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 March 30, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-9549
THERMO TERRATECH INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-2925807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(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 May 24, 1996, was approximately $41,619,000.
As of May 24, 1996, the Registrant had 17,647,504 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Fiscal 1996 Annual Report to Shareholders for
the year ended March 30, 1996, 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 September 25, 1996, are incorporated
by reference into Part III.
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PART I
Item 1. Business
(a) General Development of Business.
Thermo TerraTech Inc. (the Company or the Registrant, formerly
Thermo Process Systems Inc.) is a provider of environmental services and
infrastructure planning and design services, encompassing a range of
specializations within the consulting and design, remediation and
recycling, and laboratory-testing industries. The Company also provides
metal-treating services and thermal-processing systems used to treat
primary metals and metal parts.
The Company offers engineering, consulting, and design services in
the areas of municipal and industrial water quality management; bridge
and highway construction and reconstruction; and natural resource
management. While each of its consulting and design subsidiaries
separately offers its services to public- and private-sector clients,
they are also able to combine their strengths to provide clients with
joint solutions to their engineering, consulting, and design problems.
The Company is a leading national provider of contaminated
soil-remediation services and a leading regional supplier of fluids-
remediation services. The Company also provides consulting and
environmental management services, and is a major supplier of nuclear-
remediation and safety services at radioactively contaminated sites. The
Company's majority-owned, publicly held Thermo Remediation Inc. (Thermo
Remediation) subsidiary, a national leader in the design and operation of
nonhazardous soil-remediation facilities, operates a network of such
facilities serving customers in more than a dozen states along the East
and West Coasts. In December 1995, Thermo Remediation acquired
Remediation Technologies, Inc. (ReTec), a provider of consulting,
engineering, and on-site services to help clients manage problems
associated with environmental compliance, waste management, and the
remediation of industrial sites contaminated with organic wastes and
residues. The purchase price for ReTec of $29.7 million consisted of
$18.5 million in cash, shares of Thermo Remediation common stock and
warrants valued at $3.7 million, and approximately $7.5 million
attributable to the conversion of outstanding ReTec stock options into
Thermo Remediation stock options of equivalent intrinsic value at the
date of the acquisition. Thermo Remediation's Thermo Nutech division also
provides services to remove radioactive contaminants from sand, gravel,
and soil, as well as health physics services, radiochemistry laboratory,
and dosimetry services. Thermo Remediation's Thermo Fluids subsidiary
collects, tests, processes, and recycles used motor oil and other
industrial oils. As of March 30, 1996, the Company owned 65.9% of Thermo
Remediation's common stock and holds a $2,650,000 principal amount 3 7/8%
subordinated convertible note due 2000 issued by Thermo Remediation,
convertible into shares of Thermo Remediation common stock at a
conversion price of $9.83 per share.
The Company's majority-owned Thermo EuroTech N.V. (formerly
Beheersmaatschappij J. Amerika N.V.) subsidiary is a provider of
fluids-recycling and other environmental services in the Netherlands. As
of March 30, 1996, the Company owned 62% of the outstanding common stock
of Thermo EuroTech.
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The Company's Thermo Analytical subsidiary operates a network of
analytical laboratories that provide comprehensive laboratory-based
environmental testing, analysis, and related services to detect and
measure organic contaminants in samples of soil, water, air, industrial
wastes, mixed wastes, and biological materials. In May 1995, the Company
acquired substantially all of the assets of Lancaster Laboratories, Inc.
and its affiliate Clewmark Holdings (collectively Lancaster Laboratories)
for $25.3 million in cash, which included the repayment of $5.3 million
of debt. Lancaster Laboratories, based in Lancaster, Pennsylvania, is a
provider of high-quality analytical services to the environmental, food,
and pharmaceutical industries.
The Company performs metallurgical processing services using
thermal-treatment equipment at locations in California and Minnesota. The
Company also designs, manufactures, and installs computer-controlled,
custom-engineered, thermal-processing systems used to treat primary metal
and metal parts.
Effective April 2, 1995, the Company and Thermo Instrument Systems
Inc. (Thermo Instrument) agreed to dissolve their environmental services
joint venture (the joint venture). The Company purchased the businesses
formerly operated by the joint venture from Thermo Instrument for $34.3
million in cash. To finance this transaction, the Company issued to
Thermo Electron Corporation (Thermo Electron) a $35.0 million promissory
note that bears interest at the 90-day Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter, and is due
May 13, 1997. In June 1995, the Company transferred three businesses
formerly operated by the joint venture, collectively known as Thermo
Nutech, to Thermo Remediation in exchange for 1,583,360 shares of Thermo
Remediation common stock.
The Company was incorporated on May 30, 1986, as an indirect, wholly
owned subsidiary of Thermo Electron. Prior to its incorporation, the
Company's operations were conducted by two wholly owned subsidiaries of
Thermo Electron. As of March 30, 1996, Thermo Electron owned 14,501,958
shares of the common stock of the Company, representing 83% of such stock
then outstanding. Thermo Electron is a world leader in environmental
monitoring and analysis instruments and a 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 conducts advanced technology research and development.
Thermo Electron has announced that it may repurchase shares of the
Company's common stock from time to time in the open market or in
negotiated transactions. During fiscal 19961, Thermo Electron purchased
576,700 shares of the Company's common stock in the open market for a
total price of $7,419,000.
1 References to fiscal 1996, 1995, and 1994 herein are for the fiscal
years ended March 30, 1996, April 1, 1995, and April 2, 1994,
respectively.
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(b) Financial Information About Industry Segments.
The Company conducts business in one segment, environmental
services. Within this segment, the principal products and services are:
consulting and design, remediation and recycling services and
laboratory-based testing. The Company also provides specialized
metal-treating services including the design, manufacture, and
installation of advanced custom-engineered thermal-processing systems.
(c) Description of Business.
(i) Principal Services and Products
Consulting and Design Services
The Company provides a wide range of environmental consulting
services to private- and public-sector clients. These services include
the design and inspection of water supply and wastewater treatment
facilities; investigations of different methods to clean up hazardous
waste sites; assistance in obtaining government permits;
transportation-related and similar types of infrastructure engineering,
survey, and land-use planning; and support services which include
mechanical, electrical, and structural engineering. In addition, the
Company provides natural resource management services including
environmental impact studies.
The Company is a leading provider of comprehensive environmental
consulting and professional engineering services in selected areas of the
United States. Through the February 1995 acquisition of Elson T. Killam
Associates (Killam Associates), the Company is a leader in the design,
planning, and construction supervision of municipal and privately owned
water treatment plants, waste treatment plants, and hazardous wastewater
facilities. The Company specializes in full-service contract operations
to plant owners in the public and private sectors. These services
facilitate regulatory compliance; optimize day-to-day plant operations;
reduce costs; provide competent, experienced personnel; and promote good
community relations.
The Company provides a broad range of bridge and highway engineering
services through its Bettigole Andrews & Clark subsidiary.
The Company's Normandeau Associates subsidiary's environmental
impact assessments and mitigation/restoration studies help determine
water quality, promote the safety of wildlife, and assist clients in
meeting environmental permitting and licensing requirements. Normandeau
Associates is a leading provider of aquatic biology expertise and
ecological risk assessment to electric utility plants throughout the
country.
The market for the Company's environmental analysis and field
services consists primarily of customers who need to comply with federal,
state, and local regulations that relate to environmental protection, the
management and treatment of hazardous wastes, and the need to upgrade and
expand infrastructure in response to economic development. These
customers typically rely on independent laboratories and environmental
science and engineering consultants, such as the Company's, for ongoing
analysis and monitoring of such wastes and direction for compliance with
various environmental regulations.
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A substantial portion of the Company's consulting and design
services sales are made to existing customers on a repeat basis.
Consulting and design services are often performed as multi-year studies.
In addition to federal, state, and local governments, customers include
public utilities, consulting and construction engineers, waste management
companies, oil refineries, mining companies, chemical manufacturers,
architectural and engineering firms, and a variety of service companies
involved with real estate transactions.
During fiscal 1996, 1995, and 1994, the Company derived revenues of
$74.0 million, $40.3 million, and $29.7 million, respectively, from
consulting and design services.
Remediation and Recycling Services
The Company is a leading national provider of contaminated
soil-remediation services and a leading regional supplier of
fluids-remediation services. The Company also provides consulting and
environmental management services, and is a major supplier of nuclear
remediation and safety services at radioactively contaminated sites.
The Company's Thermo Remediation subsidiary, a national leader in
the design and operation of nonhazardous soil-remediation facilities,
operates a network of such facilities serving customers in more than a
dozen states along the East and West coasts. Headquartered in Florida,
Thermo Remediation operates fully permitted, environmentally secure
soil-remediation centers in California, Florida, Maryland, New York,
Oregon, South Carolina, Virginia, and Washington. Thermo Remediation
thermally treats soil to remove and destroy hydrocarbon contamination
caused by leaking underground storage tanks, aboveground storage tanks,
spills accumulated at manufactured-gas plants and refineries, and other
sources. The Company's strategy is to compete by providing its customers
with protection from environmental liabilities under federal, state, and
local law and superior service at competitive prices. Customers,
particularly large national accounts, choose Thermo Remediation's
services rather than those of other remediation companies and landfills
because of Thermo Remediation's stringent pre-screening and documentation
procedures, state-of-the-art facilities, thorough processing technology,
post-treatment certification, and affiliation with Thermo Electron.
Accordingly, the majority of Thermo Remediation's revenues are derived
from larger liability-conscious companies, including the major oil
companies and their affiliated service stations, public utilities, large
industrial companies, and car rental companies, as well as the federal
government, the military, and certain municipal governments and agencies.
The Company and Thermo Electron entered into a development agreement
under which Thermo Electron funded $4.0 million of the direct and
indirect costs of the Company's development of soil-remediation centers.
In exchange for this funding, the Company granted Thermo Electron a
royalty equal to approximately 3% of net revenues from soil-remediation
services performed at the centers developed under the agreement. The
Company recorded contract revenues of $776,000 under the agreement for
development costs expended in fiscal 1994. As of October 2, 1993, funding
under the agreement was complete. The Company paid royalties of $332,000,
$432,000, and $351,000 in fiscal 1996, 1995, and, 1994, respectively, to
Thermo Electron.
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In December 1995, Thermo Remediation acquired ReTec, a provider of
consulting, engineering, and on-site services to help clients manage
problems associated with environmental compliance, waste management, and
the remediation of industrial sites contaminated with organic wastes and
residues. ReTec provides particular expertise in managing wastes from
manufactured-gas plants, refineries, and railroad properties. As a leader
in the application of bioremediation technologies, with 17 offices
located in 16 states, ReTec was the first firm to successfully employ
bioremediation as the principal technology to clean up a Superfund site.
In addition, ReTec offers a broad array of remedial solutions, all of
which are applied from a risk management perspective. ReTec concentrates
on providing its clients with low-cost and innovative solutions to
complex problems. For example, ReTec has led successful brownfield
redevelopment projects that have helped transform contaminated properties
into productive assets.
Thermo Remediation's Thermo Nutech division also provides services
to remove radioactive contaminants from sand, gravel, and soil, as well
as health physics services, radiochemistry laboratory, and dosimetry
services. Over the past 30 years, Thermo Nutech's health physics group
has conducted hundreds of radiological surveys of soil contaminated with
low levels of radioactivity. To reduce the high cost of cleanup and
disposal, Thermo Nutech is developing a range of automated, technology-
based services for radioactive soil remediation, some of which are based
on proprietary technologies. For example, the Company's segmented-gate
system automatically assays and separates radioactively contaminated soil
from uncontaminated soil. This technology has been used to remediate more
than 100,000 tons of plutonium-contaminiated soil on Johnston Atoll under
an ongoing contract with the Nuclear Defense Agency, as well as to
process soils at the DOE's Savannah River site. Thermo Nutech also
provides health physics and industrial hygiene services in support of
environmental investigation and remediation projects, including site
surveys for radioactive materials and on-site sampling and analysis in
support of radiological decontamination programs, and operates
radiochemistry laboratories that provide a range of analytical laboratory
services to the nuclear utility and environmental industries. The
Company's Thermo Nutech division has been negatively affected by reduced
federal spending on remediation of nuclear sites.
The Company, through its Thermo Fluids subsidiary, collects, tests,
processes, and recycles used motor oil and other industrial oils. In
addition, the Company collects and recycles oily water and oil filters.
Thermo Fluids has collection facilities located in Phoenix and Tucson,
Arizona, and Las Vegas, Nevada. From these sites, Thermo Fluids operates
a fleet of oil and water collection trucks to pick up waste oils and oily
water.
The Company's majority-owned Thermo EuroTech subsidiary, located in
the Netherlands, provides wastewater treatment services as well as
services to test, remove, and install underground storage tanks. In March
1995, Thermo EuroTech acquired Refining and Trading B.V. Conducting
business under the name "North Refinery," the Company specializes in
processing "off-spec" mixtures of oil that contain water, ash, and
sediment into commercially tradable end products used in blending.
Although a large percentage of North Refinery's oil feedstock has
historically come from the former Soviet Union, the volume of oil
received from that nation has dropped significantly as a result of
political and economic changes that make transportation of waste oil
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difficult. To overcome this loss of supply, North Refinery has taken
steps to diversify its feedstock suppliers. However, no assurance can be
given that it will not experience future disruptions in deliveries. The
recent grant of a chemical-waste permit for the processing of a special
classification of oil-contaminated liquids has also allowed North
Refinery to begin processing chemical-waste streams. The end products of
this process are commercial grade oils that can be blended to make diesel
fuels and marine fuels or be used as a feed material. The Company's
strategy is to use Thermo EuroTech as a platform from which to eventually
provide a broad range of environmental remediation services throughout
Western Europe.
During fiscal 1996, 1995, and 1994, the Company derived revenues, of
$77.0 million, $58.2 million, and $48.7 million, respectively, from its
remediation and recycling services.
Laboratory-testing Services
Through a network of facilities in the United States, the Company
provides comprehensive laboratory-based services for the environmental,
pharmaceutical, and food industries. These laboratories also provide
analysis and related services to detect and measure hazardous wastes and
radioactive materials. Each of the laboratories in the Company's network
has developed specializations, and samples obtained by one laboratory can
be shipped to the specialists in the network for analysis, enabling the
network to provide a full complement of analytical and testing services.
Analytical laboratory services consist of a comprehensive range of
analytical tests to detect and measure organic contaminants, inorganic
contaminants, and radioactive materials in samples of soil, water, air,
industrial wastes, and biological materials. The Company has established
detailed procedures and strict operating standards to ensure consistent
performance and to allow it to participate in the Environmental
Protection Agency's (EPA's) Contract Laboratory Program (CLP). The EPA,
through the CLP, solicits bids on a competitive basis from commercial
laboratories to perform testing and analysis. The Company's environmental
laboratory business has been negatively affected by reduced federal
spending on environmental testing.
Through the May 1995 acquisition of Lancaster Laboratories, the
Company is a high-quality provider of analytical services to the
environmental, food, and pharmaceutical industries. The Company believes
that Lancaster Laboratories is the largest single-site commercial
analytical laboratory in the country. Due to its size and national
reputation for quality, Lancaster Laboratories has benefited from the
growing trend of pharmaceutical and food manufactures to outsource their
analytical laboratory functions to single-source providers.
During fiscal 1996, 1995, and 1994, the Company derived revenues of
$34.6 million, $8.6 million, and $6.0 million, respectively, from its
laboratory-testing services.
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Metal-treating Services and Process Systems
The Company performs metallurgical processing services using
thermal-treatment equipment at locations in California and Minnesota.
Through its equipment division located in Michigan, the Company also
designs, manufactures, and installs computer-controlled, custom-
engineered, thermal-processing systems used to treat primary metals and
metal parts.
During fiscal 1996, 1995, and 1994, the Company derived revenues of
$31.8 million, $26.7 million, and $25.7 million, respectively, from its
metal-treating services.
(ii) New Products
The Company has made no commitments to new products that would
require the investment of a material amount of the Company's assets.
(iii) Raw Materials
A large percentage of North Refinery's oil feedstock has
historically come from the former Soviet Union. The volume of oil
received from that nation has dropped significantly as a result of
political and economic changes that make transportation of waste oil
difficult. To overcome this loss of supply, North Refinery has taken
steps to diversify its feedstock suppliers. However, no assurance can be
given that it will not experience future disruptions in deliveries.
The principal materials used by the Company in its manufacturing
operations are fabricated steel, alloy castings, and ceramic and
insulating refractory materials. To date, the Company has not experienced
any difficulty in obtaining any of the materials or components used in
its operations and does not foresee any such difficulty in the future.
The Company has multiple sources for all of its significant raw material
needs.
(iv) Patents, Licenses, and Trademarks
The Company currently owns or has rights under licenses to a number
of U.S. patents. Although the Company believes that patent protection
provides it with competitive advantages with respect to certain portions
of its business and will continue to seek patent protection when
appropriate, the Company also believes that its business depends
primarily upon trade secrets and the technical and marketing expertise of
its personnel.
(v) Seasonal Influences
While the Company conducts significant operations year-round, the
majority of its businesses experience seasonal fluctuations due to
adverse weather during winter months. Such seasonal influences may have a
material effect on the Company's revenues. The Company experienced
significant adverse weather during the fourth quarter of fiscal 1996.
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(vi) Working Capital Requirements
In general, 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.
(vii) Dependency on a Single Customer
The Company derived 10%, 6%, and 16% of its total revenues in fiscal
1996, 1995, and 1994, respectively, from contracts or subcontracts with
the federal government.
(viii) Backlog
The Company's backlog of firm orders was $95,419,000 and $70,589,000
as of March 30, 1996 and April 1, 1995, respectively. These amounts
include the backlog of the Company's ReTec subsidiary and backlog from
consulting and design services, laboratory testing services, and process-
systems products. Soil-recycling and metallurgical services are provided
on a current basis pursuant to purchase orders. Accordingly, there is no
backlog for these services. The process-systems backlog includes the
incomplete portion of equipment contracts that are accounted for using
the percentage-of-completion method. Of the fiscal 1996 backlog amount,
substantially all orders are expected to be filled within the current
fiscal year.
(ix) Government Contracts
Approximately 10%, 6%, and 16% of the Company's revenues in fiscal
1996, 1995, and 1994, respectively, were derived from contracts or
subcontracts with the federal government that are subject to
renegotiation of profits or termination. The Company does not have any
knowledge of threatened or pending renegotiation or termination of any
material contract or subcontract.
(x) Competition
Consulting and Design Services
The Company's consulting and design businesses are engaged in highly
competitive markets in all of its service areas. These markets tend to be
regional. In its geographic service area, competition consists of small
one- to three-person firms offering a limited scope of services, as well
as much larger firms that may be regional, national, or international in
the scope of services they offer. The principal competitive factors for
the Company are: reputation; experience; breadth and quality of services
offered; and technical, managerial, and business proficiency.
Remediation and Recycling Services
The Company's competition for soil-remediation services is primarily
from other fixed-site thermal treatment facilities and from landfills.
The Company is aware of two other companies that operate fixed-site,
thermal-treatment facilities for soil remediation in multiple states.
However, several large waste management companies are analyzing this
market and may compete with the Company in the future. The market for
petroleum-contaminated, soil-processing services is highly fragmented and
limited to geographic area within several hundred miles of a site. The
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Company also competes with operators of mobile thermal-treatment
facilities, bioremediation and vapor-extraction technologies and, in
certain states, with asphalt plants and brick kilns that use the
contaminated soil in their production processes. The Company competes
primarily based on its ability to offer its customers superior protection
from environmental liabilities. Many of the Company's largest customers,
such as the major oil companies, are extremely sensitive to environmental
liability and therefore conduct thorough environmental audits of
soil-treatment facilities before qualifying them as approved facilities.
These approvals constitute an important barrier to entry into this
segment of the soil-remediation market. Although the Company typically
prices its services at a premium over landfills and other treatment
technologies, competitive conditions limit the prices charged by the
Company in each local market. Pricing is therefore a major competitive
factor for the Company.
Each of ReTec's offices is engaged in highly competitive, regional
markets. ReTec's competition consists of numerous small firms offering
limited services, as well as much larger firms that offer an array of
services. The principal competitive factors for ReTec are: reputation;
experience; breadth and quality of services offered; and technical,
managerial and business proficiency.
Thermo Nutech faces competition from many large national
competitors, and competes primarily on the basis of its proprietary
technology and price.
Thermo Fluids operates the largest fleet of collection vehicles in
Arizona and Nevada. Thermo Fluids competes with numerous smaller and
several larger national companies in its current markets.
Thermo EuroTech faces competition for oil from other oil processors
and blenders and from a company with a similar distillation technology in
Italy. The market for blending oils is very large and oils such as Thermo
EuroTech's end products represent a very small percentage of the total
market.
Laboratory-testing Services
Hundreds of independent analytical testing laboratories and
consulting firms compete for environmental services business nationwide.
Many of these firms use equipment and processes similar to those of the
Company. Competition is based not only on price, but also on reputation
for accuracy, quality, and the ability to respond rapidly to customer
requirements. In addition, many industrial companies have their own
in-house analytical testing capabilities. The Company believes that its
competitive strength lies in the quality and expertise of its services.
Metal-treating Services and Process Systems
The market for metal-treating services is typically regional and
very competitive. Both regions in which the Company has facilities
contain numerous competitors. In addition, in-house heat-treating
facilities provide a major source of competition. The Company competes in
this segment on the basis of services provided, turnaround time, and
price.
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The market for thermal-processing systems is subject to intense
competition worldwide. The Company is aware of at least eight companies
that market a number of products comparable to the Company's, but
competition for particular projects is typically limited to fewer
companies. The Company competes on the basis of several factors,
including technical performance, product quality and reliability, timely
delivery, and often price. Certain products sold by the Company's
competitors are less expensive than comparable products sold by the
Company.
(xi) Environmental Protection Regulations
The Company believes that compliance by the Company with federal,
state, and local environmental protection regulations will not have a
material adverse effect on its capital expenditures, earnings, or
competitive position.
(xii) Number of Employees
At March 30, 1996, the Company employed 2,367 persons.
(d) Financial Information About Exports by Domestic Operations and About
Foreign Operations.
The Company's exports by domestic operations and foreign operations
are currently insignificant.
(e) Executive Officers of the Registrant.
Present Title
Name Age (Year First Became Executive Officer)
---------------------- --- --------------------------------------------
Dr. John P. Appleton 61 President and Chief Executive Officer (1993)
John N. Hatsopoulos 61 Vice President and Chief Financial Officer
(1988)
Jeffrey L. Powell 37 Vice President (1994)
Bruce J. Taunt 45 Vice President, Finance and Administration
(1994)
Paul F. Kelleher 53 Chief Accounting Officer (1986)
Emil C. Herkert 58 Vice President (May 1996)
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 Dr.
Appleton, Mr. Powell, Mr. Taunt, and Mr. Herkert have held comparable
positions for at least five years, either with the Company or with its
parent company, Thermo Electron. Dr. Appleton has served as a Vice
President of Thermo Electron since 1975 in various managerial capacities.
Mr. Powell has been President of Thermo Remediation since January 1991.
From March 1989 until January 1991, Mr. Powell was Vice President, Sales
and Marketing, of Thermo Remediation. He has also served as Chief
Operating Officer since December 1993. Mr. Taunt has been Vice President
of Finance and Administration at the Company since 1992. Prior to joining
the Company, Mr. Taunt was Vice President and Controller of the Cross
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Company (an international manufacturer of specialized machine tools), a
subsidiary of Cross and Trecker. Mr. Herkert has served as President of
the Company's Killam Associates subsidiary since 1977. Messrs.
Hatsopoulos and Kelleher are full-time employees of Thermo Electron, but
devote such time to the affairs of the Company as the Company's needs
reasonably require.
Item 2. Properties
The location and general character of the Company's principal
properties as of March 30, 1996, are as follows:
The Company owns approximately 324,000 square feet of office,
engineering, laboratory, production, and manufacturing space, principally
in Massachusetts, Minnesota, New Jersey, New Mexico, California, and
Pennsylvania, and leases approximately 805,000 square feet of office,
engineering, laboratory, production, and manufacturing space, pursuant to
leases expiring in fiscal 1997 through 2008, principally in California,
Michigan, Massachusetts, Connecticut, South Carolina, Florida, Texas,
Montana, North Carolina, Colorado, Louisiana, Washington, Minnesota,
Indiana, Kansas, Ohio, Tennessee, New Jersey, New Mexico, New York,
Pennsylvania, New Hampshire, Maine, and Vermont.
The Company also owns approximately 96 acres primarily in
California, Florida, Oregon, South Carolina, and Maryland, from which it
provides soil-remediation services. The Company occupies approximately 22
acres principally in South Carolina, Virginia, Washington, California,
and New York, pursuant to leases expiring in fiscal 1998 through 2005,
from which it provides soil-remediation services.
The Company occupies approximately eight acres on two sites in
Arizona and one site in Nevada, pursuant to leases expiring in fiscal
1997 and 1998, consisting of office space, fluids-recycling and
maintenance facilities, and sites from fluids storage tanks.
The Company occupies approximately 15 acres in Delfzijl, Holland,
pursuant to leases expiring in 1998 through 2059, consisting of office
space, distillation facilities, and oil storage tanks.
The Company believes that these facilities are in good condition and
are adequate for its present operations and that other suitable space is
readily available if any of such leases are not extended.
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Item 3. Legal Proceedings
In February 1996, the Company settled its previously disclosed
litigation with Recycling Sciences International, Inc. on terms that were
not material to the Company's results of operations or financial
condition.
The Company has been notified that the EPA 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) occurred at several sites to which
chemical or other wastes generated by the manufacturing operations of the
Company were sent. These notifications allege that the Company may be a
potentially responsible party 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 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 it is only one of several companies which received
such notification and who may likewise be held liable for any such
remedial costs.
The Company evaluates its potential liability as a responsible party
for this environmental matter 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 this site and the
Company anticipates that future liabilities related to any site 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.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
13PAGE
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
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 Fiscal 1996 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 "Selected Financial Information" and "Dividend Policy" in the
Registrant's Fiscal 1996 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 Fiscal 1996 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 March 30,
1996, are included in the Registrant's Fiscal 1996 Annual Report to
Shareholders and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
Not applicable.
14PAGE
<PAGE>
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.
15PAGE
<PAGE>
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.
None.
(c) Exhibits.
See Exhibit Index on the page immediately preceding exhibits.
16PAGE
<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 by the undersigned, thereunto duly authorized.
Date: May 31, 1996 THERMO TERRATECH INC.
By: John P. Appleton
--------------------
John P. Appleton
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 May 31, 1996.
Signature Title
--------- -----
By: John P. Appleton President, Chief Executive Officer,
---------------------- and Director
John P. Appleton
By: John N. Hatsopoulos Vice President, Chief Financial Officer,
---------------------- and Director
John N. Hatsopoulos
By: Paul F. Kelleher Chief Accounting Officer
----------------------
Paul F. Kelleher
By: William A. Rainville Chairman of the Board and Director
----------------------
William A. Rainville
By: Donald E. Noble Director
----------------------
Donald E. Noble
By: Paul E. Tsongas Director
----------------------
Paul E. Tsongas
By: Polyvios C. Vintiadis Director
----------------------
Polyvios C. Vintiadis
17PAGE
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo TerraTech Inc.:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo
TerraTech Inc.'s Annual Report to Shareholders incorporated by reference
in this Form 10-K, and have issued our report thereon dated May 7, 1996
(except with respect to the matters discussed in Note 16 as to which the
date is May 8, 1996). 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 16 is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures
applied in the audits of the basic consolidated financial statements and,
in our opinion, fairly states in all material respects the consolidated
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
May 7, 1996
18PAGE
<PAGE>
SCHEDULE II
THERMO TERRATECH INC.
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Balance Charged
Allowance at to Costs Accounts Balance
for Doubtful Beginning and Accounts Written- at End
Accounts of Year Expenses Recovered off Other(a) of Year
-------------- --------- -------- --------- --------- --------- -------
Year Ended:
March 30, 1996 $ 3,560 $ 73 $ 84 $(1,628) $ 748 $ 2,837
April 1, 1995 $ 3,260 $ 162 $ (579) $ 88 $ 629 $ 3,560
April 2, 1994 $ 3,073 $ 424 $ (381) $ 79 $ 65 $ 3,260
(a) Includes allowances of businesses acquired during the year as
described in Note 3 to Consolidated Financial Statements in the
Registrant's fiscal 1996 Annual Report to Shareholders and the effect
of foreign currency translation.
19PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Reference Page
--------------------------------------------------------------------------
3.1 Restated Certificate of Incorporation, as amended (filed as
Exhibit 99 to the Registrant's Registration Statement on
Form S-2 [Registration No. 333-02269] and incorporated
herein by reference).
3.2 Bylaws of the Registrant (filed as Exhibit 3(b) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended April 2, 1988 [File No. 1-9549] and incorporated
herein by reference).
4.1 Fiscal Agency Agreement dated August 4, 1989, among the
Registrant, Thermo Electron Corporation, and Chemical Bank,
as fiscal agent (filed as Exhibit B to the Registrant's
Current Report on Form 8-K relating to the events occurring
on August 4, 1989 [File No. 1-9549] and incorporated herein
by reference).
4.2 Fiscal Agency Agreement dated as of May 2, 1996, among the
Registrant, Thermo Electron Corporation, and Chemical Bank,
as Fiscal Agent.
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 other instrument
with respect to other long-term debt of the Company or its
subsidiaries.
10.1 Thermo Electron Corporate Charter as amended and restated
effective January 3, 1993 (filed as Exhibit 10(a) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended April 3, 1993 [File No. 1-9549] and incorporated
herein by reference).
10.2 Amended and Restated Corporate Services Agreement dated
January 3, 1993, between Thermo Electron Corporation and
the Registrant (filed as Exhibit 10(b) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended April
3, 1993 [File No. 1-9549] and incorporated herein by
reference).
10.3 Agreement of Lease dated December 31, 1985, between
Claridge Properties Ltd. and Thermo Electron Corporation
(filed as Exhibit 10(c) to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-6763] and incorporated
herein by reference).
10.4 Assignment of Lease dated December 31, 1985, between Thermo
Electron Corporation and TMO, Inc. (filed as Exhibit 10(d)
to the Registrant's Registration Statement on Form S-1
[Reg. No. 33-6763] and incorporated herein by reference).
10.5 Sublease dated March 30, 1986, between TMO, Inc. and
Holcroft/Loftus, Inc. (filed as Exhibit 10(e) to the
Registrant's Registration Statement on Form S-1 [Reg. No.
33-6763] and incorporated herein by reference).
20PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Reference Page
--------------------------------------------------------------------------
10.6 Lease Amending Agreement dated January 1, 1995, between
Claridge Properties Ltd., Thermo Electron Corporation and
TMO, Inc. (filed as Exhibit 10.6 to the Registrant's Annual
Report on Form 10-K [File No. 1-9549] and incorporated by
reference).
10.7 Exclusive License and Marketing Agreement dated March 22,
1990, among TPS Technologies Inc., Holcroft Inc., and
Thermo Soil Recyclers Inc. (filed as Exhibit 10(q) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended March 30, 1990 [File No. 1-9549] and incorporated
herein by reference).
10.8 Form of Indemnification Agreement with Directors and
Officers (filed as Exhibit 10(k) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 30,
1991 [File No. 1-9549] and incorporated herein by
reference).
10.9 Development Agreement dated September 15, 1991, between
Thermo Electron Corporation and the Registrant (filed as
Exhibit 10(l) to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended September 28, 1991 [File
No. 1-9549] and incorporated herein by reference).
10.10 Amended and Restated Development Agreement dated January 2,
1992, between Thermo Electron Corporation and the
Registrant (filed as Exhibit 10(m) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended March
28, 1992 [File No. 1-9549] and incorporated herein by
reference).
10.11 Asset Transfer Agreement dated as of October 1, 1993 among
the Registrant, TPS Technologies Inc. and Thermo
Remediation Inc. (filed as Exhibit 2.3 to Thermo
Remediation's Registration Statement on Form S-1 [Reg. No.
33-70544] and incorporated herein by reference).
10.12 Exclusive License Agreement dated as of October 1, 1993
among the Registrant, TPS Technologies Inc. and Thermo
Remediation Inc. (filed as Exhibit 2.4 to Thermo
Remediation's Registration Statement on Form S-1 [Reg. No.
33-70544] and incorporated herein by reference).
10.13 Non-Competition and Non-Disclosure Agreement dated as of
October 1, 1993 among the Registrant, TPS Technologies Inc.
and Thermo Remediation Inc. (filed as Exhibit 2.5 to Thermo
Remediation's Registration Statement on Form S-1 [Reg. No.
33-70544] and incorporated herein by reference).
10.14 Tax Allocation Agreement dated as of June 1, 1992 between
the Registrant and Thermo Remediation Inc. (filed as
Exhibit 10.3 to Thermo Remediation's Registration Statement
on Form S-1 [Reg. No. 33-70544] and incorporated herein by
reference).
21PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Reference Page
--------------------------------------------------------------------------
10.15 Agreement of Partnership dated May 16, 1994 among Terra
Tech Labs Inc. (a wholly owned subsidiary of the
Registrant) and Eberline Analytical Corporation, Skinner &
Sherman, Inc., TMA/NORCAL Inc., Normandeau Associates Inc.,
Bettigole Andrews & Clark Inc., Fellows, Read & Associates
Inc. and Thermo Consulting Engineers Inc. (each a wholly
owned subsidiary of Thermo Instrument Systems Inc.) (filed
as Exhibit 1 to the Registrant's Current Report on Form 8-K
relating to the events occurring on May 16, 1994 [File No.
1-9549] and incorporated herein by reference).
10.16 Promissory Note dated May 16, 1994 issued by the Registrant
to Thermo Electron Corporation (filed as Exhibit 2 to the
Registrant's Current Report on Form 8-K relating to the
events occurring on May 16, 1994 [File No. 1-9549] and
incorporated herein by reference).
10.17 Agreement of Dissolution of Partnership dated May 9, 1995
among Thermo Terra Tech (the Partnership), Terra Tech Labs,
Inc. (a wholly owned subsidiary of the Registrant) and
Eberline Analytical Corporation, Skinner & Sherman, Inc.,
TMA/NORCAL Inc., Normandeau Associates Inc., Bettigole
Andrews & Clark Inc., Fellows, Read & Associates Inc. and
Thermo Consulting Engineers Inc. (each a wholly owned
subsidiary of Thermo Instrument Systems Inc.) (filed as
Exhibit 2.1 to the Registrant's Current Report on Form 8-K
relating to the events occurring on May 9, 1995 [File No.
1-9549] and incorporated herein by reference).
10.18 Stock Purchase Agreement dated May 9, 1995 between the
Registrant and Thermo Instrument Systems Inc. (filed as
Exhibit 2.2 to the Registrant's Current Report on Form 8-K
relating to the events occurring on May 9, 1995 [File No.
1-9549] and incorporated herein by reference).
10.19 Note dated May 17, 1995 from the Registrant to Thermo
Electron Corporation (filed as Exhibit 2.3 to the
Registrant's Current Report on Form 8-K relating to the
events occurring on May 9, 1995 [File No. 1-9549] and
incorporated herein by reference).
10.20 Stock Purchase and Note Issuance Agreement dated as of
November 22, 1993, between the Registrant and Thermo
Remediation Inc. (filed as Exhibit 10.11 to Thermo
Remediation's Registration Statement on Form S-1 [Reg. No.
33-70544] and incorporated herein by reference).
10.21 $2,650,000 principal amount Subordinated Convertible Note
dated as of November 22, 1993, made by Thermo Remediation
Inc., issued to the Registrant (filed as Exhibit 10.12 to
Thermo Remediation's Registration Statement on Form S-1
[Reg. No. 33-70544] and incorporated herein by reference).
22PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Reference Page
--------------------------------------------------------------------------
10.22 Asset Purchase Agreement dated as of November 19, 1993 by
and among All Western Oil, Inc. and certain affiliates
thereof and Thermo Fluids Inc. (filed as Exhibit 10.13 to
Thermo Remediation's Registration Statement on Form S-1
[Reg. No. 33-70544] and incorporated herein by reference).
10.23 First Addendum to Asset Purchase Agreement dated as of
August 7, 1994 among All Western Oil, Inc. et al. and
Thermo Fluids Inc. (filed as Exhibit 10.1 to Thermo
Remediation's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 1, 1994 [File No. 1-12636] and
incorporated herein by reference).
10.24 Promissory Note in the principal amount of $700,000, dated
August 7, 1994 (filed as Exhibit 10.2 to Thermo
Remediation's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 1, 1994 [File No. 1-12636] and
incorporated herein by reference).
10.25 Security Agreement dated as of August 7, 1994 among All
Western Oil, Inc. et al. and Thermo Fluids Inc. (filed as
Exhibit 10.3 to Thermo Remediation's Quarterly Report on
Form 10-Q for the fiscal quarter ended October 1, 1994
[File No. 1-12636] and incorporated herein by reference).
10.26 Stock Purchase and Sale Agreement made and entered into on
February 6, 1995, to be effective as of January 29, 1995,
by and between Nord Est S.A., the Registrant, and Emil C.
Herkert, Kenneth L. Zippler, Franklin O. Williamson, Jr.,
Fletcher N. Platt, Jr., Eugene J. Destefano, Meint Olthof
and Stanley P. Kaltnecker, Jr. (filed as Exhibit 1 to the
Registrant's Current Report on Form 8-K relating to the
events occurring on February 6, 1995 [File No. 1-9549] and
incorporated herein by reference).
10.27 Agreement and Plan of Merger dated as of June 28, 1995, by
and among the Registrant, Eberline Acquisition Inc., Thermo
Remediation Inc. and Eberline Holdings Inc. (filed as
Appendix B to Thermo Remediation's Proxy Statement for the
Annual Meeting held on December 13, 1995 [File No. 1-12636]
and incorporated herein by reference).
10.28 $28,000,000 Secured Promissory Note dated as of January 29,
1995 issued by the Registrant to Nord Est S.A. (filed as
Exhibit 2 to the Registrant's Current Report on Form 8-K
relating to the events occurring on February 6, 1995 [File
No. 1-9549] and incorporated herein by reference).
10.29 $38,000,000 Promissory Note dated as of February 21, 1995
issued by the Registrant to Thermo Electron Corporation
(filed as Exhibit 3 to the Registrant's Current Report on
Form 8-K relating to the events occurring on February 6,
1995 [File No. 1-9549] and incorporated herein by
reference).
23PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Reference Page
--------------------------------------------------------------------------
10.30 Asset Purchase Agreement by and among Thermo Analytical
Inc. (as Buyer); Lancaster Laboratories, Inc. and Clewmark
Holdings (as Sellers); and Earl H. Hess, Anita F. Hess,
Kenneth E. Hess, J. Wilson Hershey and Carol D. Hess (as
the principal owners of Sellers) (filed as Exhibit 1 to the
Registrant's Current Report on Form 8-K relating to the
events occurring on May 10, 1995 [File No. 1-9549] and
incorporated herein by reference).
10.31 Agreement and Plan of Merger dated as of the first day of
December, 1995, by and among Thermo Remediation Inc., TRI
Acquisition Inc. and Remediation Technologies, Inc. (filed
as Exhibit 2(a) to the Registrant's Current Report on Form
8-K relating to the events occurring on December 8, 1995
[File No. 1-9549] and incorporated herein by reference).
10.32 Purchase and Sale Agreement dated as of December 20, 1994
by and among TPS Technologies Inc., TPST Soil Recyclers of
Maryland Inc., Rafich Corporation, Harry Ratrie, John C.
Cyphers and J. Thomas Hood (filed as Exhibit 1 to Thermo
Remediation's Current Report on Form 8-K for the events
occurring on December 21, 1994 [File No. 1-12636] and
incorporated herein by reference).
10.33 Stock Purchase Agreement entered into on March 29, 1995, by
and among Stalt Holding, B.V., Beheersmaatschappij J.
Amerika N.V., A.J. Van Es, J.B. Van Es and D.A. Slager, and
the Registrant (filed as Exhibit 1 to the Registrant's
Current Report on Form 8-K relating to the events occurring
on March 29, 1995 [File No. 1-9549] and incorporated herein
by reference).
10.34 Master Repurchase Agreement dated January 1, 1994 between
the Registrant and Thermo Electron Corporation (filed as
Exhibit 10.21 to the Registrant's Annual Report on Form
10-K for the fiscal year ended April 2, 1994 [File No.
1-9549] and incorporated herein by reference).
10.35 Master Reimbursement Agreement dated January 1, 1994
between the Registrant, Thermo Electron Corporation, and
Thermo Remediation Inc. (filed as Exhibit 10.22 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended April 2, 1994 [File No. 1-9549] and incorporated
herein by reference).
10.36 Incentive Stock Option Plan of the Registrant (filed as
Exhibit 10(h) to the Registrant's 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 Registrant's 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).
24PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Reference Page
--------------------------------------------------------------------------
10.37 Nonqualified Stock Option Plan of the Registrant (filed as
Exhibit 10(i) to the Registrant's 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 Registrant's 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).
10.38 Deferred Compensation Plan for Directors of the Registrant
(filed as Exhibit 10(k) to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-6763] and incorporated
herein by reference).
10.39 Equity Incentive Plan (filed as Exhibit 10.63 to Thermedics
Inc.'s 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).
10.40 Directors Stock Option Plan, as amended and restated
effective January 1, 1995 (filed as Exhibit 10.39 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended April 1, 1995 [File No. 1-9549] and incorporated
herein by reference).
10.41 Severance Agreement with Thomas P. Plunkett dated August
31, 1993 (filed as Exhibit 10(aa) to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended
October 2, 1993 [File No. 1-9549] and incorporated herein
by reference).
10.42 Thermo TerraTech Inc. (formerly Thermo Process Systems
Inc.)- Thermo Remediation Inc. Nonqualified Stock Option
Plan (filed as Exhibit 10(l) to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended January 1,
1994 [File No. 1-9549] and incorporated herein by
reference).
10.43 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).
11 Computation re: Earnings per share.
13 Annual Report to Shareholders for the fiscal year ended
March 30, 1996 (only those portions incorporated herein by
reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
25PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Reference Page
--------------------------------------------------------------------------
27 Financial Data Schedule.
EXHIBIT 4.2
FISCAL AGENCY AGREEMENT
among
THERMO TERRATECH INC., as Issuer,
THERMO ELECTRON CORPORATION, as Guarantor
and
CHEMICAL BANK, as Fiscal Agent
Dated as of May 2, 1996
U.S. $115,000,000 Principal Amount
4-5/8% Convertible Subordinated Debentures Due 2003
PAGE
<PAGE>
CONTENTS
Heading Page
1. The Securities
2. Appointment of Agents and Security Registrar
3. Registration of Transfer and Exchange;
Restrictions on Transfer
4. Closing Date; Exchange of Regulation S
Global Security
5. Payment
6. Redemption
7. Conversion of Securities
8. Surrendered Securities
9. Mutilated, Destroyed, Stolen or
Lost Securities
10. Signatures
11. Agreements Concerning Agents
12. Offices, Resignation, Successors, Etc. of
Agents, Paying, Conversion and Transfer Agencies
13. Taxes
14. Meetings and Votes of Holders
15. Merger, Consolidation or Sale of Assets
16. Governing Law
17. Amendments
18. Agent for Service of Process
19. Notices
20. Counterparts
PAGE
<PAGE>
Exhibit A- Form of Registered Security
Form of Bearer Security
Exhibit B- Form of Regulation S Global Security
Exhibit C- Form of Certificate to be given by the Euroclear
Operator or Cedel with respect to the exchange of
all or a portion of the Regulation S Global
Security for Bearer Securities
Exhibit D- Form of Certificate of Beneficial Ownership for
Bearer Securities to be provided to the Euroclear
Operator or Cedel
Exhibit E- Form of Certificate of Beneficial Ownership for
Registered Securities to be provided to the
Euroclear Operator or Cedel
Exhibit F- Form of Certificate to be given by the Euroclear
Operator or Cedel with respect to the exchange of
all or a portion of the Regulation S Global
Security for Registered Regulation S Securities
Exhibit G- Form of Transferee Letter
PAGE
<PAGE>
FISCAL AGENCY AGREEMENT, dated as of May 2, 1996 (this
"Agreement"), among THERMO TERRATECH INC., a corporation duly
organized and validly existing under the laws of the State of
Delaware (the "Company"), THERMO ELECTRON CORPORATION, a
corporation duly organized and validly existing under the laws of
the State of Delaware (the "Guarantor"), and CHEMICAL BANK, a
banking corporation duly organized and validly existing under the
laws of the State of New York (the "Fiscal Agent").
1. The Securities.
(a) The Company has, by a Subscription Agreement,
dated April 26, 1996 (the "Subscription Agreement"), among the
Company, the Guarantor and the managers named therein (the
"Managers"), agreed to issue and sell to the Managers U.S.
