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 September 30, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-10573
THERMO POWER CORPORATION
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2891371
(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
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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 November 24, 1995, was approximately $63,355,000.
As of November 24, 1995, the Registrant had 12,432,545 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended September 30, 1995, 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 March 11, 1996, are incorporated by
reference into Part III.
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PART I
Item 1. Business
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(a) General Development of Business.
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Thermo Power Corporation (the Company or the Registrant) develops,
manufactures, markets, and services industrial refrigeration equipment;
gasoline engines for recreational boats; LPG (liquefied petroleum gas) and
gasoline engines for lift trucks; natural gas engines for fleet vehicles
and industrial applications; and natural gas cooling and cogeneration
systems. The Company also conducts research and development on applications
of thermal energy. Through its NuTemp, Inc. (NuTemp) subsidiary, the
Company rents commercial cooling and industrial refrigeration equipment.
Through its 78%-owned ThermoLyte Corporation (ThermoLyte) subsidiary,
formed in March 1995, the Company is also developing a propane-powered
flashlight, the first in a line of gas-powered lighting products it plans
to develop and commercialize. The Company's strategy is to engineer,
develop, and commercialize environmentally sound and economically efficient
power generation, cooling, and related products. The Company comprises five
operating units: the FES, Crusader Engines, and Tecogen divisions, and the
NuTemp and ThermoLyte subsidiaries.
In March 1995, the Company spun out ThermoLyte to complete the
development and commercialization of a family of propane-powered
flashlights, emergency lights, area lights, and other lighting products.
ThermoLyte products will all be based on the Company's patented technology
for a rigid mantle, the "bulb" in gas lights. This durable mantle allows
the Company to use propane as a power source instead of batteries. Using
propane offers several advantages over batteries, including a potentially
infinite shelf life, substantially longer operating hours, constant
brightness, and no battery disposal.
Subsequent to year-end 1995, the Company's TecoDrive(R) 4300 engine
became the first heavy-duty natural gas engine to be certified for Ultra
Low-Emission Vehicles (ULEVs) by the U.S. Environmental Protection Agency
(EPA). This certification will broaden the market for the Company's
TecoDrive 4300 engines to include states with the strictest emissions
standards.
In May 1994, the Company acquired NuTemp for $7.9 million in cash. In
fiscal 1995, the Company paid an additional $2.5 million as a result of
NuTemp having achieved certain previously agreed upon performance goals
through the period ending May 1, 1995. NuTemp is a supplier of both
remanufactured and new industrial refrigeration and commercial cooling
equipment for sale or rental. NuTemp's industrial refrigeration equipment
is used primarily in the food-processing, petrochemical, and pharmaceutical
industries, and its commercial cooling equipment is used primarily in
institutions and commercial buildings, as well as by service contractors.
The Company was originally incorporated in Massachusetts in June 1985
under the name Tecogen Inc., as a wholly owned subsidiary of Thermo
Electron Corporation (Thermo Electron) to succeed the business of Thermo
Electron's Thermal Products Division. In March 1993, the Company's name was
changed to Thermo Power Corporation. As of September 30, 1995, Thermo
Electron owned 7,832,326 shares of the Company's common stock, representing
63% of such stock then outstanding at that time. Thermo Electron is a world
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leader in environmental monitoring and analysis instruments and a
manufacturer of biomedical products including heart-assist systems and
mammography systems, paper-recycling and papermaking equipment,
alternative-energy systems, industrial process equipment, and other
specialized products. Thermo Electron also provides environmental and
metallurgical services and conducts advanced technology research and
development. Thermo Electron intends, for the foreseeable future, to
maintain at least 50% ownership of the Company. This may require the
purchase by Thermo Electron of additional shares of the Company's common
stock from time to time as the number of outstanding shares issued by the
Company increases. These purchases may be made either in the open market or
directly from the Company. During fiscal 19951, Thermo Electron purchased
885,700 shares of the Company's common stock in the open market at a total
price of $8,522,000.
(b) Financial Information About Industry Segments.
---------------------------------------------
The Company conducts business in three industry segments: (i)
industrial refrigeration and commercial cooling equipment; (ii) gasoline
engines for recreational boats, LPG and gasoline engines for lift trucks,
and natural gas engines for fleet vehicles and industrial applications; and
(iii) natural gas cooling and cogeneration systems, and conducting research
and development on applications of thermal energy. The principal products
and services rendered by the Company in these segments are described in
detail below.
