduced by the Company's Nicolet and Finnigan
subsidiaries, respectively.
Interest income was $5.9 million in 1994, $3.6 million in 1993, and $7.0
million in 1992. The increase in 1994 was primarily a result of interest
income earned on the net proceeds from the issuance of 3 3/4% senior
26PAGE
<PAGE>
Thermo Instrument Systems Inc.
convertible obligations in September 1993, offset in part by the cash used
to purchase several businesses within the EnviroTech Measurements &
Controls group of Baker Hughes in the first quarter of 1994. The decrease
in 1993 was primarily a result of lower average balances of short-term
investments due to the cash expended for the acquisition of Nicolet
Instrument Corporation in August 1992, offset in part by interest income
earned on the net proceeds from the issuance of the 3 3/4% senior
convertible obligations in September 1993. Interest expense increased to
$15.8 million in 1994 from $14.4 million in 1993 and $11.4 million in 1992
due primarily to the issuance of the 3 3/4% senior convertible obligations
in September 1993, offset in part by a reduction in interest expense as a
result of the repayment in the third quarter of 1993 of debt incurred in
connection with acquisitions.
As a result of the sale of stock by its ThermoSpectra Corporation
subsidiary (ThermoSpectra), the Company recorded a gain of $6.5 million in
1994. The gain represents an increase in the Company's proportionate share
of the subsidiary's equity and is classified as "Gain of issuance of stock
by subsidiary" in the accompanying 1994 statement of income. "Gain on sale
of investments" in the accompanying 1994 statement of income resulted from
the sale of a portion of the Company's investment in Thermedics Inc.
(Thermedics) convertible debentures. Thermedics is a majority-owned
subsidiary of Thermo Electron. "Gain on sale of investments" in the
accompanying 1992 statement of income resulted from the partial liquidation
of the Company's short-term investments. The proceeds from the sale of the
short-term investments were used to reduce borrowings from Thermo Electron.
"Equity in income of unconsolidated subsidiaries, net" in 1994 primarily
represents the Company's portion of the results of Thermo Terra Tech (see
Note 3 to Consolidated Financial Statements).
The effective tax rate was 39% in 1994, 43% in 1993, and 42% in 1992. These
rates exceeded the statutory federal income tax rate primarily due to
nondeductible amortization of cost in excess of net assets of acquired
companies, the inability to provide a tax benefit on losses incurred at
certain foreign subsidiaries, and the impact of state income taxes. The
effective tax rate decreased in 1994 from 1993 due primarily to the
nontaxable gain on the issuance of stock by the Company's ThermoSpectra
subsidiary.
Net income increased 35% in 1994 to a record $60.2 million, following a 35%
increase in 1993. Primary earnings per share grew 28% to $1.28 in 1994,
compared with a 30% increase in 1993.
Liquidity and Capital Resources
Consolidated working capital at December 31, 1994, was $230.3 million,
compared with $238.1 million at January 1, 1994, a decrease of $7.8
million. Included in working capital are cash, cash equivalents, and
short-term investments of $168.9 million at December 31, 1994, and $183.6
million at January 1, 1994. Of the $168.9 million balance at December 31,
1994, $19.3 million was held by the Company's ThermoSpectra subsidiary and
$149.6 million by the Company and its wholly owned subsidiaries. Cash
provided by operations in 1994 was $80.8 million. During 1994, the Company
expended $100.9 million for acquisitions. In 1994, the Company's
ThermoSpectra subsidiary sold 1,505,000 shares of its common stock in
private placements for net proceeds of $14.0 million.
27PAGE
<PAGE>
Thermo Instrument Systems Inc.
In 1995, the Company plans to make expenditures for property, plant and
equipment of approximately $11 million. The Company plans to make these
expenditures from working capital. The Company believes that its existing
resources are sufficient to meet the capital requirements of its existing
operations for the foreseeable future.
The Company has historically complemented internal development with
acquisitions of businesses or technologies that extend the Company's
presence in current markets or provide opportunities to enter and compete
effectively in new markets. The Company will consider making acquisitions
of such companies, product lines, or technologies that are consistent with
its plans for strategic growth. On March 1, 1995, the Company entered into
an agreement to acquire the Scientific Instruments Division of Fisons plc
for 202 million British pounds sterling, subject to a post-closing
adjustment. The purchase price will be funded from available cash and
through borrowings from Thermo Electron (see Note 14 to Consolidated
Financial Statements).
28PAGE
<PAGE>
Thermo Instrument Systems Inc.