$100,000,000 aggregate principal amount of its 4-5/8% Convertible
Subordinated Debentures Due 2003 (hereinafter referred to as the
"Initial Securities" and together with the Over-Allotment
Securities (as defined below), if any, the "Securities"). In
addition, the Company has granted an option to the Managers to
subscribe for up to an additional U.S. $15,000,000 principal
amount of Securities (the "Over-Allotment Securities") solely to
cover over-allotments, if any. The amount of Securities that may
be issued hereunder may be increased by agreement among Lehman
Brothers International (Europe) (the "Lead Manager"), the
Company, the Guarantor and the Fiscal Agent, and such additional
securities shall be "Securities" hereunder. The due and punctual
payment of principal, premium, if any, and interest and
Additional Amounts (as defined in Section 2 of the Securities) on
the Securities when and as the same shall become due and payable,
whether at maturity, upon redemption or otherwise, are
unconditionally guaranteed on a subordinated basis by the
Guarantor. Interest on the Securities shall be calculated on the
basis of a 360 day year comprised of twelve 30-day months.
(b) Pursuant to the Subscription Agreement, the
Managers (or their affiliates) may sell the Securities to (i)
persons who are not "U.S. Persons" (as such term is defined in
Regulation S promulgated by the United States Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of
1933, as amended (the "Securities Act")) in transactions that
meet the requirements of Regulation S, (ii) "qualified
institutional buyers" (as such term is defined in Rule 144A
promulgated by the SEC pursuant to the Securities Act and
hereinafter referred to as "QIBs") in reliance on Rule 144A (the
Securities that are resold by the Managers pursuant to Rule 144A
being hereinafter referred to as the "Rule 144A Securities") and
(iii) a limited number of "institutional accredited investors"
(within the meaning of Rule 501(a)(1), (2), (3) or (7)
promulgated by the SEC pursuant to the Securities Act)
("Institutional Accredited Investors") that, prior to their
purchase of any Securities, deliver to the Managers a letter
containing certain representations and agreements.
1PAGE
<PAGE>
(c) A portion of the Securities will initially be
issued in the form of a temporary global debenture in bearer form
without coupons or conversion rights having endorsed thereon the
guarantee of the Guarantor (the "Guarantee"), which will be
deposited with a depository in London for Cedel and Euroclear for
the accounts of the subscribers of such Securities on the Closing
Date (as defined herein). Upon deposit of the temporary global
debenture, Cedel or Euroclear, as the case may be, will credit
each subscriber with a principal amount of Securities equal to
the principal amount thereof for which it has subscribed and paid
in the aggregate principal amount of the entire issue of
Securities less the aggregate principal amount of the Rule 144A
Securities and Accredited Investor Securities concurrently
issued, substantially in the form of Exhibit B hereto (the
"Regulation S Global Security"). As hereinafter provided, the
Regulation S Global Security may subsequently be exchanged for
Securities (i) in printed definitive form with the Guarantees
endorsed thereon either as (a) bearer Securities ("Bearer
Securities") in denominations of U.S. $1,000 and U.S. $10,000 and
with interest coupons attached thereto, representing the
semi-annual interest payable thereon, or (b) fully registered
Securities ("Registered Regulation S Securities") in
denominations of U.S. $1,000 and integral multiples thereof,
without coupons, or (ii) a beneficial interest in the Rule 144A
Global Security (as defined below), in accordance with the
provisions of Section 3(c). Bearer Securities shall be
substantially in the form of Exhibit A hereto, including the
coupons set forth therein. Registered Regulation S Securities
also shall be substantially in the form of Exhibit A hereto. The
Securities which are not Bearer Securities or the Regulation S
Global Security are hereinafter collectively referred to as the
"Registered Securities."
(d) The Rule 144A Securities will initially be issued
in the form of a global Security in the aggregate principal
amount of the Rule 144A Securities, which Security shall be in
substantially the form of Exhibit A hereto, having endorsed
thereon a Guarantee, and is hereinafter referred to as the "Rule
144A Global Security." Such Rule 144A Global Security shall be
duly executed by the Company and authenticated by the Fiscal
Agent (as defined below) as hereinafter provided and will be
deposited on the Closing Date with, or on behalf of, The
Depositary Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee of DTC. The aggregate principal amount of
the Rule 144A Global Security may from time to time be increased
or reduced by adjustments made in the Security Register.
Transfers of interests in the Rule 144A Global Security will be
subject to certain restrictions set forth therein and described
in Section 3 hereof.
(e) The Accredited Investor Securities will initially
be issued in fully registered form in minimum denominations of
U.S. $250,000 and integral multiples of U.S. $1,000 in excess
thereof, which Securities shall be in substantially the form of
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Exhibit A hereto, having endorsed thereon a Guarantee, and are
hereinafter collectively referred to as "Registered Accredited
Investor Securities." Such Registered Accredited Investor
Securities shall be in definitive, fully registered certificated
form only and registered in the names of such Institutional
Accredited Investors or their nominees. Such Institutional
Accredited Investors may not elect to hold Registered Accredited
Investor Securities through DTC, Euroclear or Cedel. The
aggregate principal amount of the Registered Accredited Investor
Securities may be increased or reduced by adjustments made in the
Security Register. Transfers of Registered Accredited Investor
Securities will be subject to certain restrictions set forth
therein and described in Section 3 hereof.
(f) During the period beginning on the Closing Date
and ending on the date which is three years (or the then
applicable holding period under Rule 144(k) under the Securities
Act (or successor provision)) after the later of the date of
original issuance thereof and the last date on which the Company
or any affiliate of the Company was the owner thereof (or any
predecessor), all Rule 144A Securities, all Accredited Investor
Securities, all other Registered Securities and all Securities
issued upon registration of transfer of or in exchange for such
Securities, shall be "Restricted Securities" and shall be subject
to the restrictions on transfer in Section 3 hereof; provided,
however, that the term "Restricted Securities" shall not include
Registered Securities as to which such restrictions on transfer
have been terminated in accordance with Section 3(g) hereof. All
Restricted Securities shall bear the legend required by Section
3(f) hereof.
(g) The Securities will be convertible as provided in
Section 4 of the Registered Securities and the Bearer Securities
and Section 7 hereof. The Securities may be redeemed by the
Company as provided in Section 3 of the Registered Securities and
the Bearer Securities and Section 6 hereof. The Securities will
be subordinated as provided in Section 7 of the Registered
Securities and the Bearer Securities. The Registered Securities,
the Bearer Securities and the Regulation S Global Security shall
contain such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement
and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as
may, consistent herewith, be determined by the officer of the
Company executing such Securities, as evidenced by his execution
of such Securities.
(h) The Company in issuing the Securities shall use
CUSIP numbers, and the Fiscal Agent may use such CUSIP numbers in
any notice of redemption with respect to the Securities. The
Company shall obtain one CUSIP number for the Rule 144A
Securities and one for the Registered Regulation S Securities.
In addition, the Company shall obtain an ISIN number and a Common
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Code for the Regulation S Global Security, the Bearer Securities
and the Registered Regulation S Securities.
(i) Pursuant to the Subscription Agreement, the
Managers (or their affiliates) may sell the Securities to persons
who are not persons within the United States or its possessions
or "United States persons" as defined in the Internal Revenue
Code except as provided in U.S. Treasury Regulation Section
1.163-5 (c) (2) (i) (D). In compliance with United States tax
laws and regulations, Bearer Securities may not be offered or
sold during the 40-day period beginning on the Closing Date, or
at any time if part of a Manager's unsold allotment, to a person
who is within the United States or to a United States person
other than (a) foreign branches of United States financial
institutions if such institutions agree in writing to comply with
the requirements of Section 165(j)(3)(A), (B), or (C) of the
Internal Revenue Code of 1986, as amended, and the regulations
thereunder, (b) United States offices of exempt distributors, or
(c) United States offices of international organizations or
foreign central banks. United States tax laws and regulations
also require that Bearer Securities not be delivered within the
United States or its possessions.
(j) The Company will use its reasonable best efforts
to have the Securities approved for listing on the Luxembourg
Stock Exchange or such other exchange as shall be agreed upon by
the Managers and the Company, as soon as practicable after the
date hereof.
2. Appointment of Agents and Security Registrar.
(a) The Company and the Guarantor hereby appoint
Chemical Bank, at present having its principal corporate trust
office at 450 West 33rd Street, New York, New York 10001, and
having its main office in London at Chemical Bank House, 125
London Wall, London EC2Y 5AJ, England, as their fiscal agent in
respect of the Securities and the Guarantees upon the terms and
subject to the conditions herein set forth. (Chemical Bank and
its successor or successors as such fiscal agent qualified and
appointed in accordance with Section 12 hereof are herein called
the "Fiscal Agent.") The Fiscal Agent shall have the powers and
authority granted to and conferred upon it herein and in the
Securities, and such further powers and authority, acceptable to
it, to act on behalf of the Company and the Guarantor as the
Company and the Guarantor may hereafter grant to or confer upon
it.
(b) The Company and the Guarantor hereby appoint
Chemical Bank, at present located at 450 West 33rd Street, New
York, New York 10001, and having its main office in London at
Chemical Bank House, 125 London Wall, London EC2Y 5AJ, England,
as their paying agent in respect of the Securities and the
Guarantees upon the terms and subject to the conditions herein
set forth. (Chemical Bank and its successor or successors as such
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paying agent qualified and appointed in accordance with Section
12 hereof are herein called the "Paying Agent.") The Paying Agent
shall have the powers and authority granted to and conferred upon
it herein and in the Securities, and such further powers and
authority, acceptable to it, to act on behalf of the Company and
the Guarantor as the Company and the Guarantor may hereafter
grant to or confer upon it. As used herein, "paying agencies"
shall mean paying agencies maintained by the Company as provided
in Section 12(f) hereof.
(c) The Company hereby appoints Chemical Bank, at
present located at 450 West 33rd Street, New York, New York
10001, and having its main office in London at Chemical Bank
House, 125 London Wall, London EC2Y 5AJ, England, as its
conversion agent in respect of the Securities upon the terms and
subject to the conditions herein set forth. (Chemical Bank and
its successor or successors as such conversion agent qualified
and appointed in accordance with Section 12 hereof are herein
called the "Conversion Agent," and the Paying Agent, the
Conversion Agent, the Transfer Agents (as herein defined) and the
Fiscal Agent are sometimes herein referred to severally as an
"Agent" and, collectively, as the "Agents."). The Conversion
Agent shall have the powers and authority granted to and
conferred upon it herein and in the Securities, and such further
powers and authority, acceptable to it, to act on behalf of the
Company as the Company may hereafter grant to or confer upon it.
As used herein, "conversion agencies" shall mean conversion
agencies maintained by the Company as provided in Section 12(f)
hereof.
(d) The Company shall cause to be kept at the
principal corporate trust office of the Fiscal Agent a register
(the registers maintained in such office and in any other office
or agency designated for such purpose (which office shall be
located outside of the United Kingdom) being herein sometimes
collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as the Fiscal Agent may
prescribe, the Company shall provide for the registration of
Registered Securities and of transfers of Registered Securities.
The Fiscal Agent is hereby appointed "Security Registrar" for the
purpose of registering Registered Securities and transfers of
Registered Securities as herein provided.
(e) With respect to the Securities issuable or issued
in whole or in part in the form of the Rule 144A Global Security,
the Company and the Guarantor hereby appoint DTC, at present
located at 55 Water Street, New York, New York, 10041, as the
depository for the Rule 144A Global Security upon the terms and
conditions herein set forth. DTC and its successor or successors
as such depository are herein called the "Depository."
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3. Registration of Transfer and Exchange; Restrictions on
Transfer.
(a) Upon surrender for registration of transfer of any
Registered Security at any office or agency designated for such
purpose by the Company pursuant to Section 12(g) hereof, the
Company shall execute, and the Fiscal Agent shall authenticate,
register and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of any
authorized denominations and of a like aggregate principal
amount, having endorsed thereon a Guarantee duly executed by the
Guarantor, and bearing such restrictive legends as may be
required by this Agreement; provided, however, that, with respect
to any Registered Security that is a Restricted Security, the
Fiscal Agent shall not register the transfer of such Security
unless the conditions in Sections 3(b) hereof shall have been
satisfied. The holder of each Restricted Security, by such
holder's acceptance thereof, agrees to be bound by the transfer
restrictions set forth herein and in the legend on such
Restricted Security.
(b) Whenever any Restricted Security is presented or
surrendered for registration of transfer or exchange for a
Registered Security registered in a name other than that of the
holder, no registration of transfer or exchange shall be made
unless:
(i) The registered holder presenting such Restricted
Security for transfer shall have certified to the Fiscal
Agent in writing that such registered holder is transferring
such Restricted Security to a QIB in compliance with the
exemption from registration under the Securities Act
provided by Rule 144A thereunder (or a successor provision);
(ii) The registered holder presenting such Restricted
Security for transfer shall have certified to the Fiscal
Agent in writing that the registered holder is transferring
such Restricted Security outside the United States in a
transaction meeting the requirements of Rule 904 of
Regulation S under the Securities Act;
(iii)(A) The registered holder presenting such
Restricted Security for transfer shall have certified to the
Fiscal Agent in writing that such registered holder is
transferring such Restricted Security to an "institutional
accredited investor" (within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) in a transaction
that is exempt from the registration requirements of the
Securities Act; and (B) a broker or dealer registered under
Section 15 of the Securities Exchange Act of 1934, as
amended, shall have certified to the Fiscal Agent in writing
that: (x) each person who will become a beneficial owner of
the Restricted Security upon transfer is an institutional
"accredited investor" (as such term is defined in Rule
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501(a)(1), (2), (3) or (7) under the Securities Act); (y) no
general solicitation or general advertising was made or used
by such broker or dealer in connection with the offer and
sale of such Restricted Security to such person(s); and (z)
such institutional accredited investor has been informed
that the Securities have not been registered under the
Securities Act and are subject to the restrictions on
transfer set forth in the Securities and this Agreement;
(iv) The registered holder presenting such Restricted
Security for transfer shall have certified to the Fiscal
Agent in writing that the registered holder is transferring
the Registered Security to the Company; or
(v) The Fiscal Agent has received transfer
documentation indicating, and a written opinion of U.S.
counsel acceptable in form and substance to the Company and
the Fiscal Agent, that the transfer is being made pursuant
to an exemption from, or a transaction not otherwise subject
to, the registration requirements of the Securities Act.
For purposes of this Section 3(b), any such certification to
the Fiscal Agent in writing shall be in the form of the Transfer
Notice set forth on the reverse of such Security. In the case of
transfer pursuant to the foregoing clauses (ii), (iii) or (v)
above, the Company and the Fiscal Agent may require that the
registered holder deliver an opinion of counsel, certifications
or other information acceptable to them in form and substance.
The Fiscal Agent shall notify the Company upon receipt of such
Transfer Notice and the Company shall immediately advise the
Fiscal Agent as to whether an opinion of counsel, certifications
or other information as described herein shall be required for
such transfer. In addition, in the case of a transfer pursuant
to the foregoing clause (iii) above, the transferor shall be
required to deliver a letter from the transferee substantially in
the form of Exhibit G hereto.
(c) Bearer Securities may, at the option of the holder
thereof, (with all unmatured coupons appertaining thereto and
matured defaulted coupons appertaining thereto), be exchanged at,
subject to applicable laws and regulations, the offices of the
paying agencies in London and, if the Securities are listed on
the Luxembourg Stock Exchange and so long as listed thereon,
Luxembourg or as designated by the Company for such purposes
pursuant to Section 12(g), for an equal aggregate principal
amount of Registered Securities in denominations of $1,000 and
integral multiples thereof without coupons and/or Bearer
Securities of authorized denominations. If such holder is unable
to produce any such unmatured coupon or coupons or matured coupon
or coupons in default, such exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable
to the Company in an amount equal to the face amount of such
missing coupon or coupons or the surrender of such missing coupon
or coupons may be waived by the Company and the Guarantor if
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there be furnished to them and the Fiscal Agent such security or
indemnity as they may require to save each of them, the Fiscal
Agent, the Paying Agent and any paying agency harmless. If
thereafter the holder of such Security shall surrender to any
paying agency any such missing coupon in respect of which such a
payment shall have been made, such holder shall be entitled to
receive the amount of such payment from the Company; provided,
however, that, except as otherwise provided in the form of Bearer
Security set forth in Exhibit A hereto, interest represented by
coupons shall be payable only upon presentation and surrender of
those coupons outside of the United States, its territories and
its possessions. Bearer Securities and coupons are transferable
upon delivery.
Registered Securities may, at the option of the holder
thereof, be exchanged at the Corporate Trust Office of the Fiscal
Agent in New York City, or subject to applicable laws and
regulations, the offices of the paying agencies in London and, if
the Securities are listed on the Luxembourg Stock Exchange and so
long as listed thereon, Luxembourg or as designated by the
Company for such purposes pursuant to Section 12(g), for an equal
aggregate principal amount of Registered Securities of different
denominations. Registered Securities shall not be exchangeable
for Bearer Securities. Whenever any Registered Securities are so
surrendered for exchange, the Company shall execute, and the
Fiscal Agent shall authenticate and deliver, the Registered
Securities which the holder making the exchange is entitled to
receive, having endorsed thereon a Guarantee duly executed by the
Guarantor. If the holder thereof requests in writing that such
Registered Security be exchanged for an interest in the Rule 144A
Global Security, such Registered Security will be exchangeable
into an equal aggregate principal amount of beneficial interest
in the Rule 144A Global Security; provided, however, that, if
such Registered Security is a Restricted Security, such exchange
may only be made if such holder certifies to the Fiscal Agent in
writing that such holder is a QIB by completing the Transfer
Notice on the reverse of such Security. Upon any exchange as
provided in the immediately preceding sentence, the Fiscal Agent
shall cancel such Registered Security and cause, or direct any
custodian for the Rule 144A Global Security to cause, in
accordance with the standing instructions and procedures existing
between the Depository and any such custodian, the aggregate
principal amount of Securities represented by the Rule 144A
Global Security to be increased accordingly. If no Rule 144A
Global Securities are then outstanding, the Company shall issue
and the Fiscal Agent shall authenticate a new Rule 144A Global
Security in the appropriate principal amount, having endorsed
thereon a Guarantee duly executed by the Guarantor.
Any person having a beneficial interest in a Rule 144A
Global Security may upon request exchange such beneficial
interest for a Registered Security only as provided in this
paragraph. Upon receipt by the Company and the Fiscal Agent of
(i) written or electronic instructions from the Depository or its
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nominee (or such other form of instructions as is customary) on
behalf of any person having a beneficial interest in a Rule 144A
Global Security and upon receipt by the Fiscal Agent of a written
order of such person containing registration instructions and
(ii) in the case of a Restricted Security, the following
additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred
to the person designated as being the beneficial
owner, a certification to that effect from such
person; or
(B) if such beneficial interest is being transferred
to a person other than the person designated as
being the beneficial owner, the provisions of
Section 3(b) hereof have been satisfied;
in which case the Fiscal Agent or any custodian for the Rule 144A
Global Security, at the direction of the Fiscal Agent, shall, in
accordance with the standing instructions and procedures existing
between the Depository and such custodian, cause the aggregate
principal amount of the Rule 144A Global Security to be reduced
accordingly and, following such reduction, the Company shall
execute and the Fiscal Agent shall authenticate and deliver to
such person or the transferee, as the case may be, a Registered
Security in the appropriate principal amount, having endorsed
thereon a Guarantee duly executed by the Guarantor and, if such
Registered Security is a Restricted Security, including the
appropriate legend. Registered Securities issued in exchange for
a beneficial interest in the Rule 144A Global Security pursuant
to this paragraph shall be registered in such names and such
authorized denominations as shall be instructed to the Fiscal
Agent. The Fiscal Agent shall deliver such Registered Securities
to the persons in whose names such Securities are so registered.
(d) Notwithstanding any other provision of this
Agreement (other than the provisions set forth in Section 3(e)
hereof), the Rule 144A Global Security may not be transferred as
a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such
nominee to a successor Depository or a nominee of such successor
Depository.
(e) If at any time either (i) the Depository for the
Rule 144A Global Security notifies the Company and the Guarantor
that the Depository is unwilling or unable to continue as
Depository for the Rule 144A Global Security and a successor
Depository for the Rule 144A Global Security is not appointed by
the Company and the Guarantor within 90 days after delivery of
such notice, or (ii) the Company and the Guarantor, at their sole
discretion, notify the Fiscal Agent in writing that the Company
elects to cause the issuance of Registered Securities under this
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Agreement, then the Company shall execute, and the Fiscal Agent
shall authenticate and deliver, Registered Securities in an
aggregate principal amount equal to the principal amount of the
Rule 144A Global Security in exchange for such Rule 144A Global
Security.
(f) Each certificate evidencing Restricted Securities
shall bear a legend in substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHIN
THE "UNITED STATES" OR TO "U.S. PERSONS" (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT
OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED"
SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS
SECURITY PRIOR TO THE DATE WHICH IS THREE YEARS (OR THE THEN
APPLICABLE HOLDING PERIOD UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR SUCCESSOR PROVISION)) AFTER THE DATE OF
ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR), EXCEPT (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (D) OUTSIDE THE UNITED STATES
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION; AND (III) IT WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET
FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION
PURSUANT TO THE FOREGOING CLAUSE (II)(D) AND (E) IS SUBJECT
TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE FISCAL
AGENT FOR SUCH ISSUER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE
TO THEM IN FORM AND SUBSTANCE.
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(g) The restrictions imposed by Section 3(b) upon the
transferability of any particular Restricted Security shall cease
and terminate when such Restricted Security has been sold
pursuant to an effective registration statement under the
Securities Act or transferred pursuant to Rule 144 under the
Securities Act (or any successor provision thereto), unless the
holder is an affiliate of the Company within the meaning of said
Rule 144 (or such successor provision). Any Restricted Security
as to which such restrictions on transfer shall have expired in
accordance with their terms or shall have terminated may, upon
surrender of such Restricted Security for exchange to the Fiscal
Agent in accordance with the provisions of this Section 3(g)
(accompanied, in the event that such restrictions on transfer
have terminated by reason of a transfer pursuant to Rule 144 (or
any successor provision), by an opinion of counsel reasonably
acceptable to the Company, addressed to the Company and the
Fiscal Agent and in form and scope satisfactory to the Company,
to the effect that the transfer of such Restricted Security has
been made in compliance with Rule 144 (or such successor
provision)), be exchanged for a new Registered Security, of like
tenor and aggregate principal amount, which shall not bear the
restrictive legend required by Section 3(f) hereof. The Company
shall promptly inform the Fiscal Agent in writing of the
effective date of any registration statement registering the
Securities under the Securities Act.
(h) The transfer and exchange of the Rule 144A Global
Security or beneficial interests therein shall be effected
through the Depository, in accordance with this Agreement and the
procedures of the Depository therefor, which shall include
restrictions on transfer comparable to those set forth herein to
the extent required by the Securities Act.
(i) At such time as all beneficial interests in the
Rule 144A Global Security have either been exchanged for
Registered Securities, redeemed, repurchased or canceled, the
Rule 144A Global Security shall be returned to or retained and
canceled by the Fiscal Agent. At any time prior to such
cancellation, if any beneficial interest in the Rule 144A Global
Security is exchanged for Registered Securities, redeemed,
repurchased or canceled, the principal amount of Securities
represented by the Rule 144A Global Security shall be reduced
accordingly and an endorsement shall be made on the Rule 144A
Global Security, by the Fiscal Agent or any custodian therefor,
at the direction of the Fiscal Agent, to reflect such reduction.
(j) All Securities issued upon any registration of
transfer or exchange of Securities shall be the valid obligations
of the Company, and the Guarantees endorsed thereon shall be the
valid obligations of the Guarantor, evidencing the same
obligations, and entitled to the same benefits under this
Agreement, as the Securities surrendered upon such registration
of transfer or exchange.
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(k) Every Registered Security presented for
registration of transfer or surrendered for exchange shall be
duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company, the Fiscal Agent
and the Transfer Agent to which such Security is presented or
surrendered and the Security Registrar, duly executed by the
holder thereof or his attorney duly authorized in writing. All
such instruments shall comply with the applicable provisions of
this Section 3. The registration of the transfer of a Registered
Security by the Security Registrar shall be deemed to be the
written acknowledgment of such transfer on behalf of the Company.
(1) No service charge shall be made for any
registration of transfer or exchange (other than the cost of
delivery), but the Company or the Transfer Agent may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 4 hereof or not involving any
registration of transfer.
(m) Neither the Company nor the Fiscal Agent nor any
of the offices or agencies designated for the purposes specified
in Section 12(f) nor any Transfer Agent shall be required (i) to
exchange Bearer Securities for Registered Securities during the
period between the close of business on any Record Date (as
defined in Section 5(c) hereof) and the opening of business on
the next succeeding interest payment date, (ii) to exchange any
Bearer Security (or portion thereof) for a Registered Security if
the Company shall determine and inform the Fiscal Agent in
writing that, as a result thereof, the Company would incur
adverse consequences under the United States Federal income tax
laws at the time of such exchange, or (iii) in the event of a
redemption in part, (A) to register the transfer of Registered
Securities or to exchange any Bearer Securities for Registered
Securities for a period of 15 days immediately preceding the date
notice is given pursuant to Section 3(f) of the Registered
Securities and the Bearer Securities identifying the serial
numbers of any Securities to be redeemed, or (B) to register the
transfer of or exchange of any Registered Security so selected
for redemption in whole or in part, except portions not being
redeemed of Securities being redeemed in part, or (C) to exchange
any Bearer Security called for redemption; provided, however,
that a Bearer Security called for redemption may be exchanged, on
the terms and conditions set forth above, for a Registered
Security that is simultaneously surrendered, with written
instruction for payment on the date fixed for redemption, unless
the redemption date is after a Record Date and on or before the
next succeeding interest payment date, in which case such
exchange may be made only prior to the Record Date immediately
preceding the redemption date.
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4. Closing Date; Exchange of Regulation S Global Security.
(a) At any time and from time to time after the
execution and delivery of this Agreement, the Company may deliver
Securities executed by the Company in accordance with this
Agreement bearing the Guarantees of the Guarantor endorsed
thereon to the Fiscal Agent for authentication together with an
officer's certificate of the Company directing such
authentication, and the Fiscal Agent shall thereupon authenticate
and make such Securities available for delivery upon and in
accordance with the written order of the Company. No Security
shall be valid or enforceable for any purpose unless and until
the certificate of authentication thereon shall have been
manually signed by a duly authorized signatory of the Fiscal
Agent and such duly executed certificate of authentication on any
Security shall be conclusive evidence that the Security has been
duly authenticated and delivered hereunder. The Regulation S
Global Security, the Rule 144A Global Security and the Registered
Accredited Investor Securities will be issued upon payment to the
Company or its order in United States dollars in same-day funds
by check or wire transfer to a United States dollar account
designated by the Company, at 4:00 p.m., London time, on May 2,
1996, or at such other time on the same or such other date, not
later than 5:00 p.m., London time, on the fourth Business Day (as
such term is defined in Section 5(h) hereof) in London
thereafter, as the Managers and the Company may agree (the
"Closing Date"). Such payment will be made (1) upon
authorization from the Managers, (2) against delivery as provided
in Section 4(b) hereof of the amount, if any, of Rule 144A
Securities and Registered Accredited Investor Securities as the
Managers may request and as they shall direct, and (3) against
delivery of the Regulation S Global Security for the balance of
the Securities to The Chase Manhattan Bank, N.A., London office,
as depositary (the "Common Depositary") for Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the
Euroclear System (the "Euroclear Operator"), and Cedel Bank
societe anonyme ("CEDEL"). The Regulation S Global Security
shall be held on deposit with the Common Depositary for the
accounts of the Euroclear Operator and Cedel, for credit to the
Managers' respective Securities Clearance Accounts (or to such
other accounts as the Lead Manager may have specified) with the
Euroclear Operator or Cedel.
(b) On the Closing Date, the Company shall execute and
deliver to (i) the Managers, at the office of an affiliate of the
Lead Manager (as defined in the Subscription Agreement) in New
York, Registered Accredited Investor Securities bearing the
Guarantees of the Guarantor endorsed thereon (which shall have
been duly authenticated by the Fiscal Agent and which may be in
typewritten form) in respect of the Accredited Investor
Securities and (ii) the Depositary, at its office in New York,
the Rule 144A Global Security bearing the Guarantee of the
Guarantor endorsed thereon (which shall have been duly
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authenticated by the Fiscal Agent and which may be in typewritten
form) in respect of the Rule 144A Securities.
(c) On or before the Exchange Date, the Company will
execute and deliver to the Fiscal Agent, at its office in London,
definitive Registered Regulation S Securities and Bearer
Securities bearing the Guarantees of the Guarantor endorsed
thereon in the aggregate principal amount outstanding in the
Regulation S Global Security and in such proportion of Registered
Regulation S Securities to Bearer Securities as the Fiscal Agent
may specify. "Exchange Date" means the date following the
expiration of the 40-day period commencing on the Closing Date.
On or after the Exchange Date, the Regulation S Global Security
may be surrendered to the Fiscal Agent to be exchanged, as a
whole or in part, for definitive Bearer Securities without
charge, and the Fiscal Agent shall authenticate and deliver, in
exchange for such Regulation S Global Security or the portions
thereof to be exchanged, an equal aggregate principal amount of
definitive Bearer Securities, but only upon presentation to the
Fiscal Agent at its office in London of a certificate of the
Euroclear Operator or Cedel with respect to the Regulation S
Global Security or portions thereof being exchanged,
substantially in the form of Exhibit C hereto, to the effect that
it has received a certificate or certificates in substantially
the form set forth in Exhibit D hereto dated no earlier than 15
days prior to the Exchange Date and signed by the person
appearing in its records as the owner of the Regulation S Global
Security or portions thereof being exchanged. Similarly, on or
after the Exchange Date, portions of the Regulation S Global
Security may be exchanged for an equal aggregate principal amount
of definitive Registered Regulation S Securities upon
presentation to the Fiscal Agent of a certificate substantially
in the form of Exhibit F hereto, to the effect that it has
received a certificate or certificates in substantially the form
set forth in Exhibit E hereto dated no earlier than 15 days prior
to the Exchange Date and signed by the person appearing in its
records as the owner of the Regulation S Global Security or
portions thereof being exchanged. In addition, on or after the
Exchange Date, (or if permitted by the Company and the Fiscal
Agent, before the Exchange Date), portions of the Regulation S
Global Security may be exchanged for a beneficial interest in an
equal aggregate principal amount of the Rule 144A Global Security
(which portion shall be a Restricted Security) upon
certifications acceptable to the Company and to the Fiscal Agent
to the effect that the person(s) beneficially owning such portion
of the Rule 144A Global Security are QIBs.
(d) The definitive Securities and coupons shall be
printed, lithographed or engraved or produced by any combination
of these methods or may be produced in any other manner permitted
by the rules of any securities exchange on which the Securities
may be listed, all as determined by the officers executing such
Securities and coupons, as evidenced by such execution.
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(e) Only Bearer Securities may be issued upon receipt
by the Euroclear Operator or Cedel of a certificate or
certificates in the form of Exhibit D hereto. Bearer Securities
will be delivered only outside the United States, its territories
or its possessions. Only Registered Securities may be issued
upon receipt by the Euroclear Operator or Cedel of a certificate
or certificates in the form of Exhibit E hereto.
(f) The delivery to the Fiscal Agent by the Euroclear
Operator or Cedel of any certificate referred to above may be
relied upon by the Company and the Fiscal Agent as conclusive
evidence that a corresponding certificate or certificates has or
have been delivered to the Euroclear Operator or Cedel pursuant
to the terms of this Agreement. The Fiscal Agent shall receive
such certificate on behalf of the Company and shall promptly
deliver the original certificate to the Company, retaining a copy
of such certificate for its records.
(g) Upon any such exchange of a portion of the
Regulation S Global Security for a definitive Bearer Security or
Securities or a definitive Registered Regulation S Security or
Securities or a beneficial interest in the Rule 144A Global
Security, the Regulation S Global Security shall be endorsed by
the Fiscal Agent to reflect the reduction of its principal amount
by an amount equal to the aggregate principal amount of such
definitive Security or Securities. Until so exchanged in full,
the Regulation S Global Security shall in all respects be
entitled to the same benefits under this Agreement as definitive
Securities authenticated and delivered hereunder.
5. Payment.
(a) The Company will pay or cause to be paid to the
Paying Agent the amounts, at the times and for the purposes, set
forth herein and in the text of the Securities, and the Company
hereby authorizes and directs the Paying Agent to make payment of
the principal of, premium, if any, and interest on and Additional
Amounts (as defined in Section 2 of the Registered Securities and
the Bearer Securities), if any, on the Securities from such
payments.
(b) At least 15 days prior to the date on which any
payment of Additional Amounts shall be required to be made
pursuant to Section 2 of the Registered Securities and the Bearer
Securities, the Company will furnish the Paying Agent, each other
paying agency of the Company and the Fiscal Agent with a
certificate of one of its duly authorized officers instructing
the Paying Agent and each other paying agency of the Company as
to the amounts required (i) to be deducted or withheld for or on
account of any taxes described in Section 2 of the Registered
Securities and the Bearer Securities from a payment to be made on
that date and (ii) to be paid to each holder of Securities or
coupons as Additional Amounts pursuant to that Section. If the
foregoing amounts are not uniform for all holders, then the
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Company's certificate shall specify by country of residence or
other factor the amounts required to be deducted or withheld and
to be paid as Additional Amounts for each holder or class of
holders of the Securities or coupons. In the absence of its
receipt of any such certificate from the Company, the Paying
Agent may make payment without deduction or withholding. The
Company and the Guarantor hereby agree to indemnify the Paying
Agent, each other paying agency of the Company and the Fiscal
Agent for, and to hold them harmless against, any loss, liability
or expense reasonably incurred without gross negligence or bad
faith on their part, arising out of or in connection with actions
taken or omitted by any of them in reliance on any certificate
furnished pursuant to this Section.
(c) Interest on any Registered Security that is
payable, and is punctually paid or duly provided for, on any
interest payment date shall be paid to the person in whose name
that Security is registered at the close of business on the April
15 or October 15 immediately preceding such interest payment date
(each a "Record Date"), even if such Registered Security is
canceled, upon redemption, conversion or otherwise, after such
Record Date. In case a Bearer Security is surrendered for
exchange for a Registered Security after the close of business on
any Record Date and before the opening of business on the next
succeeding interest payment date, the Fiscal Agent shall not be
required to perform such transfer or exchange of such Security.
(d) Interest on any Registered Security that is
payable upon conversion in accordance with Section 7(a) hereof
shall be paid to the person in whose name that Security is
registered immediately prior to the conversion, provided that if
a Registered Security is converted after the close of business on
a Record Date and before the opening of business on the next
succeeding interest payment date, accrued interest shall be paid
on the next succeeding interest payment date to the person in
whose name that Security is registered at the close of business
on that Record Date.
(e) Any interest on any Registered Security that is
payable, but is not punctually paid or duly provided for, on any
interest payment date shall forthwith cease to be payable to the
registered holder thereof on the relevant regular record date by
virtue of having been such holder, and such defaulted interest
may be paid by the Company to the registered holder of such
registered Security on a subsequent record date established by
the Company in any lawful manner if, after notice given by the
Company to the Fiscal Agent of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable
by the Fiscal Agent.
(f) Subject to the foregoing provisions of this
Section 5, each Security delivered under this Agreement upon
registration of transfer of or in exchange for or in lieu of any
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other Security shall carry all the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
(g) In order to provide for the payment of the
principal of, premium, if any, and interest on the Securities as
the same shall become due and payable, the Company shall pay to
the Paying Agent at its office in London, in such coin or
currency of the United States of America as at the time of
payment is legal tender for the payment of public and private
debts therein, and in same day funds, the following amounts (and
the Company shall give notice to the Fiscal Agent at least one
full Business Day prior to the date payment is due to the Paying
Agent as to the means of such payment), to be held and applied by
the Paying Agent as hereinafter set forth:
(i) The Company shall pay to the Paying Agent on the
Business Day immediately prior to each interest payment date
in same day funds an amount sufficient to pay the interest
due (and Additional Amounts, if any) on all the Securities
outstanding on such interest payment date and the Paying
Agent shall apply the amounts paid to it to the payment of
such interest (and Additional Amounts, if any) on such
interest payment date.
(ii) Upon presentment for conversion of any Securities
pursuant to Section 7(a) hereof (except as described in the
proviso to Section 5(d)), the Paying Agent shall promptly
notify the Company of the amount of any accrued interest due
and owing thereon. Within four Business Days of such
notification, the Company shall pay to the Paying Agent an
amount sufficient to pay the accrued interest due on such
Securities (and Additional Amounts, if any, thereon), and
the Paying Agent shall apply the amounts so paid to it to
the payment of such accrued interest (and Additional
Amounts, if any, thereon) in accordance with the terms of
the Securities.
(iii) If the Company shall elect, or shall be
required, to redeem the Securities in accordance with
Section 6 hereof, the Company will pay to the Paying Agent
on the Business Day immediately prior to the date fixed for
redemption thereof in same day funds an amount sufficient
(with any amount then held by the Paying Agent and available
for the purpose) to pay the redemption price of the
Securities called for redemption on the redemption date or
entitled to be redeemed, together with accrued interest
thereon (and Additional Amounts, if any, thereon) to the
date fixed for redemption and not paid pursuant to clause
(g)(i) of this Section 5, and the Paying Agent shall apply
such amount to the payment of the redemption price and
accrued interest thereon (and Additional Amounts, if any,
thereon) in accordance with the terms of the Securities.
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(iv) On the Business Day immediately prior to the
maturity date of the Securities, the Company shall pay to
the Paying Agent in same day funds an amount which, together
with any amounts then held by the Paying Agent, and
available for payment thereof, shall be equal to the entire
amount of principal and interest (and Additional Amounts, if
any) to be due on such maturity date on all the Securities
then outstanding, and the Paying Agent shall apply such
amount to each payment of the principal of and interest on
(and Additional Amounts, if any, on) the Securities in
accordance with the terms of the Securities.
(h) Notwithstanding anything in this Section to the
contrary, if any payment of interest or premium or principal (or
Additional Amounts, if any) is due on a day that is not a
Business Day, payment shall be made on the next succeeding
Business Day, with the same effect as if made on the day such
payment was due, and no interest shall accrue for the period
after such date. A "Business Day" is defined, with respect to
any act to be performed pursuant hereto or to the Securities, as
any day which is not a Saturday, Sunday or a day on which banking
institutions in the place where such act is to occur are
authorized or obligated by applicable law, regulation or
executive order to close.
6. Redemption.
(a) If, under the circumstances described in Section 3
of the Registered Securities and Bearer Securities, the Company
shall elect or be required to redeem outstanding Securities, the
following provisions shall be applicable:
(i) The Company shall, at least 35 days in the case of
a redemption in whole or 75 days in the case of a redemption
in part (or such shorter period as shall be reasonably
acceptable to the Fiscal Agent) before the date designated
for such redemption, give written notice to the Agents of
its election to redeem the Securities on the redemption date
specified in such notice and state in such notice that the
conditions precedent to such redemption have occurred and
describe them, and in case of redemptions pursuant to
Section 3(b) of the Registered Securities and the Bearer
Securities, shall provide to the Fiscal Agent an opinion of
counsel satisfactory to the Fiscal Agent stating that the
legal conditions precedent to the right of the Company to
effect such redemption have occurred, and shall request the
Fiscal Agent to arrange for publication and mailing of the
notice specified in clause (a) (ii) below.
(ii) In case the Company shall give notice to the
Agents of its election to redeem the Securities, the Fiscal
Agent shall cause to be published on behalf of and at the
expense of the Company a notice of redemption in accordance
with the provisions of Section 3 of the Registered
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Securities and Bearer Securities and shall mail by
first-class mail a copy of the notice to each holder of a
Registered Security at the address of such holder as it
shall appear in the Security Register. The Fiscal Agent
shall send a copy of such notice of redemption to the
Company, the Guarantor, the Paying Agent (if different from
the Fiscal Agent) and each other paying agency of the
Company.
(iii) Such notice shall be published on behalf and at
the expense of the Company in an Authorized Newspaper (as
defined in Section 19 hereof) on a Business Day in New York
City and in London and, if the Securities are listed on the
Luxembourg Stock Exchange and so long as listed thereon, in
an Authorized Newspaper in Luxembourg, or, if publication in
either London or Luxembourg is not practical, in an
Authorized Newspaper in any country in Western Europe, as
set forth in Section 19 of this Agreement and Section 3 of
the Registered Securities and Bearer Securities. In the
case of a redemption in whole, notice will be given once not
more than 60 nor less than 30 days prior to the date fixed
for redemption. In the case of partial redemption, notice
will be given twice, the first such notice to be given not
more than 75 nor less than 60 days prior to the date fixed
for redemption and the second such notice to be given not
more than 60 and not less than 30 days prior to the date
fixed for redemption. The Fiscal Agent shall notify the
Company promptly of the portions of outstanding Securities
to be called for redemption as determined pursuant to
Section 3(a) of the Registered Securities and Bearer
Securities.
(b) Under the circumstances described in Section 3(d)
of the Registered Securities and Bearer Securities concerning the
redemption of outstanding Securities at the option of the holders
thereof, the following provisions shall be applicable:
(i) The Company shall give notice to the Fiscal Agent
of the occurrence of a Redemption Event (as defined in
Section 3(d) of the Registered Securities and Bearer
Securities) immediately upon the occurrence of such
Redemption Event. Such notice shall state:
(A) The nature of the Redemption Event;
(B) The Holder Redemption Date (as defined in
Section 3(d) of the Registered Securities and Bearer
Securities) in respect of such Redemption Event; and
(C) The redemption price as set forth in Section
3(d) of the Registered Securities and Bearer
Securities.
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(ii) The Fiscal Agent shall cause to be published on
behalf of the Company a notice of entitlement to redeem in
accordance with the provisions of Section 3 of the
Registered Securities and Bearer Securities and shall mail
by first-class mail a copy of such notice to each holder of
a Registered Security at the address of such holder as it
shall appear in the Security Register. The Fiscal Agent
shall send a copy of such notice of entitlement to redeem to
the Company, the Guarantor, the Paying Agent (if different
from the Fiscal Agent) and each other paying agency of the
Company hereunder. Such notice shall be published on behalf
and at the expense of the Company in Authorized Newspapers
on a Business Day in New York City and in London and, if the
Securities are listed on the Luxembourg Stock Exchange and
so long as listed thereon, in an Authorized Newspaper in
Luxembourg, or, if either publication in London or
Luxembourg is not practical, in an Authorized Newspaper in
any country in Western Europe, as set forth in Section 19 of
this Agreement. Notice shall be given not later than 10
days after the later of the Exchange Date or the date of the
occurrence of a Redemption Event.
(iii) Upon the deposit of any of the Registered
Securities or Bearer Securities with the agency designated
by the Company as the place for payment of the Registered
Securities and Bearer Securities together with a duly signed
and completed redemption notice in the form set forth on the
reverse of the Bearer Securities and Registered Securities,
all in accordance with the provisions of Section 3 of the
Registered Securities and Bearer Securities, the holder of
such Registered Security and Bearer Security shall be
entitled to receive a non-transferable receipt evidencing
such deposit.
(iv) The Fiscal Agent shall notify the Company on each
Business Day in the five Business Days prior to the Holder
Redemption Date for outstanding Securities to be redeemed
under this Section 6(b) of the amount required to redeem
such Securities.
7. Conversion of Securities.
(a) Subject to and upon compliance with the provisions
of this Section 7, at the option of the holder thereof, any
outstanding Registered Security or Bearer Security or, in the
case of any outstanding Registered Security or Bearer Security of
a denomination other than $1,000, any portion of the principal
amount thereof which is $1,000 or an integral multiple of $1,000,
may be converted into shares of the Company's common stock, par
value $.10 per share ("Common Stock"), issuable upon conversion
of the Securities, at the principal amount thereof, or of such
portion thereof, into fully paid and nonassessable shares of
Common Stock ("Conversion Shares") as set forth in the Registered
Securities and Bearer Securities. Such Registered Securities or
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Bearer Securities may be converted on or after the date which is
the latest of: (i) the Exchange Date, (ii) July 15, 1996 and
(iii) the date of the effectiveness of the Registration Statement
to be filed by the Company under the Securities Act relating to
the Common Stock issuable upon conversion of the Restricted
Securities (the "Registration Date"), and in any event prior to
redemption or maturity. The right to convert Securities called
for redemption will terminate at the close of business on the
fifteenth day next preceding the date fixed for redemption (or if
such date is not a Business Day, then the next succeeding
Business Day), and will be lost if not exercised prior to that
time. No payment or adjustment shall be made upon any conversion
on account of any dividends on the Common Stock issued upon
conversion. Accrued interest from the immediately preceding
interest payment date until the conversion date (and Additional
Amounts, if any, thereon) will be paid to the holder, through the
Paying Agent, in the same manner as payments of interest, within
five Business Days after the conversion date, provided that if a
Registered Security is converted after the close of business on a
Record Date and before the opening of business on the next
succeeding interest payment date, accrued interest shall be paid
on the next succeeding interest payment date to the person in
whose name that Security is registered at the close of business
on that Record Date. The price at which Conversion Shares shall
be delivered upon conversion (herein called the "Conversion
Price") shall be initially U.S. $15.90 per share of Common Stock.