Financial information concerning the Company's industry segments is
summarized in Note 11 to Consolidated Financial Statements in the
Registrant's Fiscal 1995 Annual Report to Shareholders and is incorporated
herein by reference.
(c) Description of Business.
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(i) Principal Products and Services
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Industrial Refrigeration Systems
Industrial Refrigeration Packages. The Company's FES division designs,
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engineers, manufactures, and services industrial refrigeration equipment
used for cooling, freezing, and cold-storage applications in the food-
processing, petrochemical, pharmaceutical, and liquefied-gas storage
industries. FES produces complete industrial refrigeration systems, and it
also supplies components for use in industrial refrigeration systems
produced by others. FES also manufactures screw compressor packages used to
cool inlet air for gas turbine generators at utilities.
FES equipment for food and beverage customers are primarily standard
products, such as screw-compressor packages, liquid-refrigerant pump
packages, state-of-the-art control systems, and ASME (American Society of
Mechanical Engineers) pressure vessels. A screw-compressor package, which
consists of a screw compressor, an electric-drive motor, an oil separator,
a control panel, and piping and tubing, constitutes the majority of this
equipment. FES also provides screw-compressor packages powered by the
Company's natural gas TecoDrive engines. These packages are pre-engineered
and are manufactured in quantity. Examples of applications of industrial
1 References to fiscal 1995, 1994, and 1993 herein are for the fiscal years
ended September 30, 1995, October 1, 1994, and October 2, 1993,
respectively.
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refrigeration equipment used by food and beverage processors include the
freezing, storing, and warehousing of meats, fish, fruits, and vegetables;
freezing of fruit juice concentrates; or controlling process temperatures
in brewing and wine-making, and soft drink carbonization, where the
temperature of water is regulated to absorb a controlled quantity of carbon
dioxide.
FES supplies entire refrigeration packages to petrochemical,
pharmaceutical, and related industries for integration into their plants'
refrigeration systems. These higher-cost custom packages require
significant design engineering and are used in a wide variety of
applications, such as chilling brine that cools chemicals used in the
production of penicillin. In another application of a custom package, FES
units are used to chill and condense toxic effluent gases released in the
production of chlorine.
FES systems have capacities ranging from 10 to 4,500 tons, with
evaporating temperatures ranging from +50.F to -100.F. Approximately 65% of
FES's sales are of standard units for the food and beverage industry, and
approximately 35% are of custom units for the petrochemical and
pharmaceutical industries. The average price for a standard food and
beverage refrigeration package is approximately $50,000, and a
representative price for a custom unit would be approximately $300,000,
although prices for these units can exceed $1 million. FES refrigeration
packages can be designed for use with any common refrigerant, but
approximately 80% of FES's units operate on ammonia. FES's utilization of
ammonia, a cost-effective and environmentally safe substance compared with
conventional chlorofluorocarbon (CFC)-based refrigerants, places FES in a
leadership position to target the reduction of CFC systems. Ammonia does
not harm the ozone layer, costs much less than conventional refrigerants,
and is widely available on a global basis.
The Company's NuTemp subsidiary buys new and surplus industrial
refrigeration equipment, which is remanufactured for sale or rental. NuTemp
serves numerous industries such as food-processing, petrochemical,
pharmaceutical, and others. One of NuTemp's key services is its ability to
respond to emergency situations and provide temporary large-tonnage
refrigeration capacity on short notice.
In many instances, NuTemp custom designs a refrigeration package to
meet a customer's unique requirements. This results in a refrigeration
system that meets the customer's specific needs in refrigeration capacity
and operating temperature, as well as in control systems. Custom systems
can be manufactured using new and remanufactured components to provide the
most cost-effective and timely solution for the customer. Custom systems
can be rented with an option to purchase, again providing a unique service
in this industry.
Applications for NuTemp's products range from cooling water to +60.F
to cooling synthetic glycol to -45.F. The colder fluids are used in
industrial process applications, which include chemical-reaction control,
environmental testing, VOC (volatile organic compound) recovery, and
plastics production.
Revenues from industrial refrigeration packages were $55,193,000,
$53,146,000, and $39,936,000 in fiscal 1995, 1994, and 1993, respectively.