Selected Financial Information
(In thousands except
per share amounts) 1994(a) 1993(c) 1992(d) 1991(e) 1990
--------------------------------------------------------------------------
Statement of
Income Data:
Revenues $ 662,187 $ 584,176 $ 423,199 $ 338,747 $ 285,384
Income before
provision for
income taxes 99,382 78,873 57,165 43,573 32,515
Net income 60,220 44,764 33,130 24,837 18,915
Earnings per
share:
Primary 1.28 1.00 .77 .61 .49
Fully diluted 1.18 .94 .74 .58 .47
Balance Sheet
Data:
Working capital $ 230,306 $ 238,053 $ 68,412 $ 197,391 $ 63,372
Total assets 1,011,917 891,141 686,425 497,959 376,148
Long-term
obligations 263,559 286,161 170,092 123,476 64,171
Shareholders'
investment 440,763 358,055 272,723 250,954 184,140
Quarterly Information (Unaudited)
(In thousands except per share amounts)
1994 First Second(a) Third(b) Fourth(b)
---------------------------------------------------------------------------
Revenues $159,782 $162,615 $161,580 $178,210
Gross profit 75,372 78,787 77,565 85,629
Net income 12,852 14,084 15,104 18,180
Earnings per share:
Primary .28 .30 .32 .38
Fully diluted .26 .28 .29 .35
1993 First(c) Second(c) Third(c) Fourth
--------------------------------------------------------------------------
Revenues $149,748 $140,415 $136,511 $157,502
Gross profit 69,106 65,309 63,153 74,576
Net income 9,849 10,506 11,223 13,186
Earnings per share:
Primary .22 .24 .25 .29
Fully diluted .22 .23 .24 .27
(a) Reflects the March 1994 acquisition of several businesses within the
EnviroTech Measurements & Controls group of Baker Hughes Incorporated,
and the formation of the Thermo Terra Tech joint venture, effective
April 4, 1994.
(b) Results include nontaxable gains of $3,284,000 and $3,185,000 in the
third and fourth quarters, respectively, from the issuance of stock by
subsidiary.
(c) Reflects the February 1993 acquisition of Spectra-Physics Analytical,
the April 1993 sale of the Company's biomedical instruments products
business of its Nicolet Instrument Corporation subsidiary, and the
29PAGE
<PAGE>
Thermo Instrument Systems Inc.
September 1993 issuance of $210,000,000 aggregate principal amount of
3 3/4% senior convertible obligations due 2000.
(d) Reflects the August 1992 acquisition of Nicolet Instrument Corporation.
(e) Reflects the issuance of $101,250,000 aggregate principal amount of
6 5/8% subordinated convertible obligations due 2001.
30PAGE
<PAGE>
Thermo Instrument Systems Inc.
Common Stock Market Information
The following table shows the market range for the Company's common stock
based on reported sales prices on the American Stock Exchange (symbol THI)
for 1994 and 1993. Prices were restated in 1993 to reflect a three-for-two
stock split effected in July 1993.
1994 1993
-------------------- ----------------------
Quarter High Low High Low
-------------------------------------------------------------------
First $34 3/4 $28 1/4 $28 2/3 $23
Second 31 7/8 27 1/8 27 3/8 24 1/3
Third 32 1/4 27 1/2 29 7/8 25 1/2
Fourth 31 7/8 28 5/8 34 7/8 28 1/4
As of January 27, 1995, the Company had 2,858 holders of record of its
common stock. This does not include holdings in street or nominee names.
The closing market price on the American Stock Exchange for the Company's
common stock on January 27, 1995, was $31 per share.
Stock Transfer Agent
American Stock Transfer & Trust Company is the stock transfer agent and
maintains shareholder activity records. The agent will respond to questions
on issuances of stock certificates, changes of ownership, lost stock
certificates, and changes of address. For these and similar matters, please
direct inquires to:
American Stock Transfer & Trust Company
Shareholder Services Department
40 Wall Street, 46th Floor
New York, New York 10005
(718) 921-8200
Shareholder Services
Shareholders of Thermo Instrument Systems Inc. who desire information about
the Company are invited to contact John N. Hatsopoulos, Chief Financial
Officer, Thermo Instrument Systems Inc., 81 Wyman Street, P.O. Box 9046,
Waltham, Massachusetts 02254-9046, by letter or telephone at (617)
622-1111. A mailing list is maintained to enable shareholders whose stock
is held in street name, and other interested individuals, to receive
quarterly and annual reports as quickly as possible. If you would like your
name added to the mailing list, please notify this office.
Dividend Policy
The Company has never paid cash dividends because its policy has been to
use earnings to finance expansion and growth. Payment of dividends will
rest within the discretion of the Board of Directors and will depend upon,
among other factors, the Company's earnings, capital requirements, and
financial condition.