The Conversion Price shall be adjusted in certain instances as
provided in paragraphs (c)(i), (ii), (iii), (iv), (vi) and (vii)
of Section 4 of the Registered Securities and Bearer Securities.
(b) In order to exercise the conversion privilege, the
holder of any Security to be converted shall surrender such
Security, or, if less than the entire principal amount of a
Registered Security or Bearer Security of a denomination other
than $1,000 is to be converted, the portion thereof to be
converted, together with all unmatured coupons and any matured
coupons in default appertaining thereto, at the office of the
Conversion Agent or any office or agency of the Company
maintained for that purpose pursuant to Section 12(f) hereof,
accompanied by a duly signed and completed Conversion Notice, in
substantially the form set forth in the Registered Securities and
Bearer Securities, to the Company, at such office or agency that
the holder elects to convert such Security (or specified portion
thereof).
(c) Securities shall be deemed to have been converted
immediately prior to the close of business on the day of
surrender of such Securities for conversion in accordance with
the foregoing provisions, and at such time the rights of the
holders of such Securities as holders shall cease, and the person
or persons entitled to receive the Common Stock issuable upon
conversion shall be treated for all purposes as the record holder
or holders of such Common Stock at such time. As promptly as
practicable on or after the conversion date, the Company shall
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cause to be issued or delivered at such office or agency a
certificate or certificates for the number of full shares of
Common Stock issuable or deliverable upon conversion, together
with payment, in lieu of any fraction of a share, as provided
below. The Paying Agent shall, within five business days after
the conversion date, make a payment for the accrued interest
thereon (and Additional Amounts, if any, thereon), except as
otherwise provided in this Section 7.
(d) In the case of any Registered Security or Bearer
Security of a denomination other than $1,000 which is converted
in part only, upon such conversion the Company shall execute and
the Fiscal Agent shall authenticate and deliver to the holder
thereof, at the expense of the Company, a new Security or
Securities of any authorized kind or denomination as requested by
such holder, in aggregate principal amount equal to the
unconverted portion of the principal amount of such Security,
having endorsed thereon a Guarantee duly executed by the
Guarantor.
(e) No fractional shares of Common Stock shall be
issued or delivered upon conversion of Securities. If more than
one Security shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock which
shall be issuable or deliverable upon conversion thereof shall be
computed on the basis of the aggregate principal amount of the
Securities (or, in the case of Registered Securities or Bearer
Securities of a denomination other than $1,000, specified
portions thereof) so surrendered. Instead of any fractional
share of Common Stock which would otherwise be issuable or
deliverable upon conversion of any Security or Securities (or, in
the case of Registered Securities or Bearer Securities of a
denomination other than $1,000, specified portions thereof), the
Company shall pay a cash adjustment in respect of such fraction
in an amount equal to the same fraction of the Closing Price (as
defined in Section 4(c)(v) of the Registered Securities and
Bearer Securities) for a share of Common Stock at the close of
business on the day preceding the day of conversion.
(f) Whenever the Conversion Price is adjusted as
provided in the Registered Securities and Bearer Securities:
(i) the Company shall compute the adjusted
Conversion Price in accordance with the terms of the
Registered Securities and Bearer Securities and shall
prepare a certificate signed by the President, any Vice
President or the Treasurer of the Company setting forth the
adjusted Conversion Price and showing in reasonable detail
the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Conversion
Agent and at each office or agency maintained for the
purpose of conversion of Securities pursuant to Section
12(f) hereof; and
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(ii) a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted Conversion
Price shall forthwith be prepared, and, as soon as
practicable after it is prepared, the Company shall promptly
cause a notice setting forth the adjusted Conversion Price
to be given to the holders of the Securities. Such notice
shall be published on behalf and at the expense of the
Company in Authorized Newspapers on a Business Day in New
York City and in London and, if the Securities are listed on
the Luxembourg Stock Exchange and so long as listed thereon,
in an Authorized Newspaper in Luxembourg, or, if publication
in either London or Luxembourg is not practical, in an
Authorized Newspaper in any country in Western Europe, as
set forth in Section 19 of this Agreement and Section 4 of
the Registered Securities and Bearer Securities.
(g) In case:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock payable otherwise
than in cash out of its retained earnings (excluding
dividends payable in stock for which adjustment is made
pursuant to the terms of the Registered Securities and
Bearer Securities); or
(ii) the Company shall authorize the granting to
the holders of its Common Stock of rights or warrants to
subscribe for or purchase any shares of capital stock of any
class or of any other rights; or
(iii) of any reclassification of the Common Stock
of the Company (other than a subdivision or combination of
its outstanding shares of Common Stock), or of any
consolidation with, or merger of the Company into, any other
corporation, or of any merger of another corporation into
the Company (other than a merger which does not result in
any reclassification, conversion, exchange or cancellation
of outstanding shares of Common Stock of the Company), or of
any sale or transfer of all or substantially all of the
assets of the Company (which shall not include the sale or
transfer of any portion of the assets of the Company to any
corporation which, immediately following such transfer is at
least 51% owned by the Company, provided that such sale or
transfer does not result in the reclassification,
conversion, exchange or cancellation of outstanding shares
of Common Stock of the Company); or
(iv) of the involuntary dissolution, liquidation
or winding up of the Company; or
(v) the Company proposes to take any other action
which would require an adjustment of the Conversion Price
pursuant to the Registered Securities and Bearer Securities;
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then the Company shall cause to be filed with the Conversion
Agent and at each office or agency maintained for the
purpose of conversion of Securities a notice setting forth
the adjusted Conversion Price and shall cause notice to be
given as provided in Section 19 except that notice need be
given once at least 20 days (or 10 days in any case
specified in clause (i) or (iii) above) prior to the
applicable record date hereinafter specified, stating (x)
the date on which a record is to be taken for the purpose of
such dividend, distribution, rights or warrants or, if a
record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants is to be determined, or (y)
the date on which a reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for the
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. The failure to give
notice required by this Section or any defect therein shall
not affect the legality or validity of any dividend,
distribution, rights, warrants, reclassification,
consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, or the vote on any such action.
(h) The Company shall, at all times, have reserved and
available, free from preemptive rights, out of its authorized but
unissued shares of Common Stock, for the purpose of effecting the
conversion of Securities, the full number of Conversion Shares
then issuable upon the conversion of all Securities (based on the
aggregate principal amount of Securities outstanding).
(i) The Company shall file, as soon as practicable
following the Closing Date, a shelf registration statement with
the United States Securities and Exchange Commission covering the
resale of shares of Common Stock issuable upon conversion of the
Restricted Securities ("Registrable Securities"); provided that
any holder of any Restricted Securities shall not sell any shares
pursuant to such registration statement unless and until it
provides to the Company such information as the Company may
reasonably request for use in connection with the identification
of such holder as a selling stockholder in such registration
statement, or any prospectus included therein, and no such sale
shall be made by such holder pursuant to such registration
statement unless and until such information is included by the
Company in such registration statement or prospectus. The
Company shall in good faith use its best efforts and at its cost
to cause such registration statement to be declared effective as
promptly as practicable thereafter and to include in such
registration statement the information provided by a holder as a
selling stockholder and shall notify the Fiscal Agent of the
effectiveness thereof and agrees to use its best efforts to (i)
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cause all registrations with, and to obtain any approvals by, any
governmental authority under any Federal or state law of the
United States that may be required in connection with the
conversion of the Securities into Common Stock and the resale
thereof, (ii) maintain the effectiveness of such registrations
until the earlier of (a) three years from the latest date of
original issuance of the Securities hereunder, or (b) the date
that Rule 144(k) under the Securities Act (or successor
provision) is available for the resale of the shares of Common
Stock issuable upon conversion of the Restricted Securities (or
other securities issuable upon conversion of the Securities) and
(iii) to list the shares of Common Stock required to be issued or
delivered upon conversion of Securities (or other securities
issuable upon conversion of the Securities) prior to such issue
or delivery on such national securities exchange or automated
over-the-counter trading market where such Common Stock is listed
or traded at the time of such delivery. The Company and the
Guarantor shall, without limitation as to time, jointly and
severally indemnify and hold harmless, to the fullest extent
permitted by law, each holder of Registrable Securities, the
officers, directors and agents and employees of each of them,
each person who controls such holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended) and the officers, directors,
agents and employees of any such controlling person, from and
against all losses, claims, damages, liabilities, costs
(including, without limitation, the costs of preparation and
attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any such
registration statement, or related prospectus or in any amendment
or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are based
solely upon information, if any, furnished in writing to the
Company by such holder expressly for use therein; provided, that
the Company and the Guarantor shall not be liable to any holder
of Registrable Securities to the extent that any such Losses
arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any
preliminary prospectus if either (A)(i) such holder failed to
send or deliver a copy of the final prospectus with or prior to
the delivery of written confirmation of the sale by such holder
of a Registrable Security to the person asserting the claim from
which such Losses arise and (ii) the prospectus would have
completely corrected such untrue statement or alleged untrue
statement or such omission or alleged omission; or (B)(i) such
untrue statement or alleged untrue statement, omission or alleged
omission is completely corrected in an amendment or supplement to
the prospectus and (ii) having previously been furnished by or on
behalf of the Company with copies of the prospectus as so amended
or supplemented, such holder thereafter fails to deliver such
prospectus as so amended or supplemented, prior to or
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concurrently with the sale of a Registrable Security to the
person asserting the claim from which such Losses arise.
Promptly after receipt by an indemnified party under this
Paragraph (i) of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect
thereof is to be made against the Company or the Guarantor under
this Paragraph (i) notify the Company or the Guarantor, as the
case may be, in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the Company
or the Guarantor, as the case may be, shall not relieve the
Company or the Guarantor, as the case may be, from any liability
which it may have to an indemnified party otherwise than under
this Paragraph (i). If any such claim or action shall be brought
against an indemnified party, and it shall notify the Company or
the Guarantor thereof, the Company or the Guarantor, as the case
may be, shall be entitled to participate therein and, to the
extent that the Company or the Guarantor, as the case may be,
wishes, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
Company or the Guarantor, as the case may be, to the indemnified
party of its election to assume the defense of such claim or
action, the Company or the Guarantor, as the case may be, shall
not be liable to the indemnified party under this Paragraph (i)
for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof;
provided, however, if the defendants in any such action include
both an indemnified party and the Company or the Guarantor and
the indemnified party shall have reasonably concluded that there
may be legal defenses available to it and for other indemnified
parties that are different from or additional to those available
to the Company or the Guarantor, as the case may be, the
indemnified party or parties under this Paragraph (i) shall have
the right to employ not more than one counsel to represent them
and, in that event, the reasonable fees and expenses of not more
than one such separate counsel shall be paid by the Company and
the Guarantor. Neither the Company nor the Guarantor shall be
liable for any settlement effected without its written consent of
any claim or action.
(j) The Company covenants that all shares of Common
Stock which may be issued or delivered upon conversion of
Securities (or other securities issuable upon conversion of the
Securities) will upon issuance be fully paid and nonassessable
and, except as provided in Section 13 hereof, the Company will
pay all stamp, excise or similar taxes or duties, liens and
charges with respect to the issue thereof.
(k) All converted Securities shall be held by the
Company, and may, at any time, be delivered to the Fiscal Agent
for cancellation, which shall hold or dispose of the same in
accordance with its policy for disposal of canceled securities or
as otherwise directed by the Company. Converted Securities shall
not be transferred. The Conversion Agent shall give the Company
prompt notice of all Securities which have been converted, and if
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the Fiscal Agent is not also the Conversion Agent, the Company
will promptly give, or cause to be given, written notice to the
Fiscal Agent of the serial numbers of all Securities which have
been converted.
(1) In case of any consolidation with, or merger of
the Company into, any other corporation, or in case of any merger
of another corporation into the Company (other than a merger
which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of
the Company), or in case of any sale or transfer of all or
substantially all of the assets of the Company (which shall not
include the sale or transfer of any portion of the assets of the
Company to any corporation which, immediately following such
transfer is at least 51% owned by the Company, provided that such
sale or transfer does not result in the reclassification,
conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), the corporation formed by such
consolidation or resulting from such merger, or which acquires
such assets, as the case may be, shall execute and deliver to the
Fiscal Agent an amendment to the Fiscal Agency Agreement
providing that the holder of each Registered Security and Bearer
Security shall have the right during the period such Security
shall be convertible as specified in the Registered Securities
and Bearer Securities to convert such Security only into the kind
and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which such
Security might have been converted immediately prior to such
consolidation, merger, sale or transfer, assuming, if such
consolidation, merger, sale or transfer is prior to the period
such Security shall be convertible as specified in the Registered
Securities and Bearer Securities, that the Securities were
convertible at such time at the initial Conversion Price as
adjusted pursuant to the terms of the Registered Securities and
Bearer Securities. Such amendment shall provide for adjustments
which, for events subsequent to the effective date of such
amendment, shall be as nearly equivalent as may be practicable to
the adjustments provided for in the Registered Securities and the
Bearer Securities. The above provisions of this Section shall
similarly apply to successive consolidations, mergers, sales or
transfers.
(m) Subject to Section 11(j) hereof, neither the
Fiscal Agent nor the Conversion Agent or conversion agency
appointed by the Company shall at any time be under any duty or
responsibility to any holder of Securities to determine whether
any facts exist which may require any adjustment of the
Conversion Price, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method
employed, or herein or in the Registered Securities and Bearer
Securities provided to be employed, in making the same. Neither
the Fiscal Agent nor the Conversion Agent or conversion agency
appointed by the Company shall be accountable with respect to the
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validity or value (or the kind or amount) of any shares of Common
Stock or of any securities or property which may at any time be
issued or delivered upon the conversion of any Security; and
neither the Fiscal Agent nor the Conversion Agent or conversion
agency appointed by the Company makes any representation with
respect thereto. Neither the Fiscal Agent nor the Conversion
Agent or conversion agency appointed by the Company shall be
responsible for any acts or omissions of the Company including
without limitation any failure of the Company to issue, transfer
or deliver any certificates representing shares of Common Stock
or other securities or property or to make any cash payment upon
the delivery of any Security for the purpose of conversion or to
comply with any of the covenants contained in this Section 7.
(n) Any Common Stock issued upon conversion of a
Restricted Security ("Restricted Common Stock") at any time prior
to the date which is three years (or the then applicable holding
period under Rule 144(k) under the Securities Act (or successor
provision)) after the date of original issuance of such
Restricted Security and the last date on which the Company or any
affiliate of the Company was the owner thereof (or any
predecessor), and when a registration statement in respect of
such Common Stock is not effective under the Securities Act,
shall be subject to the restrictions on transfer set forth in
Section 3 hereof to the same extent as such Restricted Securities
which were so converted. All shares of Restricted Common Stock
shall bear the legend and transfer requirements set forth in
Section 3(f) hereof, with such modifications thereto as the
Company shall deem appropriate.
8. Surrendered Securities.
All Securities, together with any coupons appertaining
thereto, surrendered for payment, redemption, retirement,
transfer or exchange and all coupons paid through the application
of interest installments and all Securities purchased by the
Company or any subsidiary shall be delivered to the Fiscal Agent.
In any such case the Fiscal Agent shall cancel all Securities and
coupons not previously canceled and destroy all such Securities
and coupons so delivered and shall furnish to the Company and the
Guarantor a certificate with respect to such destruction. Such
certificate shall state, in the case of destruction of the
Regulation S Global Security, that all certificates of the
Euroclear Operator or Cedel as to beneficial ownership required
by Section 4 hereof have been duly presented by the Euroclear
Operator or Cedel.
9. Mutilated, Destroyed, Stolen or Lost Securities.
The Fiscal Agent is hereby authorized, in accordance with
the provisions of the Securities and this Section, from time to
time to authenticate and deliver Securities in exchange for or in
lieu of Securities that become mutilated, destroyed, stolen or
lost, upon receipt of indemnity and such other documents or proof
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as may be required in form and substance satisfactory to the
Fiscal Agent, the Company and the Guarantor. Every Security
authenticated and delivered in exchange for or in lieu of any
such Security shall have endorsed thereon a Guarantee and shall
be considered obligations of the Company and the Guarantor and
shall carry all rights to interest accrued and unpaid and to
accrue which were carried by such Security, and notwithstanding
anything to the contrary herein contained, any new Bearer
Security shall have attached thereto such coupons that neither
gain nor loss in interest shall result from such exchange or
substitution.
10. Signatures.
(a) Securities shall be executed on behalf of the
Company by its President, its Secretary, any Vice President or
its Treasurer, any of whose signatures may be manual or in
facsimile, and any coupons appertaining thereto shall be executed
on behalf of the Company by the facsimile signature of its
President, its Secretary, any Vice President or its Treasurer.
Any signature in facsimile may be imprinted or otherwise
reproduced on the Securities. The Company may adopt and use the
signature or facsimile signature of any person who shall be a
President, Secretary, Vice President or Treasurer at the time of
the execution of the Securities, notwithstanding the fact that at
the time the Securities shall be authenticated and delivered, or
disposed of, such person shall have ceased to have held such
office by virtue of which such person so executed such security.
(b) The Guarantees shall be executed on behalf of the
Guarantor by its President, any Vice President, or its Treasurer,
manually or in facsimile, and a facsimile of its corporate seal
shall be impressed, imprinted or engraved thereon and shall be
attested by its Secretary or one of its Assistant Secretaries,
whose signature may be manual or in facsimile, prior to the
authentication of the Securities on which they are endorsed. Any
signature in facsimile may be imprinted or otherwise reproduced
on the Guarantees. The Guarantor may adopt and use the signature
or facsimile signature of any person who shall be any such
officer of the Guarantor at the time of the execution of the
Guarantee, notwithstanding the fact that at the time the
Securities shall be authenticated and delivered, or disposed of,
such person shall have ceased to be such officer of the
Guarantor.
11. Agreements Concerning Agents.
Each of the Agents accepts its obligations herein and in the
Securities, upon the terms and conditions hereof and thereof,
including the following, to all of which the Company and the
Guarantor agree and to all of which the rights hereunder of the
holders from time to time of the Securities and coupons shall be
subject:
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(a) Each of the Agents shall be entitled to reasonable
compensation for all services rendered by such Agent, as
separately agreed by the Company and the Agent, and the
Company and the Guarantor agree promptly to pay such
compensation and to reimburse each of the Agents for the
reasonable out-of-pocket expenses (including, but not
limited to, counsel fees) incurred by such Agent in
connection with the services rendered by it hereunder. The
Company and the Guarantor also agree to indemnify each of
the Agents and each other paying agency and conversion
agency of the Company for, and to hold it harmless against,
any loss, liability or expense (including the costs and
expenses of defending against any claim of liability)
incurred without negligence or bad faith on the part of such
Agent or other paying agency and conversion agency of the
Company hereunder. The obligations of the Company and the
Guarantor under this clause (a) shall survive payment of the
Securities or the resignation or removal of any Agent or
paying agency or conversion agency.
(b) In acting under this Agreement and in connection
with the Securities, each of the Agents and each other
paying agency and conversion agency of the Company is acting
solely as agent of the Company, and does not assume any
obligation, or relationship of agency or trust, for or with
any of the owners or holders of the Securities or coupons,
except that all funds held by the Paying Agent or any other
paying agency of the Company for payment of principal of,
premium, if any, or interest on (or Additional Amounts, if
any, on) the Securities shall be held in trust but need not
be segregated from other funds except as required by law and
as set forth herein and in the Securities, and shall be
applied as set forth herein and in the Securities; provided,
however, that monies paid by the Company or the Guarantor to
the Paying Agent or any other paying agency of the Company
for the payment of principal of or interest on (or
Additional Amounts, if any, on) Securities remaining
unclaimed at the end of two years after such principal or
interest (or Additional Amounts, if any) shall have become
due and payable shall be repaid to the Company or the
Guarantor, as provided and in the manner set forth in the
Securities, whereupon the aforesaid trust shall terminate
and all liability of the Paying Agent or such other paying
agency or the Company with respect thereto shall cease.
(c) Each of the Agents and each other paying agency
and conversion agency of the Company may consult with one or
more counsel satisfactory to it (including counsel to the
Company or the Guarantor), and the written opinion of such
counsel shall be full and complete authorization and
protection in respect of any action taken, omitted or
suffered by it hereunder in good faith and in accordance
with the opinion of such counsel.
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(d) Each of the Agents and each other paying agency
and conversion agency of the Company shall be protected and
shall incur no liability for or in respect of any action
taken, omitted or suffered by it in reliance upon any
Security, Guarantee or coupon, notice, direction, consent,
certificate, affidavit, statement or other paper or document
believed in good faith by such Agent or such other paying
agency and conversion agency of the Company to be genuine
and to have been signed by the property parties.
(e) Each of the Agents and each other paying agency
and conversion agency of the Company, its officers,
directors and employees may become the owner of, or acquire
any interest in, any Securities or coupons, with the same
rights that it or they would have if it were not an Agent or
such other paying agency of the Company hereunder, and may
engage or be interested in any financial or other
transaction with the Company, the Guarantor and their
affiliates and may act on, or as depositary, trustee or
agent for, any committee or body of holders of Securities or
other obligations of the Company or the Guarantor, as freely
as if it were not an Agent or a paying agency or conversion
agency of the Company hereunder.
(f) Neither the Paying Agent nor any other paying
agency of the Company shall be under any liability for
interest on any monies at any time received by it pursuant
to any of the provisions of this Agreement or of the
Securities.
(g) The recitals contained herein and in the
Securities (except in the Fiscal Agent's certificates of
authentication), shall be taken as the statements of the
Company or the Guarantor, as the case may be, and the Agents
assume no responsibility for the correctness of the same.
None of the Agents makes any representation as to the
validity or sufficiency of this Agreement or the Securities
or the coupons or the Guarantees, except for such Agent's
due authorization to execute this Agreement. Neither the
Agents nor any other paying agency or conversion agency of
the Company shall be accountable for the use or application
by the Company of the proceeds of any Securities
authenticated and delivered by the Fiscal Agent in
conformity with the provisions of this Agreement.
(h) The Agents and each other paying agency and
conversion agency of the Company shall be obligated to
perform such duties and only such duties as are herein and
in the Securities specifically set forth and no implied
duties or obligations shall be read into this Agreement or
the Securities against the Agents or any other paying agency
of the Company. The Agents shall not be under any
obligation to take any action hereunder which may tend to
involve them in any expense or liability, the payment of
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which, within a reasonable time, is not, in their reasonable
opinion, assured to them.
(i) Unless herein or in the Securities otherwise
specifically provided, any order, certificate, notice,
request, direction, or other communication, from the Company
or the Guarantor made by or given by it under any provision
of this Agreement shall be sufficient if signed by the
President, the Secretary, any Vice President or the
Treasurer of the Company or the Guarantor, as the case may
be.
(j) Anything in this Agreement to the contrary
notwithstanding, none of the Agents shall incur any
liability hereunder, except as a result of negligence or bad
faith attributable to it or its officers or employees, and
shall incur no liability for the negligence or bad faith of
its agents appointed by it with due care; provided that the
Agent shall notify the Company and the Guarantor of the
appointment of any such agents.
(k) The Agents shall not be liable for any loss caused
by events beyond the reasonable control of the Agents,
including any malfunction, interruption of or error in the
transmission of information caused by any machines or
systems or interruption of communication facilities,
abnormal operating conditions or acts of God. The Agents
shall have no liability whatsoever for any consequential,
special, indirect or speculative losses or damages.
12. Offices, Resignation, Successors, Etc. of Agents,
Paying, Conversion and Transfer Agencies.
(a) The Company agrees that, until none of the
Securities and coupons are outstanding or until monies for the
payment of all principal of, premium, if any, and interest on
(and Additional Amounts, if any, on) all outstanding Securities
shall have been made available at the office of the Paying Agent
and shall have been returned to the Company as provided in the
Securities, there shall at all times be a Fiscal Agent in the
Borough of Manhattan, New York City, which shall be a bank or
trust company organized and doing business under the laws of the
United States of America or of any State of the United States of
America, in good standing and authorized under such laws to
exercise corporate trust powers, a Paying Agent, a Conversion
Agent and a Transfer Agent having offices in New York City, which
shall be a bank or trust company organized, in good standing and
doing business under the laws of the United States of America or
of any State of the United States of America, and a paying
agency, a conversion agency and a transfer agency in at least one
city in Western Europe, which shall be Luxembourg if the
Securities are listed on the Luxembourg Stock Exchange and so
long as listed thereon.
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(b) Each of the Agents may at any time resign as such
Agent by giving written notice to the Company and to the
Guarantor of such intention on its part, specifying the date on
which its desired resignation shall become effective; provided,
however, that such date shall not be less than 90 days after
receipt of such notice by the Company and the Guarantor unless
the Company and the Guarantor agree to accept less notice. Each
of the Agents hereunder may be removed at any time by the filing
with it of any instrument in writing signed on behalf of the
Company and the Guarantor and specifying such removal and the
date when it is intended to become effective. Such resignation
or removal shall take effect upon the date of the appointment by
the Company and the Guarantor, as hereinafter provided, of a
successor Fiscal Agent, Conversion Agent or Paying Agent, as the
case may be, and the acceptance of such appointment by such
successor Agent. Upon its resignation or removal, each of the
Agents shall be entitled to the payment by the Company and the
Guarantor of its compensation for the services rendered hereunder
and to the reimbursement of all reasonable out-of-pocket expenses
incurred in connection with the services rendered hereunder by
such Agent.
(c) In case at any time any of the Agents shall
resign, or shall be removed, or shall be incapable of acting, or
shall file a voluntary petition as a debtor under Chapter 7 or 11
of Title 11 of the United States Code or have an order for relief
entered against it as a debtor under Chapter 7 or 11 of Title 11
of the United States Code or make an assignment for the benefit
of its creditors or consent to the appointment of a receiver of
all or any substantial part of its property, or shall admit in
writing its inability to pay or meet its debts as they mature, or
if an order of any court shall be entered approving any petition
filed by or against the Fiscal Agent under any legislation
similar to the provisions of Title 11 of the United States Code
or against any of the Agents under the provisions of any
legislation similar to the provisions of Title 11 of the United
States Code, or if a receiver of it or of all or any substantial
part of its property shall be appointed, or if any public officer
shall take charge or control of it or of its property or affairs,
for the purpose of rehabilitation, conservation or liquidation, a
successor Agent, qualified as aforesaid, shall be appointed by
the Company and the Guarantor by an instrument in writing. Upon
the appointment as aforesaid of a successor Agent and acceptance
by it of such appointment, the Agent so superseded shall cease to
be such Agent hereunder. If no successor Agent shall have been
so appointed by the Company and the Guarantor and shall have
accepted appointment as hereinafter provided, any holder of a
Security, on behalf of itself and all others similarly situated,
or any Agent may petition any court of competent jurisdiction for
the appointment of a successor Agent and shall promptly notify
the Company and the Guarantor of such action.
(d) Any successor Fiscal Agent, Conversion Agent,
Transfer Agent or Paying Agent appointed hereunder shall execute,
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acknowledge and deliver to its predecessor and to the Company and
the Guarantor an instrument accepting such appointment hereunder,
and thereupon such successor Agent, without any further act, deed
or conveyance, shall become vested with all the authority,
rights, powers, trusts, immunities, duties and obligations of
such predecessor with like effect as if originally named as such
Agent hereunder, and such predecessor, upon payment of its
charges and disbursements then unpaid, shall thereupon become
obligated to transfer, deliver and pay over, and such successor
Agent shall be entitled to receive, all monies, securities or
other property on deposit with or held by such predecessor, as
such Agent hereunder.
(e) Any corporation or bank into which any of the
Agents hereunder may be merged or converted, or any corporation
or bank with which such Agent may be consolidated, or any
corporation or bank resulting from any merger, conversion or
consolidation to which such Agent shall be a party, or any
corporation or bank to which such Agent shall sell or otherwise
transfer all or substantially all the assets and business of such
Agent, or any corporation to which the Fiscal Agent shall sell or
otherwise transfer all or substantially all of its corporate
trust business, provided that it shall be qualified as aforesaid,
shall be the successor to such Agent under this Agreement without
the execution or filing of any document or any further act on the
part of any of the parties hereto.
(f) So long as there shall be a Fiscal Agent and
Paying Agent hereunder, the Company shall maintain agencies (i)
where Registered Securities (but not Bearer Securities or
coupons) may be presented for surrender for payment (and for the
payment of Additional Amounts on the Registered Securities, if
any) and where Securities may be surrendered for conversion in
the Borough of Manhattan, New York City, and (ii) where Bearer
Securities and coupons may be surrendered for payment (and for
the payment of Additional Amounts (pursuant to Section 2 of the
Bearer Securities) on Bearer Securities, if any) and where Bearer
Securities may be surrendered for conversion in at least one city
in Western Europe, which shall be Luxembourg if the Securities
are listed on the Luxembourg Stock Exchange and so long as listed
thereon. The Company now intends to maintain additional agencies
(subject to applicable laws and regulations) where Bearer
Securities may be surrendered for payment (and for the payment of
Additional Amounts (pursuant to Section 2 of the Bearer
Securities) on Bearer Securities, if any), where Registered
Securities may be surrendered for payment and where Securities
may be surrendered for conversion in London, England and, if the
Securities are listed on the Luxembourg Stock Exchange and so
long as listed thereon, Luxembourg, and during such period to
keep the Agents advised of the names and locations of such
agencies. Unless the Company shall otherwise notify each of the
Agents in writing, the sole such paying agencies and conversion
agencies shall be the agencies specified in the Securities. The
Company authorizes the Paying Agent to pay to or to the order of
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the aforesaid agencies, upon demand by such agencies, funds for
the payment of the principal of, premium, if any, and interest on
(and Additional Amounts pursuant to Section 2 of the Registered
Securities and Bearer Securities, if any, on) the Securities.
Except as otherwise arranged by the Company, the Fiscal Agent
shall arrange for the payment of the compensation of such paying
agencies for their services as such, and the Company and the
Guarantor shall pay to the Fiscal Agent from time to time
sufficient funds to make such payments.
(g) So long as there shall be a Fiscal Agent, Paying
Agent and Conversion Agent hereunder, the Company shall maintain
a Security Registrar and additional transfer agencies (the
"Transfer Agents") (i) where Registered Securities may be
surrendered for exchange for other Registered Securities in New
York City and (ii) in at least one city in Western Europe, which
shall be Luxembourg if the Securities are listed on the
Luxembourg Stock Exchange and so long as listed thereon, where
Bearer Securities may be delivered in exchange for Bearer
Securities or for Registered Securities. Consistent with
applicable laws and regulations, including the provisions of the
federal income tax laws of the United States, such agencies may
be the same agencies as or different agencies from those
maintained by the Company pursuant to Section 12(f).
The Company hereby appoints, subject to the listing of the
Securities on the Luxembourg Stock Exchange, Banque
Internationale a Luxembourg, 69, route d'Esch, L-1470 Luxembourg
Ville, Luxembourg, as Transfer Agent for such exchanges. The
transfer, exchange and registration of transfer or exchange of
Registered Securities shall be made by the Fiscal Agent in New
York City.
13. Taxes.
The Company will pay all stamp taxes and other similar
duties, if any, that may be imposed by the United States of
America or the United Kingdom, or any state or political
subdivision thereof or taxing authority therein, with respect to
the execution or delivery of this Agreement, or the issuance of
the Regulation S Global Security or the Guarantees, or the
exchange from time to time of the Regulation S Global Security
for Registered Securities and Bearer Securities, or with respect
to the issue or delivery of shares of Common Stock on conversion
of Securities; provided, however, that the Company shall not be
required to pay any tax or duty which may be payable in respect
of any transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the holder of the
Security or Securities to be converted, and no such issue or
delivery shall be made unless and until the person requesting
such issue has paid to the Company the amount of any such tax or
duty or has established to the satisfaction of the Company that
such tax or duty has been paid; and further provided that the
Company shall not be required to pay any tax or duty that may be
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payable in respect of any accrued interest paid in connection
with the conversion of the Securities.
14. Meetings and Votes of Holders.
(a) A meeting of holders of Securities may be called
at any time and from time to time pursuant to this Section for
any of the following purposes: (i) to give any notice to the
Company, to the Guarantor or to the Fiscal Agent, or to give any
directions to the Fiscal Agent, or to consent to the waiving of
any default hereunder or under the Registered Securities and
Bearer Securities and its consequences, or to take any other
action authorized to be taken by holders of Securities pursuant
to Section 9 of the Registered Securities and Bearer Securities;
or (ii) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount
of the Securities under any other provision of this Agreement,
the Registered Securities and Bearer Securities or under
applicable law.
(b) Meetings of holders of Securities may be held at
such place or places in New York City or London as the Fiscal
Agent or, in case of its failure to act, the Company, the
Guarantor or the holders calling the meeting shall from time to
time determine.
(c) The Fiscal Agent may at any time call a meeting of
holders of Securities to be held at such time and at such place
in any of the locations designated in Section 14(b) hereof as the
Fiscal Agent shall determine. Notice of every meeting of holders
shall be made as specified in Section 19 hereof, except that such
notice shall set forth the time and the place of such meeting, in
general terms the action proposed to be taken at such meeting and
a general description of regulations applicable to such meeting,
and shall be published at least three times in the publications
specified in such Section 19, the first publication to be not
less than 21 nor more than 180 days prior to the date fixed for
the meeting.
(d) In case at any time the Company, the Guarantor or
the holders of at least 25% in aggregate principal amount of the
Securities shall have requested the Fiscal Agent to call a
meeting of the holders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting,
and the Fiscal Agent shall not have given the first notice of
such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company, the Guarantor or the holders
of Securities in the amount above specified may determine the
time and the place in either of the locations designated in
Section 14(b) hereof for such meeting and may call such meeting
to take any action authorized in Section 14(a) hereof by giving
notice thereof as provided in Section 14(c) hereof.
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(e) To be entitled to vote at any meeting of holders
of Securities, a person shall be (i) a holder of one or more
Securities, or (ii) a person appointed by an instrument in
writing as proxy for a holder or holders of Securities by such
holder or holders, which proxy need not be a holder of
Securities. The only persons who shall be entitled to be present
or to speak at any meeting of holders shall be the persons
entitled to vote at such meeting and their counsel and any
representatives of the Fiscal Agent and its counsel and any
representatives of the Company and its counsel and any
representatives of the Guarantor and its counsel.
(f) The persons entitled to vote a majority in
principal amount of the outstanding Securities shall constitute a
quorum for the transaction of all business specified in Section
14(a) hereof. No business shall be transacted in the absence of a
quorum unless a quorum is represented when the meeting is called
to order. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if
convened at the request of the holders of Securities (as provided
in Section 14(d) hereof), be dissolved. In any other case the
meeting shall be adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting shall be given as provided in Section
14(c) hereof except that such notice need be published only once
but must be given not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Subject to the
foregoing, at the reconvening of any meeting adjourned for a lack
of a quorum the persons entitled to vote 25% in principal amount
of the Securities outstanding shall constitute a quorum for the
taking of any action set forth in the notice of the original
meeting. Notice of the reconvening of an adjourned meeting shall
state expressly the percentage of the aggregate principal amount
of the Securities that shall constitute a quorum. At a meeting
or an adjourned meeting duly reconvened and at which a quorum is
present as aforesaid, any resolution and all matters (except as
limited by Section 9 of the Registered Securities and Bearer
Securities) shall be effectively passed and decided if passed or
decided by the persons entitled to vote a majority in principal
amount of the Securities represented and voting at such meeting,
provided that such amount shall be not less than 25% in principal
amount of the Securities outstanding. Any holder of a Security
who has executed an instrument in writing appointing a person as
his proxy shall be deemed to be present for the purposes of
determining a quorum and be deemed to have voted; provided,
however, that such holder shall be considered as present or
voting only with respect to the matters covered by such
instrument in writing. Any resolution passed or decision taken
at any meeting of the holders of Securities duly held in
accordance with this Section 14 shall be binding on all the
holders of Securities whether or not present or represented at
the meeting.
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(g) Notwithstanding any other provision of this
Agreement, the Fiscal Agent may make such reasonable regulations
as it may deem advisable for any meeting of holders of Securities
in regard to proof of the holding of Securities and of the
appointment of proxies and in regard to the appointment and
duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Bearer
Securities shall be proved by the production of the Bearer
Securities or by a certificate executed, as depositary, by, and
the appointment of any proxy shall be proved by having the
signature of the person executing the proxy witnessed or
guaranteed by, in each case, any trust company, bank or banker
satisfactory to the Fiscal Agent. Such regulations may provide
that written instruments appointing proxies, regular on their
face, may be presumed valid and genuine without the proof
specified herein or other proof. The holding of Registered
Securities shall be proved by the registry books maintained in
accordance with Section 2(d) hereof or by a certificate or
certificates of the Fiscal Agent in its capacity as Company's
agent for the maintenance of such books.
(h) The Fiscal Agent shall, by an instrument in
writing, appoint a temporary chairperson and a temporary
secretary of the meeting, unless the meeting shall have been
called by the Company, the Guarantor or by the holders of
Securities or the Fiscal Agent at the request of the Company, the
Guarantor or the holders of Securities as provided in Section
14(d) hereof and in the Securities, in which case the Company,
the Guarantor or the holders calling the meeting, as the case may
be, shall in like manner appoint a temporary chairperson and a
temporary secretary. A permanent chairperson and a permanent
secretary of the meeting shall be elected by vote of the holders
of a majority in principal amount of the Securities represented
at the meeting and entitled to vote.
(i) At any meeting each holder or proxy shall be
entitled to one vote for each U.S. $1,000 principal amount of
Securities held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any
Securities challenged as not outstanding and ruled by the
chairperson of the meeting to be not outstanding. The
chairperson of the meeting shall have no right to vote, except as
a holder or proxy.
(j) Any meeting of holders of Securities duly called
pursuant to Section 14(c) or 14(d) hereof at which a quorum is
present may be adjourned from time to time by vote of the holders
(or proxies for the holders) of a majority in principal amount of
the Securities represented at the meeting and entitled to vote;
and the meeting may be held as so adjourned without further
notice.
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(k) The vote upon any resolution submitted to any
meeting of holders of Securities shall be by written ballots on
which shall be subscribed the signatures of the holders of
Securities or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them.
The permanent chairperson of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record, at least
in triplicate, of the proceedings of each meeting of holders of
Securities shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts
setting forth a copy of the notice of the meeting and showing
that said notice was published as provided in Section 14(c) or
14(d) hereof and, if applicable, Section 14(f) hereof. Each copy
shall be signed and verified by the affidavits of the permanent
chairperson and secretary of the meeting, and one such copy shall
be delivered to the Company, another to the Guarantor and another
to the Fiscal Agent to be preserved by the Fiscal Agent, the copy
delivered to the Fiscal Agent to have attached thereto the
ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
15. Merger, Consolidation or Sale of Assets.
(a) If at any time there shall be a merger,
consolidation, sale or conveyance of assets or assumption of
obligations to which any of the covenants contained in Section 6
of the Registered Securities and Bearer Securities or Section 3
of the Guarantees, is applicable, then in any such event the
successor or assuming corporation referred to therein will
promptly deliver to the Fiscal Agent:
(i) a certificate signed by an executive officer of
such successor or assuming corporation stating that as of the
time immediately after the effective date of any such
transaction, the covenants of the Company or the Guarantor, as
the case may be, contained in the Registered Securities and
Bearer Securities or the Guarantees, as applicable, have been
complied with and the successor or assuming corporation is not in
default under the provisions of this Agreement or the Securities
or the Guarantees, as applicable; and
(ii) a written opinion of legal counsel (who may be an
employee of or counsel to the successor or assuming corporation)
stating that, in such counsel's opinion, such covenants have been
complied with and that any instrument or instruments executed in
the performance of such covenants comply with the requirements
thereof.
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In case of any such merger, consolidation, sale, conveyance
or assumption, such successor or assuming corporation shall
succeed to and be substituted for the Company or the Guarantor,
as the case may be, with the same effect, subject to (in the case
of a merger to which the Company is a party) Section 6(b) of the
Registered Securities and Bearer Securities, as if such successor
or assuming corporation had been named herein and in the
Registered Securities and Bearer Securities or the Guarantees, as
applicable, as the Company or the Guarantor, as the case may be;
the Company or the Guarantor, as the case may be, shall thereupon
be relieved of any further obligation or liability hereunder or
upon the Securities or the Guarantees, as applicable, provided
that any successor or assuming corporation shall have the right
to redeem the Securities, pursuant to Section 3(b) of the
Registered Securities and Bearer Securities, only as a result of
circumstances which occur subsequent to such merger,
consolidation, sale, conveyance or assumption and as a result of
which the Company would have had such right if the Company had
remained the obligor on the Securities. The Company or the
Guarantor, as the case may be, as the predecessor corporation may
thereupon or at any time thereafter be dissolved, wound up or
liquidated. If applicable, such successor or assuming
corporation thereupon may cause to be signed, and may issue
either in its own name or in the name of the Company any or all
of the Securities issuable hereunder which theretofore shall not
have been executed on behalf of the Company and delivered to the
Fiscal Agent; and, upon the order of such successor or assuming
corporation, instead of the Company, and subject to all the
terms, conditions and limitations in this Agreement prescribed,
the Fiscal Agent shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered
by the officers of the Company to the Fiscal Agent for
authentication, and any Securities which such successor or
assuming corporation thereafter shall cause to be signed and
delivered to the Fiscal Agent for that purpose. If applicable,
such successor or assuming corporation may cause to be endorsed
either in its own name or in the name of the Guarantor,
Guarantees on any or all of the Securities issuable hereunder
which theretofore shall not have been so endorsed and delivered
to the Fiscal Agent. All the Securities so issued shall in all
respects have the same legal rank and benefit under this
Agreement as the Securities theretofore or thereafter issued in
accordance with the terms of this Agreement as though all of such
Securities had been issued at the date of the execution hereof.
In case of any merger, consolidation, sale, conveyance or
assumption, such changes in phraseology and form (but not in
substance) may be made in the Securities or the Guarantees
thereafter to be issued as may be appropriate.
(b) The Fiscal Agent may rely on the documents
delivered pursuant to this Agreement by any successor or assuming
corporation pursuant to this Section 15 as conclusive evidence
that any such merger, consolidation, sale, conveyance or
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assumption complies with the provisions of this Section and the
Securities.
16. Governing Law.
THIS AGREEMENT, THE SECURITIES AND ANY COUPONS APPERTAINING
THERETO AND THE GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO ITS CONFLICTS
OF LAW RULES.
17. Amendments.
This Agreement may be amended by the parties hereto, and
certain provisions hereof may be waived, in the manner provided
in Section 9 of the Registered Securities and Bearer Securities.
This Agreement may also be amended by the parties hereto, without
the consent of the holder of any Security, for the purposes set
forth in Section 9 of the Registered Securities and Bearer
Securities and for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision
contained herein or in any manner that the parties may mutually
deem necessary or desirable, and that shall not materially
adversely affect the interests of the holders of the Securities.
18. Agent for Service of Process.
As long as any of the Securities or coupons appertaining
thereto remain outstanding, the Company and the Guarantor will at
all times have an authorized agent in the City of New York, upon
whom process may be served in any legal action or proceeding
arising out of or relating to this Agreement or any Security or
any coupons appertaining thereto or any Guarantee. Service of
process upon such agent and written notice of such service mailed
or delivered to the Company or the Guarantor, as the case may be,
shall to the extent permitted by law be deemed in every respect
effective service of process upon the Company or the Guarantor,
as the case may be, in any such legal action or proceeding. Each
of the Company and the Guarantor hereby appoints the Fiscal Agent
as its agent for such purpose, and covenants and agrees that
service of process in any legal action or proceeding may be made
upon it at the office of such agent located at 450 West 33rd
Street, 15th Floor, New York, New York 10001 (or such other
address in the City of New York, as may be the principal
corporate trust office of such agent), unless and until the
Company or the Guarantor, as the case may be, shall designate
another agent for such purpose by written notice to the Fiscal
Agent. If the Fiscal Agent receives any such service of process,
it shall promptly notify the Company and the Guarantor of such
service.