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Microprocessor Controls. FES microprocessor-based control systems for
industrial refrigeration equipment are designed to reduce energy
consumption through operating efficiencies, to anticipate problems with
built-in pre-alarms, to announce system shutdowns, to offer memory storage,
and to provide easy sensor calibration through keypads and displays. These
controls are supplied with FES products, and they can also be fitted on
refrigeration packages produced by other suppliers for ease of integration
within FES's central supervisory control system.
Other Products. FES also manufactures and sells liquid-refrigerant
recirculation systems, heat-recovery heat exchangers, and pressure vessels
for use in refrigeration packages and systems produced by others. FES's
liquid-refrigerant recirculation systems, or "pump packages," are used in a
variety of applications such as food freezing and storage, industrial
process cooling, and thermal storage systems.
As with its refrigeration equipment, NuTemp buys new and surplus
commercial cooling equipment, which is remanufactured for sale or rental.
NuTemp's customers in the commercial cooling industry include institutions,
commercial building owners, and service contractors. The commercial cooling
industry is currently coming into compliance with the phaseout of CFC
refrigerants and replacing them with environmentally sound refrigerants.
This retrofit process is creating a temporary market for NuTemp's
commercial cooling systems, which operate on alternative refrigerants,
while customers install new equipment.
Engines
Marine Engines. The Company's Crusader Engines division (Crusader)
manufactures, markets, and services inboard marine engines and accessories
both to OEM (original equipment manufacturer) boat companies and to a
network of 37 distributors who support 900 dealers servicing Crusader's
products in the field. Crusader does not customarily manufacture engines
for its own inventory, but rather in response to orders from distributors,
dealers, and boat manufacturers. Crusader's key customers are OEM
manufacturers of "cruiser" class boats generally ranging in size from 25 to
45 feet. The purchase price of boats containing Crusader engines typically
is in the $50,000 to $250,000 range. In fiscal 1995, sales to Crusader's
top four OEM customers, Silverton Marine Corp. (Silverton), Carver Boat
Corp. (Carver), Gibson Fiberglass, and Tiara Yachts, accounted for
approximately 60% of Crusader's unit sales. Approximately 95% of Crusader's
unit sales to OEM manufacturers is in the United States. Sales of engines
to distributors account for approximately 19% of Crusader's unit sales.
The market for Crusader's marine engine products declined
significantly in the economic downturn during the past few years. In the
early and mid-1980s, the United States market for inboard marine engines
for cruiser class boats experienced significant annual growth and peaked in
the 1988 model year (running from August 1987 through July 1988). The
market for marine engines has improved in the 1994 and 1995 model years,
and the Company believes market conditions will continue to improve as the
economy rebounds and consumer confidence increases. The repeal of the
federal tax on luxury purchases in 1993 has also had a positive effect on
sales.
Revenues from marine engines were $21,536,000, $18,315,000, and
$18,172,000 in fiscal 1995, 1994, and 1993, respectively.
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TecoDrive Natural Gas Engines for Vehicles. The Company's extensive
development work on dedicated compressed natural gas (CNG) engines has
resulted in sales of a number of its TecoDrive engines for use in school
buses, package-delivery vehicles and other fleet vehicles. These engines
feature substantially lower emissions than currently commercially available
gasoline or natural gas engines. In November 1995, the Company's TecoDrive
4300 engine became the first heavy-duty natural gas engine to be certified
for Ultra Low-Emission Vehicles (ULEVs) by the EPA. This certification will
broaden the market for the Company's TecoDrive 4300 engines to include
states with the strictest emissions standards.
In February 1995, the Company received an order valued at $3.3 million
to supply United Parcel Service (UPS) with natural gas engines and gasoline
engines that can be easily converted to run on natural gas for use in its
package-delivery vehicles. The 276 TecoDrive engines that were part of this
order will convert vehicles that operate on diesel to natural gas. This
order follows the successful evaluation of 20 TecoDrive engines by UPS in
the Washington, DC, area, as part of the U.S. Department of Energy's
(DOE's) heavy- and medium-duty commercial truck Alternative Fuels Program.