31PAGE
<PAGE>
Thermo Instrument Systems Inc.
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended December
31, 1994, as filed with the Securities and Exchange Commission, may be
obtained at no charge by writing to John N. Hatsopoulos, Chief Financial
Officer, Thermo Instrument Systems Inc., 81 Wyman Street, P.O. Box 9046,
Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Monday, May 22, 1995, at
8:45 a.m. at the Hyatt Regency Hotel, Hilton Head, South Carolina.
Corporate Office
Thermo Instrument Systems Inc.
504 Airport Road
Post Office Box 2108
Santa Fe, New Mexico 87504-2108
32<PAGE>
Exhibit 21
Thermo Instrument Systems Inc. - Subsidiaries of the Registrant
At March 3, 1995, Thermo Instrument Systems Inc. owned the following companies:
STATE OR
JURISDICTION
OF PERCENT OF
NAME INCORPORATION OWNERSHIP
- -------------------------------------------------------------------------------
Analytical Instrument Development, Inc. Pennsylvania 100
Bettigole Andrews & Clark, Inc. New York 100
N. H. Bettigole Co., Inc. Delaware 100
N. H. Bettigole, P.A. New Jersey 100
N. H. Bettigole, P.C. New York 100
CIDTEC Acquisition Corp. New York 100
Eberline Analytical Corporation New Mexico 100
Eberline Instrument Company Limited United Kingdom 100
Eberline Instrument Corporation New Mexico 100
Epsilon Industrial Inc. Texas 100
Fellows, Read & Associates, Inc. New Jersey 100
Finnigan Corporation Virginia 100
Finnigan Instruments, Inc. New York 100
Finnigan International Sales, Inc. California 100
Finnigan MAT China, Inc. California 100
Finnigan MAT (Delaware), Inc. Delaware 100
Finnigan MAT Instruments, Inc. Nevada 100
Finnigan MAT International Sales, Inc. California 100
Finnigan MAT (Nevada), Inc. Nevada 100
Finnigan MAT AG Switzerland 100
Finnigan MAT Canada, Ltd. Canada 100
Finnigan MAT GmbH Germany 100
Finnigan MAT Ltd. United Kingdom 100
Finnigan MAT AB Sweden 100
Finnigan MAT S.A.R.L. France 100
Finnigan MAT S.R.L. Italy 100
Thermo Separation Products S.R.L. Italy 100
Thermo Instruments Australia Pty. Limited Australia 100
Finnigan Properties, Inc. California 100
Gamma-Metrics California 100
Gamma-Metrics International F.S.C. Inc. Guam 100
Gas Tech Inc. California 100
Gas Tech Australia, Pty. Ltd. Australia 50
Gas Tech Partnership California 50*
Gastech Instruments Canada Ltd. Canada 100
Houston Atlas Inc. Texas 100
National Nuclear Corporation California 100
Nicolet Instrument Corporation Wisconsin 100
Nicolet Instrument Canada, Inc. Canada 100
Nicolet Instrument Limited United Kingdom 100
Nicolet Instrument S.A.R.L. France 100
Nicolet Japan K.K. Japan 100
Project Phoenix of Madison, Inc. Wisconsin 100
Spectra-Tech, Europe Limited United Kingdom 100
Spectra-Tech, Inc. Wisconsin 100
ThermoSpectra Corporation Delaware 85.67**
Beleggingsmaatschappij Zeis B.V. Netherlands 100
Page 1PAGE
<PAGE>
Thermo Instrument Systems Inc. - Subsidiaries of the Registrant
At March 3, 1995, Thermo Instrument Systems Inc. owned the following companies:
STATE OR
JURISDICTION
OF PERCENT OF
NAME INCORPORATION OWNERSHIP
- -------------------------------------------------------------------------------
Bakker Electronics Dongen B.V. Netherlands 100
Bakker Electronics Limited United Kingdom 100
Nicolet Instrument Technologies Inc. Wisconsin 100
NORAN Instruments Inc. Wisconsin 100
Normandeau Associates, Inc. New Hampshire 100
Skinner & Sherman, Inc. Massachusetts 100
Skinner & Sherman Laboratories, Inc. Massachusetts 100
Skinner & Sherman Technology, Inc. Massachusetts 100
Spectrace Instruments Inc. California 100
TEV Administrative Services Corporation Delaware 100
Thermo BioAnalysis Corporation` Delaware 100
Thermo Consulting Engineers Inc. Delaware 100
George A. Schock & Associates, Inc. New Jersey 100
Jennison Engineering, Inc. Vermont 100
Thermo Environmental Instruments Inc. California 100
MIE Acquisition, Inc. Massachusetts 100
Thermo Instrument Controls Inc. Delaware 100