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<PAGE>
19. Notices.
All notices hereunder shall be deemed to have been given
when deposited in the mail as first-class mail, registered or
certified, return receipt requested, postage prepaid, addressed
to any party hereto as follows:
The Company: 81 Wyman Street
P.O. Box 9046
Waltham, MA 02254-9046
Attn: President
with a copy to the
Guarantor and the
General Counsel of
the Guarantor
The Guarantor: 81 Wyman Street
P.O. Box 9046
Waltham, MA 02254-9046
Attn: Secretary,
with a copy to the General Counsel
The Fiscal Agent: 450 West 33rd Street
15th Floor
New York, New York 10001
Attn: Corporate Trust Department
Chemical Bank House
125 London Wall
London EC2Y 5AJ
England
Attn: Corporate Agency
The Paying Agent: 450 W. 33rd Street
15th Floor
New York, New York 10001
Attn: Corporate Trust Department
Chemical Bank House
125 London Wall
London EC2Y 5AJ
England
Attn: Corporate Agency
The Transfer Agent(1): Banque Internationale a
Luxembourg, S.A.
69, Route d'Esch
L-1470 Luxembourg Ville, Luxembourg
___________________
(1) Subject to the listing of the Securities on the Luxembourg
Stock Exchange.
42PAGE
<PAGE>
or at any other address of which any of the foregoing shall have
notified the others in writing.
Notices to holders of the Securities shall be given by
publication on a Business Day in an Authorized Newspaper. For
purposes of this Agreement, the term "Authorized Newspaper" means
an English language newspaper, customarily published on each
business day in morning editions, whether or not it shall be
published in Saturday, Sunday or holiday editions, such as The
Wall Street Journal (Eastern edition) in New York City, the
Financial Times in London and the Luxemburger Wort in Luxembourg.
If by reason of the temporary or permanent suspension of
publication of any newspaper or by reason of any other cause it
shall be impossible to make publication of such notice in an
Authorized Newspaper as herein provided, then such publication or
other notice in lieu thereof as shall be made by the Fiscal Agent
shall constitute sufficient publication of such notice, if such
publication or other notice shall, so far as may be possible,
approximate the terms and conditions of the publication in lieu
of which it is given. Notices will be mailed by the Fiscal
Agent, on behalf of and at the expense of the Company, by
first-class mail to registered holders of Registered Securities
at their registered address as the same shall appear on the books
of the Fiscal Agent on the day 15 days prior to such mailing.
The Fiscal Agent shall promptly furnish to the Company and to
each other paying agency of the Company a copy of each notice so
published or mailed.
20. Counterparts.
This Agreement may be executed in separate counterparts, and
by each party separately in a separate counterpart, each such
counterpart, when so executed and delivered, to be an original.
Such counterparts shall together constitute but one and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Fiscal Agency Agreement as of the date first above written.
THERMO TERRATECH INC.
By: Jonathan W. Painter
Name: Jonathan W. Painter
Title: Treasurer
THERMO ELECTRON CORPORATION
By: Jonathan W. Painter
Name: Jonathan W. Painter
Title: Treasurer
CHEMICAL BANK,
as Fiscal Agent
By: Trevor J. Hearn
Name: Trevor J. Hearn
Title: Attorney-in-Fact
44PAGE
<PAGE>
EXHIBIT A
(FORM OF FACE OF REGISTERED SECURITY)
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be
transferred except as a whole by the Depository to a nominee of
the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor depository or a
nominee of such successor Depository. Unless this certificate is
presented by an authorized representative of The Depository Trust
Company, a New York corporation (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.(1)
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED WITHIN THE "UNITED STATES" OR TO
"U.S. PERSONS" (AS DEFINED IN REGULATION S UNDER THE SECURITIES
ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF
THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY
WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT
WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO
THE DATE WHICH IS THREE YEARS (OR THE THEN APPLICABLE HOLDING
PERIOD UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR SUCCESSOR
PROVISION)) AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE
LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR),
EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (D) OUTSIDE THE UNITED STATES IN A
____________
(1) This paragraph should be included only if the Security is
issued in global form.
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TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE
RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR
OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSES II(D) AND (E)
IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE
FISCAL AGENT FOR SUCH ISSUER TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION
ACCEPTABLE TO THEM IN FORM AND SUBSTANCE.(2)
___________________
(2) This paragraph to be included if the Security is a
Restricted Security.
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<PAGE>
THERMO TERRATECH INC.
(Incorporated in the State of Delaware)
4-5/8% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2003
GUARANTEED ON A SUBORDINATED BASIS BY
THERMO ELECTRON CORPORATION
(Incorporated in the State of Delaware)
No. R-___________ U.S.$_______
Thermo TerraTech Inc., a corporation duly incorporated and
existing under the laws of the State of Delaware (the "Company"),
for value received, hereby promises to pay to ________________,
or registered assigns, the principal sum of __________________
United States Dollars on May 1, 2003 upon presentation and
surrender hereof and to pay interest thereon, from May 2, 1996 or
from the most recent Interest Payment Date (as defined below) to
which interest has been paid or duly provided for, semiannually
in arrears on May 1 and November 1 in each year (each an
"Interest Payment Date"), commencing November 1, 1996, at the
rate of 4-5/8% per annum, until the principal hereof is paid or
made available for payment. Interest hereon shall be calculated
on the basis of a 360-day year comprised of twelve 30-day months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Fiscal
Agency Agreement (as defined on the reverse hereof), be paid to
the person in whose name this Security is registered at the close
of business on the Record Date for such interest payment, which
shall be the April 15 or October 15 (whether or not a Business
Day (as defined on the reverse hereof)) next preceding such
Interest Payment Date. Except as otherwise provided in the
Fiscal Agency Agreement (as defined on the reverse hereof), any
such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the holder on such Record Date
and may be paid at any time in any lawful manner, all as more
fully provided in the Fiscal Agency Agreement. Payment of
interest on this Security shall be made by United States dollar
check drawn on a bank in the City of New York and mailed to the
person entitled thereto at his address as it shall appear in the
Security Register, or (if arrangements satisfactory to the
Company and the Fiscal Agent are made) by wire transfer to a
United States dollar account maintained by the payee with a bank
in the City of New York; provided, however, that if such mailing
is not possible and no such application shall have been made,
payment of interest shall be made at the principal corporate
trust office of the Fiscal Agent, or such other office or agency
of the Company as may be designated for such purpose in the City
of New York, in United States currency.
Reference is hereby made to the further provisions of this
Security set forth under Terms and Conditions of the Securities
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<PAGE>
on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Security shall not become valid or enforceable for any
purpose unless and until the certificate of authentication hereon
shall have been manually signed by a duly authorized signatory of
the Fiscal Agent.
IN WITNESS WHEREOF, the Company has caused this Security to
be duly executed in its corporate name by the manual or facsimile
signature of a duly authorized officer.
Dated:
THERMO TERRATECH INC.
By: ________________________
Name:
Title:
Attest:
_______________________
CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the
within-mentioned Fiscal Agency Agreement.
CHEMICAL BANK,
as Fiscal Agent
By: _________________________
Authorized Signatory
Dated:
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<PAGE>
(FORM OF FACE OF BEARER SECURITY)
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
TO U.S. PERSONS EXCEPT TO QUALIFIED INSTITUTIONAL BUYERS (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
RULE 144A (IF AVAILABLE) OR OTHERWISE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a)
OF THE UNITED STATES INTERNAL REVENUE CODE.
THERMO TERRATECH INC.
(Incorporated in the State of Delaware)
4-5/8% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2003
GUARANTEED ON A SUBORDINATED BASIS BY
THERMO ELECTRON CORPORATION
(Incorporated in the State of Delaware)
No. B-______________ U.S.$______
Thermo Terratech Inc., a corporation duly incorporated and
existing under the laws of the State of Delaware (the "Company"),
for value received, hereby promises to pay to bearer upon
presentation and surrender of this Security the principal sum of
__________ United States Dollars on May 1, 2003, and to pay
interest thereon from May 2, 1996, semiannually in arrears on May
1 and November 1 in each year (each an "Interest Payment Date"),
commencing November 1, 1996, at the rate of 4-5/8% per annum,
until the principal hereof is paid or made available for payment.
Interest hereon shall be calculated on the basis of a 360-day
year comprised of twelve 30-day months. Such payments (including
premium, if any) shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal
tender for the payment of public and private debts, subject to
any laws or regulations applicable thereto and to the right of
the Company (limited as provided in the Fiscal Agency Agreement
(as defined on the reverse hereof)) to terminate the appointment
of any paying agency, at the London office of Chemical Bank
located at Chemical Bank House, 125 London Wall, London EC2Y 5AJ,
England, or, if the Securities are listed on the Luxembourg Stock
Exchange and so long as listed thereon, Banque Internationale a
Luxembourg S.A., 69, Route d'Esch, L-1470 Luxembourg or at such
other offices or agencies outside the United States of America,
its territories and its possessions as the Company may designate,
by United States dollar check drawn on a bank in the City of New
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<PAGE>
York, or (if arrangements satisfactory to the Company and the
Fiscal Agent (as defined on the reverse hereof) are made) by wire
transfer to a United States dollar account maintained by the
holder at a bank outside the United States, its territories and
its possessions. Interest on this Security shall be paid only at
an office or agency located outside the United States, its
territories and its possessions and, in the case of interest due
on or before maturity, only upon presentation and surrender at
such an office or agency of the interest coupons hereto attached
as they severally mature. No payment on this Security or any
coupon will be made at the corporate trust office of the Fiscal
Agent or any other paying agency maintained by the Company in the
United States, its territories or possessions, nor will any
payment be made by transfer to an account in, or by mail to an
address in, the United States, its territories or possessions,
except as may be permitted by United States tax laws and
regulations in effect at the time of such payment without
detriment to the Company. Notwithstanding the foregoing, payment
of this Security and coupons may be made at the office of the
Fiscal Agent in the City of New York if full payment at all
paying agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar
restrictions.
Reference is hereby made to the further provisions of this
Security set forth under Terms and Conditions of the Securities
on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Neither this Security nor any of the coupons attached hereto
shall become valid or enforceable for any purpose unless and
until the certificate of authentication hereon shall have been
manually signed by a duly authorized signatory of the Fiscal
Agent.
IN WITNESS WHEREOF, the Company has caused this Security to
be duly executed in its corporate name by the manual or facsimile
signature of a duly authorized signatory and coupons bearing the
facsimile signature of a duly authorized signatory to be annexed
hereto.
Dated: ____________ __, 1996
THERMO TERRATECH INC.
By: _________________________
Name:
Title:
Attest:
____________________
A-6PAGE
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the
within-mentioned Fiscal Agency Agreement.
CHEMICAL BANK,
as Fiscal Agent
By: _________________________
Authorized Signatory
Dated:
A-7PAGE
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(FORM OF FACE OF COUPON ON BEARER SECURITIES)
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a)
OF THE UNITED STATES INTERNAL REVENUE CODE.
THERMO TERRATECH INC.
(Incorporated in the State of Delaware)
4-5/8% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2003
No: _____________
U.S.$____________
Due:
Unless the Security to which this coupon appertains shall
have been called for redemption prior to the due date hereof and
payment thereof duly provided for or shall have been converted,
Thermo TerraTech Inc. (herein called the "Company") shall,
subject to and in accordance with the terms and conditions of the
Bearer Security and the Fiscal Agency Agreement dated as of May
2, 1996 among the Company, Thermo Electron Corporation, as
guarantor, and Chemical Bank, as Fiscal Agent, pay to the bearer,
on the date set forth herein upon surrender hereof, the amount
shown hereon (together with any Additional Amount in respect
thereof which the Company may be required to pay according to the
terms of said Bearer Security) at the paying agencies set out on
the reverse hereof or at such other places outside the United
States of America, its territories and its possessions as the
Company may determine from time to time, by United States dollar
check drawn on a bank in the City of New York, or (if
arrangements satisfactory to the Company and the Fiscal Agent are
made) wire transfer to a United States dollar account maintained
by the bearer at a bank outside the United States of America, its
territories and its possessions, being one-half year's interest
then payable on said Security.
THERMO TERRATECH INC.
By: _________________________
Name:
Title:
Attest:
__________________________
A-8PAGE
<PAGE>
[Reverse of Coupon]
Chemical Bank Banque Internationale a
Chemical Bank House Luxembourg, S.A.(3)
125 London Wall 69, Route d'Esch
London EC2Y 5AJ L-1470 Luxembourg
England
__________________________
(3) Subject to the listing of the Securities on the Luxembourg
Stock Exchange.
A-9PAGE
<PAGE>
(FORM OF REVERSE OF REGISTERED AND BEARER SECURITIES)
Terms and Conditions of the Securities
1. General.
(a) This Security is one of a duly authorized issue of
Securities of the Company designated as its 4-5/8% Convertible
Subordinated Debentures Due 2003 (herein called the
"Securities"). The Company, for the benefit of the holders from
time to time of the Securities, has entered into a Fiscal Agency
Agreement dated as of May 2, 1996 (the "Fiscal Agency Agreement")
among the Company, Thermo Electron Corporation, a corporation
duly organized and existing under the laws of the State of
Delaware, as Guarantor (the "Guarantor") and Chemical Bank, as
Fiscal Agent, Paying Agent, Security Registrar and Conversion
Agent (the "Fiscal Agent"), to which Fiscal Agency Agreement
reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Guarantor, the Fiscal Agent, and the holders
of Securities and any coupons appertaining thereto and of the
terms upon which the Securities are, and are to be, authenticated
and delivered. The holders of the Securities will be entitled to
the benefits of, be bound by, and be deemed to have notice of,
all of the provisions of the Fiscal Agency Agreement. A copy of
the Fiscal Agency Agreement is on file and may be inspected at
the office of paying agencies appointed by the Company.
(b) The Securities are issuable as bearer securities
(the "Bearer Securities"), with interest coupons attached, in the
denominations of U.S. $1,000 and U.S. $10,000, and as registered
securities (the "Registered Securities"), without coupons, in
denominations of U.S. $1,000 and integral multiples thereof. The
Registered Securities, and transfers thereof, shall be registered
as provided in Section 8 hereof and in the Fiscal Agency
Agreement. The holder of any Bearer Security or any coupon and
the registered holder of a Registered Security shall (to the
fullest extent permitted by applicable law) be treated at all
times, by all persons and for all purposes as the absolute owner
of such Security or coupon, as the case may be, regardless of any
notice of ownership, theft or loss or of any writing thereon.
(c) The Securities are direct and unsecured
obligations of the Company, subordinated as set forth in Section
7 hereof. There are no restrictions herein on other indebtedness
or securities which may be incurred or issued by the Company.
2. Additional Amounts. The Company will pay to the holder
of this Security or of any coupon appertaining hereto who is a
United States Alien (as defined below) such additional amounts
("Additional Amounts") as may be necessary in order that every
net payment of the principal of, premium, if any, and interest on
this Security, after withholding for or on account of any
present or future tax, assessment or governmental charge imposed
A-10PAGE
<PAGE>
upon or as a result of such payment by the United States or any
political subdivision or taxing authority thereof or therein,
will not be less than the amount provided herein or in any coupon
appertaining hereto to be then due and payable; provided,
however, that the foregoing obligation to pay Additional Amounts
shall not apply to any one or more of the following:
(a) any tax, assessment or other governmental charge
which would not have been so imposed but for (i) the existence of
any present or former connection between such holder (or between
a fiduciary, settlor, beneficiary, member or stockholder of, or a
person holding a power over, such holder, if such holder is an
estate, trust, partnership or corporation) and the United States,
including, without limitation, such holder (or such fiduciary,
settlor, beneficiary, member, stockholder or person holding a
power) being or having been a citizen or resident or treated as a
resident thereof or being or having been engaged in a trade or
business therein or being or having been present therein or
having or having had a permanent establishment therein, or (ii)
such holder's present or former status as a personal holding
company, foreign personal holding company, passive foreign
investment company, foreign private foundation or other foreign
tax-exempt entity or controlled foreign corporation for United
States tax purposes or a corporation which accumulates earnings
to avoid United States Federal income tax, or (iii) such holder's
status as a bank extending credit pursuant to a loan agreement
entered into in the ordinary course of business;
(b) any tax, assessment or other governmental charge
which would not have been so imposed but for the presentation by
the holder of this Security or any coupon appertaining hereto for
payment on a date more than 10 days after the date on which such
payment became due and payable or on the date on which payment
thereof is duly provided, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer or
personal property tax or any similar tax, assessment or other
governmental charge;
(d) any tax, assessment or other governmental charge
which would not have been imposed but for the failure to comply
with certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or
present or former connection with the United States of the holder
or beneficial owner of such Security or any related coupon if
such compliance is required by statute, regulation or ruling of
the United States or any political subdivision or taxing
authority thereof as a precondition to relief or exemption from
such tax, assessment or other governmental charge;
(e) any tax, assessment or other governmental charge
which is payable otherwise than by deduction or withholding from
payments of principal of and premium, if any, or interest on this
Security;
A-11PAGE
<PAGE>
(f) any tax, assessment or other governmental charge
imposed on interest received by a person holding, actually or
constructively, 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote; or
(g) any tax, assessment or other governmental charge
required to be withheld by any paying agent from any payment of
principal of, or premium, if any, or interest on this Security or
interest on any coupon appertaining thereto if such payment can
be made without such withholding by any other paying agent; nor
will Additional Amounts be paid with respect to any payment of
the principal of, premium, if any, or interest on this Security
(or cash in lieu of issuance of shares of Common Stock upon
conversion) to a person other than the sole beneficial owner of
such payment, or that is a partnership or fiduciary to the extent
such beneficial owner, member of such partnership or beneficiary
or settlor with respect to such fiduciary would not have been
entitled to the payment of Additional Amounts had such beneficial
owner, member, beneficiary or settlor been the holder of this
Security or any coupon appertaining hereto.
The term "United States Alien" means any person who, for
United States Federal income tax purposes, is a foreign
corporation, a non-resident alien individual, a foreign
partnership, or an estate or trust subject to United States
Federal income tax on net income basis, and the term "United
States" means the United States of America (including the several
States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
Except as specifically provided herein and in the Fiscal
Agency Agreement, the Company shall not be required to make any
payment with respect to any tax, assessment or other governmental
charge imposed by any government or any political subdivision or
taxing authority thereof or therein.
Whenever any Additional Amounts are to be paid on the
Securities, the Company will give notice to the Guarantor, the
Fiscal Agent, the Paying Agent and any paying agency of the
Company, all as provided in the Fiscal Agency Agreement.
3. Redemption.
(a) The Company, at its option, may redeem the
Securities, in whole or in part, at any time on or after May 1,
1998, upon notice as hereinafter prescribed, at a redemption
price equal to 100% of the principal amount thereof, together
with accrued interest to the redemption date; provided, however,
that the Securities may not be so redeemed on or before May 1,
1999, unless the Closing Price (as defined in Section 4(c)(v) of
these Terms and Conditions) per share of Common Stock of the
Company on twenty of the thirty consecutive days on which there
was such a price ending within five days prior to the initial
A-12PAGE
<PAGE>
publication of the notice of such redemption equals or exceeds
140% of the Conversion Price then in effect. In the event of a
partial redemption, the Securities to be redeemed will be
selected by the Fiscal Agent not more than 75 days before the
date fixed for redemption by such method as the Fiscal Agent
shall deem fair and appropriate. Provisions of this Security that
apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Fiscal Agent shall
notify the Company promptly of the Securities or portions of
Securities to be called for redemption.
(b) If, at any time, the Company shall determine that
as a result of any change in or amendment to the laws or any
regulations or rulings of the United States or any political
subdivision or taxing authority thereof or therein affecting
taxation, or any amendment to, or change in, an official
application or interpretation of such laws, regulations or
rulings, which amendment or change is announced or becomes
effective on or after April 26, 1996, the Company has or will
become obligated to pay to the holder of any Security (other than
the Registered Securities) or coupon Additional Amounts and such
obligation cannot be avoided by the Company taking reasonable
measures available to it, then the Company may, at its election
exercised at any time when such conditions continue to exist,
redeem such Securities as a whole but not in part, upon notice as
hereinafter prescribed, at a redemption price equal to 100% of
the principal amount, together with accrued interest, if any, to
the date fixed for redemption; provided that no such notice of
redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay such
Additional Amounts were a payment in respect of such Securities
then due; and provided further that, at the time such notice is
given, such obligations to pay such Additional Amounts remains in
effect.
Prior to any redemption of the Securities pursuant to the
preceding paragraph, the Company shall provide the Fiscal Agent
with one or more certificates (signed by the President or any
Vice President and the Treasurer or the Secretary) of the Company
on which the Fiscal Agent may conclusively rely to the effect
that the Company is entitled to redeem such Securities pursuant
to such paragraph and that the conditions precedent to the right
of the Company to redeem such Securities pursuant to such
paragraph have occurred and a written opinion of counsel (who may
be an employee of the Company or the Guarantor) stating that all
legal conditions precedent to the right of the Company to redeem
such Securities pursuant to such paragraph have occurred.
(c) Except as set forth in the next succeeding
paragraph, the Company shall redeem the Bearer Securities as a
whole but not in part, upon notice as hereinafter prescribed, at
100% of their principal amount, together with interest accrued to
the date fixed for redemption, less applicable withholding taxes,
if any, plus any applicable Additional Amounts payable, in the
A-13PAGE
<PAGE>
event that the Company determines that payment of principal of,
premium, if any, or interest on a Bearer Security or a coupon
appertaining thereto made outside the United States by the
Company or a paying agent, based on a written opinion of counsel,
would under any present or future laws or regulations of the
United States be subject to any certification, identification or
information reporting requirement with regard to the nationality,
residence or identity of a beneficial owner of a Bearer Security
or a coupon appertaining thereto who is a United States Alien
(other than a requirement (a) that would not be applicable to a
payment made by the Company or any one of its paying agents (i)
directly to the beneficial owner or (ii) to a custodian, nominee
or other agent of the beneficial owner, or (b) that can be
satisfied by the custodian, nominee or other agent certifying
that the beneficial owner is a United States Alien, provided,
however, in each case referred to in clauses (a)(ii) and (b),
payment by such custodian, nominee or other agent of the
beneficial owner is not otherwise subject to any such
requirement). The Company shall make such determination on the
basis of a written opinion of counsel and will notify the Fiscal
Agent thereof in writing as soon as practicable, stating in the
notice the effective date of such certification, identification,
or information reporting requirement and the dates within which
the redemption shall occur, and the Fiscal Agent shall give
prompt notice thereof to the holders of the Securities in
accordance with the Fiscal Agency Agreement. The Company shall
determine the redemption date by notice to the Fiscal Agent at
least 75 days before the redemption date, unless shorter notice
is acceptable to the Fiscal Agent. Such redemption of the Bearer
Securities must take place on such date, not later than one year
after the publication of the initial notice of the Company's
determination of the existence of such certification,
identification or information reporting requirement. The Company
shall not so redeem the Bearer Securities, however, if the
Company, based on a written opinion of counsel, determines not
less than 30 days prior to the date fixed for redemption, that no
such payment would be subject to any requirement described above,
in which case the Company shall notify the Fiscal Agent, which
shall give prompt notice of that determination in accordance with
the Fiscal Agency Agreement and any earlier redemption notice
shall thereupon be revoked and of no further effect.
Notwithstanding the next preceding paragraph, if and so long
as the certification, identification or information reporting
requirement referred to in the next preceding paragraph would be
fully satisfied by payment of United States withholding, backup
withholding or similar taxes, the Company may elect, prior to
publication of the notice of redemption and in lieu of redemption
of the Bearer Securities, to have the provisions of this
paragraph apply in lieu of the provisions of the next preceding
paragraph. In that event, the Company will pay such Additional
Amounts (without regard to Section 2 hereof) as are necessary in
order that, following the effective date of such requirements,
every net payment made outside the United States by the Company
A-14PAGE
<PAGE>
or a paying agent of the principal of, premium, if any, and
interest on a Bearer Security or a coupon appertaining thereto to
a holder who is a United States Alien (without regard to a
certification, identification or information reporting
requirement as to the nationality, residence or identity of such
holder), after deduction for United States withholding, backup
withholding or similar taxes (other than a tax (i) that would not
be applicable in the circumstances referred to in the
parenthetical clause of the first sentence of the next preceding
paragraph or (ii) are imposed as a result of presentation of such
Bearer Security or coupon for payment more than 10 days after the
date on which such payment becomes due and payable or on which
payment thereof is duly provided for, whichever occurs later),
will not be less than the amount provided in the Bearer Security
or the related coupon to be then due and payable. If the Company
elects to pay such Additional Amounts and as long as it is
obligated to pay such Additional Amounts, the Company may
subsequently redeem the Bearer Securities, at any time, in whole
but not in part, upon not more than 60 days nor less than 30 days
notice, given as hereinafter prescribed, at 100% of their
principal amount, plus accrued interest to date fixed for
redemption and Additional Amounts, if any.
(d) Each Security is subject to redemption in whole or
in part (which shall be in a principal amount hereof which is
U.S. $1,000 or an integral multiple thereof) at the option of the
holder thereof on any Holder Redemption Date (as defined below)
at a redemption price equal to 100% of the principal amount
thereof, together with accrued interest, if a Redemption Event
shall occur or have occurred. For purposes hereof a "Redemption
Event" shall have occurred if the Company's Common Stock (or
other equity securities into which the Securities are then
convertible) is neither listed for trading on a United States
national securities exchange nor approved for trading on an
established automated over-the-counter trading market in the
United States. The "Holder Redemption Date" with respect to any
Redemption Event shall be the ninetieth day after the later of
the Exchange Date or the date a Redemption Event has occurred.
Notwithstanding the fact that a Security or a portion
thereof is called for redemption by the Company, each holder of a
Security desiring to exercise the option for redemption set forth
in this Section 3(d) shall, as a condition to such redemption, on
or before the close of business on the fifth day prior to the
Holder Redemption Date, surrender the Security to be redeemed in
whole or in part together with the redemption notice hereon duly
executed at the place or places specified in the notice required
by Section 3(e) and otherwise comply with the provisions of
Section 3(f). A holder of a Security who has tendered a
redemption notice (i) will be entitled to revoke its election by
delivering a written notice of such revocation together with the
holder's non-transferable receipt for such Security to the office
or agency of the Company designated as the place for the payment
of the Securities to be so redeemed on or before the Holder
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<PAGE>
Redemption Date and (ii) will retain the right to convert its
Securities into shares of Common Stock of the Company to the
extent set forth in Section 4.
(e) Notice of redemption will be given by publication
in Authorized Newspapers (as defined in the Fiscal Agency
Agreement) on a Business Day (as defined in the Fiscal Agency
Agreement) in New York City and in London and, if the Securities
are listed on the Luxembourg Stock Exchange and so long as listed
thereon, in an Authorized Newspaper in Luxembourg, or, if either
publication in London or Luxembourg is not practical, in an
Authorized Newspaper in any country in Western Europe, and by
mail to holders of Registered Securities, all as provided in the
Fiscal Agency Agreement. In the case of a redemption in whole at
the option of the Company, notice will be given once not more
than 60 nor less than 30 days prior to the date fixed for
redemption. In the case of a partial redemption at the option of
the Company, notice will be given twice, the first such notice to
be given not more than 75 nor less than 60 days prior to the date
fixed for redemption and the second such notice to be given not
more than 60 nor less than 30 days prior to the date fixed for
redemption. In the case of a redemption by the Company at the
option of a holder of a Security pursuant to Section 3(d) hereof,
notice will be given by the Fiscal Agent setting forth the
information described below not later than 10 days after the
later of the Exchange Date or the occurrence of a Redemption
Event. Neither the failure to give notice nor any defect in any
notice given to any particular holder of a Security shall affect
the sufficiency of any notice with respect to other Securities.
Notices relating to the redemption of Securities whether at
the option of the Company or the holder hereof shall specify: the
date fixed for redemption or the Holder Redemption Date, as the
case may be; the redemption price; the date the conversion
privilege expires; the place or places of payment; and that
payment will be made upon presentation and surrender of the
Securities to be redeemed, together, in the case of a Bearer
Security, with all appurtenant coupons, if any, maturing
subsequent to the date fixed for redemption; and that interest
accrued to the date fixed for redemption (unless the redemption
date is an interest payment date) will be paid as specified in
such notice; and that, on and after said date, interest thereon
will cease to accrue. In the case of a redemption by the Company
at the option of the holder of a Security pursuant to Section
3(d), the notices given by the Fiscal Agent informing a holder of
such holder's entitlement to redeem shall also specify that a
holder electing redemption will be entitled to revoke its
election by delivering a written notice of such revocation,
together with the holder's non-transferable receipt for such
Security, to the agency designated by the Company as the place
for the payment of the Securities to be so redeemed not later
than the fifth day prior to the Holder Redemption Date. In the
case of a redemption in part at the option of the Company,
notices shall specify the aggregate principal amount of
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Securities to be redeemed and the aggregate principal amount of
Securities outstanding after such partial redemption. The first
notice shall specify the last date on which exchanges or
transfers of Securities may be made, and the second notice shall
specify the serial numbers of the Securities and the portions
thereof called for redemption. In the case of a redemption in
whole or in part by the Company, notices shall specify the date
the conversion privilege expires in accordance with Section 4(a)
hereof. Such notices shall also state that the conditions
precedent, if any, to such redemption have occurred.
(f) If (i) notice of redemption has been given in the
manner set forth in Section 3(e) hereof with respect to
Securities to be redeemed at the option of the Company, or (ii)
notice of redemption has been given by the holder of a Security
to be redeemed pursuant to Section 3(d) hereof, the Securities so
to be redeemed shall become due and payable on the applicable
redemption date specified in such notice and upon presentation
and surrender of the Securities at the place or places specified
in the notices given by the Company with respect to such
redemption, together in the case of Bearer Securities with all
appurtenant coupons, if any, maturing subsequent to the
redemption date and any related mature defaulted coupons, the
Securities shall be paid and redeemed by the Company, at the
places and in the manner and currency herein specified and at the
redemption price together with accrued interest, if any, to the
redemption date; provided, however, that interest due in respect
of coupons maturing on or prior to the redemption date shall be
payable only upon the presentation and surrender of such coupons
(at an office or agency located outside of the United States of
America). If any Bearer Security surrendered for redemption
shall not be accompanied by all appurtenant coupons maturing
after the redemption date and any related mature defaulted
coupons, such Security may be paid after deducting from the
amount otherwise payable an amount equal to the face amount of
all such missing coupons, or the surrender of such missing coupon
or coupons may be waived by the Company and the Fiscal Agent if
they are furnished with such security or indemnity as they may
require to save each of them and each other paying agency of the
Company harmless. From and after the redemption date, if monies
for the redemption of Securities shall have been available at the
principal corporate trust office of the Fiscal Agent for
redemption on the redemption date, the Securities shall cease to
bear interest, the coupons for interest appertaining to Bearer
Securities maturing subsequent to the redemption date shall be
void, the only right of the holders of such Securities shall be
to receive payment of the redemption price together with accrued
interest to the redemption date. If monies for the redemption of
the Securities are not made available by the Company for payment
until after the redemption date, the Securities shall not cease
to bear interest until such monies have been so made available.
(g) Accrued interest payable on any Registered
Security that is redeemed will be payable against surrender of
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such Registered Security in the manner described in this Section
with respect to payments of principal on Registered Securities,
except that interest on any Registered Security that is redeemed
on a date after the close of business on any interest Record Date
and on or before the next succeeding Interest Payment Date, shall
be paid to the holder of record of such Registered Security on
the interest Record Date.
4. Conversion.
(a) Subject to and upon compliance with the provisions
of the Fiscal Agency Agreement, a holder of Securities is
entitled, at its option, at any time on or after the date that is
the latest of (i) the Exchange Date, (ii) July 15, 1996 and (iii)
the date of the effectiveness of the Registration Statement to be
filed by the Company under the Securities Act relating to the
Common Stock issuable upon conversion of the Restricted
Securities (the "Registration Date") and on or before the close
of business on May 1, 2003, or in the case of a Security or
portion thereof that is called for redemption by the Company, or
the holder thereof elects to have such Security or portion
thereof redeemed by the Company pursuant to Section 3(d) hereof,
then in respect of such Security or such portion thereof until
and including, but (unless the Company and the Guarantor default
in making the payment due upon redemption) not after, the close
of business on the 15th day next preceding the date fixed for
redemption (or if such date is not a business day, as described
in Section 11 hereof in New York City, then the next succeeding
business day), to convert such Security (or any portion of the
principal amount thereof which is U.S. $1,000 or an integral
multiple thereof), at the principal amount thereof, or of such
portion, into fully paid and nonassessable shares ("Conversion
Shares") (calculated as to each conversion to the nearest 1/1000
of a share) of common stock, par value $.10 per share of the
Company ("Common Stock"), at a Conversion Price equal to U.S.
$15.90 aggregate principal amount of Securities for each
Conversion Share (the "Conversion Price") (or at the current
adjusted Conversion Price if an adjustment has been made as
provided herein) by surrender of the Security, or in the case of
a Security submitted for redemption pursuant to Section 3(d)
hereof, satisfactory evidence of such submission, together with
(i) if a Bearer Security, all unmatured coupons and any matured
coupons in default appertaining thereto, and if a Registered
Security (if so required by the Company or the Fiscal Agent),
instruments of transfer in form satisfactory to the Company and
the Fiscal Agent, duly executed by the registered holder or by
his duly authorized attorney, and (ii) the conversion notice
hereon duly executed (x) at the principal corporate trust office
of the Fiscal Agent, or at such other office or agency of the
Company as may be designated by it for such purpose in New York
City, or (y) subject to any laws or regulations applicable
thereto and subject to the right of the Company to terminate the
appointment of any such conversion agency, at Chemical Bank,
Chemical Bank House, 125 London Wall, London EC2Y 5AJ, England,
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and if the Securities are listed on the Luxembourg Stock Exchange
and so long as listed thereon, Banque Internationale a
Luxembourg, S.A., 69, Route d'Esch, L-1470 Luxembourg, or at such
other offices or agencies as the Company may designate.
(b) In the case of a conversion after the close of
business on a Record Date next preceding any interest payment
date and before the opening of business on such interest payment
date, the holder of record of a Registered Security at such
Record Date is to receive an installment of interest on the
interest payment date. No payment or adjustment shall be made
upon any conversion for dividends on the Common Stock delivered
on conversion. Except as set forth in the first sentence of this
subsection (b), accrued interest from the immediately preceding
interest payment date until the date of conversion (together with
any Additional Amounts, if any, thereon) will be paid to the
holder within five business days after presentment for conversion
on account of any interest accrued on the Securities surrendered
for conversion, except that interest on Registered Securities
surrendered for conversion after the close of business on a
Record Date and before the opening of business on the next
succeeding interest payment date shall be paid in an amount equal
to the interest payable on such interest payment date on the
principal amount being surrendered for conversion. No fractions
of shares or scrip representing fractions of shares will be
issued or delivered on conversion, but instead of any fractional
interest the Company shall pay a cash adjustment as provided in
the Fiscal Agency Agreement. Such conversion shall be so
affected by the Company, except payment of accrued interest
(together with Additional Amounts, if any, thereon) which will be
paid by the Paying Agent.
(c) (i) In case at any time the Company shall pay or
make a dividend or other distribution on any class of capital
stock of the Company in shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following
the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced so
that the same shall equal the price determined by multiplying
such Conversion Price by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the
total number of shares of Common Stock constituting such dividend
or other distribution, such adjustment to become effective
immediately after the opening of business on the day following
the date fixed for such determination.
(ii) In the case at any time the Company shall (A)
subdivide its outstanding shares of Common Stock, (B) combine its
outstanding shares of Common Stock into a smaller number of
shares, or (C) issue by reclassification of its shares of Common
Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
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corporation) any shares of capital stock, the Conversion Price in
effect at the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the
holder of any Security surrendered for conversion after such time
shall be entitled to receive the aggregate number and kind of
shares which, if such Security had been converted immediately
prior to such time, the holder would have owned upon such
conversion and been entitled to receive upon such subdivision,
combination or reclassification. Such adjustment shall become
effective immediately after the effectiveness of such
subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall
occur.
(iii) In case at any time the Company shall fix a
record date for the issuance of rights or warrants to all holders
of its Common Stock entitling them to subscribe for or purchase
Common Stock at a price per share less than the current market
price per share of Common Stock (determined as provided in
paragraph (v) of this subsection (c)) on such record date, the
Conversion Price in effect at the opening of business on the day
following such record date shall be reduced so that the same
shall equal the price determined by multiplying such Conversion
Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on
such record date plus the number of shares of Common Stock which
the aggregate of the offering price of the total number of shares
so offered for subscription or purchase would purchase at such
current market price per share of Common Stock and the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on such record date plus the
number of shares so offered for subscription or purchase, such
reduction to become effective immediately after the opening of
business on the day following such record date. Such reduction
shall be made successively whenever such a record date is fixed;
and in the event that such rights or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such record date had not
been fixed.
(iv) In case at any time the Company shall fix a
record date for the making of a distribution, by dividend or
otherwise, to all holders of its shares if Common Stock, of
evidences of its indebtedness or assets (including securities,
but excluding any dividend or distribution referred to in
paragraph (i) of this subsection (c), any rights or warrants
referred to in paragraph (iii) of this subsection (c), and any
dividend or distribution paid in cash out of the retained
earnings of the Company), then in each such case the Conversion
Price in effect after such record date shall be determined by
multiplying the Conversion Price in effect immediately prior to
such record date by a fraction, of which numerator shall be the
total number of outstanding shares of Common Stock multiplied by
the current market price per share of Common Stock (determined as
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provided in paragraph (v) of this subsection (c)) on such record
date, less the fair market value (as determined by the Board of
Directors of the Company, whose determination shall be conclusive
and described in a statement filed with the Fiscal Agent) of the
portion of the assets or evidences of indebtedness so to be
distributed, and of which denominator shall be the total number
of outstanding shares of Common Stock multiplied by such current
market price per share of Common Stock. Such adjustment shall be
made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the Conversion
Price shall again be adjusted to be the Conversion Price which
would then be in effect if such record date has not been fixed.
(v) For the purpose of any computation under
paragraphs (iii) and (iv) of this subsection (c), the current
market price per share of Common Stock on any date shall be
deemed to be the average of the Closing Prices (as defined below)
for the 15 consecutive trading days upon which the principal
trading market for the Common Stock is open and selected by the
Company commencing not less than 20 nor more than 30 days before
the day in question. The "Closing Price" for any day shall be
the last reported sales prices regular way or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case
on the American Stock Exchange or, if the Common Stock is not or
admitted to trading on such exchange, on the principal national
securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on
any national securities exchange, the closing sale price quoted
on the Nasdaq National Market, or if not so quoted, as determined
by the Company.
(vi) The Company may make such adjustments in the
Conversion Price, in addition to those required by paragraphs
(i), (ii) and, (iii) selected by the Company of this section, as
it considers to be advisable in order that any event treated for
United States Federal income tax purposes as a dividend of stock
or stock rights shall not be taxable to the recipients.
(vii) No adjustment in the Conversion Price shall
be required unless such adjustment would require an increase or
decrease of at least U.S. $.25 in such Conversion Price;
provided, however, that any adjustment which by reason of this
paragraph (vii) is not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this subsection (c) shall be made to the
nearest cent or to the nearest 1/1000 of a share, as the case may
be.
(d) Whenever the Conversion Price is adjusted and in
the event of certain other corporate actions, as herein provided,
the Company shall give notice, all as provided in the Fiscal
Agency Agreement.
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(e) The Company shall file, as soon as practicable
following the Closing Date, a shelf registration statement with
the United States Securities and Exchange Commission covering the
resale of the shares of Common Stock issuable upon conversion of
the Restricted Securities ("Registrable Securities"); provided
that any holder of any Restricted Securities or Registrable
Securities shall not sell any shares pursuant to such
registration statement unless and until it provides to the
Company such information as the Company may reasonably request
for use in connection with the identification of such holder as a
selling stockholder in such registration statement, or any
prospectus included therein, and no such sale shall be made by
such holder pursuant to such registration statement unless and
until such information is included by the Company in such
registration statement or prospectus. The Company shall in good
faith use its best efforts and at its cost to cause such
registration statement to be declared effective as promptly as
practicable thereafter and to include in such registration
statement the information provided by a holder as a selling
stockholder and shall notify the Fiscal Agent of the
effectiveness thereof and agrees to use its best efforts to (i)
cause all registrations with, and to obtain any approvals by, any
governmental authority under any Federal or state law of the
United States that may be required in connection with the
conversion of the Securities into Common Stock and the resale
thereof, (ii) maintain the effectiveness of such registrations
until the earlier of (a) three years from the date of the Fiscal
Agency Agreement, or (b) the date that Rule 144(k) under the
Securities Act is available for the resale of the shares of
Common Stock issuable upon conversion of the Restricted
Securities (or other securities issuable upon conversion of the
Securities) and (iii) to list the shares of Common Stock required
to be issued or delivered upon conversion of Securities (or other
securities issuable upon conversion of the Securities) prior to
such issue or delivery on such national securities exchange or
automated over-the-counter trading market where such Common Stock
is listed or traded at the time of such delivery. The Company
and the Guarantor shall, without limitation as to time, indemnify
and hold harmless, to the fullest extent permitted by law, each
holder of Registrable Securities, the officers, directors and
agents and employees of each of them, each person who controls
such holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act of 1934, as
amended) and the officers, directors, agents and employees of any
such controlling person, from and against all losses, claims,
damages, liabilities, costs (including, without limitation, the
costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based
upon any untrue or alleged untrue statement of a material fact
contained in any such registration statement, or related
prospectus or in any amendment or supplement thereto, or arising
out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
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insofar as the same are based solely upon information, if any,
furnished in writing to the Company by such holder expressly for
use therein; provided, that the Company and the Guarantor shall
not be liable to any holder of Registrable Securities to the
extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if either
(a)(i) such holder failed to send or deliver as required a copy
of the final prospectus with or prior to the delivery of written
confirmation of the sale by such holder of a Registrable Security
to the person asserting the claim from which such Losses arise
and (ii) the prospectus would have completely corrected such
untrue statement or alleged untrue statement or such omission or
alleged omission; or (b)(i) such untrue statement or alleged
untrue statement, omission or alleged omission is completely
corrected in an amendment or supplement to the prospectus and
(ii) having previously been furnished by or on behalf of the
Company with copies of the prospectus as so amended or
supplemented, such holder thereafter fails to deliver as required
such prospectus as so amended or supplemented, prior to or
concurrently with the sale of a Registrable Security to the
person asserting the claim from which such Losses arise. Promptly
after receipt by an indemnified party under this Paragraph (e) of
notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be
made against the Company or the Guarantor under this Paragraph
(e) notify the Company or the Guarantor, as the case may be, in
writing of the claim or the commencement of that action;
provided, however, that the failure to notify the Company or the
Guarantor, as the case may be, shall not relieve the Company or
the Guarantor, as the case may be, from any liability which it
may have to an indemnified party otherwise than under this
Paragraph (e). If any such claim or action shall be brought
against an indemnified party, and it shall notify the Company or
the Guarantor thereof, the Company or the Guarantor, as the case
may be, shall be entitled to participate therein and, to the
extent that the Company or the Guarantor, as the case may be,
wishes, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
Company or the Guarantor, as the case may be, to the indemnified
party of its election to assume the defense of such claim or
action, the Company or the Guarantor, as the case may be, shall
not be liable to the indemnified party under this Paragraph (e)
for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof;
provided, however, if the defendants in any such action include
both an indemnified party and the Company or the Guarantor and
the indemnified party shall have reasonably concluded that there
may be legal defenses available to it and for other indemnified
parties that are different from or additional to those available
to the Company or the Guarantor, as the case may be, the
indemnified party or parties under this Paragraph (e) shall have
the right to employ not more than one counsel to represent them
and, in that event, the reasonable fees and expenses of not more
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<PAGE>
than one such separate counsel shall be paid by the Company and
the Guarantor. Neither the Company nor the Guarantor shall be
liable for any settlement effected without its written consent of
any claim or action.
(f) The Company shall, at all times, have reserved and
available, free from preemptive rights, out of its authorized but
unissued shares of Common Stock, for the purpose of effecting the
conversion of Securities, the full number of shares of Common
Stock then issuable upon the conversion of all Securities (based
on the aggregate principal amount of Securities outstanding).
The Company covenants that all shares of Common Stock which may
be issued or delivered upon conversion of Securities will upon
issuance be fully paid and nonassessable.
(g) In case of any consolidation with, or merger of
the Company into, any other corporation, or in case of any merger
of another corporation into the Company (other than a merger
which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of
the Company), or in case of any sale or transfer of all or
substantially all of the assets of the Company (which shall not
include the sale or transfer of any portion of the assets of the
Company to any corporation which, immediately following such
transfer is at least 51% owned by the Company, provided that such
sale or transfer does not result in the reclassification,
conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), the corporation formed by such
consolidation or resulting from such merger or which acquires
such assets, as the case may be, shall execute and deliver to the
Fiscal Agent an amendment to the Fiscal Agency Agreement
providing that the holder of each Security shall have the right
during the period such Security shall be convertible as specified
in section (a) hereof to convert such Security only into the kind
and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which such
Security might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming, if such
consolidation, merger, sale or transfer is prior to the period
such Security shall be convertible as specified in subsection (a)
hereof, that the Securities were convertible at such time at the
initial Conversion Price as adjusted from April 26, 1996 to such
time pursuant to paragraphs (i), (ii), (iii), (iv) and (vi) of
subsection (c) hereof. Such amendment shall provide for
adjustments which, for events subsequent to the effective date of
such amendment, shall be as nearly equivalent as may be
practicable to the adjustments provided for herein. The above
provisions of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
5. Events of Default. In the event that any of the
following ("Events of Default") shall occur and be continuing:
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(a) the Company shall fail to pay when due the
principal of, or premium, if any, on any of the Securities
whether at maturity or upon redemption or otherwise; or
(b) the Company shall fail to pay any installment of
interest or any required payment of any Additional Amounts (as
described in Section 2 hereof) on any of the Securities for a
period of 10 days after the date when due; or
(c) the Company shall fail duly to perform or observe
any other term, covenant or agreement contained in any of the
Securities or in the Fiscal Agency Agreement or the Guarantor
shall fail to perform or observe any term, covenant or agreement
contained in a Guarantee endorsed on any of the Securities or in
the Fiscal Agency Agreement, for a period of 60 days after the
date on which written notice of such failure, requiring the
Company or the Guarantor, as the case may be, to remedy the same,
shall first have been given to the Company and the Fiscal Agent
by the holders of at least 25% in aggregate principal amount of
the Securities at the time outstanding; provided, however, that
in the event the Company or the Guarantor shall within the
aforesaid period of 60 days commence legal action in a court of
competent jurisdiction seeking a determination that the Company
or the Guarantor, as the case may be, had not failed duly to
perform or observe the term or terms, covenant or covenants or
agreement or agreements specified in the aforesaid notice, such
failure shall not be an Event of Default unless the same
continues for a period of 10 days after the date of any final
determination to the effect that the Company or the Guarantor had
failed to duly perform or observe one or more of such terms,
covenants or agreements; or
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company or
the Guarantor in an involuntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Company or the Guarantor or for any
substantial part of the property of either of them or ordering
the winding-up or liquidation of the affairs of either of them
and such decree or order shall remain unstayed and in effect for
a period of 20 consecutive days; or
(e) the Company or the Guarantor shall commence a
voluntary case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter
in effect, or shall consent to the entry of an order for relief
in an involuntary case under any such law, or shall consent to
the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or
similar official) of the Company or the Guarantor, as the case
may be, or for any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or
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shall admit in writing its inability to pay its debts as they
become due or shall take any corporate action in furtherance of
any of the foregoing; or
(f) an event of default, as defined in any indenture
or instrument evidencing or under which the Company shall have at
least $15,000,000 outstanding (or its equivalent in another
currency), in aggregate principal amount of indebtedness for
borrowed money, shall happen and be continuing and such default
shall involve the failure to pay the principal of such
indebtedness (or any part thereof), when due and payable after
the expiration of any applicable grace period with respect
thereto, or such indebtedness shall have been accelerated so the
same shall be or become due and payable prior to the date on
which the same would otherwise have become due and payable, and
failure to pay shall not have been cured by the Company within 20
days after such failure or such acceleration shall not be
rescinded or annulled within 20 days after notice thereof shall
have first been given to the Company; provided that if such event
of default under such indenture or instrument shall be remedied
or cured by the Company or waived by the holders of such
indebtedness, then the Event of Default hereunder by reason
thereof shall be deemed likewise to have been thereupon remedied,
cured or waived without further action upon the part of any of
the holders of Securities; then the holder of this Security may,
at such holder's option, declare the principal of this Security
and the interest accrued hereon (and Additional Amounts under
Section 2 hereof, if any, thereon) to be due and payable
immediately by written notice to the Company, the Guarantor and
the Fiscal Agent, and if any such Event of Default shall continue
at the time of receipt of such written notice, the principal of
this Security and the interest accrued hereon (and Additional
Amounts, if any, hereon) shall become immediately due and
payable, subject to the proviso of subsection (c) of this Section
5. Upon payment of such amount of principal, premium, if any, and
interest (and Additional Amounts pursuant to Section 2 hereof, if
any), all of the Company's obligations in respect of payment of
principal of, premium, if any, and interest on (and Additional
Amounts, if any, on) this Security shall terminate. Interest on
overdue principal, premium, if any, and interest (and Additional
Amounts, if any) shall accrue from the date on which such
principal, premium, if any, and interest (and Additional Amounts,
if any) were due and payable to the date such principal, premium,
if any, and interest (and Additional Amounts, if any) are paid or
duly provided for, at the rate borne by the Securities (to the
extent payment of such interest shall be legally enforceable).
Any acceleration of this Security pursuant to this Section 5
shall not affect the subordination provisions of Section 7
hereof.
If an Event of Default, as defined in this Section 5, with
respect to the Securities, or an event which would, with the
passing of time or the giving of notice, or both, be an Event of
Default, shall occur and be continuing, the Company or the
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Guarantor, as the case may be, shall within five Business Days of
becoming aware thereof notify the Company or the Guarantor, as
the case may be, and the Fiscal Agent in writing of such Event of
Default, and the Fiscal Agent shall thereupon promptly notify all
of the holders of the Securities of such Event of Default.
6. Merger, Consolidation, Sale, Conveyance or Assumption.
(a) The Company will not merge or consolidate with, or
sell or convey all or substantially all of its assets to, any
other corporation, unless (i) either (A) the Company shall be the
surviving corporation in the case of a merger, (B) the assets
sold or conveyed shall be owned by a corporation which,
immediately following such sale or conveyance, is at least 51%
owned by the Company, provided that such sale or conveyance does
not result in the reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the
Company, or (C) (I) the surviving, resulting or transferee
corporation shall expressly assume the due and punctual payment
(including Additional Amounts pursuant to Section 2 hereof, if
any) of all the Securities, according to their tenor, and the due
and punctual performance of all of the covenants and obligations
of the Company under the Securities, the coupons and the Fiscal
Agency Agreement, by supplemental agreement reasonably
satisfactory to the Fiscal Agent and (II) the Fiscal Agent shall
have received the documentation required in the context by the
Fiscal Agency Agreement, (ii) the surviving, resulting or
transferee corporation, if not organized and validly existing
under the laws of the United States, shall expressly agree to
make payments under the Securities free of any deduction or
withholding for any and all then existing or future withholding
taxes, levies, imposts and charges whatsoever imposed by or for
the account of the jurisdiction where such successor corporation
is generally subject to taxation (or any political subdivision or
taxing authority thereof or therein) in a manner equivalent to
that set forth herein, subject to the exceptions contained in
such forms of the Securities, and (iii) the Company or such
successor corporation, as the case may be, shall not, immediately
after such merger, consolidation, sale or conveyance, be in
default in the performance of any covenants or obligations of the
Company under the Securities or the Fiscal Agency Agreement.
(b) Upon any merger, consolidation, sale, conveyance
or assumption as provided in Section 6(a), the successor or
assuming corporation shall succeed to and be substituted for, and
may exercise every right and power of and be subject to all the
obligations of, the Company under the Securities and Fiscal
Agency Agreement, with the same effect as if such successor or
assuming corporation had been named as the Company therein and
herein and the Company shall be released from its liability as
obligor under the Securities and Fiscal Agency Agreement;
provided that any successor or assuming corporation shall have
the right to redeem the Securities pursuant to Section 3(b)
hereof only as a result of circumstances which occur subsequent
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to such merger, consolidation, sale, conveyance or assumption and
as a result of which the Company would have had such right if the
Company had remained the obligor on the Securities.
7. Agreement of Subordination of Securities.
(a) The Company, for itself, its successors and
assigns, covenants and agrees, and each holder of Securities and
coupons by his acceptance thereof, likewise covenants and agrees,
that the payment of the principal of, premium, if any, and
interest and Additional Amounts (pursuant to Section 2 hereof) on
each and all of the Securities and coupons is hereby expressly
subordinated, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full of all
Senior Indebtedness of the Company (as defined below).
"Senior Indebtedness of the Company" or "Senior
Indebtedness" shall mean the principal of, premium, if any, and
interest on and all other amounts due on or with respect to the
following whether outstanding at the date of execution of the
Fiscal Agency Agreement or thereafter incurred or created:
(i) indebtedness of the Company for money borrowed by
the Company (excluding the Securities, but including, without
limitation, purchase money obligations), whether or not evidenced
by debentures, bonds, notes or other corporate debt securities or
similar instruments issued by the Company; provided, however,
that Senior Indebtedness shall not include the Company's 6 1/2%
Convertible Subordinated Debentures due 1997 or the Company's
obligations to the Guarantor under several promissory notes due
April 1996 through June 1997, the obligations represented by
which shall rank pari passu with the obligations represented
hereby in right of payment;
(ii) obligations to reimburse any bank or other person
in respect of amounts paid under letters of credit;
(iii) leases of real property, equipment or other
assets, which leases are capitalized in the Company's financial
statements in accordance with generally accepted accounting
principles;
(iv) commitment, standby and other fees due and payable
to financial institutions with respect to credit facilities
available to the Company;
(v) obligations of the Company under interest rate and
currency swaps, floors, caps or other similar arrangements
intended to hedge interest rates or currency exposure;
(vi) indebtedness secured by any mortgage, pledge, lien
or other encumbrance on property which is owned or held by the
Company subject to such mortgage, pledge, lien or other
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encumbrance, whether or not the indebtedness secured thereby
shall have been assumed by the Company;
(vii) obligations of the Company constituting
guarantees of indebtedness of or joint obligations with another
or others which would be included in the preceding clauses (i),
(ii), (iii), (iv), (v) or (vi); and
(viii) modifications, renewals, extensions or
refundings of any of the indebtedness, leases, fees or
obligations referred to in the preceding clauses (i), (ii),
(iii), (iv), (v), (vi) or (vii), or debentures, notes or other
evidences of indebtedness issued in exchange therefor;
provided that Senior Indebtedness shall not include any
particular indebtedness, lease, fee, obligation, modification,
renewal, extension, refunding or exchanged securities if, under
the express provisions of the instrument creating or evidencing
the same, or pursuant to which the same is outstanding, such
indebtedness, lease, fee or obligation or such modification,
renewal, extension, refunding or exchanged security is stated to
be not superior in right to payment to the Securities.
(b) (i) In the event of any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or
other similar proceedings in connection therewith, relative to
the Company or to its creditors, in their capacity as such
creditors, or to its property, or in the event of any proceedings
for voluntary liquidation, dissolution or other winding up of the
Company, whether or not involving insolvency or bankruptcy, or in
the event of any assignment for the benefit of creditors of the
Company or any marshalling of assets of the Company, then the
holders of Senior Indebtedness of the Company shall first be
entitled to receive payment in full of the principal of (and
premium, if any, on) and interest, including interest thereon
accruing after the commencement of any such proceeding, and other
amounts due on or with respect to, all Senior Indebtedness of the
Company before the holders of any of the Securities shall be
entitled to receive any payment on account of the principal of,
premium, if any, or interest and Additional Amounts (pursuant to
Section 2 hereof) on the Securities, and to that end the holders
of Senior Indebtedness of the Company shall be entitled to
receive for application in payment thereof any payment or
distribution of any kind or character, whether in cash, property
or securities, which may be payable or deliverable in any such
proceedings in respect of the Securities, other than securities
of the Company as reorganized or readjusted or securities of the
Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is
subordinate, at least to the extent provided in this Section 7
with respect to the Securities, to the payment of all Senior
Indebtedness of the Company, provided that the rights of the
holders of Senior Indebtedness of the Company are not altered by
such reorganization or readjustment. For the purposes of this
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Section 7, no consolidation, merger, conveyance or transfer made
pursuant to the provisions of Section 6 shall be deemed to be a
liquidation, reorganization, dissolution or other winding up of
the Company.
(ii) If under the circumstances set forth in paragraph
(i) of this subsection, and notwithstanding the provisions
thereof, any payment or distribution of assets of the Company of
any kind, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or
securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment the payment of which
is subordinated, at least to the extent provided in this Section
7 with respect to the Securities, to the payment of all Senior
Indebtedness of the Company, provided that the rights of the
holders of Senior Indebtedness of the Company are not altered by
such reorganization or readjustment), shall be received by the
holders of the Securities before all Senior Indebtedness of the
Company is paid in full, such payment or distribution shall be
paid over to the holders of Senior Indebtedness of the Company,
ratably, for application to the payment of all Senior
Indebtedness of the Company remaining unpaid until all Senior
Indebtedness of the Company shall have been paid in full, after
giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness of the Company.
(iii) Upon any distribution of assets of the Company
referred to in this Section, the holders of Securities shall be
entitled to rely upon any final order or decree of a court of
competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and the
holders of Securities shall be entitled to rely upon a
certificate of the liquidating trustee or agent or other person
making any distribution to the holders of Securities for the
purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness of the
Company and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Section.
(c) (i) Upon the maturity of any Senior Indebtedness
of the Company by lapse of time, acceleration or otherwise, all
principal thereof (and premium, if any) and interest due thereon,
including interest thereon accruing after the commencement of any
proceeding of the type referred to in paragraph (i) of Section
7(b) above, and all other amounts due on or with respect thereto,
shall first be paid in full, or such payment duly provided for in
cash, before any payment, directly or indirectly, is made on
account of the principal of, premium, if any, or interest and
Additional Amounts (pursuant to Section 2 hereof) on the
Securities or coupons.
(ii) Upon the happening of an event of default
with respect to any Senior Indebtedness of the Company, as
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defined therein or in the instrument under which it is
outstanding permitting the holders to accelerate the maturity
thereof, then, unless and until such event of default shall have
been cured or waived or shall have ceased to exist, no payment
shall be made by the Company, directly or indirectly, on account
of the principal of, premium, if any, or interest and Additional
Amounts (pursuant to Section 2 hereof) on the Securities or
coupons.
(d) In case cash, securities or other property
otherwise payable or deliverable to the holders of the Securities
shall have been applied, pursuant to Section 7(b) or 7(c), to the
payment of Senior Indebtedness of the Company, then, upon the
payment in full of all Senior Indebtedness of the Company, the
holders of the Securities shall be subrogated to any rights of
any holders of Senior Indebtedness of the Company to receive any
further payment or distributions applicable to Senior
Indebtedness of the Company until the principal of, premium, if
any, and interest and Additional Amounts (pursuant to Section 2
hereof) on the Securities shall have been paid in full, and such
payments or distributions received by the holders of the
Securities and coupons, by reason of such subrogation, of cash,
securities or other property which otherwise would be paid or
distributed to the holders of Senior Indebtedness of the Company
shall, as between the Company and its creditors other than the
holders of Senior Indebtedness of the Company, on the one hand,
and the holders of the Securities, on the other hand, be deemed
to be a payment by the Company on account of Senior Indebtedness
of the Company and not on account of the Securities.
(e) No present or future holder of any Senior
Indebtedness of the Company shall be prejudiced in any way in the
right to enforce the subordination of the Securities by any act
or failure to act on the part of the Company. The provisions of
this Section are solely for the purpose of defining the relative
rights of the holders of Senior Indebtedness of the Company, on
the one hand, and the holders of the Securities, on the other
hand, against the Company and its assets, and nothing contained
in this Section shall impair, as between the Company and the
holder of any Security, the obligation of the Company, which is
unconditional and absolute, to pay to the holder thereof, the
principal thereof, premium, if any, and interest and Additional
Amounts (pursuant to Section 2 hereof) thereon as and when the
same shall become due and payable in accordance with the terms
thereof, or prevent the holder of any Security, upon default
hereunder or under such Security, from exercising all rights,
powers and remedies otherwise provided herein or therein or by
applicable law, all subject to the rights of the holders of
Senior Indebtedness of the Company under this Section to receive
cash, property or securities otherwise payable or deliverable to
the holders of the Securities and coupons.
(f) Nothing contained in this Section or in any of the
Securities shall prevent at any time, except under the conditions
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described in Sections 7(b) and (c) hereof or during the pendency
of any dissolution, winding up, liquidation or reorganization
proceedings therein referred to, the Company from making payments
at any time of principal of, premium, if any, or interest or
Additional Amounts (pursuant to Section 2 hereof) on the
Securities. Nothing contained in this Section shall prevent
conversions of Securities.
8. Replacement, Transfer and Exchange of Securities.
(a) In case any Security (including any coupons
appertaining thereto) shall at any time become mutilated,
destroyed, stolen or lost and such Security or evidence of the
loss, theft or destruction thereof (together with the indemnity
hereinafter referred to and such other documents or proof as may
be required) shall be delivered to the Fiscal Agent, a new
Security of like tenor and date with appropriate interest
coupons, if any, and having the Guarantee endorsed thereon will
be issued by the Company in exchange for the Security so
mutilated, or in lieu of the Security so destroyed, stolen or
lost, but, in the case of a destroyed, stolen or lost Security
only upon receipt of evidence satisfactory to the Fiscal Agent,
the Company and the Guarantor that such Security was destroyed,
stolen or lost, and if required by the Fiscal Agent, the Company
or the Guarantor, upon receipt also of indemnity satisfactory to
the Fiscal Agent, the Company and the Guarantor. All expenses
and reasonable charges associated with procuring such indemnity
and with the preparation, authentication and delivery of a new
Security shall be borne by the owner of the Security so
mutilated, destroyed, stolen or lost.
(b) As provided in the Fiscal Agency Agreement and
subject to certain limitations therein set forth, Bearer
Securities (with all unmatured and matured defaulted coupons
appertaining thereto) are exchangeable at, subject to applicable
laws and regulations, the offices of the paying agencies in
London and, if the Securities are listed on the Luxembourg Stock
Exchange and so long as listed thereon, Luxembourg or as
designated by the Company for such purpose pursuant to the Fiscal
Agency Agreement, for an equal aggregate principal amount of
Registered Securities in the denominations of $1,000 and integral
multiples thereof without coupons and/or Bearer Securities of
authorized denominations, and Registered Securities are
exchangeable at the Corporate Trust Office of the Fiscal Agent in
New York City or, subject to applicable laws and regulations, the
offices of the paying agencies in London and, if the Securities
are listed on the Luxembourg Stock Exchange and so long as listed
thereon, Luxembourg or as designated by the Company for such
purpose pursuant to the Fiscal Agency Agreement, for an equal
aggregate principal amount of Registered Securities of authorized
denominations as requested by the holder surrendering the same.
Registered Securities will not be exchangeable for Bearer
Securities. The Company shall not be required (a) to exchange
Bearer Securities for Registered Securities during the period
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between the close of business on each April 15 and October 15 and
the opening of business on the next succeeding interest payment
date or (b) to exchange Bearer Securities for Registered
Securities, if as a result, the Company or the Guarantor would
incur adverse consequences under United States Federal income tax
laws in effect of the time of exchange, or (c) in the event of a
redemption in part, (i) to register the transfer of Registered
Securities or to exchange Bearer Securities for Registered
Securities for a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Securities
called for such redemption; (ii) to register the transfer or
exchange of any such Registered Securities, or portion thereof,
called for redemption; or (iii) to exchange any such Bearer
Securities called for redemption; provided, however, that a
Bearer Security called for redemption may be exchanged for a
Registered Security that is simultaneously surrendered, with
written instruction for payment on the date fixed for redemption,
unless the date fixed for redemption is during the period between
the close of business on each April 15 and October 15 and the
close of business on the next succeeding interest payment date,
in which case such exchange may only be made prior to the close
of business on each April 15 and October 15 immediately preceding
the date fixed for redemption. In the event of redemption or
conversion of a Security in part only, a new Security or
Securities for the unredeemed or unconverted portion hereof will
be issued in the name of the holder thereof.
(c) The costs and expenses of effecting any exchange
or registration of transfer pursuant to the foregoing provisions,
except for the expenses of delivery by other than regular mail
(if any) and except, if the Company shall so require, the payment
of a sum sufficient to cover any tax or other governmental charge
or insurance charges that may be imposed in relation thereto,
will be borne by the Company.
(d) The Company has initially appointed as registrar
and transfer agent the Fiscal Agent acting through the Corporate
Trust Office in New York. The Company has also initially
appointed Banque Internationale a Luxembourg as a transfer agent,
subject to the listing of the Securities on the Luxembourg Stock
Exchange. The Company may at any time terminate the appointment
of the registrar and transfer agent and appoint additional or
other registrars and transfer agents or approve any change in an
office through which the registrar and transfer agent acts;
provided that, until all of the Securities have been delivered to
the Fiscal Agent for cancellation, or monies sufficient to pay
the Securities have been made available for payment and either
paid or returned to the Company as provided in the Securities,
the Company will maintain a registrar and transfer agent in the
City of New York in the United States.
(e) For purposes of the provisions of this Security
and the Fiscal Agency Agreement, any Security authenticated and
delivered pursuant to the Fiscal Agency Agreement shall, as of
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any date of determination, be deemed to be "outstanding", except
for:
(i) Securities previously canceled by the Fiscal
Agent or delivered to the Fiscal Agent for cancellation;
(ii) Securities which have been called for
redemption by the Company in accordance with Section 3 hereof or
which have become due and payable at maturity or otherwise and
with respect to which monies sufficient to pay the principal
thereof and interest thereon (including Additional Amounts, if
any) shall have been made available to the Fiscal Agent; or
(iii) Securities in lieu of or in substitution
for which other Securities have been authenticated and delivered
pursuant to the Fiscal Agency Agreement;
provided, however, that in determining whether the holders of the
requisite principal amount of outstanding Securities are present
at a meeting of holders of Securities for quorum purposes or have
given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Securities owned by the Company or
the Guarantor or any subsidiary thereof shall be disregarded and
deemed not to be outstanding.
9. Modifications and Amendments.
(a) Without the consent of any holders of Securities
or coupons, modifications of or amendments to the Fiscal Agency
Agreement or the Terms and Conditions of the Securities may be
made for any of the following purposes:
(i) to evidence the succession of another
corporation to the Company or the Guarantor and the assumption by
any such successor of the covenants of the Company or the
Guarantor, as the case may be, in the Fiscal Agency Agreement,
the Securities or the Guarantees;
(ii) to add to the covenants of the Company or the
Guarantor for the benefit of the holders of Securities or related
coupons, or to surrender any right or power herein conferred upon
the Company or the Guarantor;
(iii) to permit payment of principal of, premium,
if any, and interest on Bearer Securities in the United States,
provided that such payment is permitted by United States tax laws
and regulations then in effect;
(iv) to make provision with respect to the
conversion rights of holders of Securities or coupons in the
event of a consolidation, merger or sale of substantially all of
the assets of the Company;
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(v) to cure any ambiguity, to correct or
supplement any defective provision in the Fiscal Agency Agreement
which may be inconsistent with any other provision therein, or to
make any other provisions with respect to matters or questions
arising under this Security or the Fiscal Agency Agreement,
provided such action pursuant to this clause (v) will not
materially adversely affect the interests of the holders of
Securities or related coupons; or
(vi) to increase the principal amount of
Securities that may be issued pursuant to the Fiscal Agency
Agreement.
(b) Modifications and amendments to the Fiscal Agency
Agreement or to the Terms and Conditions of the Securities may be
made, and future compliance with or past default by the Company
under any of the provisions thereof may be waived, with the
written consent of the holders of not less than a majority in
aggregate principal amount of the Securities at the time
outstanding (excluding for purposes of this calculation the
aggregate principal amount of Securities held by the Company or
the Guarantor or any of its subsidiaries), or of such lesser
percentage as may act at a meeting of holders of Securities held
in accordance with the provisions set forth herein; provided that
no such modification, amendment or waiver may, without the
consent of the holder of each such Security affected thereby:
(i) waive a default in the payment of the
principal of, premium, if any, or any installment of interest on
any Security;
(ii) change the stated maturity of the principal
of, premium, if any, or any installment of interest on, any
Security, or reduce the principal amount thereof or any premium,
if any, or any installment of interest, or change the obligation
of the Company to pay Additional Amounts pursuant to Section 2
hereof (except as permitted by subsection (a) of Section 9 or by
the Fiscal Agency Agreement), or change the coin or currency in
which any Security or any premium or interest thereon is payable,
or, except as otherwise permitted or contemplated by the
provisions concerning corporate reorganizations, adversely affect
the right to redeem (pursuant to Section 3(d) hereof) or convert
any Securities as provided in Sections 3 and 4, respectively, or
modify the provisions of the Guarantees in a manner adverse to
the holders;
(iii) reduce the requirements of Section 10
hereof for the adoption of a resolution of the quorum required at
any meeting of holders of Securities at which a resolution is
adopted, or reduce the percentage in principal amount of the
outstanding Securities the consent of whose holders is required
for any amendment or modification of the Fiscal Agency Agreement
or the Terms and Conditions of the Securities or the consent of
whose holders is required for any waiver (of compliance with
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certain provisions of the Fiscal Agency Agreement or the
Securities or certain defaults hereunder and thereunder and their
consequences) provided for in the Terms and Conditions of the
Securities;
(iv) modify the obligation of the Company and the
Guarantor to maintain an office or agency in the City of New York
and outside the United States; or
(v) modify any of the provisions of this section
except to increase any such percentage or to provide that certain
other provisions of the Fiscal Agency Agreement or the Securities
cannot be modified or waived without the consent of the holder of
each outstanding Security affected thereby.
It shall not be necessary for any act of holders of Securities
under this Section to approve the particular form of any proposed
amendment, modification or waiver, but it shall be sufficient if
such act shall approve the substance thereof. Any modifications,
amendments or waivers to the Fiscal Agency Agreement or to these
Terms and Conditions will be conclusive and binding on all
holders of the Securities and any coupons appertaining thereto,
whether or not they have given such consent or were present at
such meeting and whether or not notation of such modifications,
amendments or waivers is made upon the Securities or coupons, and
on all future holders of Securities and coupons. Any instrument
given by or on behalf of any holder of a Security in connection
with any consent to any such modification, amendment or waiver
will be irrevocable once given and will be conclusive and binding
on all subsequent holders of such Security and coupons
appertaining thereto.
10. Meetings and Votes of Holders.
(a) A meeting of holders of Securities may be called
at any time and from time to time pursuant to this Section for
any of the following purposes: (i) to give any notice to the
Company, to the Guarantor or to the Fiscal Agent, or to give any
directions to the Fiscal Agent, or to consent to the waiving of
any default hereunder and its consequences, or to take any other
action authorized to be taken by holders of Securities pursuant
to these Terms and Conditions; or (ii) to take any other action
authorized to be taken by or on behalf of the holders of any
specified aggregate principal amount of the Securities under any
other provision of the Fiscal Agency Agreement, under applicable
law or under these Terms and Conditions.
(b) Meetings of holders of Securities may be held at
such place or places in New York City or London as the Fiscal
Agent or, in case of its failure to act, the Company, the
Guarantor or the holders calling the meeting shall from time to
time determine.
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The Fiscal Agent may at any time call a meeting of holders
of the Securities to be held at such time and at such place in
any of such designated locations as the Fiscal Agent shall
determine. Notice of every meeting of holders shall be made as
specified in the Fiscal Agency Agreement.
In case at any time the Company, the Guarantor or the
holders of at least 25% in aggregate principal amount of the
Securities shall have requested the Fiscal Agent to call a
meeting of the holders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting,
and the Fiscal Agent shall not have given the first notice of
such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company , the Guarantor or the holders
of Securities in the amount above specified may determine the
time and the place in such designated locations for such meeting
and may call such meeting to take any action authorized herein by
giving notice thereof as provided in the Fiscal Agency Agreement.
(c) To be entitled to vote at any meeting of holders
of Securities, a person shall be (i) a holder of one or more
Securities, or (ii) a person appointed by an instrument in
writing as proxy for a holder or holders of Securities by such
holder or holders, which proxy need not be a holder of
Securities. The only persons who shall be entitled to be present
or to speak at any meeting of holders shall be the persons
entitled to vote at such meeting and their counsel and any
representatives of the Fiscal Agent and its counsel and any
representatives of the Company and its counsel and any
representatives of the Guarantor and its counsel. The persons
entitled to vote a majority in principal amount of outstanding
Securities shall constitute a quorum for the transaction of all
business specified in subsection (a) hereof. No business shall
be transacted in the absence of a quorum unless a quorum is
represented when the meeting is called to order. In the absence
of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of the
holders of Securities, be dissolved. In any other case the
meeting shall be adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting shall be given as provided in the Fiscal
Agency Agreement. Subject to the foregoing, at the reconvening
of any meeting adjourned for a lack of a quorum the persons
entitled to vote 25% in principal amount of the Securities
outstanding shall constitute a quorum for the taking of any
action set forth in the notice of the original meeting. Notice
of the reconvening of an adjourned meeting shall state expressly
the percentage of the aggregate principal amount of the
Securities that shall constitute a quorum. At a meeting or an
adjourned meeting duly reconvened and at which a quorum is
present as aforesaid, any resolution and all matters (except as
limited by Section 9 of these Terms and Conditions) shall be
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effectively passed and decided if passed or decided by the
persons entitled to vote a majority in principal amount of the
Securities represented and voting at such meeting, provided that
such amount shall not be less than 25% in principal amount of the
Securities outstanding. Any holder of a Security who has
executed an instrument in writing appointing a person as his
proxy shall be deemed to be present for the purposes of
determining a quorum and be deemed to have voted; provided,
however, that such holder shall be considered as present or
voting only with respect to the matters covered by such
instrument in writing. Any resolution effectively passed or
decision taken at any meeting of the holders of Securities duly
held in accordance with this Section 10 shall be binding on all
the holders of Securities whether or not present or represented
at the meeting.
(d) Notwithstanding any other provision of this
Security, the Fiscal Agent may make such reasonable regulations
as it may deem advisable for any meeting of holders of Securities
in regard to proof of the holding of Securities and of the
appointment of proxies and in regard to the appointment and
duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Bearer
Securities shall be proved by the production of the Bearer
Securities or by a certificate executed, as depositary, by, and
the appointment of any proxy shall be proved by having the
signature of the person executing the proxy witnessed or
guaranteed by, in each case, any trust company, bank or banker
satisfactory to the Fiscal Agent. Such regulations may provide
that written instruments appointing proxies, regular on their
face, may be presumed valid and genuine without the proof
specified herein or other proof. The holding of Registered
Securities shall be proved by the registry books maintained in
accordance with the Fiscal Agency Agreement or by a certificate
or certificates of the Fiscal Agent in its capacity as the
Company's agent for the maintenance of such books.
(e) The Fiscal Agent shall, by an instrument in
writing, appoint a temporary chairperson and a temporary
secretary of the meeting, unless the meeting shall have been
called by the Company, the Guarantor or by the holders of
Securities as provided herein and in the Fiscal Agency Agreement,
in which case the Company, the Guarantor or the holders calling
the meeting, as the case may be, shall in like manner appoint a
temporary chairperson and a temporary secretary. A permanent
chairperson and a permanent secretary of the meeting shall be
elected by vote of the holders of a majority in principal amount
of the Securities represented at the meeting and entitled to
vote. At any meeting each holder or proxy shall be entitled to
one vote for each U.S. $1,000 principal amount of Securities held
or represented by him; provided, however, that no vote shall be
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cast or counted at any meeting in respect of the Securities
challenged as not outstanding and ruled by the chairperson of the
meeting to be not outstanding. The chairperson of the meeting
shall have no right to vote, except as a holder or proxy. Any
meeting of holders of Securities duly called at which a quorum is
present may be adjourned from time to time by vote of the holders
(or proxies for the holders) of a majority in principal amount of
the Securities represented at the meeting and entitled to vote;
and the meeting may be held as so adjourned without further
notice.
(f) The vote upon any resolution submitted to any
meeting of holders of Securities shall be written ballots on
which shall be subscribed the signatures of the holders of
Securities or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them.
The permanent chairperson of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record, at least
in triplicate, of the proceedings of each meeting of holders of
Securities shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts
setting forth a copy of the notice of the meeting and showing
that said notice was published as provided in the Fiscal Agency
Agreement. Each copy shall be signed and verified by the
affidavits of the permanent chairperson and secretary of the
meeting, and one of such copy shall be delivered to the Company,
another to the Guarantor and another to the Fiscal Agent to be
preserved by the Fiscal Agent, the copy delivered to the Fiscal
Agent to have attached thereto by ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
11. Business Days. Notwithstanding anything herein or in
the Fiscal Agency Agreement to the contrary, if any payment of
interest or premium or principal (or Additional Amounts, if any)
is due on a day that is not a Business Day, payment shall be made
on the next succeeding Business Day, with the same effect as if
made on the day such payment was due, and no interest shall
accrue for the period after such date. A "Business Day" is
defined, with respect to any act to be performed pursuant hereto
or to the Fiscal Agency Agreement, as any day which is not a
Saturday, Sunday or a day on which banking institutions in the
place where such act is to occur are authorized or obligated by
applicable law, regulation or executive order to close.
12. Fiscal and Paying Agent.
(a) In acting under the Fiscal Agency Agreement and in
connection with the Securities, the Fiscal Agent is acting solely
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as agent of the Company and the Guarantor and does not assume any
obligation, or relationship of agency or trust, for or with the
owner or holder of this Security or any interest coupon
appertaining hereto, except that funds held by the Fiscal Agent
for payment on this Security shall be held in trust by it and
applied as set forth herein, but need not be segregated from
other funds held by it, except as required by law. For a
description of the duties and the immunities and rights of the
Fiscal Agent under the Fiscal Agency Agreement, reference is made
to the Fiscal Agency Agreement, and the obligations of the Fiscal
Agent to the holder hereof are subject to such immunities and
rights.
(b) Any monies paid by the Company to any paying
agency for payment of principal of, premium, if any, or interest
on any Security (including Additional Amounts, if any, in respect
thereof) and remaining unclaimed for two years after such payment
has been made shall be repaid to the Company and to the extent
permitted by law the holder of any Security shall thereafter look
only to the Company or the Guarantor for any payment thereof as a
general unsecured obligation thereof and all liability of the
Fiscal Agent with respect thereto shall cease.
(c) No reference herein to the Fiscal Agency Agreement
and no provision of this Security or of the Fiscal Agency
Agreement shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of,
premium, if any, and interest (and Additional Amounts, as
described above) on this Security at the times, places and rate,
and in the coin or currency, herein prescribed or to convert or
redeem (at the request of a holder) this Security as provided
herein or in the Fiscal Agency Agreement.
Title to Bearer Securities and coupons shall pass by
delivery. As provided in the Fiscal Agency Agreement and subject
to certain limitations therein set forth, the transfer of
Registered Securities is registrable on the Security Register
upon surrender of a Registered Security for registration of
transfer at the office or agency of the Company in the City of
New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Security Registrar duly executed by, the holder thereof or
his attorney duly authorized in writing, and thereupon one or
more new Registered Securities, of authorized denominations and
for the same aggregate principal amount, having endorsed thereon
a Guarantee executed by the Guarantor, will be issued to the
designated transferee or transferees.
13. Notices. All notices to the holders of Securities will
be published on a Business Day in an Authorized Newspaper (as
defined in the Fiscal Agency Agreement) in New York City and in
London, and, if the Securities are listed on the Luxembourg Stock
Exchange and so long as listed thereon , in Luxembourg or, if
either publication in London or Luxembourg is not practical, in
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an Authorized Newspaper in any country in Western Europe. It is
expected that publication in New York City will be made in The
Wall Street Journal (Eastern edition), in London in the Financial
Times and in Luxembourg in the Luxemburger Wort. Notices shall
be deemed to have been given on the date of publication as
aforesaid or, if published on different dates, on the date of the
first such publication. A copy of each such notice will be
mailed by the Fiscal Agent, on behalf of and at the expense of
the Company, by first-class mail to each holder of a Registered
Security at the registered address of such holder as the same
shall appear in the Security Register (as defined in the Fiscal
Agency Agreement) on the day fifteen days prior to such mailing.
14. Governing Law.
(a) THE FISCAL AGENCY AGREEMENT, THE SECURITIES AND
ANY COUPONS APPERTAINING THERETO AND THE GUARANTEES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS, UNITED STATES OF AMERICA WITHOUT
GIVING EFFECT TO ITS CONFLICTS OF LAWS RULES.
(b) The Company and the Guarantor have appointed the
Fiscal Agent as its agent upon whom process may be served in any
suit, action or proceeding initially at its office located at 450
West 33rd Street, 15th Floor, New York, New York 10001, with a
copy to the Company at 81 Wyman Street, Waltham, Massachusetts
02254-9046, Attention: President and with a copy to the Guarantor
at 81 Wyman Street, Waltham, Massachusetts 02254-9046, Attention:
General Counsel.
15. Authentication. This Security and any coupons
appertaining thereto shall not become valid or obligatory for any
purpose until the certificate or authentication hereon shall have
been duly signed by the Fiscal Agent acting under the Fiscal
Agency Agreement.
16. Warranty of the Issuer. Subject to Section 15 hereof,
the Company hereby certifies and warrants that all acts,
conditions and things required to be done and performed and to
have happened precedent to the creation and issuance of this
Security and any coupons appertaining thereto, and to constitute
the same legal, valid and binding obligations of the Company
enforceable in accordance with their terms, have been done and
performed and have happened in due and strict compliance with all
applicable laws.
17. Delivery of Certain Information. At any time when the
Company is not subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, upon the request of a holder
or beneficial owner of a Restricted Security, the Company will
promptly furnish or cause to be furnished such information as is
specified in Rule 144A(d)(4) under the Securities Act (or any
successor thereto) to such holder, to a prospective purchaser of
such Restricted Security designated by such holder, to such
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beneficial owner or to a prospective purchaser of such Restricted
Security designated by such beneficial owner, as the case may be,
in order to permit compliance by such holder or beneficial owner
with Rule 144A under the Securities Act in connection with the
resale of such Security by such holder or beneficial owner,
provided, however, that the Company shall not be required to
furnish such information in connection with any request made on
or after the date which is three years (or the then applicable
holding period under Rule 144(k) under the Securities Act (or
successor provision)) from the later of (i) the date such
Security (or any predecessor security) was originally acquired
from the Company and (ii) the date such Security (or any
predecessor security) was last acquired from the Company or an
"affiliate" of the Company within the meaning of Rule 144 under
the Securities Act.
18. Accounting Terms. All accounting terms not otherwise
defined herein shall have the meanings assigned to them in
accordance with generally accepted accounting principles as
applied in the United States.
19. Descriptive Headings. The descriptive headings
appearing in these Terms and Conditions are for convenience of
reference only and shall not alter, limit or define the
provisions hereof.
A-42PAGE
<PAGE>
GUARANTEE OF THERMO ELECTRON CORPORATION
1. FOR VALUE RECEIVED, Thermo Electron Corporation, a
corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Guarantor"), hereby
unconditionally guarantees to the holder of the Security upon
which this Guarantee is endorsed and to each holder of any coupon
appertaining thereto the due and punctual payment of the
principal of, premium, if any, and interest and any Additional
Amounts (payable in accordance with Section 2 of such Security)
on such Security when and as the same shall become due and
payable, whether at the stated maturity or by declaration of
acceleration, call for redemption, redemption at the option of
the holder thereof or otherwise, according to the terms of such
Security and of the Fiscal Agency Agreement referred to in the
Security upon which this Guarantee is endorsed. In case of the
failure of the Company referred to in the Security upon which
this Guarantee is endorsed punctually to make any such payment of
principal, premium, if any, or interest or such Additional
Amounts, if any, the Guarantor hereby agrees to cause any such
payment to be made punctually when and as the same shall become
due and payable, whether at the stated maturity or by declaration
of acceleration, call for redemption, redemption at the option of
the holder thereof or otherwise, and as if such payment were made
by the Company.
2. The Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of such Security or the Fiscal
Agency Agreement, the absence of any action to enforce the same,
any waiver or consent by the holder of such Security or any such
coupon or by the Fiscal Agent with respect to any provisions
thereof or of the Fiscal Agency Agreement, the recovery of any
judgment against the Company or any action to enforce the same or
any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor. The Guarantor
hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against
the Company, protest or notice with respect to such Security or
coupon or the indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be
discharged except by complete performance of the obligations
contained in such Security and any such coupon and in this
Guarantee.
3. (a) The Guarantor will not merge or consolidate with,
or sell or convey all or substantially all of its assets to, any
other corporation, unless (i) either (A) the Guarantor shall be
the surviving corporation in the case of a merger, (B) the assets
sold or conveyed shall be owned by a corporation which,
immediately following such sale or conveyance, is at least
51%-owned by the Guarantor, provided that such sale or conveyance
A-43PAGE
<PAGE>
does not result in the reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the
Guarantor, or (C) (I) the surviving, resulting or transferee
corporation shall expressly assume the due and punctual
performance of all of the covenants and obligations of the
Guarantor under the Guarantees and Fiscal Agency Agreement, by
supplemental agreement reasonably satisfactory to the Fiscal
Agent, and (II) the Fiscal Agent shall have received the
documentation required in the context by the Fiscal Agency
Agreement and (ii) the Guarantor or such successor corporation,
as the case may be, shall not, immediately after such merger,
consolidation, sale or conveyance, be in default in the
performance of any covenants or obligations of the Guarantor
under the Guarantees or the Fiscal Agency Agreement.
(b) Upon any merger, consolidation, sale, conveyance
or assumption as provided in Section 3(a), the successor or
assuming corporation shall succeed to and be substituted for, and
may exercise every right and power of and be subject to all the
obligations of, the Guarantor under the Guarantees and Fiscal
Agency Agreement, with the same effect as if such successor or
assuming corporation had been named as the Guarantor therein and
herein and the Guarantor shall be released from its obligations
as obligor under the Guarantees and Fiscal Agency Agreement.
4. (a) The Guarantor, for itself, its successors and
assigns, covenants and agrees, and each holder of Securities by
his acceptance thereof, likewise covenants and agrees, that all
obligations of the Guarantor relating to payment of the principal
of, premium, if any, and interest and Additional Amounts
(pursuant to Section 2 of the Securities) on each and all of the
Securities and coupons is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all Senior Indebtedness
of the Guarantor (as defined below).
"Senior Indebtedness of the Guarantor" or "Senior
Indebtedness" shall mean the principal of, premium, if any, and
interest on and all other amounts due on or with respect to the
following, whether outstanding at the date hereof or hereafter
created or incurred:
(i) indebtedness of the Guarantor for money
borrowed by the Guarantor (excluding the Guarantees, but
including purchase money obligations) whether or not evidenced by
debentures, bonds, notes or other corporate debt securities or
similar instruments issued by the Guarantor (including the
Guarantor's obligations with respect to its 5% Senior Convertible
Debentures due 2001 and its 4-5/8% Senior Convertible Debentures
due 1997); provided, however, that Senior Indebtedness shall not
include (a) the Guarantor's 4-1/4% Convertible Subordinated
Debentures due 2003 and its 4-7/8% Convertible Subordinated
Debentures due 1997, the obligations represented by which shall
rank pari passu with the obligations represented hereby in right
A-44PAGE
<PAGE>
of payment, (b) the Guarantor's subordinated guarantee of the
principal, premium, if any, and interest on the 6% Convertible
Subordinated Debentures due 2001 of Thermo Instrument Systems
Inc., on the 6% Convertible Subordinated Debentures due 1997 of
the Company on the Non-Interest Bearing Convertible Subordinated
Debentures due 1997 of Thermo Cardiosystems Inc., on the 6%
Convertible Subordinated Debentures Due 1998 of Thermedics Inc.,
on the Non-Interest Bearing Convertible Subordinated Debentures
due 2001 of Thermo Ecotek Corporation, on the 3% Convertible
Subordinated Debentures due 2000 of Thermo Voltek Corp., on the
4% Convertible Subordinated Debentures due 2000 of Thermo
Remediation Inc., on the 5% Convertible Subordinated Debentures
due 2000 of ThermoQuest Corporation, and on the 5% Convertible
Subordinated Debentures due 2000 of Thermo Optek Corporation, the
obligations represented by which shall rank pari passu with the
obligations represented hereby in right of payment and (c) the
Guarantor's subordinated guarantee of the obligations to redeem
the common stock of ThermoLyte Corporation, the obligations
represented by which shall rank pari passu with the obligations
represented hereby in right of payment;
(ii) obligations to reimburse any bank or other
person in respect of amounts paid under letters of credit;
(iii) leases for real property, equipment or
other assets, which leases are capitalized in the Guarantor's
consolidated financial statements in accordance with generally
accepted accounting principles;
(iv) commitment, standby and other fees due and
payable to financial institutions with respect to credit
facilities available to the Guarantor;
(v) obligations of the Guarantor under interest
rate and currency swaps, floors, caps or other similar
arrangements intended to fix or hedge interest rate obligations
or currency exposure;
(vi) indebtedness secured by any mortgage, pledge,
lien or other encumbrance on property which is owned or held by
the Guarantor subject to such mortgage, pledge, lien or other
encumbrance, whether or not the indebtedness secured thereby
shall have been assumed by the Guarantor;
(vii) obligations of the Guarantor constituting
guarantees of indebtedness of or joint obligations with another
or others which would be included in the preceding clauses (i),
(ii), (iii), (iv), (v) or (vi) (including the Guarantor's
guarantee of the principal, premium, if any, and interest on the
3-3/4% Senior Convertible Debentures due 2000 of Thermo
Instrument Systems Inc.); or
(viii) modifications, renewals, extensions or
refundings of any of the indebtedness, leases, fees or
A-45PAGE
<PAGE>
obligations referred to in the preceding clauses (i), (ii),
(iii), (iv), (v), (vi) and (vii), or debentures, notes or other
evidences of indebtedness issued in exchange therefor;
provided that Senior Indebtedness shall not include any
particular indebtedness, lease, fee, obligation, modification,
renewal, extension, refunding or exchanged security if, under the
express provisions of the instrument creating or evidencing the
same, or pursuant to which the same is outstanding, such
indebtedness, lease, fee or obligation or such modification,
renewal, extension, refunding or exchanged security is stated to
be not superior in right of payment to the Guarantees.