Thermo Instrument Systems Japan Holdings, Inc. Delaware 100
Nippon Jarrell-Ash Company, Ltd. Japan 100
Thermo Instruments do Brasil Ltda. Brazil 100
Thermo Instruments F.S.C. Inc. U.S. Virgin 100
Islands
Thermo Jarrell Ash Corporation Massachusetts 100
Baird Analytical Instrr Tech Co. Beijing Ltd. China 100
Baird DD Brazil Representacoes Ltda. Brazil 100
Scientific Measurement Systems Inc. Colorado 100
Thermo Instrument Systems (F.E.) Limited China 100
Thermo Instruments (Canada) Inc. Canada 100
Eberline Instruments (Canada) Ltd. Canada 100
Thermo Separation Products AG Switzerland 100
Thermo Separation Products Inc. Delaware 100
Thermo Instrument Systems (France) S.A. France 100
Thermo Separation Products S.A. France 100
Thermo Separation Products K.K. Japan 100
TMA/Hanford, Inc. Washington 100
TMA/NORCAL Inc. California 100
TN Technologies Inc. Texas 100
Van Hengel Holding B.V. Netherlands 100
Baird Europe B.V. Netherlands 100
Baird France S.A.R.L. France 100
Thermo Electron Limited United Kingdom 100
Planweld Limited United Kingdom 100
Hilger Analytical Limited United Kingdom 100
Thermo Instrument Systems B.V. Netherlands 100
Hilkomij B.V. Netherlands 100
NORAN Instruments B.V. Netherlands 100
Page 2PAGE
<PAGE>
Thermo Instrument Systems Inc. - Subsidiaries of the Registrant
At March 3, 1995, Thermo Instrument Systems Inc. owned the following companies:
STATE OR
JURISDICTION
OF PERCENT OF
NAME INCORPORATION OWNERSHIP
- -------------------------------------------------------------------------------
Thermo Automation Services (ThAS) B.V. Netherlands 100
Van Oortmerssen B.V. Netherlands 100
Thermo Instrument Systems GmbH Germany 100
Eberline Instruments GmbH Germany 100
Nicolet Instrument GmbH Germany 100
NORAN Instruments GmbH Germany 100
Thermo Instruments GmbH Germany 100
Thermo Separation Products GmbH Germany 100
Thermo Jarrell Ash (Europe) B.V. Netherlands 100
Thermo Jarrell Ash, S.A. Spain 100
Thermo Separation Products B.V. Netherlands 100
Thermo Separation Products B.V. B.A. Belgium 100
Westronics Inc. Texas 100
* Joint Venture/Partnership ** As of 12/31/94
Exhibit 23
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated February 10, 1995 (except
with respect to the matters discussed in Note 14 as to which the date is
March 1, 1995) included in or incorporated by reference into Thermo
Instrument Systems Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1994, into the Company's previously filed Registration
Statements as follows: Registration Statement No. 33-14980 on Form S-8,
Registration Statement No. 33-16461 on Form S-8, Registration Statement No.
33-14974 on Form S-8, Post Effective Amendment to Registration Statement on
Form S-4 No. 33-32579-02 on Form S-8, Registration Statement No. 33-33577
on Form S-8, Registration Statement No. 33-36221 on Form S-8, Registration
Statement No. 33-37866 on Form S-8, and Registration Statement No. 33-42270
on Form S-3, and Registration Statement No. 33-69526 on Form S-3.
Arthur Andersen LLP
Boston, Massachusetts
March 7, 1995
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
INSTRUMENT SYSTEMS INC.'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBE 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 152,933
<SECURITIES> 15,931
<RECEIVABLES> 159,615
<ALLOWANCES> 8,779
<INVENTORY> 121,353
<CURRENT-ASSETS> 489,656
<PP&E> 170,907
<DEPRECIATION> 43,983
<TOTAL-ASSETS> 1,011,917
<CURRENT-LIABILITIES> 259,350
<BONDS> 122,225
<COMMON> 4,816
0
0
<OTHER-SE> 435,947
<TOTAL-LIABILITY-AND-EQUITY> 1,011,917
<SALES> 649,992
<TOTAL-REVENUES> 662,187
<CGS> 335,341
<TOTAL-COSTS> 344,834
<OTHER-EXPENSES> 42,924
<LOSS-PROVISION> 733
<INTEREST-EXPENSE> 15,761
<INCOME-PRETAX> 99,494
<INCOME-TAX> 39,162
<INCOME-CONTINUING> 60,220
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,220
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.18
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