(b) (i) In the event of any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or
other similar proceedings in connection therewith, relative to
the Guarantor or it its creditors, in their capacity as such
creditors, or to its property, or in the event of any proceedings
for voluntary liquidation, dissolution or other winding up of the
Guarantor, whether or not involving insolvency or bankruptcy, or
in the event of any assignment for the benefit of creditors of
the Guarantor or any marshalling of assets of the Guarantor, then
the holders of Senior Indebtedness of the Guarantor shall first
be entitled to receive payment in full of the principal of (and
premium, if any) and interest, including interest thereon
accruing after the commencement of any such proceeding, and other
amounts due on or with respect to, all Senior Indebtedness of the
Guarantor before the holders of any of the Securities and coupons
shall be entitled to receive any payment on account of the
obligations of the Guarantor relating to the principal of,
premium, if any, or interest and Additional Amounts (pursuant to
Section 2 of the Securities) on the Securities and coupons, and
to that end the holders of Senior Indebtedness of the Guarantor
shall be entitled to receive for application in payment thereof
any payment or distribution of any kind or character, whether in
cash, property or securities, which may be payable or deliverable
in any such proceedings in respect of the obligations of the
Guarantor relating to the Securities and coupons, other than
securities of the Guarantor as reorganized or readjusted or
securities of the Guarantor or any other corporation provided for
by a plan of reorganization or readjustment the payment of which
is subordinate, at least to the extent provided in this Section 4
with respect to the obligations of the Guarantor relating to the
Securities and coupons, to the payment of all Senior Indebtedness
of the Guarantor, provided that the rights of the holders of
Senior Indebtedness of the Guarantor are not altered by such
reorganization or readjustment. For the purposes of this Section
4, no consolidation, merger, conveyance or transfer made pursuant
to the provisions of Section 3 shall be deemed to be a
liquidation, reorganization, dissolution or other winding up of
the Guarantor.
(ii) If under the circumstances set forth in
paragraph (i) of this subsection, and notwithstanding the
A-46PAGE
<PAGE>
provisions thereof, any payment or distribution of assets of the
Guarantor of any kind, whether in cash, property, or securities
(other than securities of the Guarantor as reorganized or
readjusted or securities of the Guarantor or any other
corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinated, at least to
the extent provided in this Section 4 with respect to the
obligations of the Guarantor relating to the Securities and
coupons, to the payment of all Senior Indebtedness of the
Guarantor, provided that the rights of the holders of Senior
Indebtedness of the Guarantor are not altered by such
reorganization or readjustment), shall be received by the holders
of the Securities in respect of the obligations of the Guarantor
before all Senior Indebtedness of the Guarantor is paid in full,
such payment or distribution shall be paid over to the holders of
Senior Indebtedness of the Guarantor, ratably, for application to
the payment of all Senior Indebtedness of the Guarantor remaining
unpaid until all Senior Indebtedness of the Guarantor shall have
been paid in full, after giving effect to any concurrent payment
or distribution to the holders of such Senior Indebtedness of the
Guarantor.
(iii) Upon any distribution of assets of the
Guarantor referred to in this Section, the holders of Securities
shall be entitled to rely upon any final order or decree of a
court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are
pending, and the holders of Securities shall be entitled to rely
upon a certificate of the liquidating trustee or agent or other
person making any distribution to the holders of Securities for
the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of Senior Indebtedness of the
Guarantor and other indebtedness of the Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Section.
(c) (i) Upon the maturity of any Senior Indebtedness
of the Guarantor by lapse of time, acceleration or otherwise, all
principal thereof (and premium, if any) and interest due thereon,
including interest thereon accruing after the commencement of any
proceeding of the type referred to in paragraph (i) of Section
4(b) above, and all other amounts due on or with respect thereto,
shall first be paid in full, or such payment duly provided for in
cash, before any payment, directly or indirectly, is made on
account of the obligations of the Guarantor relating to the
principal of, premium, if any, or interest and Additional Amounts
(pursuant to Section 2 of the Securities) on the Securities or
coupons.
(ii) Upon the happening of an event of default
with respect to any Senior Indebtedness of the Guarantor, as
defined therein or in the instrument under which it is
outstanding, permitting the holders to accelerate the maturity
A-47PAGE
<PAGE>
thereof, then, unless and until such event of default shall have
been cured or waived or shall have ceased to exist, no payment
shall be made by the Guarantor, directly or indirectly, on
account of the obligations of the Guarantor relating to the
principal of, premium, if any, or interest and Additional Amounts
(pursuant to Section 2 of the Securities) on the Securities and
coupons.
(d) In case cash, securities or other property
otherwise payable or deliverable to the holders of the Securities
on account of the Guarantees shall have been applied, pursuant to
Section 4(b) or (c), to the payment of Senior Indebtedness of the
Guarantor, then, upon the payment in full of all Senior
Indebtedness of the Guarantor, the holders of the Securities and
coupons shall be subrogated to any rights of any holders of
Senior Indebtedness of the Guarantor, to receive any further
payments or distributions applicable to Senior Indebtedness of
the Guarantor until the obligations of the Guarantor in respect
of the Guarantees shall have been discharged in full, and such
payments or distributions received by the holders of the
Securities and coupons, by reason of such subrogation, of cash,
securities or other property which otherwise would be paid or
distributed to the holders of Senior Indebtedness of the
Guarantor, shall, as between the Guarantor and its creditors
other than the holders of Senior Indebtedness of the Guarantor,
on the one hand, and the holders of the Securities and coupons on
account of the Guarantees, on the other hand, be deemed to be a
payment by the Guarantor on account of Senior Indebtedness of the
Guarantor and not on account of the Securities and coupons.
(e) No present or future holder of any Senior
Indebtedness of the Guarantor shall be prejudiced in any way in
the right to enforce the subordination of the Guarantees by any
act or failure to act on the part of the Guarantor. The
provisions of this Section 4 are solely for the purpose of
defining the relative rights of the holders of Senior
Indebtedness of the Guarantor, on the one hand, and the holders
of the Securities and coupons on account of the Guarantees, on
the other hand, against the Guarantor and its assets, and nothing
contained in this Section 4 shall impair, as between the
Guarantor and the holder of any Security or coupon, the
obligation of the Guarantor, which is unconditional and absolute,
to perform in accordance with the terms of its Guarantees, or
prevent the holder of any Security or coupon, upon default
hereunder or under such Security or coupon, from exercising all
rights, powers and remedies otherwise provided herein or therein
or by applicable law, all subject to the rights of the holders of
Senior Indebtedness of the Guarantor under this Section 4 to
receive cash, property or securities otherwise payable or
deliverable to the holders of the Securities and coupons on
account of the Guarantees.
(f) Nothing contained in this Section 4 or in any
Guarantees shall prevent at any time, except under the conditions
A-48PAGE
<PAGE>
described in Sections 4(b) and (c) hereof or during the pendency
of any dissolution, winding up, liquidation or reorganization
proceedings therein referred to, the Guarantor from performing
its obligations under the Guarantees.
5. The Guarantor shall be subrogated to all rights of the
holders of the Securities and of any coupons against the Company
in respect of any amounts paid by the Guarantor pursuant to the
provisions of this Guarantee; provided, however, that the
Guarantor shall not be entitled to enforce or to receive any
payments arising out of, or based upon, such right of subrogation
until the principal of, premium, if any, and interest on and
Additional Amounts (pursuant to Section 2 of the Securities, if
any, on) all of the Securities shall have been paid in full.
6. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
UNITED STATES OF AMERICA WITHOUT GIVING EFFECT TO ITS CONFLICTS
OF LAWS RULES.
7. All terms used in this Guarantee which are defined in
the Fiscal Agency Agreement shall have the meanings assigned to
them in the Fiscal Agency Agreement.
8. Subject to the next following paragraph, the Guarantor
hereby certifies and warrants that all acts, conditions and
things required to be done and performed and to have happened
precedent to the creation and issuance of this Guarantee and to
constitute the same a legal, valid and binding obligations of the
Guarantor enforceable in accordance with their terms, have been
done and performed and have happened in due and strict compliance
with all applicable laws.
9. This Guarantee shall not become valid or obligatory for
any purpose until the certificate of authentication on the
Security upon which this Guarantee is endorsed shall have been
duly signed by the Fiscal Agent acting under the Fiscal Agency
Agreement.
A-49PAGE
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee
to be duly executed in its corporate name by the manual or
facsimile signature of a duly authorized officer.
Dated:
THERMO ELECTRON CORPORATION
By: _____________________________
Name:
Title:
Attest:
_________________________
A-50PAGE
<PAGE>
TRANSFER NOTICE
Only if a Registered Security is transferred:
FOR VALUE RECEIVED, the undersigned Holder hereby sell(s),
assign(s) and transfer(s) unto _________________________________
unto____________________________________________________________
__________________ whose taxpayer identification number is
__________________ and whose address including postal/zip code is
____________________________________ the within Security and all
rights thereunder, hereby irrevocably constituting and appointing
_________________________ attorney-in-fact to transfer said
Security on the books of the Fiscal Agent with full power of
substitution in the premises.
In connection with the transfer of this Security, the undersigned
Holder certifies that:
(Check one)
[ ] (a) This Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933) in compliance
with the exemption from registration under the
Securities Act of 1933 provided by Rule 144A.
[ ] (b) This Security is being transferred in an Offshore
Transaction (as defined in Regulation S under the
Securities Act of 1933) in compliance with the
exemption from registration under the Securities
Act of 1933 provided by Regulation S and in
connection with which transfer the Company has
received, if so requested, an opinion of counsel
(satisfactory to it in form and substance) to the
effect that the transfer is being made pursuant to
an exemption from the registration requirements of
Securities Act of 1933.
[ ] (c) This Security is being transferred to an
institutional investor which is an "accredited
investor" (within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act of 1933)
in a transaction that is exempt from the
registration requirements of the Securities Act of
1933 and in connection with which transfer the
Company has received, if so requested, an opinion
of counsel (satisfactory to it in form and
substance) to the effect that the transfer is
being made pursuant to an exemption from the
registration requirements of Securities Act of
1933
[ ] (d) This Security is being transferred to THERMO
TERRATECH INC.
A-51PAGE
<PAGE>
[ ] (e) Transfer other than those above in connection with
which the Company has received an opinion of
counsel (satisfactory to it in form and substance)
to the effect that the transfer is being made
pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of
the Securities Act of 1933.
[ ] (f) This Security is being exchanged for a beneficial
interest in the Rule 144A Global Security and the
undersigned is a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act
of 1933).
Dated: ______________________ Name: ________________________
By: ________________________
Title: ________________________
NOTICE: The signature of the Holder to this
assignment must correspond with the name as
written upon the face of the within instrument in
every particular, without enlargement or any
change whatsoever.
SIGNATURE GUARANTEED
_________________________________
TO BE COMPLETED BY A BROKER OR DEALER IF (c) ABOVE IS CHECKED:
The undersigned represents and warrants that (i) it is a broker
or dealer registered under Section 15 of the Securities Exchange
Act of 1934, (ii) each person which will become a beneficial
owner of this Security upon transfer is an institutional investor
which is an "accredited investor" (within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933);
(iii) no general solicitation or advertising was made or used by
it in connection with the offer and sale of this Security to such
person(s); and (iv) each such person has been notified that this
Security has not been registered under the Securities Act of 1933
and is subject to the restrictions on transfer of the Security
set forth herein and in the Fiscal Agency Agreement.
Dated: ________________________ ____________________________
By: _______________________
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE FISCAL AGENT SHALL
NOT BE OBLIGATED TO REGISTER THE TRANSFER OF THIS SECURITY UNLESS
A-52PAGE
<PAGE>
AND UNTIL THE CONDITIONS TO ANY SUCH TRANSFER OF REGISTRATION SET
FORTH HEREIN, ON THE FACE HEREOF AND IN THE FISCAL AGENCY
AGREEMENT SHALL HAVE BEEN SATISFIED.
A-53PAGE
<PAGE>
CONVERSION NOTICE
If Bearer Security of denomination U.S. $1,000:
The undersigned holder of this Security hereby (i)
irrevocably exercises the option to convert this Security into
shares of Common Stock of Thermo TerraTech Inc. (the "Company")
in accordance with the terms of this Security, and (ii) directs
that such shares be registered in the name of and delivered,
together with a check in payment for any fractional share, to the
undersigned unless a different name has been indicated below. If
shares are to be registered in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto.
Dated:
Signature
[MUST BE GUARANTEED IF STOCK IS TO BE ISSUED
IN A NAME OTHER THAN THE REGISTERED
HOLDER OF THE SECURITY]
If shares are to be registered in
the name of and delivered to a
person other than the holder,
please print such person's name
and address and, if this is a
Restricted Security, complete
the Transfer Notice:
______________________________
______________________________
______________________________
HOLDER
Please print name and address of holder:
______________________________
______________________________
______________________________
A-54PAGE
<PAGE>
CONVERSION NOTICE
If (i) Registered Security or (ii) Bearer Security of
denomination U.S. $10,000:
The undersigned holder of this Security hereby irrevocably
exercises the option to convert this Security, or portion hereof
(which is U.S. $1,000 or an integral multiple thereof) below
designated, into shares of Common Stock of Thermo TerraTech Inc.
(the "Company") in accordance with the terms of this Security,
and (ii) directs that such shares, together with a check in
payment for any fractional share and any Securities representing
any unconverted principal amount hereof, be delivered to and be
registered (if a Registered Security) in the name of the
undersigned unless a different name has been indicated below. If
shares or Securities are to be registered in the name of a person
other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Signature
[MUST BE GUARANTEED IF STOCK IS TO
BE ISSUED IN A NAME OTHER THAN
THE REGISTERED HOLDER OF THE SECURITY]
Dated: __________________
If shares or Securities are to be
registered in the name of a Person
other than the registered holder,
please print such person's name
and address and, if this is a
Restricted Security, complete
Transfer Notice:
______________________________
______________________________
______________________________
A-55PAGE
<PAGE>
HOLDER
Please print name and address of holder:
______________________________
______________________________
______________________________
If only a portion of the Securities is
to be converted, please indicate:
1 . Principal Amount to be
converted: U.S.$________
2. Kind, amount and denomination
of Securities representing
unconverted principal amount
to be issued:
Bearer U.S. $_____________
(U.S. $1,000 or $10,000)
Registered U.S.$___________
Denominations: U.S.$__________
(U.S. $1,000 or an integral
multiple thereof)
Registered Securities are not
exchangeable for Bearer Securities.
A-56PAGE
<PAGE>
REDEMPTION NOTICE UNDER SECTION 3(d)
If Bearer Security of denomination
U.S. $ 1,000:
The undersigned holder of this Security hereby requests and
instructs the Company to redeem this Security in accordance with
the terms of Section 3(d) of this Security and directs that a
check in payment of the redemption amount be delivered to the
undersigned unless a different name has been indicated below.
The undersigned understands that this request can be revoked by
delivering written notice to the Paying Agent on or before the
Holder Redemption Date, together with the undersigned's
non-transferable receipt for such Security.
Dated:
____________________________
Signature
[MUST BE GUARANTEED IF CHECK IS TO
BE MADE PAYABLE TO A NAME OTHER
THAN THE REGISTERED HOLDER OF THE SECURITY]
If a check in payment of the redemption
amount is to be delivered to a person
other than the holder, please print
such person's name and address:
______________________________
______________________________
______________________________
HOLDER
Please print name and address of holder:
______________________________
______________________________
______________________________
A-57PAGE
<PAGE>
REDEMPTION NOTICE UNDER SECTION 3(d)
If (i) Registered Security or (ii) Bearer Security of
denomination U.S. $10,000:
The undersigned holder of this Security hereby requests and
instructs the Company to redeem this Security or portion hereof
(which is U.S. $1,000 or an integral multiple thereof) in
accordance with the terms of Section 3(d) of this Security, and
directs that a check in payment of the redemption amount be
delivered to, and any Securities representing any unredeemed
principal amount hereof be delivered to and be registered in the
name of, the undersigned unless a different name has been
indicated below. If Securities are to be registered in the name
of a person other than the undersigned, the undersigned will pay
all transfer taxes payable with respect thereto. The undersigned
understands that this request can be revoked by delivering
written notice to the Paying Agent on or before the Holder
Redemption Date, together with the undersigned's non-transferable
receipt for such Security.
Dated:
______________________________
Signature
[MUST BE GUARANTEED IF CHECK
IS TO BE MADE PAYABLE TO A
NAME OTHER THAN THE REGISTERED
HOLDER OF THE SECURITY]
If Securities are to be registered HOLDER
in the name of, or a check in Please print name and address
payment of the redemption of holder:
amount is to be delivered to,
a person other than the holder, _____________________________
please print such person's name
and address, and if this is a _____________________________
Restricted Security and any
Securities representing any _____________________________
unredeemed principal amount
thereof are to be registered in
the name of a person other than
the undersigned, complete
Transfer Notice.
______________________________
______________________________
______________________________
A-58PAGE
<PAGE>
1. Principal Amount to redeemed:
U.S. $
2. Kind, amount and denomination
of Securities representing
unredeemed principal amount to
be issued:
Bearer U.S. $____________
Denominations: U.S. $_______
(U.S. $1,000 or $10,000)
Registered U.S.$___________
Denominations: U.S.$________
(U.S. $1,000 or an integral
multiple thereof)
Registered Securities are not
exchangeable for Bearer
Securities.
A-59PAGE
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES(4)
The following exchanges of a part of this Rule 144A Global
Security for Registered Accredited Investor Securities, or other
Registered Securities not in global form, have been made:
Principal
Amount Signature
Amount of Amount of of this of
Decrease Increase Global Authorized
in Princi- In Princi- Security Officer
pal Amount pal Amount following of Fiscal
of this of this such de- Agent or
Amount of Global Global crease (or Security
Exchange Security Security increase) Custodian
-------- -------- -------- --------- ---------
_______________________
(4) This should be included only if the Security is issued as a
Rule 144 A Global Security.
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EXHIBIT B
(FORM OF REGULATION S GLOBAL SECURITY)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OF AMERICA, ITS TERRITORIES, ITS POSSESSION AND OTHER
AREAS SUBJECT TO ITS JURISDICTION (THE "UNITED STATES" ) OR TO
ANY CITIZEN, NATIONAL RESIDENT OF THE UNITED STATES OR TO ANY
CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED IN
OR UNDER THE LAWS OF THE UNITED STATES OR ANY POLITICAL
SUBDIVISION THEREOF, OR TO ANY ESTATE OR TRUST THE INCOME OF
WHICH IS SUBJECT TO UNITED STATES FEDERAL INCOME TAXATION
REGARDLESS OF ITS SOURCE OR TO ANY OTHER PERSON OR ENTITY DEEMED
A U.S. PERSON UNDER REGULATIONS UNDER THE SECURITIES ACT ("UNITED
STATES PERSON"), EXCEPT TO CERTAIN INSTITUTIONAL INVESTORS IN THE
UNITED STATES IN TRANSACTIONS NOT REQUIRED TO BE REGISTERED UNDER
THE SECURITIES ACT.
ANY UNITED STATES PERSON WHO HOLDS THIS SECURITY WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,
INCLUDING THE LIMITATIONS PROVIDED IN SECTION 165(j) AND 1287(a)
OF THE UNITED STATES INTERNAL REVENUE CODE.
THIS SECURITY IS A TEMPORARY GLOBAL SECURITY, WITHOUT
COUPONS OR CONVERSION RIGHTS, EXCHANGEABLE FOR DEFINITIVE BEARER
SECURITIES WITH INTEREST COUPONS OR REGISTERED SECURITIES WITHOUT
INTEREST COUPONS. THE RIGHTS ATTACHING TO THIS GLOBAL SECURITY,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
DEFINITIVE SECURITIES, ARE AS SPECIFIED IN THE FISCAL AGENCY
AGREEMENT (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS GLOBAL
SECURITY SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON
EXCEPT PURSUANT TO THE PROVISIONS HEREOF.
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THERMO TERRATECH INC.
(Incorporated in the State of Delaware)
4-5/8% Convertible Subordinated Debenture Due 2003
Guaranteed on a Subordinated Basis By
THERMO ELECTRON CORPORATION
(Incorporated in the State of Delaware)
TEMPORARY GLOBAL DEBENTURE
Thermo TerraTech Inc., a corporation duly incorporated and
existing under the laws of the State of Delaware (the "Company"),
for value received, hereby promises to pay to bearer upon
presentation and surrender of this Global Security the principal
sum of $_______ United States Dollars on May 1, 2003 and to pay
interest thereon, from the date hereof, semiannually in arrears
on May 1 and November in each year, commencing November 1, 1996,
at the rate of 4-5/8% per annum, until the principal hereof is
paid or made available for payment; provided, however, that
interest on this Global Security shall be payable only after the
issuance of the definitive Securities for which this Global
Security is exchangeable and, in the case of definitive
Securities in bearer form, only upon presentation and surrender
(at an office or agency outside the United States, its
territories and its possessions, except as otherwise provided in
the Fiscal Agency Agreement referred to below) of the interest
coupons thereto attached as they severally mature.
This Global Security is one of a duly authorized issue of
Securities of the Company designated as specified in the title
hereof, issued and to be issued under the Fiscal Agency Agreement
dated as of May 2, 1996 (the "Fiscal Agency Agreement") among the
Company, Thermo Electron Corporation, a corporation duly
incorporated and existing under the laws of the State of
Delaware, as guarantor and Chemical Bank, as fiscal agent (the
"Fiscal Agent", which term includes any successor fiscal agent
under the Fiscal Agency Agreement). This Global Security is a
temporary security and is exchangeable in whole or from time to
time in part without charge upon request of the holder hereof for
definitive Securities in bearer form, with interest coupons
attached, or in registered form, without coupons, of authorized
denominations, (a) not earlier than the day following expiration
of the 40-day period that begins on the date hereof and (b) as
promptly as practicable following presentation of certification,
in the forms set forth as Exhibits C and F of the Fiscal Agency
Agreement for such purpose, that the beneficial owner or owners
of this Global Security (or, if such exchange is only for a part
of this Global Security, of such part) are not United States
Persons or other persons who have purchased such Debenture for
resale to United States Persons. Definitive Securities in bearer
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form to be delivered in exchange for any part of this Global
Security shall be delivered only outside of the United States,
its territories and its possessions. Upon any exchange of a part
of this Global Security for definitive Securities, the portion of
the principal amount hereof so exchanged shall be endorsed by the
Fiscal Agent or its agents on the Schedule of Exchanges hereto,
and the principal amount hereof shall be reduced for all purposes
by the amount so exchanged.
Until exchanged in full for definitive Securities, this
Global Security shall in all respects be entitled to the same
benefits under, and subject to the same terms and conditions of,
the Fiscal Agency Agreement as definitive Securities
authenticated and delivered thereunder, except that neither the
holder hereof nor the beneficial owners of this Global Security
shall be entitled to receive payment of interest hereon, except
as provided above, or to convert this Global Security into shares
of Common Stock of the Company or any other security, cash or
other property.
THIS GLOBAL SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO ITS CONFLICTS
OF LAW RULES.
All terms used in this Global Security which are defined in
the Fiscal Agency Agreement shall have the meanings assigned to
them in the Fiscal Agency Agreement.
Unless the certificate of authentication hereon has been
manually executed by an authorized signatory of the Fiscal Agent,
this Global Security shall not be entitled to any benefit under
the Fiscal Agency Agreement or valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this Global
Security to be duly executed in its corporate name by its duly
authorized signatory under its corporate seal.
Dated: May 2, 1996
THERMO TERRATECH INC.
By: ________________________
Name:
Title:
Attest:
_________________________
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CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the
within-mentioned Fiscal Agency Agreement.
CHEMICAL BANK
as Fiscal Agent
By: ________________________
Authorized Officer
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SCHEDULE OF EXCHANGES
Principal Remaining
amount principal Notation
exchanged for amount made on
Date definitive following behalf of the
made Securities such exchange Fiscal Agent
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_________________________________________________________________
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GUARANTEE OF THERMO ELECTRON CORPORATION
1. FOR VALUE RECEIVED, Thermo Electron Corporation, a
corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Guarantor"), hereby
unconditionally guarantees to the holder of the Security upon
which this Guarantee is endorsed and to each holder of any coupon
appertaining thereto the due and punctual payment of the
principal of, premium, if any, and interest and any Additional
Amounts (payable in accordance with Section 2 of such Security)
on such Security when and as the same shall become due and
payable, whether at the stated maturity or by declaration of
acceleration, call for redemption, redemption at the option of
the holder thereof or otherwise, according to the terms of such
Security and of the Fiscal Agency Agreement referred to in the
Security upon which this Guarantee is endorsed. In case of the
failure of the Company referred to in the Security upon which
this Guarantee is endorsed punctually to make any such payment of
principal, premium, if any, or interest or such Additional
Amounts, if any, the Guarantor hereby agrees to cause any such
payment to be made punctually when and as the same shall become
due and payable, whether at the stated maturity or by declaration
of acceleration, call for redemption, redemption at the option of
the holder thereof or otherwise, and as if such payment were made
by the Company.
2. The Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of such Security or the Fiscal
Agency Agreement, the absence of any action to enforce the same,
any waiver or consent by the holder of such Security or any such
coupon or by the Fiscal Agent with respect to any provisions
thereof or of the Fiscal Agency Agreement, the recovery of any
judgment against the Company or any action to enforce the same or
any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor. The Guarantor
hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against
the Company, protest or notice with respect to such Security or
coupon or the indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be
discharged except by complete performance of the obligations
contained in such Security and any such coupon and in this
Guarantee.
3. (a) The Guarantor will not merge or consolidate with,
or sell or convey all or substantially all of its assets to, any
other corporation, unless (i) either (A) the Guarantor shall be
the surviving corporation in the case of a merger, (B) the assets
sold or conveyed shall be owned by a corporation which,
immediately following such sale or conveyance, is at least
51%-owned by the Guarantor, provided that such sale or conveyance
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does not result in the reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the
Guarantor, or (C) (I) the surviving, resulting or transferee
corporation shall expressly assume the due and punctual
performance of all of the covenants and obligations of the
Guarantor under the Guarantees and Fiscal Agency Agreement, by
supplemental agreement reasonably satisfactory to the Fiscal
Agent, and (II) the Fiscal Agent shall have received the
documentation required in the context by the Fiscal Agency
Agreement and (ii) the Guarantor or such successor corporation,
as the case may be, shall not, immediately after such merger,
consolidation, sale or conveyance, be in default in the
performance of any covenants or obligations of the Guarantor
under the Guarantees or the Fiscal Agency Agreement.
(b) Upon any merger, consolidation, sale, conveyance
or assumption as provided in Section 3(a), the successor or
assuming corporation shall succeed to and be substituted for, and
may exercise every right and power of and be subject to all the
obligations of, the Guarantor under the Guarantees and Fiscal
Agency Agreement, with the same effect as if such successor or
assuming corporation had been named as the Guarantor therein and
herein and the Guarantor shall be released from its obligations
as obligor under the Guarantees and Fiscal Agency Agreement.
4. (a) The Guarantor, for itself, its successors and
assigns, covenants and agrees, and each holder of Securities by
his acceptance thereof, likewise covenants and agrees, that all
obligations of the Guarantor relating to payment of the principal
of, premium, if any, and interest and Additional Amounts
(pursuant to Section 2 of the Securities) on each and all of the
Securities and coupons is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all Senior Indebtedness
of the Guarantor (as defined below).
"Senior Indebtedness of the Guarantor" or "Senior
Indebtedness" shall mean the principal of, premium, if any, and
interest on and all other amounts due on or with respect to the
following, whether outstanding at the date hereof or hereafter
created or incurred:
(i) indebtedness of the Guarantor for money
borrowed by the Guarantor (excluding the Guarantees, but
including purchase money obligations) whether or not evidenced by
debentures, bonds, notes or other corporate debt securities or
similar instruments issued by the Guarantor (including the
Guarantor's obligations with respect to its 5% Senior Convertible
Debentures due 2001 and its 4-5/8% Senior Convertible Debentures
due 1997); provided, however, that Senior Indebtedness shall not
include (a) the Guarantor's 4-1/4% Convertible Subordinated
Debentures due 2003 and its 4-7/8% Convertible Subordinated
Debentures due 1997, the obligations represented by which shall
rank pari passu with the obligations represented hereby in right
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of payment, (b) the Guarantor's subordinated guarantee of the
principal, premium, if any, and interest on the 6-5/8%
Convertible Subordinated Debentures due 2001 of Thermo Instrument
Systems Inc., on the 6-1/2% Convertible Subordinated Debentures
due 1997 of the Company, on the Non-Interest Bearing Convertible
Subordinated Debentures due 1997 of Thermo Cardiosystems Inc., on
the Non-Interest Bearing Convertible Subordinated Debentures due
2001 of Thermo Ecotek Corporation, on the 6-1/2% Convertible
Subordinated Debentures due 1998 of Thermedics Inc., on the
3-3/4% Convertible Subordinated Debentures due 2000 of Thermo
Voltek Corp., on the 4-7/8% Convertible Subordinated Debentures
due 2000 of Thermo Remediation Inc., on the 5% Convertible
Subordinated Debentures due 2000 of ThermoQuest Corporation, and
on the 5% Convertible Subordinated Debentures due 2000 of Thermo
Optek Corporation, the obligations represented by which shall
rank pari passu with the obligations represented hereby in right
of payment and (c) the Guarantor's subordinated guarantee of the
obligations to redeem the common stock of ThermoLyte Corporation,
the obligations represented by which shall rank pari passu with
the obligations represented hereby in right of payment;
(ii) obligations to reimburse any bank or other
person in respect of amounts paid under letters of credit;
(iii) leases for real property, equipment or
other assets, which leases are capitalized in the Guarantor's
consolidated financial statements in accordance with generally
accepted accounting principles;
(iv) commitment, standby and other fees due and
payable to financial institutions with respect to credit
facilities available to the Guarantor;
(v) obligations of the Guarantor under interest
rate and currency swaps, floors, caps or other similar
arrangements intended to fix or hedge interest rate obligations
or currency exposure;
(vi) indebtedness secured by any mortgage, pledge,
lien or other encumbrance on property which is owned or held by
the Guarantor subject to such mortgage, pledge, lien or other
encumbrance, whether or not the indebtedness secured thereby
shall have been assumed by the Guarantor;
(vii) obligations of the Guarantor constituting
guarantees of indebtedness of or joint obligations with another
or others which would be included in the preceding clauses (i),
(ii), (iii), (iv), (v) or (vi) (including the Guarantor's
guarantee of the principal, premium, if any, and interest on the
3-3/4% Senior Convertible Debentures due 2000 of Thermo
Instrument Systems Inc.); or
(viii) modifications, renewals, extensions or
refundings of any of the indebtedness, leases, fees or
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obligations referred to in the preceding clauses (i), (ii),
(iii), (iv), (v), (vi) and (vii), or debentures, notes or other
evidences of indebtedness issued in exchange therefor;
provided that Senior Indebtedness shall not include any
particular indebtedness, lease, fee, obligation, modification,
renewal, extension, refunding or exchanged security if, under the
express provisions of the instrument creating or evidencing the
same, or pursuant to which the same is outstanding, such
indebtedness, lease, fee or obligation or such modification,
renewal, extension, refunding or exchanged security is stated to
be not superior in right of payment to the Guarantees.
(b) (i) In the event of any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or
other similar proceedings in connection therewith, relative to
the Guarantor or it its creditors, in their capacity as such
creditors, or to its property, or in the event of any proceedings
for voluntary liquidation, dissolution or other winding up of the
Guarantor, whether or not involving insolvency or bankruptcy, or
in the event of any assignment for the benefit of creditors of
the Guarantor or any marshalling of assets of the Guarantor, then
the holders of Senior Indebtedness of the Guarantor shall first
be entitled to receive payment in full of the principal of (and
premium, if any) and interest, including interest thereon
accruing after the commencement of any such proceeding, and other
amounts due on or with respect to, all Senior Indebtedness of the
Guarantor before the holders of any of the Securities and coupons
shall be entitled to receive any payment on account of the
obligations of the Guarantor relating to the principal of,
premium, if any, or interest and Additional Amounts (pursuant to
Section 2 of the Securities) on the Securities and coupons, and
to that end the holders of Senior Indebtedness of the Guarantor
shall be entitled to receive for application in payment thereof
any payment or distribution of any kind or character, whether in
cash, property or securities, which may be payable or deliverable
in any such proceedings in respect of the obligations of the
Guarantor relating to the Securities and coupons, other than
securities of the Guarantor as reorganized or readjusted or
securities of the Guarantor or any other corporation provided for
by a plan of reorganization or readjustment the payment of which
is subordinate, at least to the extent provided in this Section 4
with respect to the obligations of the Guarantor relating to the
Securities and coupons, to the payment of all Senior Indebtedness
of the Guarantor, provided that the rights of the holders of
Senior Indebtedness of the Guarantor are not altered by such
reorganization or readjustment. For the purposes of this Section
4, no consolidation, merger, conveyance or transfer made pursuant
to the provisions of Section 3 shall be deemed to be a
liquidation, reorganization, dissolution or other winding up of
the Guarantor.
(ii) If under the circumstances set forth in
paragraph (i) of this subsection, and notwithstanding the
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provisions thereof, any payment or distribution of assets of the
Guarantor of any kind, whether in cash, property, or securities
(other than securities of the Guarantor as reorganized or
readjusted or securities of the Guarantor or any other
corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinated, at least to
the extent provided in this Section 4 with respect to the
obligations of the Guarantor relating to the Securities and
coupons, to the payment of all Senior Indebtedness of the
Guarantor, provided that the rights of the holders of Senior
Indebtedness of the Guarantor are not altered by such
reorganization or readjustment), shall be received by the holders
of the Securities in respect of the obligations of the Guarantor
before all Senior Indebtedness of the Guarantor is paid in full,
such payment or distribution shall be paid over to the holders of
Senior Indebtedness of the Guarantor, ratably, for application to
the payment of all Senior Indebtedness of the Guarantor remaining
unpaid until all Senior Indebtedness of the Guarantor shall have
been paid in full, after giving effect to any concurrent payment
or distribution to the holders of such Senior Indebtedness of the
Guarantor.
(iii) Upon any distribution of assets of the
Guarantor referred to in this Section, the holders of Securities
shall be entitled to rely upon any final order or decree of a
court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are
pending, and the holders of Securities shall be entitled to rely
upon a certificate of the liquidating trustee or agent or other
person making any distribution to the holders of Securities for
the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of Senior Indebtedness of the
Guarantor and other indebtedness of the Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Section.
(c) (i) Upon the maturity of any Senior Indebtedness
of the Guarantor by lapse of time, acceleration or otherwise, all
principal thereof (and premium, if any) and interest due thereon,
including interest thereon accruing after the commencement of any
proceeding of the type referred to in paragraph (i) of Section
4(b) above, and all other amounts due on or with respect thereto,
shall first be paid in full, or such payment duly provided for in
cash, before any payment, directly or indirectly, is made on
account of the obligations of the Guarantor relating to the
principal of, premium, if any, or interest and Additional Amounts
(pursuant to Section 2 of the Securities) on the Securities or
coupons.
(ii) Upon the happening of an event of default
with respect to any Senior Indebtedness of the Guarantor, as
defined therein or in the instrument under which it is
outstanding, permitting the holders to accelerate the maturity
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thereof, then, unless and until such event of default shall have
been cured or waived or shall have ceased to exist, no payment
shall be made by the Guarantor, directly or indirectly, on
account of the obligations of the Guarantor relating to the
principal of, premium, if any, or interest and Additional Amounts
(pursuant to Section 2 of the Securities) on the Securities and
coupons.
(d) In case cash, securities or other property
otherwise payable or deliverable to the holders of the Securities
on account of the Guarantees shall have been applied, pursuant to
Section 4(b) or (c), to the payment of Senior Indebtedness of the
Guarantor, then, upon the payment in full of all Senior
Indebtedness of the Guarantor, the holders of the Securities and
coupons shall be subrogated to any rights of any holders of
Senior Indebtedness of the Guarantor, to receive any further
payments or distributions applicable to Senior Indebtedness of
the Guarantor until the obligations of the Guarantor in respect
of the Guarantees shall have been discharged in full, and such
payments or distributions received by the holders of the
Securities and coupons, by reason of such subrogation, of cash,
securities or other property which otherwise would be paid or
distributed to the holders of Senior Indebtedness of the
Guarantor, shall, as between the Guarantor and its creditors
other than the holders of Senior Indebtedness of the Guarantor,
on the one hand, and the holders of the Securities and coupons on
account of the Guarantees, on the other hand, be deemed to be a
payment by the Guarantor on account of Senior Indebtedness of the
Guarantor and not on account of the Securities and coupons.
(e) No present or future holder of any Senior
Indebtedness of the Guarantor shall be prejudiced in any way in
the right to enforce the subordination of the Guarantees by any
act or failure to act on the part of the Guarantor. The
provisions of this Section 4 are solely for the purpose of
defining the relative rights of the holders of Senior
Indebtedness of the Guarantor, on the one hand, and the holders
of the Securities and coupons on account of the Guarantees, on
the other hand, against the Guarantor and its assets, and nothing
contained in this Section 4 shall impair, as between the
Guarantor and the holder of any Security or coupon, the
obligation of the Guarantor, which is unconditional and absolute,
to perform in accordance with the terms of its Guarantees, or
prevent the holder of any Security or coupon, upon default
hereunder or under such Security or coupon, from exercising all
rights, powers and remedies otherwise provided herein or therein
or by applicable law, all subject to the rights of the holders of
Senior Indebtedness of the Guarantor under this Section 4 to
receive cash, property or securities otherwise payable or
deliverable to the holders of the Securities and coupons on
account of the Guarantees.
(f) Nothing contained in this Section 4 or in any
Guarantees shall prevent at any time, except under the conditions
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described in Sections 4(b) and (c) hereof or during the pendency
of any dissolution, winding up, liquidation or reorganization
proceedings therein referred to, the Guarantor from performing
its obligations under the Guarantees.
5. The Guarantor shall be subrogated to all rights of the
holders of the Securities and of any coupons against the Company
in respect of any amounts paid by the Guarantor pursuant to the
provisions of this Guarantee; provided, however, that the
Guarantor shall not be entitled to enforce or to receive any
payments arising out of, or based upon, such right of subrogation
until the principal of, premium, if any, and interest on and
Additional Amounts (pursuant to Section 2 of the Securities, if
any, on) all of the Securities shall have been paid in full.
6. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
UNITED STATES OF AMERICA WITHOUT GIVING EFFECT TO ITS CONFLICTS
OF LAWS RULES.
7. All terms used in this Guarantee which are defined in
the Fiscal Agency Agreement shall have the meanings assigned to
them in the Fiscal Agency Agreement.
8. Subject to the next following paragraph, the Guarantor
hereby certifies and warrants that all acts, conditions and
things required to be done and performed and to have happened
precedent to the creation and issuance of this Guarantee and to
constitute the same a legal, valid and binding obligations of the
Guarantor enforceable in accordance with their terms, have been
done and performed and have happened in due and strict compliance
with all applicable laws.
9. This Guarantee shall not become valid or obligatory for
any purpose until the certificate of authentication on the
Security upon which this Guarantee is endorsed shall have been
duly signed by the Fiscal Agent acting under the Fiscal Agency
Agreement.
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee
to be duly executed in its corporate name by the manual or
facsimile signature of a duly authorized officer.
Dated:
THERMO ELECTRON CORPORATION
By: ________________________
Name:
Title:
Attest:
_________________________
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EXHIBIT C
Form of Certificate to be Given by
The Euroclear Operator and Cedel Bank, societe anonyme
CERTIFICATION
U.S. $
THERMO TERRATECH INC.
4-5/8% Convertible Subordinated Debentures
due May 1, 2003
(the "Securities")
This is to certify that, based solely on certifications we
have received in writing, by tested telex or electronic
transmission from member organizations appearing in our records
as persons being entitled to a portion of the principal amount
set forth below or to interest payable on an interest payment
date (our "Member Organizations"), substantially to the effect
set forth in the Fiscal Agency Agreement relating to the
above-captioned Securities, as of the date hereof, U.S.
$_______________ aggregate principal amount of the
above-captioned Securities is owned by persons that are not
citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the
income of which is subject to United States Federal income
taxation regardless of its source or any other person deemed a
"United States person" or a "U.S. person" under the Internal
Revenue Code of 1986, as amended, or Regulation S under the U.S.
Securities Act of 1933, as amended ("United States persons").
The following denominations of Bearer Securities are
requested:
No. of Certificates Amount
$1,000 Denomination ________________ = $________________
$10,000 Denomination ________________ = $________________*
Total Requested ________________ = $________________
We further certify (i) that we are not making available
herewith for exchange any portion of the Regulation S Global
Security excepted in such certifications and (ii) that as of the
______________
* Must equal the amount stated in the first paragraph of this
certificate.
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date hereof we have not received any notification from any of our
Member Organizations to the effect that the statements made by
such Member Organization with respect to any portion of the part
submitted herewith for exchange are no longer true and cannot be
relied upon as of the date hereof. We further certify that
interest payable on the interest payment dates on May 1 and
November 1 will be paid with respect to U.S. $_____________
principal amount of the Securities with respect to which we have
received from Member Organizations certificates substantially in
the form set out in Exhibit D to the Fiscal Agency Agreement
relating to the Securities that the Securities (a) are owned by a
person (other than a financial institution for purposes of resale
during the restricted period) who is not a United States person;
(b) are owned by a United States person (other than a financial
institution for purposes of resale during the restricted period)
who is (i) a foreign branch of a United States financial
institution or (ii) a United States person who acquired such
Securities through the foreign branch of a United States
financial institution and who for purposes of this certification
holds such Securities through such financial institution on the
date hereof and, in either case, such United States financial
institution has agreed, for the benefit of the Company, to comply
with the requirements of Section 165(j)(3)(A), (B) or (C) of the
United States Internal Revenue Code of 1986, as from time to time
amended, and the regulations thereunder; or (c) are owned by a
financial institution for purposes of resale during the
restricted period and such financial institution has certified
that it has not acquired such Securities for purposes of resale
directly or indirectly to a United States person or to a person
within the United States or its possessions.
To the extent that we have knowledge that any of such
certificates from a Member Organization is false and to the
extent that we have not received with respect to any Securities
such certificates from Member Organization, we are not requesting
that payment be made for interest with respect thereto.
We further certify that as of the date hereof we have not
received any notification from any of our Member Organizations to
the effect that the statements made by such Member Organization
with respect to any interest payment on any portion of the
principal amount of the Securities are no longer true and cannot
be relied upon as of the date hereof. We further certify that
under the rules of the undersigned organization, each Member
Organization has agreed that any electronic certification shall
have the effect of a signed certification and that all
certifications shall be retained for at least four years in
compliance with the rules set forth under Treas. Reg. Section
1.163-5 (c) (2) (i) (D) (3) (ii).
We undertake that any interest received by us and not paid
as provided above shall be returned to the Fiscal Agent for the
above-captioned Securities immediately prior to the expiration of
two years after such interest payment date in order to be repaid
C-2PAGE
<PAGE>
by such Fiscal Agent to the above issuer at the end of two years
after such interest payment date.
We understand that this certification is required in
connection with certain tax laws and, if applicable, certain
securities laws of the United States. In connection therewith,
if administrative or legal proceedings are commenced or
threatened in connection with which this certification is or
would be relevant, we irrevocably authorize you to produce this
certification to any interested party in such proceedings.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and
its territories and possessions, including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands. As used herein, "restricted period"
means the period described in Section 1.163-5(c)(2)(i)(D)(7) of
the Treasury Regulations and "financial institution" means the
persons described in Section 1. 165-12(c)(1)(v) of the Treasury
Regulations.
Dated: ____________________, 1996**
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, BRUSSELS OFFICE, AS OPERATOR OF
THE EUROCLEAR SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]***
By: _____________________________
_______________________
** To be dated no earlier than the date which is 40 days after
May 2, 1996.
*** Delete as appropriate.
C-3PAGE
<PAGE>
EXHIBIT D
Form of Certificate of Beneficial Ownership for
Bearer Securities to be Provided to the
Euroclear Operator or to Cedel Bank, societe anonyme
CERTIFICATION
U.S. $____________
THERMO TERRATECH INC.
4-5/8% Convertible Subordinated Debentures
due May 1, 2003
(the "Securities")
This is to certify that as of the date hereof and except as
set forth below, $___________ aggregate principal amount of the
above-mentioned Securities held by you for our account are owned
or, if this certificate is being delivered in connection with a
payment of interest, were owned, by or on behalf of, (a) a person
(other than a financial institution for purposes of resale during
the restricted period) who is not a United States person; or (b)
a United States person (other than a financial institution for
purposes of resale during the restricted period) who is (i) a
foreign branch of a United States financial institution or (ii) a
United States person acquiring such Securities through the
foreign branch of a United States financial institution and who
for purposes of this certification holds such Securities through
such financial institution on the date hereof, and, in the case
of either (i) or (ii), such United States financial institution
has agreed, for the benefit of the Company, to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the United
States Internal Revenue Code of 1986, as from time to time
amended, and the regulations thereunder; or (c) a financial
institution for purposes of resale during the restricted period
and such financial institution has not acquired such Securities
for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its
possessions; and the undersigned has obtained a similar
certificate from its member organizations on which this
certificate is based; provided, however, that if the undersigned
has actual knowledge that the information contained in such a
certificate is false (and, absent documentary evidence that the
beneficial owner of such Security is not a United states person,
it will be deemed to have actual knowledge that such certificate
is false if it has a United States address for such beneficial
owner, other than a financial institution described above), the
undersigned will not deliver a Security in temporary or
definitive bearer form to the person who signed such certificate
notwithstanding the delivery of such certificate to the
undersigned.
D-1PAGE
<PAGE>
No. of Certificates Amount
$1,000 Denomination ________________ = $________________
$10,000 Denomination ________________ = $________________*
Total Requested ________________ = $________________
As used herein, (i) "United States person" means a citizen
or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the
United States and an estate or trust the income of which is
subject to United States Federal income taxation regardless of
its source or any other person deemed a "United States person" or
a "U.S. person" under the Internal Revenue Code of 1986, as
amended, or Regulation S under the U.S. Securities Act of 1933,
as amended, (ii) "United States" means the United States of
America (including the States and the District of Columbia) and
its territories and possessions, including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands, (iii) "restricted period" means the
period described in Section 1.163-5(c)(2)(i)(D)(7) of the
Treasury Regulations, and (iv) "financial institution" means the
persons described in Section 1. 165-12(c)(1)(v) of the United
States Treasury Regulations.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your
certification relating to the Securities held by you for our
account in accordance with your operating procedures if any
applicable statement herein is not correct on such date, and in
the absence of any such notification it may be assumed that this
certification applies as of such date.
This certification excepts and does not relate to
U.S.$_______________ of such interest in the above Securities in
respect of which we are not able to certify and as to which we
understand exchange and delivery of definitive Securities cannot
be made until we do so certify.
________________
* Must equal the amount stated in the first paragraph of this
certificate.
D-2PAGE
<PAGE>
We understand that this certification is required in
connection with certain tax laws and, if applicable, certain
securities laws of the United States. In connection therewith,
if administrative or legal proceedings are commenced or
threatened in connection with which this certification is or
would be relevant, we irrevocably authorize you to produce this
certification or a copy hereof to any interested party in such
proceedings.
Dated: ___________________, 1996**
[Name]
By: _________________________
Signature
As, or as agent for, the
beneficial owner[s] of the
Securities to which this
certificate relates.
______________________
** Not earlier than 15 days prior to the date which is 40 days
after May 2, 1996.
D-3PAGE
<PAGE>
EXHIBIT E
Form of Certificate of Beneficial Ownership
for Registered Securities to be Provided to the
Euroclear Operator or to Cedel Bank, societe anonyme
CERTIFICATION
U.S. $____________
THERMO TERRATECH INC.
4-5/8% Convertible Subordinated Debentures
due May 1, 2003
(the "Securities")
Please issue U. S. $_______ of the U.S. $________ aggregate
principal amount of the Securities held by you for our account in
registered form. We hereby certify to you that we are not a
"U.S. Person" as defined in Regulation S under the United States
Securities Act of 1933, as amended or a "United States person" as
defined under the Internal Revenue Code of 1986, as amended,
except as provided in U.S. Treasury Regulation Section
1.163-5(c)(2)(i)(D). The exact name of the beneficial holder
that the Securities are to be registered in is as follows:
The following denomination(s) of Registered Securities are
requested (integral multiples of $1,000):
Denominations No. of Certificates Amount
$_________________ ________________ = $________________
$_________________ ________________ = $________________
$_________________ ________________ = $________________
$_________________ ________________ = $________________
Total Requested ________________ = $________________*
_______________________
* Must equal the amount stated in the first paragraph of this
certificate.
E-1PAGE
<PAGE>
This certificate does not constitute such certification [or
We hereby certify that we have provided such certification] on
Form W-8 or its equivalent as may be necessary to avoid
imposition of withholding and/or back-up withholding under U.S.
federal tax law with respect to any payments of interest on the
Securities.
We irrevocably authorize you to produce this certificate or
a copy hereof to any interested party in any administrative or
proceedings with respect to the matters covered by this
certificate.
Dated: __________________, 1996**
Yours faithfully,
[NAME]
By:
Signature
To be completed by the account
holder as, or as agent for,
the beneficial owner(s) of the
Securities to which this
certificate relates.
________________________
** To be dated not earlier than the date which is 40 days after
May 2, 1996.
E-2PAGE
<PAGE>
EXHIBIT F
Form of Certificate to be Given by
The Euroclear Operator and Cedel Bank, societe anonyme
CERTIFICATION
U.S. $_____________
THERMO TERRATECH INC.
4-5/8% Convertible Subordinated Debentures
due May 1, 2003
(the "Securities")
This is to certify that, based solely on certifications we
have received in writing, by tested telex or electronic
transmission from member organizations appearing in our records
as persons being entitled to a portion of the principal amount
set forth below (our "Member Organizations"), substantially to
the effect set forth in the Fiscal Agency Agreement, as of the
date hereof, U.S. $___________ aggregate principal amount of the
above-captioned Securities is owned by persons that are not
citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the
income of which is subject to United States Federal income
taxation regardless of its source (except as provided in U.S.
Treasury Regulation Section 1.163-5(c)(2)(i)(D)) or any other
person deemed a "U.S. person" under Regulation S under the U.S.
Securities Act of 1933, as amended.
The following denomination(s) of Registered Securities are
requested (integral multiples of $1,000):
No. of Certificates Amount
$1,000 Denomination ________________ = $________________
$10,000 Denomination ________________ = $________________
Total Requested ________________ = $________________*
We further certify (i) that we are not making available
herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) any portion of the Regulation S
Global Security excepted in such certifications and (ii) that as
of the date hereof we have not received any notification from any
______________________
* Must equal the amount stated in the first paragraph of this
certificate.
F-1PAGE
<PAGE>
of our Member Organizations to the effect that the statements
made by such Member Organization with respect to any portion of
the part submitted herewith for exchange (or, if relevant,
exercise of any rights or collection of any interest) are no
longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in
connection with certain tax laws and, if applicable, certain
securities laws of the United States. In connection therewith,
if administrative or legal proceedings are commenced or
threatened in connection with which this certification is or
would be relevant, we irrevocably authorize you to produce this
certification to any interested party in such proceedings.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and
its territories and possessions, including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
Dated: __________________, 1996**
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, BRUSSELS OFFICE, AS
OPERATOR OF THE EUROCLEAR SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]
By: __________________________
_______________________
** To be dated no earlier than the date which is 40 days after
May 2, 1996.
F-2PAGE
<PAGE>
EXHIBIT G
FORM OF TRANSFEREE LETTER
Thermo TerraTech Inc.
Attention: Secretary
81 Wyman Street
P.O. Box 9046
Waltham, Massachusetts 02254-9046
and
Chemical Bank
Attention: Corporate Trust Department
450 West 33rd Street, 15th floor
New York, New York 10001
and
Chemical Bank House
Attention: Corporate Agency
125 London Wall
London EC2Y 5AJ
England
Ladies and Gentlemen:
We are delivering this letter in connection with the
purchase of 4-5/8% Convertible Subordinated Debentures due 2003
(the "Debentures") of Thermo TerraTech Inc., a Delaware
corporation (the "Company"), which are convertible into shares of
Common Stock of the Company (the "Underlying Shares" and together
with the Debentures, the "Restricted Securities"), all as
described in the Company's Offering Circular dated April 26, 1996
(the "Offering Circular").
We represent, warrant and agree as follows:
1. We understand and hereby acknowledge that the
Debentures and, prior to the effectiveness of a registration
statement filed with the Securities and Exchange Commission
relating to the resale of the Underlying Shares, the
Underlying Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"),
and may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any
investor account (as hereinafter defined) for which we are
purchasing the Debentures to offer, sell or otherwise
transfer such Restricted Securities prior to the date which
is three years (or the then applicable holding period under
Rule 144(k) under the Securities Act (or successor
provision)) after the later of the date of original issue
and the last date on which the Company or any affiliate of
G-1PAGE
<PAGE>
the Company was the owner of such Restricted Securities (or
any predecessor thereto) (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to
a registration statement which has been declared effective
under the Securities Act, (c) for so long as the Debentures
are eligible for resale pursuant to Rule 144A under the
Securities Act, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB to
whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) outside the United States in a
transaction meeting the requirements of Rule 904 of
Regulation S under the Securities Act, (e) in a transaction
arranged by a broker or dealer registered under the
Securities Exchange Act of 1934, as amended, to an
institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3), or (7) of Rule 501 under the
Securities Act (an "Institutional Accredited Investor") that
is purchasing Restricted Securities for its own account or
for the account of such Institutional Accredited Investor,
for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of
the Securities Act or (f) pursuant to any other available
exemption from the registration requirements of the
Securities Act as confirmed in an opinion of counsel,
acceptable in form and substance to the Company, and, in
each case, in accordance with the applicable securities laws
of any state of the United States or any other applicable
jurisdiction and subject to any requirement of law that the
disposition of our property or the property of such investor
account or accounts be at all times within our or their
control and in compliance with any applicable state
securities laws. The foregoing restrictions on resale will
not apply subsequent to the Resale Restriction Termination
Date. If any resale or other transfer of the Restricted
Securities is proposed to be made pursuant to clause (e)
above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee
containing representations and agreements substantially the
same as those contained herein. We acknowledge that the
Company and the Fiscal Agent reserve the right prior to any
offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Debentures and Common
Stock pursuant to clause (d), (e) or (f) above to require
the delivery of an opinion of counsel, certifications or
other information acceptable to the Company and the Fiscal
Agent in form and substance.
2. We are an Institutional Accredited Investor within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act.
3. Any purchase of Restricted Securities by us will
be for our own account or for the account of one or more
G-2PAGE
<PAGE>
other Institutional Accredited Investors (an "investor
account") as to which we exercise sole investment
discretion.
4. We are not acquiring the Restricted Securities
with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act.
5. We have such knowledge and experience in financial
and business matters as to be capable of evaluating the
merits and risks of purchasing the Restricted Securities,
and we and any investor account for which we are acting are
each able to bear the economic risk of our or its
investment.
6. We have received a copy of the Offering Circular
and acknowledge that we have had access to such financial
and other information, and have been afforded the
opportunity to ask such questions of representatives of the
Company and the Guarantor and receive answers thereto, as we
deem necessary in connection with our decision to purchase
Restricted Securities.
We understand that the registrar and transfer agent will not
be required to accept for registration of transfer any Restricted
Securities, except upon presentation of evidence satisfactory to
the Company and the Fiscal Agent that the foregoing restrictions
on transfer have been complied with. We further understand that
the Restricted Securities will be in the form of definitive
physical certificates and that such certificates will bear a
legend reflecting the substance of paragraph 1 above.
We shall provide to any person purchasing any Restricted
Securities from us a notice advising such purchaser that
transfers of the Debentures and the Underlying Shares are
restricted as set forth herein.
We understand that prior to any proposed offer of Debentures
occurring before the Resale Restriction Termination Date, we must
check the appropriate box set forth on the reverse of the
certificate evidencing such Debentures relating to the manner of
such transfer and submit the certificates to the Fiscal Agent.
In addition, we understand that prior to any proposed transfer of
Debentures or any proposed offer of Underlying Shares acquired
upon conversion of Debentures when there is not effective
registration statement covering such Underlying Shares to an
institutional accredited investor occurring before the Resale
Restriction Termination Date, we may be required to furnish to
the Company and the Fiscal Agent such certifications, legal
opinion or other information as they may reasonably require to
confirm that the proposed transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, and that
transfers occurring before the Resale Restriction Termination
G-3PAGE
<PAGE>
Date to any other person pursuant to another available exemption
under the Securities act will require an opinion of counsel
satisfactory to the Company.
We acknowledge that you and others will rely upon our
confirmations, acknowledgments and agreements set forth herein,
and we agree to notify you promptly in writing of any of our
representations or warranties herein ceases to be accurate and
complete. You are irrevocably authorized to produce this letter
or a copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters
covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
Very truly yours,
_____________________________
(Name of Purchaser)
By: ___________________________
Name:
Title:
Address:
Date: _______________________
Exhibit 11
THERMO TERRATECH INC.
Computation of Earnings per Share
Year Ended
-----------------------------
March 30, 1996 April 1, 1995
-------------- -------------
Computation of Primary Earnings per Share:
Net income (a) $ 3,218,000 $ 4,115,000
----------- -----------
Shares:
Weighted average shares outstanding 17,419,826 17,142,815
Add: Shares issuable from assumed
exercise of options (as determined
by the application of the treasury
stock method) 817,544 -
----------- -----------
Weighted average shares outstanding,
as adjusted (b) 18,237,370 17,142,815
----------- -----------
Primary Earnings per Share (a) / (b) $ .18 $ .24
=========== ===========
Exhibit 13
THERMO TERRATECH INC.
Consolidated Financial Statements as of March 30, 1996
PAGE
<PAGE>
Thermo TerraTech Inc.
Consolidated Statement of Income
Year Ended
-------------------------------
March 30, April 1, April 2,
(In thousands) 1996 1995 1994
--------------------------------------------------------------------------
Revenues (Note 14):
Service revenues $197,727 $119,422 $ 94,326
Product revenues 19,670 14,381 15,029
Contract revenues from related party
(Note 9) - - 776
-------- -------- --------
217,397 133,803 110,131
-------- -------- --------
Costs and Operating Expenses:
Cost of service revenues 136,856 86,570 70,230
Cost of product revenues 17,001 11,982 13,136
Cost of contract revenues from related
party (Note 9) - - 776
Selling, general and administrative
expenses (Note 9) 47,638 26,257 21,195
Product and new business development
expenses 1,086 883 447
Restructuring and other nonrecurring
costs (Note 12) 4,995 - 2,661
-------- -------- --------
207,576 125,692 108,445
-------- -------- --------
Operating Income 9,821 8,111 1,686
Interest Income 5,102 3,322 1,955
Interest Expense (includes $5,464 and
$1,071 to parent company in fiscal
fiscal 1996 and 1995) (10,730) (2,855) (1,387)
Gain on Issuance of Stock by Subsidiaries
(Note 11) 4,127 1,343 4,488
Gain on Sale of Investments (includes
$1,089 on sale of related party
debentures in fiscal 1995) 180 1,092 645
Loss on Sale of Assets (Note 12) (569) - -
-------- ------- --------
Income Before Income Taxes, Minority
Interest and Cumulative Effect of Change
in Accounting Principle 7,931 11,013 7,387
Income Tax (Provision) Benefit (Note 6) (3,490) (2,630) 40
Minority Interest Expense (1,223) (4,268) (4,018)
-------- -------- --------
Income Before Cumulative Effect of Change
in Accounting Principle 3,218 4,115 3,409
Cumulative Effect of Change in Accounting
Principle (Note 1) - - 500
-------- -------- --------
Net Income $ 3,218 $ 4,115 $ 3,909
======== ======== ========
2PAGE
<PAGE>
Thermo TerraTech Inc.
Consolidated Statement of Income (continued)
Year Ended
-------------------------------
March 30, April 1, April 2,
(In thousands except per share amounts) 1996 1995 1994
--------------------------------------------------------------------------
Earnings per Share Before Cumulative Effect
of Change in Accounting Principle $ .18 $ .24 $ .20
======== ======== ========
Earnings per Share $ .18 $ .24 $ .23
======== ======== ========
Weighted Average Shares 18,237 17,143 16,863
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
3PAGE
<PAGE>
Thermo TerraTech Inc.
Consolidated Balance Sheet
March 30, April 1,
(In thousands) 1996 1995
-------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 31,182 $ 35,808
Short-term available-for-sale investments,
at quoted market value (amortized cost of
$7,007 and $5,179) (Note 2) 7,004 5,155
Accounts receivable, less allowances
of $2,837 and $3,560 44,053 27,949
Unbilled contract costs and fees 20,241 16,481
Inventories 4,755 2,732
Prepaid expenses 4,345 3,788
Prepaid and refundable income taxes (Note 6) 9,500 8,228
-------- --------
121,080 100,141
-------- --------
Property, Plant and Equipment, at Cost, Net 81,845 59,737
-------- --------
Long-term Available-for-sale Investments,
at Quoted Market Value (amortized cost
of $2,108 and $10,687) (Note 2) 2,098 10,564
-------- --------
Long-term Held-to-maturity Investments, at
Amortized Cost (quoted market value of
$24,963 and $22,810) (Note 2) 24,251 22,569
-------- --------
Other Assets 12,931 12,146
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Notes 3 and 12) 89,804 66,516
-------- --------
$332,009 $271,673
======== ========
4PAGE
<PAGE>
Thermo TerraTech Inc.
Consolidated Balance Sheet (continued)
March 30, April 1,
(In thousands except share amounts) 1996 1995
--------------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Accounts payable $ 10,841 $ 9,612
Notes payable and current maturities of
long-term obligations (includes $15,000 and
$4,000 due to parent company)
(Notes 3, 8, and 16) 19,711 4,652
Billings in excess of revenues earned 3,012 835
Accrued payroll and employee benefits 9,801 6,845
Accrued income taxes - 1,773
Other accrued expenses (Note 3) 6,808 8,612
Due to parent company 3,459 3,116
-------- --------
53,632 35,445
-------- --------
Deferred Income Taxes (Note 6) 3,377 4,116
-------- --------
Other Deferred Items 980 1,057
-------- --------
Long-term Obligations (Notes 8 and 13):
Subordinated convertible debentures 56,132 18,547
Other (includes $73,000 and $53,000 due to
parent company) (Notes 3 and 16) 99,252 78,304
-------- --------
155,384 96,851
-------- --------
Minority Interest 32,295 56,603
-------- --------
Commitments and Contingencies (Note 7)
Shareholders' Investment (Notes 4 and 10):
Common stock, $.10 par value, 30,000,000
shares authorized; 17,598,013 and
17,414,322 shares issued 1,760 1,741
Capital in excess of par value 59,419 53,559
Retained earnings 24,945 21,727
Treasury stock at cost, 34,531 and 71,072
shares (410) (864)
Cumulative translation adjustment 635 1,526
Net unrealized loss on available-for-sale
investments (Note 2) (8) (88)
-------- --------
86,341 77,601
-------- --------
$332,009 $271,673
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
5PAGE
<PAGE>
Thermo TerraTech Inc.
Consolidated Statement of Cash Flows
Year Ended
------------------------------
March 30, April 1, April 2,
(In thousands) 1996 1995 1994
--------------------------------------------------------------------------
Operating Activities:
Net income $ 3,218 $ 4,115 $ 3,909
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,834 6,615 5,653
Restructuring and other nonrecurring
costs (Note 12) 4,995 - 2,661
Loss on sale of assets (Note 12) 569 - -
Minority interest expense 1,223 4,268 4,018
Provision for losses on accounts
receivable 73 162 424
Other noncash expenses 1,541 1,634 1,075
Increase (decrease) in deferred
income taxes (646) - 713
Gain on issuance of stock by
subsidiaries (Note 11) (4,127) (1,343) (4,488)
Gain on sale of investments (180) (1,092) (645)
Cumulative effect of change in
accounting principle (Note 1) - - (500)
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable 1,190 (1,547) (362)
Inventories and unbilled
contract costs and fees (5,411) (1,752) (895)
Other current assets 430 267 (493)
Current liabilities (5,214) (3,942) 498
-------- -------- --------
Net cash provided by
operating activities 8,495 7,385 11,568
-------- -------- --------
Investing Activities:
Acquisitions, net of cash acquired
(Note 3) (43,824) (38,188) (4,150)
Purchase of minority interest in Thermo
Terra Tech joint venture (Note 3) (34,267) - -
Proceeds from sale and maturities of
available-for-sale investments 37,795 19,252 59,401
Purchases of available-for-sale
investments (30,864) - (74,650)
Purchases of held-to-maturity
investments - (22,300) -
Purchases of property, plant and
equipment (16,492) (7,030) (7,491)
Purchase of other assets (1,090) - -
Other 400 (380) (197)
-------- -------- --------
Net cash used in investing
activities $(88,342) $(48,646) $(27,087)
-------- -------- --------
6PAGE
<PAGE>
Thermo TerraTech Inc.
Consolidated Statement of Cash Flows (continued)
Year Ended
-------------------------------
March 30, April 1, April 2,
(In thousands) 1996 1995 1994
--------------------------------------------------------------------------
Financing Activities:
Net proceeds from issuance of subordinated
convertible debentures (Note 8) $ 36,889 $ - $ -
Issuance of notes payable to parent
company (Notes 3 and 8) 35,000 57,000 -
Repayment of note payable to parent
company (Notes 3 and 8) (4,000) - -
Proceeds from issuance of Company and
subsidiaries' common stock and warrants
(Note 11) 7,662 3,903 15,999
Issuance of note receivable (Note 3) (653) (700) -
Issuance of short-term obligations 2,178 - -
Repayment of note payable (688) - -
Dividends paid by subsidiaries to minority
shareholders (810) (685) (519)
Environmental Services Businesses transfer
of cash to Thermo Instrument (Note 3) - - (2,703)
Other 63 (124) (103)
-------- -------- --------
Net cash provided by
financing activities 75,641 59,394 12,674
-------- -------- --------
Exchange Rate Effect on Cash (420) 1,699 (344)
-------- -------- --------
Increase (Decrease) in Cash and Cash
Equivalents (4,626) 19,832 (3,189)
Cash and Cash Equivalents at Beginning of
Year 35,808 15,976 19,165
-------- -------- --------
Cash and Cash Equivalents at End of Year $ 31,182 $ 35,808 $ 15,976
======== ======== ========
See Note 15 for supplemental cash flow information.
The accompanying notes are an integral part of these consolidated financial
statements.
7PAGE
<PAGE>
Thermo TerraTech Inc.
Consolidated Statement of Shareholders' Investment
Common
Stock, Capital in
$.10 Par Excess of Retained
(In thousands) Value Par Value Earnings
--------------------------------------------------------------------------
Balance April 3, 1993 $ 1,709 $45,191 $13,703
Net income - - 3,909
Issuance of stock under employees'
and directors' stock plans 16 469 -
Effect of majority-owned subsidiaries'
equity transactions - 796 -
Effect of change in accounting
principle (Note 2) - - -
Translation adjustment - - -
------- ------- -------
Balance April 2, 1994 1,725 46,456 17,612
Net income - - 4,115
Issuance of stock under employees'
and directors' stock plans 16 582 -
Tax benefit related to employees'
and directors' stock plans - 1,249 -
Issuance of stock for acquired
company (Note 3) - (1,326) -
Issuance of Company stock options
for acquired company (Note 3) - 6,923 -
Effect of majority-owned subsidiaries'
equity transactions - (325) -
Change in net unrealized loss on
available-for-sale investments (Note 2) - - -
Translation adjustment - - -
------- ------- -------
Balance April 1, 1995 1,741 53,559 21,727
Net income - - 3,218
Issuance of stock under employees'
and directors' stock plans 15 268 -
Tax benefit related to employees'
and directors' stock plans - 585 -
Conversions of subordinated convertible
debentures 4 351 -
Effect of majority-owned subsidiaries'
equity transactions - 4,656 -
Change in net unrealized loss on
available-for-sale investments (Note 2) - - -
Translation adjustment - - -
------- ------- -------
Balance March 30, 1996 $ 1,760 $59,419 $24,945
======= ======= =======
8PAGE
<PAGE>
Thermo TerraTech Inc.
Consolidated Statement of Shareholders' Investment (continued)
Net
Unrealized
Loss on
Cumulative Available-
Treasury Translation for-sale
(In thousands) Stock Adjustment Investments
--------------------------------------------------------------------------
Balance April 3, 1993 $(2,956) $ (28) $ -
Net income - - -
Issuance of stock under employees'
and directors' stock plans 45 - -
Effect of majority-owned subsidiaries'
equity transactions - - -
Effect of change in accounting
principle (Note 2) - - 346
Translation adjustment - (641) -
------- ------- -------
Balance April 2, 1994 (2,911) (669) 346
Net income - - -
Issuance of stock under employees'
and directors' stock plans (119) - -
Tax benefit related to employees'
and directors' stock plans - - -
Issuance of stock for acquired
company (Note 3) 2,166 - -
Issuance of Company stock options
for acquired company (Note 3) - - -
Effect of majority-owned subsidiaries'
equity transactions - - -
Change in net unrealized loss on
available-for-sale investments
(Note 2) - - (434)
Translation adjustment - 2,195 -
------- ------- -------
Balance April 1, 1995 (864) 1,526 (88)
Net income - - -
Issuance of stock under employees'
and directors' stock plans 454 - -
Tax benefit related to employees'
and directors' stock plans - - -
Conversions of subordinated convertible
debentures - - -
Effect of majority-owned subsidiaries'
equity transactions - - -
Change in net unrealized loss on
available-for-sale investments
(Note 2) - - 80
Translation adjustment - (891) -
------- ------- -------
Balance March 30, 1996 $ (410) $ 635 $ (8)
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
9PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Thermo TerraTech Inc. (the Company) (formerly Thermo Process Systems
Inc.) provides environmental services and infrastructure planning and
design services, encompassing a range of specializations within the
consulting and design, remediation and recycling, laboratory-testing, and
metal-treating industries.
Relationship with Thermo Electron Corporation
The Company was incorporated on May 30, 1986, as an indirect, wholly
owned subsidiary of Thermo Electron Corporation (Thermo Electron). As of
March 30, 1996, Thermo Electron owned 14,501,958 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 and its majority- and wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated. Majority-owned
subsidiaries include Thermo Remediation Inc. (Thermo Remediation), a
publicly held subsidiary and Thermo EuroTech N.V. (Thermo EuroTech), a
privately held subsidiary.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest
March 31. References to fiscal 1996, 1995, and 1994 are for the fiscal
years ended March 30, 1996, April 1, 1995, and April 2, 1994, respectively.
Revenue Recognition
For the majority of its operations, the Company recognizes revenues
upon completion of services it renders. Revenues from soil-remediation
services are recognized as soil is processed. With respect to
soil-remediation services, the Company bills customers upon receipt of the
contaminated soil at its remediation centers. Amounts billed in excess of
revenues recognized are classified as billings in excess of revenues earned
in the accompanying balance sheet.
Revenues and profits on substantially all contracts are recognized
using the percentage-of-completion method. Revenues recorded under the
percentage-of-completion method were $61,223,000 in fiscal 1996,
$47,446,000 in fiscal 1995, and $46,072,000 in fiscal 1994. The percentage
of completion is determined by relating either the actual costs or actual
labor incurred to date to management's estimate of total costs or total
labor, respectively, to be incurred on each contract. If a loss is
indicated on any contract in process, a provision is made currently for the
entire loss. The Company's contracts generally provide for billing of
10PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
customers upon the attainment of certain milestones specified in each
contract. 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 Subsidiaries
At the time a subsidiary sells its stock to unrelated 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 (Note 11).
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. Such transactions are reflected as equity transactions
and the net effect of these transactions is reflected in the accompanying
statement of shareholders' investment as "Effect of majority-owned
subsidiaries' equity transactions."
Income Taxes
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," as of the beginning of fiscal 1994.
Under SFAS No. 109, deferred income taxes are recognized 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. Prior to fiscal 1994, the
Company recorded income taxes on timing differences between financial
statement and tax treatment of income and expenses under Accounting
Principles Board Opinion No. 11. Upon adoption of SFAS No. 109, the Company
recorded a cumulative benefit of $500,000, which is included in the
accompanying fiscal 1994 statement of income.
Earnings per Share
Earnings per share have been computed based on the weighted average
number of shares outstanding during the year. Weighted average shares
includes the assumed exercise of stock options and warrants computed using
the treasury stock method. Fully diluted earnings per share have not been
presented because the effect of the assumed exercise of stock options and
warrants and the assumed conversion of the Company's subordinated
convertible debentures would be immaterial.
11PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Cash and Cash Equivalents
As of March 30, 1996, $29,552,000 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 U.S. government agency securities, corporate notes,
commercial paper, money market funds, and other marketable securities, in
the amount of at least 103% of such obligation. The Company's funds subject
to the repurchase agreement are readily convertible into cash by the
Company and have an original maturity of three months or less. The
repurchase agreement earns a rate based on the 90-day Commercial Paper
Composite Rate plus 25 basis points, set at the beginning of each quarter.
As of March 30, 1996, the Company's cash equivalents also include
investments in a money market fund, which have an original maturity of
three months or less. Cash equivalents are carried at cost, which
approximates fair market value.
Available-for-sale and Held-to-maturity Investments
Pursuant to SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," short- and long-term debt and marketable equity
securities that the Company considers available-for-sale are accounted for
at market value. Debt securities that the Company intends to hold to
maturity are accounted for at amortized cost (Note 2). Prior to fiscal
1994, short- and long-term marketable equity securities were carried at the
lower of cost or market value.
Inventories
Inventories are stated at the lower of cost (on an average-cost basis)
or market value and include materials, labor, and manufacturing overhead.
The components of inventories are as follows:
(In thousands) 1996 1995
--------------------------------------------------------------------------
Raw materials and supplies $3,822 $2,705
Work in process and finished goods 933 27
------ ------
$4,755 $2,732
====== ======
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 primarily using the
straight-line method over the estimated useful lives of the property as
follows: buildings and improvements - 5 to 40 years; machinery and
equipment - 3 to 12 years; and leasehold improvements - the shorter of the
term of the lease or the life of the asset. Soil-remediation units, which
accounted for 17% and 21% of the Company's machinery and equipment at
12PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
fiscal year-end 1996 and 1995, respectively, are depreciated based on an
hourly rate that is computed by estimating total hours of operation for
each unit. Property, plant and equipment consist of the following:
(In thousands) 1996 1995
--------------------------------------------------------------------------
Land and buildings $ 36,232 $ 23,333
Machinery, equipment and leasehold improvements 85,615 69,462
-------- --------
121,847 92,795
Less: Accumulated depreciation and amortization 40,002 33,058
-------- --------
$ 81,845 $ 59,737
======== ========
Other Assets
Other assets in the accompanying balance sheet include the cost of
acquired technology and other specifically identifiable intangible assets
that are being amortized using the straight-line method over their
estimated useful lives, which range from 5 to 12 years. These assets were
$9,508,000 and $9,994,000, net of accumulated amortization of $4,791,000
and $3,217,000, at fiscal year-end 1996 and 1995, respectively.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired
companies is amortized using the straight-line method over periods not
exceeding 40 years. Accumulated amortization was $6,735,000 and $4,721,000
at fiscal year-end 1996 and 1995, 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 (Note
12). The Company considers the future undiscounted cash flows of the
acquired companies 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
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.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
13PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
2. Available-for-sale and Held-to-maturity Investments
Effective April 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 that are
classified as available-for-sale investments in the accompanying balance
sheet 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 loss on available-for-
sale investments." Effect of change in accounting principle in the
accompanying fiscal 1994 statement of shareholders' investment represents
the unrealized gain, net of related tax effects, pertaining to short-term
available-for-sale investments held by the Company on April 2, 1994.
The aggregate market value, cost basis, and gross unrealized gains and
losses of short- and long-term available-for-sale investments by major
security type, as of March 30, 1996 and April 1, 1995, are as follows:
1996 Gross Gross
Unrealized Unrealized
(In thousands) Market Value Cost Basis Gains Losses
--------------------------------------------------------------------------
Tax-exempt securities $ 5,009 $ 4,998 $ 11 $ -
Corporate bonds 1,985 2,000 - (15)
Money market preferred stock 2,098 2,107 - (9)
Other 10 10 - -
------- ------- ------- -------
$ 9,102 $ 9,115 $ 11 $ (24)
======= ======= ======= =======
1995 Gross Gross
Unrealized Unrealized
(In thousands) Market Value Cost Basis Gains Losses
--------------------------------------------------------------------------
Tax-exempt securities $11,545 $11,594 $ - $ (49)
Corporate bonds 1,980 2,000 - (20)
Money market preferred stock 2,087 2,165 - (78)
Other 107 107 - -
------- ------- ------- -------
$15,719 $15,866 $ - $ (147)
======= ======= ======= =======
Short- and long-term available-for-sale investments in the
accompanying fiscal 1996 balance sheet include $5,012,000 with contractual
maturities of one year or less and $4,090,000 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 the Company and/or the issuer to redeem these securities at an
earlier date.
14PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
2. Available-for-sale and Held-to-maturity Investments (continued)
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 fiscal
1996, 1995, and 1994 resulted from gross realized gains relating to the
sale of available-for-sale investments.
In order to meet the Company's obligation to the former owner of Elson
T. Killam Associates, Inc., which the Company acquired in February 1995,
the Company purchased U.S. treasury bonds that mature in February and May
1998, the dates the Company's zero coupon promissory note is due (Note 3).
These securities are classified as long-term held-to-maturity investments
in the accompanying balance sheet and are carried at amortized cost. It is
the Company's intent and ability to hold these securities to maturity.
3. Joint Venture and Acquisitions
Joint Venture
In May 1994, the Company entered into an agreement establishing an
environmental services joint venture (the joint venture), with Thermo
Instrument Systems Inc. (Thermo Instrument) that became effective April 4,
1994. The Company contributed to the joint venture Terra Tech Labs, Inc.
(later renamed Thermo Analytical Inc.) and approximately $31 million in
cash and short-term investments, $15 million of which was borrowed from
Thermo Electron pursuant to a promissory note (Note 8). Thermo Instrument
contributed its environmental services businesses (Environmental Services
Businesses) that consist of a national network of analytical laboratories,
and businesses that provide nuclear-radiation safety and environmental
science and consulting services. Accordingly, the joint venture's operating
results were consolidated with the Company's operating results. Under the
terms of the joint venture agreement, 66.67% of income earned by the joint
venture from April 4, 1994 to April 1, 1995 was allocated to Thermo
Instrument.
Because the Company and the Environmental Services Businesses were
deemed for accounting purposes to be under control of their common majority
owner, Thermo Electron, the transaction was accounted for at historical
cost in a manner similar to the pooling-of-interests method. Accordingly,
in fiscal 1994, all historical financial information presented was restated
to include the accounts and operations of the Environmental Services
Businesses. In fiscal 1994, amounts earned by the Environmental Services
Businesses were allocated to Thermo Instrument through minority interest
expense in the accompanying financial statements.
15PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
3. Joint Venture and Acquisitions (continued)
Effective April 2, 1995, the Company and Thermo Instrument dissolved
the joint venture and the Company purchased the businesses formerly
operated by the joint venture from Thermo Instrument for $34,267,000 in
cash. As a result of this transaction, the Company increased its ownership
in the businesses operated by the joint venture from 51% to 100%. Based on
unaudited data, if the acquisition of Thermo Instrument's share of such
businesses by the Company had occurred at the beginning of fiscal 1994, net
income and earnings per share on a pro forma basis would have been
$4,574,000 and $.27, respectively, for fiscal 1995 and $5,326,000 and $.32,
respectively, for fiscal 1994. The Company borrowed the purchase price from
Thermo Electron through the issuance of a $35,000,000 promissory note
(Note 8).
In June 1995, the Company transferred three businesses formerly
operated by the joint venture, collectively known as the Nuclear Services
Group (renamed Thermo Nutech), to Thermo Remediation in exchange for
1,583,360 shares of Thermo Remediation common stock.
Acquisitions
In December 1995, Thermo Remediation acquired Remediation
Technologies, Inc. (ReTec), a provider of integrated environmental services
such as the remediation of industrial sites contaminated with organic
wastes and residues. The purchase price of $29,672,000 consisted of
$18,462,000 in cash, 227,250 shares of Thermo Remediation's common stock
and 75,750 warrants to purchase shares of Thermo Remediation's common stock
at $14.85 per share, valued in the aggregate at $3,716,000, and
approximately $7,494,000 attributable to the conversion of outstanding
ReTec stock options into Thermo Remediation stock options of equivalent
intrinsic value at the date of acquisition.
In May 1995, the Company acquired substantially all of the assets of
Lancaster Laboratories, Inc. and its affiliate Clewmark Holdings
(collectively Lancaster Laboratories). Lancaster Laboratories, based in
Lancaster, Pennsylvania, is a provider of high-quality analytical services
to the environmental, food, and pharmaceutical industries. The purchase
price for the assets was $25,329,000 in cash, which included the repayment
of $5,333,000 of debt.
In March 1995, the Company's Thermo EuroTech subsidiary acquired all
of the outstanding capital stock of Refining and Trading Holland B.V.,
which conducts business under the name North Refinery, from Stalt Holding
B.V. North Refinery, located in Delfzijl, Holland. North Refinery
specializes in processing "off-spec" and contaminated petroleum fluids into
usable products such as gas oil, diesel oil, and fuel oil. The purchase
price for North Refinery's stock was 9,568,000 Dutch guilders
(approximately $6,180,000) and 228,570 shares of Thermo EuroTech's capital
stock, valued at 1,327,000 Dutch guilders (approximately $857,000). Thermo
EuroTech has also agreed to pay, after the fifth anniversary date of the
closing, an amount equal to 20% of the amount by which the cumulative
pretax profits of North Refinery's business over the five-year period
ending on such anniversary exceeds 5,000,000 Dutch guilders.
16PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
3. Joint Venture and Acquisitions (continued)
In February 1995, the Company acquired all of the outstanding capital
stock of Engineering, Technology and Knowledge Corporation (ETKC) from Nord
Est S.A., a French industrial company (Nord Est). ETKC's sole subsidiary,
Elson T. Killam Associates, Inc. (Killam Associates), is a leading provider
of comprehensive environmental consulting and professional engineering
services in selected areas of the U.S. The purchase price for ETKC's stock
was $13,273,000 in cash and a zero coupon promissory note with a face value
of $28,000,000 and a present value of $22,300,000 as of the acquisition
closing date, payable in February and May 1998. The Company has also agreed
to pay, after the third anniversary date of the closing, an amount equal to
30% of the amount by which Killam Associates' cumulative net income for the
three-year period ending on such anniversary exceeds $13 million. In a
related transaction, certain members of Killam Associates' senior
management (the Killam Management) exchanged outstanding options to
purchase shares of Killam Associates' capital stock for options to purchase
an aggregate of 847,678 shares of the Company's common stock, which options
were valued at $6,923,000. Additional options to purchase shares of Killam
Associates' capital stock were canceled in exchange for cash payments to
the Killam Management in the aggregate amount of $1,922,000. The Company
borrowed the cash portion of the purchase price, including cash used to
purchase U.S. treasury bonds to collateralize the promissory note delivered
to Nord Est, from Thermo Electron through the issuance of a $38 million
promissory note (Note 8).
In October 1994, Thermo Remediation acquired a soil-remediation
facility in South Tacoma, Washington, (renamed TPST Woodworth) from
Woodworth & Company, Inc. The purchase price for TPST Woodworth was
$4,701,000 in cash. In connection with the financing of acquisitions,
Thermo Remediation issued to Thermo Electron a $4,000,000 promissory note
(Note 8). During fiscal 1995, Thermo Remediation and the environmental
services joint venture made other acquisitions for an aggregate of $14.2
million in cash.
In January 1994, the Company acquired Terra Tech Labs, Inc. (Terra
Tech), a privately held company specializing in fast-response testing of
petroleum-contaminated soils and groundwater in the southwestern region of
the U.S. The acquisition was made for $1,924,000 in cash, including a
$424,000 payment made as a result of the business having achieved certain
performance goals over a two-year period. Terra Tech has a facility in
Santa Ana, California, as well as four mobile units, which provide services
primarily to the petroleum industry and consulting engineers.
In November 1993, the Company acquired a fluids recovery company based
in Mesa, Arizona, (renamed Thermo Fluids) for $2,650,000 in cash and
immediately transferred it to Thermo Remediation in exchange for a
$2,650,000 principal amount 3 7/8% subordinated convertible note due 2000.
In addition, due to Thermo Fluids having met certain performance criteria,
on February 1, 1995, the Company issued to the former owner of Thermo
Fluids, 178,060 restricted shares of its common stock valued at $840,000.
Thermo Remediation, in turn, issued to the Company 127,369 restricted
shares of its common stock valued at $840,000. In August 1994, Thermo
Remediation loaned $700,000, included in other assets in the accompanying
fiscal 1996 and 1995 balance sheet, to the former owner of Thermo Fluids in
connection with the termination of his employment with Thermo Fluids and
the settlement of the parties' respective obligations to one another. This
17PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
3. Joint Venture and Acquisitions (continued)
obligation is represented by a promissory note bearing interest at a rate
equal to the rate of interest on one-year U.S. treasury notes, adjusted on
an annual basis, and is secured by a pledge of the Company's common stock
issued to the former owner. The note is payable in three equal installments
due in March 1997, December 1997, and December 1998.
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 the acquisitions in fiscal 1996, 1995,
and 1994 exceeded the estimated fair value of the acquired net assets by
$67,795,000, 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
1996, is subject to adjustment upon finalization of the purchase price
allocation.
Based on unaudited data, the following table presents selected
financial information for the Company, ReTec, and Lancaster Laboratories on
a pro forma basis, assuming the companies had been combined since the
beginning of fiscal 1995, and for the Company, North Refinery, Killam
Associates, and TPST Woodworth on a pro forma basis, assuming the companies
had been combined since the beginning of fiscal 1994. The effect on the
Company's financial statements of the acquisitions not included in the pro
forma data was not material to the Company's results of operations and
financial position.
(In thousands except per share amounts) 1996 1995 1994
--------------------------------------------------------------------------
Revenues $251,189 $249,476 $158,933
Income before cumulative effect of
change in accounting principle 2,111 7,300 3,299
Earnings per share before cumulative
effect of change in accounting
principle .12 .43 .20
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 fiscal 1995 or 1994, as
applicable.
Other accrued expenses in the accompanying balance sheet includes
$423,000 and $1,848,000 at fiscal year-end 1996 and 1995, respectively, for
estimated severance, relocation, and other exit costs associated with
acquisitions.
4. 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
fiscal 1994, 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,
18PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
4. Stock-based Compensation Plans (continued)
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 three 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 the 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 September 1991, that provides for
the grant of stock options to outside 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 to 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.
In connection with the acquisition of Killam Associates in February
1995, the Company assumed certain outstanding options granted under Killam
Associates' nonqualified stock option plan. Such options were converted
into options to purchase shares of the Company's common stock, in
accordance with the original terms of the options. All of the options
converted were fully vested and exercisable immediately pursuant to their
original terms. Such options expire ten years from the date of grant.
19PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
4. Stock-based Compensation Plans (continued)
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:
1996 1995 1994
---------------- ---------------- ---------------
Range of Range of Range of
Option Option Option
Number Prices Number Prices Number Prices
(In thousands except of per of per of per
per share amounts) Shares Share Shares Share Shares Share
--------------------------------------------------------------------------
Options outstanding, $ .08- $ 1.43- $ 1.27-
beginning of year 2,559 $16.05 1,318 $16.05 823 $16.05
Assumed upon
acquisition of
Killam Associates - - 848 .08 - -
10.50- 7.83- 7.65-
Granted 182 14.58 665 8.18 785 9.28
.08- 1.43- 1.27-
Exercised (141) 9.35 (197) 3.19 (238) 3.19
8.10- 8.10- 6.00-
Lapsed or cancelled (39) 10.00 (75) 10.00 (52) 8.65
----- ----- -----
Options outstanding, $ .08- $ .08- $ 1.43-
end of year 2,561 $16.05 2,559 $16.05 1,318 $16.05
===== ===== =====
$ .08- $ .08- $ 1.43-
Options exercisable 2,558 $16.05 2,558 $16.05 1,316 $16.05
===== ===== =====
Options available for
grant 730 874 415
===== ===== =====
5. Employee Benefit Plans
Employee Stock Purchase Plan
The majority of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase plan sponsored by the Company.
Prior to the November 1995 plan year, shares of the Company's and Thermo
Electron's common stock could 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 were subject to a one-year resale restriction.
Effective November 1, 1995, the applicable shares of common stock may be
purchased at 95% of the fair market value at the beginning of the plan
year, and the shares purchased are subject to a six-month resale
restriction. Shares are purchased through payroll deductions of up to 10%
of each participating employee's gross wages. During fiscal 1996, 1995, and
1994, the Company issued 44,259 shares, 21,999 shares, and 28,845 shares,
respectively, of its common stock under this plan. Employees of the
20PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
5. Employee Benefit Plans (continued)
Environmental Services Businesses participated in an employee stock
purchase plan sponsored by Thermo Instrument through November 1994.
Thereafter, they became eligible to participate in the Company's employee
stock purchase 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, prior to January
1, 1995, in Thermo Electron's employee stock ownership plan (ESOP).
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. Certain subsidiaries of the Company also have a defined
contribution retirement plan, a union-sponsored, collectively bargained
multi-employer pension plan, and 401(k) savings plans. For these plans, the
Company contributed and charged to expense $1,439,000, $1,654,000, and
$1,465,000 in fiscal 1996, 1995, and 1994, respectively. Effective December
31, 1994, the ESOP was split into two plans: ESOP I, covering employees of
Thermo Electron's corporate office and its wholly owned subsidiaries and
ESOP II, covering employees of certain of Thermo Electron's majority-owned
subsidiaries, including the Company. Also, effective December 31, 1994, the
ESOP II plan was terminated, and as a result, the Company's employees are
no longer eligible to participate in an ESOP.
6. Income Taxes
The components of the income tax (provision) benefit are as follows:
(In thousands) 1996 1995 1994
--------------------------------------------------------------------------
Currently (payable) prepaid:
Federal $(1,216) $(3,061) $ 139
State (647) (1,063) (41)
Foreign 1,120 (96) 45
------- ------- -------
(743) (4,220) 143
------- ------- -------
(Deferred) prepaid, net:
Federal (2,198) 1,287 (50)
State (549) 303 (53)
------- ------- -------
(2,747) 1,590 (103)
------- ------- -------
$(3,490) $(2,630) $ 40
======= ======= =======
21PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
6. Income Taxes (continued)
The income tax (provision) benefit in the accompanying statement of
income differs from the provision calculated by applying the statutory
federal income tax rate of 34% to income before income taxes, minority
interest and cumulative effect of change in accounting principle due to the
following:
(In thousands) 1996 1995 1994
--------------------------------------------------------------------------
Provision for income taxes at statutory rate $(2,697) $(3,744) $(2,512)
Differences resulting from:
Gain on issuance of stock by subsidiaries 1,403 456 1,526
Minority interest in joint venture
income (Note 3) - 1,061 1,205
Foreign tax rate and tax law differential 249 (10) (114)
State income taxes, net of federal tax (777) (502) (62)
Tax-exempt investment income 181 180 34
Nondeductible expenses (47) (249) (47)
Reversal of tax reserves no longer required 750 - -
Amortization and write-off of cost in
excess of net assets of acquired
companies (2,485) (44) (20)
Other, net (67) 222 30
------- ------- -------
$(3,490) $(2,630) $ 40
======= ======= =======
Prepaid income taxes and deferred income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1996 1995
----------------------------------------------------------------
Prepaid income taxes:
Accrued compensation $ 2,805 $ 3,623
Reserves and accruals 3,019 3,112
Allowance for doubtful accounts 1,107 1,444
Net operating loss carryforward 732 106
Federal tax credit carryforward 248 39
Other 159 180
------- -------
8,070 8,504
Less: Valuation allowance 276 276
------- -------
$ 7,794 $ 8,228
======= =======
Deferred income taxes:
Depreciation $ 1,056 $ 2,376
Other deferred items 2,321 1,740
------- -------
$ 3,377 $ 4,116
======= =======
22PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
6. Income Taxes (continued)
During fiscal 1996, the Company reversed previously established tax
reserves totaling $750,000 that were no longer required as a result of the
completion of certain revenue agent reviews.
The valuation allowance relates to the uncertainty surrounding the
realization of the tax benefits attributable to federal operating loss and
credit carryforwards and purchase accounting reserves related to various
acquisitions. The valuation allowance will be used to reduce cost in excess
of net assets of acquired companies when any portion of the related
deferred tax asset is recognized.
A provision has not been made for U.S. or additional foreign taxes on
$505,000 of undistributed earnings of foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company currently
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.
7. Commitments and Contingencies
Operating Leases
The Company leases land, office and manufacturing facilities, and
equipment under operating leases expiring at various dates through fiscal
2059. The accompanying statement of income includes expenses from operating
leases of $4,632,000, $2,491,000, and $2,509,000 in fiscal 1996, 1995, and
1994, respectively. Future minimum payments due under noncancellable
operating leases at March 30, 1996, are $3,893,000 in fiscal 1997;
$2,483,000 in fiscal 1998; $1,866,000 in fiscal 1999; $1,338,000 in fiscal
2000; $1,011,000 in fiscal 2001; and $1,112,000 in fiscal 2002 and
thereafter. Total future minimum lease payments are $11,703,000. See Note 9
for office and manufacturing facilities leased from Thermo Electron.
In March 1991, the Company's TPST Virginia subsidiary entered into a
seven-year agreement, terminable at the Company's option with 90 days'
notice, to operate one or more of its soil-remediation units at a site
owned by a third party. Under the terms of the agreement, the Company pays
a fee based on the gross remediation revenues generated from the operations
at the site, less certain operating costs incurred by the Company. The
accompanying statement of income includes expenses relating to this
agreement of $147,000, $307,000, and $410,000 in fiscal 1996, 1995, and
1994, respectively.
Contingencies
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.
23PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
8. Short- and Long-term Obligations and Other Financing Arrangements
Long-term Obligations
Long-term obligations of the Company are as follows:
(In thousands except per share amounts) 1996 1995
------------------------------------------------------------------------
6 1/2% Subordinated convertible debentures,
due 1997, convertible at $10.33 per share $ 18,182 $ 18,547
4 7/8% Subordinated convertible debentures,
due 2000, convertible into shares of Thermo
Remediation at $17.92 per share 37,950 -
Promissory note to parent company, due
April 1996 (Notes 3 and 16) (a) 15,000 15,000
Promissory note to parent company, due
May 1997 (Notes 3 and 16) (a) 35,000 -
Promissory note to parent company, due
June 1997 (Note 3) (a) 38,000 38,000
Zero coupon promissory note, face value $28,000,
due in two installments in February and
May 1998 (Note 3) 24,251 22,569
6.75% Mortgage loan, payable in monthly
installments of $9, with final payment
in 2008 1,403 1,513
Other 814 1,874
-------- --------
170,600 97,503
Less: Current maturities of long-term obligations 15,216 652
-------- --------
$155,384 $ 96,851
======== ========
(a) Bears interest at the 90-day Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter.
The 6 1/2% and 4 7/8% subordinated convertible debentures are
guaranteed on a subordinated basis by Thermo Electron. The Company has
agreed to reimburse Thermo Electron in the event Thermo Electron is
required to make a payment under the guarantee. During fiscal 1996,
$365,000 principal amount of the 6 1/2% debentures was converted into
35,332 shares of the Company's common stock.
The annual requirements for long-term obligations as of March 30,
1996, are $15,216,000 in fiscal 1997; $18,836,000 in fiscal 1998;
$24,400,000 in fiscal 1999; $2,800,000 in fiscal 2000; $38,100,000 in
fiscal 2001; and $71,248,000 in fiscal 2002 and thereafter. Total
requirements of long-term obligations are $170,600,000. See Note 13 for
information pertaining to the fair value of the Company's long-term
obligations.
Short-term Obligations and Other Financing Arrangements
The Company's Thermo EuroTech subsidiary has a line of credit,
denominated in Netherlands guilders, under which approximately $6,050,000
may be borrowed at the Netherlands discount rate plus 125 basis points. At
March 30, 1996, $3,995,000 was outstanding under this arrangement, bearing
interest at 5.25%.
24PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
8. Short- and Long-term Obligations and Other Financing Arrangements
(continued)
In December 1994, Thermo Remediation borrowed $4,000,000 from Thermo
Electron through issuance of a promissory note due June 29, 1995, and
bearing interest at the 90-day Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter. The average interest
rate on the note was 6.4% and 6.5% in fiscal 1996 and 1995, respectively.
The promissory note was repaid in full in June 1995. The promissory note is
included in notes payable and current maturities of long-term obligations
in the accompanying fiscal 1995 balance sheet.
9. 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 pays Thermo Electron
annually an amount equal to 1.0% of the Company's revenues. Prior to
January 1, 1996, the Company paid an annual fee equal to 1.20% of the
Company's revenues. Prior to January 1, 1995, the Company paid an annual
fee equal to 1.25% 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 $2,577,000, $1,653,000, and $1,377,000,
in fiscal 1996, 1995, and 1994, respectively. 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). 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. 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.
Development Agreement
The Company and Thermo Electron entered into a development agreement
under which Thermo Electron agreed to fund up to $4.0 million of the direct
and indirect costs of the Company's development of soil-remediation
centers. In exchange for this funding, the Company granted Thermo Electron
a royalty equal to approximately 3% of net revenues from soil-remediation
services performed at the centers developed under the agreement. The
royalty payments may cease if the amounts paid by the Company yield a
certain internal rate of return to Thermo Electron on the funds advanced to
the Company under the agreement. The Company recorded contract revenues of
$776,000 under this agreement for development costs expended in fiscal
1994. As of October 2, 1993, funding under this agreement was completed.
Two sites have been developed under this agreement. The Company paid
25PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
9. Related Party Transactions (continued)
royalties of $332,000, $432,000, and $351,000 in fiscal 1996, 1995, and
1994, respectively, relating to this agreement, which are included in
selling, general and administrative expenses in the accompanying statement
of income.
Operating Leases
The Company leases or subleases two office and manufacturing
facilities from Thermo Electron under lease agreements expiring in fiscal
1997 and 2004. The accompanying statement of income includes expenses from
the operating lease and sublease of $486,000, $537,000, and $426,000 in
fiscal 1996, 1995, and 1994, respectively. The future minimum payments due
under the lease and sublease as of March 30, 1996, are $813,000 in fiscal
1997 through 2000; $772,000 in fiscal 2001; and $2,589,000 in fiscal 2002
and thereafter. Total future minimum payments are $6,613,000.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
Short- and Long-term Obligations
See Note 8 for a description of short- and long-term obligations of
the Company held by Thermo Electron.
10. Common Stock
At March 30, 1996, the Company had reserved 5,891,401 unissued shares
of its common stock for possible issuance under stock-based compensation
plans, possible issuance upon conversion of the 6 1/2% subordinated
convertible debentures, and exercise of warrants.
11. Transactions in Stock of Subsidiaries
During fiscal 1996, Thermo Remediation sold 500,000 shares of its
common stock in a private placement at $13.25 per share for net proceeds of
$6,625,000, resulting in a gain of $2,742,000. During fiscal 1996, Thermo
Remediation issued 227,250 shares of its common stock in connection with
the acquisition of ReTec (Note 3), resulting in a gain of $1,385,000.
During fiscal 1995, the Company's Thermo EuroTech subsidiary completed
private placements in Europe of 700,331 shares of its common stock at $3.75
per share for net proceeds of $2,423,000, resulting in gains of $829,000.
During fiscal 1995, the Company's Thermo Remediation subsidiary completed a
private placement of 75,000 shares of its common stock at $9.67 per share
for net proceeds of $715,000, resulting in a gain of $229,000.
26PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
11. Transactions in Stock of Subsidiaries (continued)
During fiscal 1994, the Company's Thermo Remediation subsidiary
completed an initial public offering of 1,785,000 shares of its common
stock at $8.33 per share for net proceeds of $13,505,000, resulting in a
gain of $3,886,000. During fiscal 1994, Thermo Remediation also completed a
private placement consisting of 300,000 units, comprising an aggregate of
300,000 shares of Thermo Remediation common stock, valued at $6.59 per
share, and warrants to purchase 300,000 shares of Thermo Remediation common
stock, valued at $.33 per warrant. The warrants expired in whole upon the
closing of Thermo Remediation's initial public offering at a price above
the warrants' exercise price of $6.93 per share. Net proceeds from the sale
were $2,077,000, resulting in a gain of $602,000.
Dividends declared by the Company's majority-owned subsidiaries were
$2,491,000, $2,012,000, and $2,127,000 in fiscal 1996, 1995, and 1994,
respectively. Dividends declared by the Company's majority-owned
subsidiaries include $1,667,000 in fiscal 1996 that was allocated to the
Company and reinvested in 117,805 shares of Thermo Remediation's common
stock pursuant to Thermo Remediation's Dividend Reinvestment Plan adopted
in fiscal 1995, $1,316,000 in fiscal 1995 reinvested in 113,491 shares of
Thermo Remediation's common stock, and $1,608,000 in fiscal 1994 that was
paid to the Company in cash.
The Company has 700,500 warrants to purchase its common stock
outstanding at March 30, 1996, which are exercisable at $10.00 - $11.34 per
share and expire in fiscal 2001. The warrants were issued in fiscal 1992
and 1993 in connection with private placements completed by three of the
Company's soil-recycling subsidiaries.
The Company's percentage ownership of its majority-owned subsidiaries
at year-end was as follows:
1996 1995 1994
-------------------------------------------------------------------------
Thermo EuroTech 62% 62% 72%
Thermo Remediation 66 66 66
12. Nonrecurring Costs
Following the purchases of Killam Associates in February 1995, the
businesses formerly operated by the Company's environmental services joint
venture with Thermo Instrument in April 1995, and Lancaster Laboratories in
May 1995, the primary growth focus of the Company has become environmental
infrastructure services. The Company no longer expects to reinvest in the
thermal-processing equipment business. The Company's analysis indicates
that the expected future undiscounted cash flow from this business will be
insufficient to recover the Company's investment. Accordingly, in the
second quarter of fiscal 1996, the Company wrote off $4,995,000 of cost in
excess of net assets of acquired company associated with the
thermal-processing equipment business. This noncash expense is
nondeductible for tax purposes.
27PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
12. Nonrecurring Costs (continued)
In September 1995, the Company sold to a management group the assets
of a small civil engineering design office in Williston, Vermont, that was
no longer included in the geographic expansion plans of the Company. An
intangible asset of $569,000 associated with this office was not recovered
in the sale price and, accordingly, was written off during the second
quarter of fiscal 1996. This noncash expense is nondeductible for tax
purposes. Sales and earnings of this office were not material to the
Company.
In fiscal 1994, the Company wrote off $2,661,000 of mobile
soil-remediation assets and other related expenses. The Company decided to
no longer actively pursue mobile soil-remediation projects.
13. Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, available-for-sale and held-to-maturity investments, accounts
receivable, notes payable and current maturities of long-term obligations,
accounts payable, due to parent company, and long-term obligations. The
carrying amounts of these financial instruments, with the exception of
available-for-sale and held-to-maturity investments, and long-term
obligations, approximate fair value due to their short-term nature.
Available-for-sale investments are carried at fair value in the
accompanying balance sheet. The fair values were determined based on quoted
market prices. See Note 2 for fair value information pertaining to these
financial instruments. Held-to-maturity investments in the accompanying
balance sheet are carried at amortized cost. The fair values are disclosed
on the accompanying balance sheet and were determined based on quoted
market prices.
The fair value of long-term obligations was determined based on quoted
market prices and on borrowing rates available to the Company at the
respective year-ends. The fair value of convertible obligations at year-end
fiscal 1996 exceeds the carrying amount primarily due to the market price
of the Company's common stock exceeding the conversion price of the
convertible obligations. The carrying amount and fair value of the
Company's long-term obligations are as follows:
1996 1995
---------------------- ---------------------
Carrying Fair Carrying Fair
(In thousands) Amount Value Amount Value
------------------------------------------------------------------------
Long-term obligations:
Convertible
obligations $ 56,132 $ 63,681 $ 18,547 $ 18,547
Other 99,252 99,252 78,304 78,304
-------- -------- -------- --------
$155,384 $162,933 $ 96,851 $ 96,851
======== ======== ======== ========
28PAGE
<PAGE>
Thermo TerraTech Inc.
Notes to Consolidated Financial Statements
14. Significant Customers
During fiscal 1996, 1995, and 1994 revenues derived from U.S.
government agencies accounted for 10%, 6%, and 16%, respectively, of the
Company's total revenues.
15. Supplemental Cash Flow Information
Supplemental cash flow information is as follows:
Year Ended
------------------------------
March 30, April 1, April 2,
(In thousands) 1996 1995 1994
--------------------------------------------------------------------------
Cash Paid For:
Interest $ 7,438 $ 2,507 $ 1,938
Income taxes $ 5,803 $ 952 $ 881
Noncash Activities:
Fair value of assets of acquired
companies $ 68,533 $ 86,721 $ 5,250
Cash paid for acquired companies (45,005) (39,559) (4,150)
Issuance of note payable for acquired
company - (22,300) -
Issuance of Company and subsidiary
common stock, stock options, and
warrants for acquired companies (11,210) (7,780) -
-------- -------- --------
Liabilities assumed of acquired
companies $ 12,318 $ 17,082 $ 1,100
======== ======== ========
Conversions of subordinated convertible
debentures (Note 8) $ 365 $ - $ -
Issuance of Company common stock to
former owner of acquired company
(Note 3) $ - $ 840 $ -
See Note 3 for discussion of the environmental services joint venture.
16. Subsequent Event
Issuance of Subordinated Convertible Debentures
In May 1996, the Company issued and sold $115 million principal amount
of 4 5/8% subordinated convertible debentures due 2003. The debentures are
convertible into shares of the Company's common stock at a price of $15.90
per share. Upon completion of the debenture offering, the Company repaid
its $15 million and $35 million notes payable to Thermo Electron.
29PAGE
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo TerraTech Inc.:
We have audited the accompanying consolidated balance sheet of Thermo
TerraTech Inc. (a Delaware corporation and an 83%-owned subsidiary of
Thermo Electron Corporation) and subsidiaries as of March 30, 1996 and
April 1, 1995, and the related consolidated statements of income,
shareholders' investment and cash flows for each of the three years in the
period ended March 30, 1996. 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 TerraTech Inc. and subsidiaries as of March 30, 1996 and April 1,
1995, and the results of their operations and their cash flows for each of
the three years in the period ended March 30, 1996, in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements,
effective April 4, 1993, the Company changed its method of accounting for
income taxes and effective April 2, 1994, the Company changed its method of
accounting for investments in debt and marketable equity securities.
Arthur Andersen LLP
Boston, Massachusetts
May 7, 1996 (except with respect to
the matters discussed in Note 16 as
to which the date is May 8, 1996)
30PAGE
<PAGE>
Thermo TerraTech Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview
The Company is a provider of environmental services and infrastructure
planning and design services, encompassing a range of specializations
within the consulting and design, remediation and recycling, and
laboratory-testing industries. The Company also provides metal-treating
services and thermal-processing systems used to treat primary metals and
metal parts. The Company's environmental services businesses are affected
by several factors, most particularly, extreme weather variations,
government spending, and deregulation of remediation activities.
Consulting and Design - The Company's wholly owned Bettigole Andrews &
Clark and Normandeau Associates subsidiaries provide both private and
public sector clients with a range of consulting services that address
transportation planning and design, and natural resource management issues,
respectively. In February 1995, the Company acquired Elson T. Killam
Associates Inc. (Killam Associates), which provides environmental
consulting and engineering services and specializes in wastewater treatment
and water resources management.
Remediation and Recycling - The Company's majority-owned Thermo
Remediation Inc. (Thermo Remediation) subsidiary operates a network of
soil-remediation centers, serving customers in more than a dozen states on
the East and West coasts by providing thermal treatment of soil to remove
and destroy petroleum contamination caused by leaking underground and
aboveground storage tanks, spills, and other sources. In addition, Thermo
Remediation's Thermo Fluids subsidiary, located in Arizona, offers
fluids-recycling services including waste motor oil and wastewater
treatment throughout Arizona, Nevada, and in neighboring states. Through
its Thermo Nutech subsidiary, Thermo Remediation provides services to
remove radioactive contaminants from sand, gravel, and soil, as well as
health physics, radiochemistry laboratory, and radiation dosimetry
services. In December 1995, Thermo Remediation acquired Remediation
Technologies, Inc. (ReTec), which provides integrated environmental
services such as remediation of industrial sites contaminated with organic
wastes and residues. The Company's majority-owned Thermo EuroTech N.V.
(Thermo EuroTech) subsidiary, located in the Netherlands, provides
wastewater treatment services as well as services to test, remove, and
install underground storage tanks. In March 1995, Thermo EuroTech acquired
Refining and Trading Holland B.V. (North Refinery), which specializes in
converting "off-spec" and contaminated petroleum fluids into usable oil
products.
Laboratory-testing - The Company's wholly owned Thermo Analytical
subsidiary operates a network of analytical laboratories that provide
environmental testing services to commercial and government clients
throughout the U.S. The May 1995 acquisition of Lancaster Laboratories,
Inc. (Lancaster Laboratories) expands the Company's range of contract
services beyond environmental testing to the pharmaceutical- and
food-testing industries.
Metal-treating - The Company performs metallurgical processing
services using thermal-treatment equipment at locations in California and
Minnesota. The Company also designs, manufactures, and installs advanced
custom-engineered, thermal-processing systems through its equipment
division located in Michigan.
31PAGE
<PAGE>
Thermo TerraTech Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Overview (continued)
In October 1995, the Financial Accounting Standards Board (FASB)
issued an exposure draft of a Proposed Statement of Financial Accounting
Standards, "Consolidated Financial Statements: Policy and Procedures"
(Proposed Statement). The Proposed Statement would establish new rules for
how consolidated financial statements should be prepared. If the Proposed
Statement is adopted, there could be significant changes in the way the
Company records certain transactions of its controlled subsidiaries,
including the following: (i) any sale of the stock of a subsidiary that
does not result in a loss of control would be accounted for as a
transaction in equity of the consolidated entity with no gain or loss being
recorded and (ii) under certain circumstances, acquisitions could be
structured to significantly reduce the goodwill that is recorded and
consequently reduce the Company's future goodwill amortization associated
with the acquisition. The Company typically acquires technology companies
which are often characterized by significant amounts of goodwill. In
addition, under the Proposed Statement, a company that has made certain
equity investments of generally less than 20% ownership would record a gain
(or loss) upon increasing its investment level to the point of exerting
"significant influence," generally 20% or higher.
The FASB conducted a hearing concerning the Proposed Statement in
February 1996, at which Thermo Electron Corporation (Thermo Electron),
along with other major companies and many of the major accounting firms and
accounting associations, expressed their disagreement with various parts of
the Proposed Statement. The FASB expects to issue a final statement which
could become effective for fiscal years beginning after December 15, 1996.
Results of Operations
Fiscal 1996 Compared With Fiscal 1995
Total revenues increased 62% to $217.4 million in fiscal 1996 from
$133.8 million in fiscal 1995. Consulting and design services revenues
increased to $74.0 million in fiscal 1996 from $40.3 million in fiscal
1995, primarily as a result of an increase of $34.2 million due to the
inclusion of revenues for a full year from Killam Associates, which was
acquired in February 1995. Revenues from remediation and recycling services
increased to $77.0 million in fiscal 1996 from $58.2 million in fiscal
1995, primarily due to the inclusion of $24.4 million in revenues from
businesses acquired or constructed in late fiscal 1995 and 1996, and higher
revenues from a long-term environmental restoration contract for the U.S.
Department of Energy's (DOE) Hanford site (Hanford), which began in the
second quarter of fiscal 1995. These increases were offset in part by lower
soil-remediation services revenues resulting from a decrease in the volume
and price of soil processed as a result of regulatory uncertainties at
several sites, competitive pricing pressures, and severe weather conditions
primarily in the fourth quarter of fiscal 1996. Revenues from
radiochemistry laboratory work also decreased, reflecting a reduction in
spending at the DOE and delays in federal government budget appropriations.
Revenues from laboratory-testing services, excluding the radiochemistry
laboratory services included in remediation and recycling services,
32PAGE
<PAGE>
Thermo TerraTech Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Fiscal 1996 Compared With Fiscal 1995 (continued)
increased to $34.6 million in fiscal 1996 from $8.6 million in fiscal 1995,
reflecting the inclusion of $29.1 million in revenues from Lancaster
Laboratories, which was acquired in May 1995, offset in part by a decline
in revenues due to reduced federal spending and a shift in business from
existing sites to the newly acquired Lancaster Laboratories. Metal-treating
revenues increased to $31.8 million in fiscal 1996 from $26.7 million in
fiscal 1995, primarily due to an increase in demand for thermal-processing
equipment.
The gross profit margin increased to 29% in fiscal 1996 from 26% in
fiscal 1995, due to the inclusion of higher-margin revenues from Killam
Associates and Lancaster Laboratories, offset in part by lower margins from
remediation and recycling services revenues primarily due to competitive
pricing pressures and lower revenues from higher-margin radiochemistry
laboratory work. In addition, gross profit margins at Thermo EuroTech
decreased as a result of severe winter weather and market conditions in
fiscal 1996.
During the second quarter of fiscal 1996, the Company wrote off
$4,995,000 of cost in excess of net assets of acquired company related to
its thermal-processing equipment business. In addition, in the second
quarter of fiscal 1996, the Company incurred a loss of $569,000 as a result
of the sale of an engineering office. These noncash expenses are
nondeductible for tax purposes (Note 12).
Selling, general and administrative expenses as a percentage of
revenues increased to 22% in fiscal 1996 from 20% in fiscal 1995, primarily
due to the inclusion of higher selling, general and administrative expenses
as a percentage of revenues at Killam Associates and, to a lesser extent,
at Thermo EuroTech due to the settlement of several contract disputes.
Interest income increased to $5.1 million in fiscal 1996 from $3.3
million in fiscal 1995 as a result of higher invested balances following
the issuance of $38 million principal amount of 4 7/8% subordinated
convertible debentures by Thermo Remediation in May 1995 and a private
placement of shares of Thermo Remediation's common stock in May 1995,
offset in part by funds expended to purchase the business formerly operated
by the environmental services joint venture from Thermo Instrument Systems
Inc. (Thermo Instrument) (Note 3). Interest expense increased to $10.7
million in fiscal 1996 from $2.9 million in fiscal 1995 as a result of
borrowings from Thermo Electron for the February 1995 acquisition of Killam
Associates and the May 1995 acquisition of Lancaster Laboratories, and the
issuance of the 4 7/8% subordinated convertible debentures by Thermo
Remediation in May 1995. Interest expense will increase in fiscal 1997 as a
result of the May 1996 issuance of $115 million principal amount of 4 5/8%
subordinated convertible debentures by the Company (Note 16).
As a result of the issuance of stock by Thermo Remediation in fiscal
1996 and 1995, and by Thermo EuroTech in fiscal 1995, the Company recorded
gains of $4,127,000 and $1,343,000 in fiscal 1996 and 1995, respectively.
These gains represent increases in the Company's proportionate share of the
subsidiaries' equity and are classified as gain on issuance of stock by
subsidiaries in the accompanying statement of income.
33PAGE
<PAGE>
Thermo TerraTech Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Fiscal 1996 Compared With Fiscal 1995 (continued)
The effective tax rates were 44% and 24% in fiscal 1996 and 1995,
respectively. The effective tax rate in fiscal 1996 was higher than the
statutory federal income tax rate primarily due to the nondeductible
write-off of cost in excess of net assets of acquired company and the loss
on sale of assets, offset in part by the nontaxable gains on issuance of
stock by subsidiaries and the reversal of previously established tax
reserves of $750,000 that were no longer required due to the completion of
certain revenue agent reviews. In fiscal 1995, the effective tax rate was
lower than the statutory federal income tax rate primarily due to the
exclusion of income taxed directly to a minority partner.
Minority interest expense decreased to $1.2 million in fiscal 1996
from $4.3 million in fiscal 1995 due primarily to the Company's purchase of
the businesses formerly operated by the Company's joint venture with Thermo
Instrument (Note 3).
Fiscal 1995 Compared With Fiscal 1994
Total revenues were $133.8 million in fiscal 1995, compared with
$110.1 million in fiscal 1994, an increase of 21%. Revenues from consulting
and design services increased to $40.3 million in fiscal 1995 from $29.7
million in fiscal 1994, primarily due to the inclusion of approximately
$7.2 million in revenues from Killam Associates, which was acquired in
February 1995. Revenues from remediation and recycling services increased
20% to $58.2 million in fiscal 1995 from $48.7 million in fiscal 1994,
primarily due to an increase in the volume of soil processed at the
Company's soil-remediation centers located in Southern California and
Florida, additional revenues of $3.8 million from businesses acquired in
late fiscal 1994 and in fiscal 1995 and, to a lesser extent, revenues
generated from the Hanford contract. Revenues from laboratory-testing
services, excluding the radiochemistry laboratory services included in
remediation and recycling services, increased to $8.3 million in fiscal
1995 from $6.0 million in fiscal 1994, primarily due to the inclusion of
revenues from Terra Tech Labs, Inc. (Terra Tech), which was acquired in
late fiscal 1994. Metal-treating revenues increased to $26.7 million in
fiscal 1995 from $25.7 million in fiscal 1994, primarily due to the
Company's efforts to increase its nongovernment business.
Contract revenues from related party in fiscal 1994 represents funding
under an agreement between the Company and Thermo Electron to fund up to
$4.0 million of the direct and indirect costs of the Company's development
of soil-remediation centers (Note 9). The Company earned no profit from
this funding. As of October 2, 1993, funding under this agreement was
completed. Any expenses incurred in connection with the development of
additional soil-remediation centers subsequent to October 2, 1993, are
included in product and new business development expenses in the
accompanying statement of income.
34PAGE
<PAGE>
Thermo TerraTech Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Fiscal 1995 Compared With Fiscal 1994 (continued)
The gross profit margin increased to 26% in fiscal 1995 from 24% in
fiscal 1994. The gross profit margin on consulting and design services
improved to 25% in fiscal 1995 from 17% in fiscal 1994 due to the inclusion
of higher-margin revenues at Killam, which was acquired in February 1995.
The gross profit margin on remediation and recycling services declined
slightly to 33% in fiscal 1995 from 34% in fiscal 1994, primarily due to a
decrease in higher-margin radiochemistry laboratory revenues, offset in
part by higher-margin revenues associated with the start-up of the Hanford
contract. The gross profit margin on laboratory-testing services decreased
to 23% in fiscal 1995 from 30% in fiscal 1994, primarily due to a decrease
in higher-margin revenues and an increase in lower-margin revenues from
Terra Tech. The gross profit margin on metal-treating revenues increased to
14% in fiscal 1995 from 8% in fiscal 1994 as a result of the Company's
efforts to increase nongovernment business.
Selling, general and administrative expenses as a percentage of
revenues remained relatively unchanged at 19.6% in fiscal 1995, compared
with 19.2% in fiscal 1994.
The Company recorded gains on the issuance of stock by subsidiaries of
$1.3 million in fiscal 1995 and $4.5 million in fiscal 1994 (Note 11).
Net interest income was $0.5 million in fiscal 1995, compared with
$0.6 million in fiscal 1994. An increase in interest expense due to
borrowings from Thermo Electron in May 1994 to fund the Company's
investment in the environmental services joint venture with Thermo
Instrument and in February 1995 to fund the Company's acquisition of Killam
Associates was offset in part by higher average invested balances.
See Note 6 to the Consolidated Financial Statements for a
reconciliation of the statutory tax rate to the effective tax rate.
Liquidity and Capital Resources
Consolidated working capital, including cash, cash equivalents, and
short-term available-for-sale investments, increased to $67.4 million at
March 30, 1996 from $64.7 million at April 1, 1995. Cash, cash equivalents,
and short- and long-term available-for-sale investments were $40.3 million
at March 30, 1996, compared with $51.5 million at April 1, 1995. In
addition, at March 30, 1996, the Company had $24.3 million of long-term
held-to-maturity investments, compared with $22.6 million at April 1, 1995.
Of the $40.3 million balance at March 30, 1996, $35.3 million was held by
Thermo Remediation, $0.1 million by Thermo EuroTech, and the remainder by
the Company and its wholly owned subsidiaries. During fiscal 1996,
operating activities provided cash of $8.5 million. The Company used cash
of $5.4 million in fiscal 1996 to fund increases in inventory and unbilled
contract costs and fees primarily due to increased thermal-processing
equipment contracts and increased inventory at North Refinery, and used
$5.2 million to reduce current liabilities.
35PAGE
<PAGE>
Thermo TerraTech Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Liquidity and Capital Resources (continued)
During fiscal 1996, the Company expended an aggregate of $78.1
million, net of cash acquired, to purchase Lancaster Laboratories, ReTec,
and the businesses formerly operated by the Company's joint venture with
Thermo Instrument. In addition, the Company expended $16.5 million on
purchases of property, plant and equipment, primarily relating to two
soil-remediation sites constructed in fiscal 1996.
In May 1995, Thermo Remediation issued and sold $38 million principal
amount of 4 7/8% subordinated convertible debentures due 2000. In addition,
in May 1995, Thermo Remediation sold 500,000 shares of its common stock in
a private placement for net proceeds of $6.6 million. In June 1995, Thermo
Remediation repaid its $4.0 million note payable to Thermo Electron with
proceeds from the offerings.
In May 1996, the Company issued and sold $115 million principal amount
of 4 5/8% subordinated convertible debentures due 2003. The debentures are
convertible into shares of the Company's common stock at a price of $15.90
per share. In May 1996, the Company repaid its $15.0 million and $35.0
million notes payable to Thermo Electron with proceeds from the offering.
The Company has no material commitments to acquire other businesses or
for capital expenditures. Such expenditures will largely be affected by the
number and size of the complementary businesses that can be acquired or
developed during the year. The Company believes that it has adequate
resources to meet the financial needs of its current operations for the
foreseeable future.
36PAGE
<PAGE>
Thermo TerraTech Inc.
Selected Financial Information
(In thousands except
per share amounts) 1996(a) 1995(b) 1994(c) 1993 1992
---------------------------------------------------------------------------
Statement of Income Data:
Revenues $217,397 $133,803 $110,131 $104,949 $103,019
Income before cumulative
effect of change in
accounting principle 3,218 4,115 3,409 3,164 1,035
Net income 3,218 4,115 3,909 3,164 1,035
Earnings per share
before cumulative
effect of change in
accounting principle .18 .24 .20 .19 .06
Earnings per share .18 .24 .23 .19 .06
Balance Sheet Data:
Working capital $ 67,448 $ 64,696 $ 51,612 $ 49,542 $ 53,481
Total assets 332,009 271,673 155,434 134,114 129,230
Long-term obligations 155,384 96,851 18,732 18,743 18,918
Shareholders' investment 86,341 77,601 62,559 57,619 54,820
(a)Reflects the acquisition of Lancaster Laboratories in May 1995, the
purchase of the businesses formerly operated by the environmental
services joint venture from Thermo Instrument, and the issuance of a
$35 million promissory note to Thermo Electron to fund the purchase.
Also reflects the Thermo Remediation acquisition of ReTec in December
1995, the issuance of $38 million principal amount of 4 7/8%
subordinated convertible debentures by Thermo Remediation, and the
private placement of 500,000 shares of Thermo Remediation common stock
for net proceeds of $6.6 million.
(b)Reflects the acquisitions of RMC Environmental Services, Inc. in August
1994 and Killam Associates in February 1995, and the issuance of $53
million of long-term promissory notes to Thermo Electron. Also reflects
Thermo EuroTech's acquisition of North Refinery in March 1995.
(c)Reflects Thermo Remediation's private placement and initial public
offering of common stock for net proceeds of $15.6 million and the
acquisitions of Thermo Fluids in November 1993 and Terra Tech Labs,
Inc. in January 1994. Also reflects the adoption of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
37PAGE
<PAGE>
Thermo TerraTech Inc.
Quarterly Information (Unaudited)
(In thousands except per share amounts)
Fiscal 1996(a)
--------------------------------------
First(b) Second(c) Third(d) Fourth
------------------------------------------------------------------------
Revenues $49,856 $53,782 $54,878 $58,881
Gross profit 15,404 16,540 15,960 15,636
Net income (loss) 3,949 (4,159) 1,587 1,841
Earnings (loss) per share .22 (.24) .09 .10
Fiscal 1995(e)
--------------------------------------
First Second(f) Third Fourth(g)
------------------------------------------------------------------------
Revenues $28,864 $31,015 $34,671 $39,253
Gross profit 7,196 8,207 8,481 11,367
Net income 881 1,028 1,142 1,064
Earnings per share .05 .06 .07 .06
(a)Includes nontaxable gains of $2,742,000 and $1,385,000 in the first and
fourth quarters, respectively, from the issuance of stock by
subsidiaries.
(b)Reflects the acquisition of Lancaster Laboratories in May 1995, and the
purchase of the businesses formerly operated by the environmental
services joint venture from Thermo Instrument.
(c)Includes the write-off of goodwill of $4,995,000 and a loss on the sale
of assets of $569,000.
(d)Reflects the December 1995 acquisition of ReTec by Thermo Remediation.
(e)Includes nontaxable gains of $229,000, $668,000, $161,000, and $285,000
in the first, second, third, and fourth quarters, respectively, from
the issuance of stock by subsidiaries.
(f)Reflects the August 1994 acquisition of RMC Environmental Services,
Inc.
(g)Reflects the February 1995 acquisition of Killam Associates and the
March 1995 acquisition of North Refinery by Thermo EuroTech.
38PAGE
<PAGE>
Thermo TerraTech Inc.
Common Stock Market Information
The following table shows the market range for the Company's common
stock based on reported sale prices on the American Stock Exchange (symbol
TTT) for fiscal 1996 and 1995.
Fiscal 1996 Fiscal 1995
----------------- -----------------
Quarter High Low High Low
--------------------------------------------------------------------------
First $12 3/8 $ 8 1/2 $ 8 7/8 $ 8
Second 12 7/8 11 1/8 8 3/8 8
Third 13 1/8 10 3/4 8 1/4 7 3/4
Fourth 14 5/8 10 7/8 8 7/8 7 3/4
As of May 24, 1996, the Company had 952 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 May 24, 1996, was $13 1/2 per share.
Common stock of Thermo Remediation Inc., the Company's majority-owned
public subsidiary, is traded on the American Stock Exchange (symbol THN).
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 inquiries 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 TerraTech Inc. who desire information about the
Company are invited to contact John N. Hatsopoulos, Chief Financial
Officer, Thermo TerraTech Inc., 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02254-9046, (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 reports, annual reports, and
press releases as quickly as possible. Quarterly reports and press releases
are also available through the Internet at Thermo Electron's home page on
the World Wide Web (http://www.thermo.com).
Dividend Policy
The Company has never paid cash dividends and does not expect to pay
cash dividends in the foreseeable future because its policy has been to use
earnings to finance expansion and growth. Payment of dividends will rest
within the discretion of the Company's Board of Directors and will depend
upon, among other factors, the Company's earnings, capital requirements,
and financial condition.
39PAGE
<PAGE>
Thermo TerraTech Inc.
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended
March 30, 1996, as filed with the Securities and Exchange Commission, may
be obtained at no charge by writing to John N. Hatsopoulos, Chief Financial
Officer, Thermo TerraTech Inc., 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Wednesday,
September 25, 1996, at 11:00 a.m. at Thermo Electron Corporation, 81 Wyman
Street, Waltham, Massachusetts.
40
EXHIBIT 21
THERMO TERRATECH INC.
SUBSIDIARIES OF THE REGISTRANT
At May 24, 1996, Thermo TerraTech Inc. owned the following companies:
State or Registrant's
Jurisdiction % of
Name Incorporation Ownership
---------------------------------------------------------------------------
Holcroft (Canada) Limited Canada 100%
Holcroft Corporation Delaware 100%
Holcroft GmbH Germany 100%
Metallurgical, Inc. Minnesota 100%
Cal-Doran Metallurgical Services, Inc. California 100%
Normandeau Associates, Inc. New Hampshire 100%
Thermo Analytical Inc. Delaware 100%
Skinner & Sherman, Inc. Massachusetts 100%
Thermo Consulting & Design Inc. Delaware 100%
Engineering Technology and Knowledge
Corporation Delaware 100%
Elson T. Killam Associates, Inc. New Jersey 100%
Bettigole Andrews Clark & Killam
Associates 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%
Duncan, Lagnese and Associates,
Incorporated Pennsylvania 100%
E3-Killam, Inc. New York 100%
Killam Associates, Inc. Ohio 100%
Killam Management and Operational
Services, Inc. New Jersey 100%
Fellows, Read & Associates, Inc. New Jersey 100%
Killam Associates, New England Inc. Delaware 100%
George A. Schock & Associates, Inc. New Jersey 100%
Jennison Engineering, Inc. Vermont 100%
Thermo EuroTech N.V. Netherlands 62.27%
Amerika Tankinstallaties B.V. Netherlands 100%
Grond-& Watersaneringstechniek
Nederland B.V. Netherlands 100%
High-Tech Trouble-Shooters B.V. Netherlands 100%
Jac. Amerika en Zonen B.V. Netherlands 100%
Refining & Trading Holland B.V. Netherlands 100%
Thermo Remediation Inc. Delaware 65.85%
Eberline Holdings Inc. Delaware 100%
Eberline Analytical Corporation New Mexico 100%
Thermo Hanford Inc. Delaware 100%
TMA/NORCAL Inc. California 100%
Remediation Technologies, Inc. Delaware 100%
RETEC Thermal, Inc. Delaware 100%
ReTec/Tetra L.C. Texas 50%*
Thermo Fluids Inc. Delaware 100%
TPS Technologies Inc. Florida 100%
TPST Soil Recyclers of California Inc. California 100%
California Hydrocarbon, Inc. Nevada 100%
TPST Soil Recyclers of Maryland Inc. Maryland 100%
Todds Lane Limited Partnership Maryland 100%*
PAGE
<PAGE>
EXHIBIT 21
THERMO TERRATECH INC.
SUBSIDIARIES OF THE REGISTRANT
State or Registrant's
Jurisdiction % of
Name Incorporation Ownership
---------------------------------------------------------------------------
TPST Soil Recyclers of New York Inc. New York 100%
TPST Soil Recyclers of Oregon Inc. Oregon 100%
TPST Soil Recyclers of South
Carolina Inc. Delaware 100%
TPST Soil Recyclers of Virginia Inc. Delaware 100%
TPST Soil Recyclers of Washington Inc. Washington 100%
TMA/Hanford, Inc. Washington 100%
* Joint Venture/Partnership
EXHIBIT 23
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation of our reports dated May 7, 1996 (except with respect to the
matters discussed in Note 16 as to which the date is May 8, 1996), included
in or incorporated by reference into Thermo TerraTech Inc.'s Annual Report
on Form 10-K for the year ended March 30, 1996 and into the Company's
previously filed Registration Statements as follows: Registration
Statement No. 333-02269 on Form S-2, Registration Statement No. 33-16462 on
Form S-8, Registration Statement No. 33-16464 on Form S-8, Registration
Statement No. 33-16465 on Form S-8, Registration Statement No. 33-16466 on
Form S-8, Registration Statement No. 33-31478 on Form S-3, Registration
Statement No. 333-2055 on Form S-3, Registration Statement No. 33-52824 on
Form S-8, Registration Statement No. 033-65307 on Form S-8, Registration
Statement No. 033-65283 on Form S-8, Registration Statement No. 033-65281
on Form S-8, and Registration Statement No. 33-80194 on Form S-8.
Arthur Andersen LLP
Boston, Massachusetts
May 31, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
TERRATECH INC.'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINACIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> MAR-30-1996
<PERIOD-END> MAR-30-1996
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<RECEIVABLES> 46,890
<ALLOWANCES> 2,837
<INVENTORY> 4,755
<CURRENT-ASSETS> 121,080
<PP&E> 121,847
<DEPRECIATION> 40,002
<TOTAL-ASSETS> 332,009
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<BONDS> 82,384
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