The U.S. Postal Service is currently operating a total of eight two-ton
delivery trucks powered by TecoDrive engines in four major U.S. cities. In
California, 104 buses manufactured by Blue Bird Corporation (Blue Bird) and
powered by turbocharged TecoDrive engines were the only CNG vehicles
ordered under Phase II of a pilot program of the California Energy
Commission (CEC) for safer, lower-emission school buses. These school
buses, along with 10 school buses powered by the Company's naturally
aspirated TecoDrive engines, provided during Phase I of the CEC program,
have recorded a total of more than 3 million miles.
The natural gas vehicle (NGV) market is in its formative stage. The
use of NGVs in the United States results primarily from governmental
regulations and incentive programs requiring the use of alternative fuels
in certain situations. The Clean Air Act Amendments of 1990 and the Energy
Policy Act of 1992, as well as numerous state regulations, require the
increased use of alternative fuels over a period of time. There can be no
assurance that NGVs will be the most popular alternative-fuel vehicles
under the various mandates. The Company believes that most NGVs currently
in use do not comply with proposed environmental regulations in the United
States, the wide majority being equipped with aftermarket gasoline-to-
natural-gas conversion kits that do not provide the low emissions offered
by the Company's factory-built dedicated engines. Producing a natural gas
engine with reduced emissions and adequate power at a cost that is not
prohibitive is a key factor in the development of the market.
TecoDrive Natural Gas Engines for Irrigation and Industrial
Applications. The Company manufactures natural gas engines for the
irrigation pump engine market. The Company is the first supplier to offer
agricultural users extended warranties and total service support similar to
what is offered to the Company's marine engine, cooling, and cogeneration
customers. As a result of the positive response the Company has received
from its customers in the irrigation market, the Company has developed
TecoDrive engines for other stationary applications, such as powering air
and gas compressors. There are now four OEM manufacturers incorporating the
Company's TecoDrive engines into their natural gas compressors for NGV
refueling. In summer 1995, the Company received orders for a total of 70
engines for pipeline gas compressors in Western Canadian gas fields. The
Company also provides engines for a stationary application for Climaveneta,
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a manufacturing firm in Italy. In addition, the Company offers a range of
optional equipment that broadens the industrial applications for its
engines.
LPG and Gasoline Engines for Lift Trucks. The Company has embarked on
a significant program to engineer and manufacture 2.2-, 3.0-, and 4.3-liter
LPG and gasoline engines for installation into lift trucks. In May 1995,
the Company completed its first shipment of fork-lift engines to Clark
Materials Handling Company (Clark), one of the largest suppliers of lift
trucks in the U.S. The Company is currently shipping engines under an order
from Clark for 600 engines. The Company is also shipping engines under an
order from Toyota Industrial Equipment Manufacturing Inc. (Toyota) for 450
3.0-liter engines for installation into Toyota's lift trucks. Toyota has
also indicated its intent to purchase an additional 1,000 engines by summer
1996. The Company is also engineering lift-truck engines for Daewoo, Royal
Tractor Company, and Taylor Machine Works, Inc.
Cooling and Cogeneration Systems
The Company designs, develops, manufactures, markets, and services
packaged cooling and cogeneration systems fueled principally by natural gas
for sale to a wide range of commercial, institutional, industrial, and
multi-unit residential users. Many of these products are powered by the
Company's dedicated TecoDrive natural gas engines.
The Company's Tecochill(R) commercial cooling and Tecogen(R)
cogeneration products incorporate several proprietary features that are the
result of the Company's advances in engine, thermal, and control
technologies. One such proprietary feature is the Company's microprocessor-
based control module, which automates the operation of such systems and can
also include remote control, monitoring, and diagnostic capabilities. The
standardized designs of the Company's products also enable rapid
installation and startup, facilitate maintenance, and allow competitive
delivery time. The Company supports its customers by offering a
comprehensive maintenance contract under which the Company assumes
responsibility for substantially all maintenance, repairs, and replacement
parts.
The cost savings that result from use of the Company's packaged
cooling and cogeneration systems is directly related to the retail price of
electricity. In the past few years, electricity prices have declined in
many areas and rates remain relatively low on a historical basis in most
regions. Given prevailing rate structures, demand for the Company's cooling
and cogeneration systems has been less than anticipated.
Tecochill Cooling Systems. The Company entered the gas-fueled cooling
business by introducing its 150-ton gas-fueled cooling unit in 1988. The
Company's Tecochill units are powered by the same TecoDrive engine used in
the Company's small-scale cogeneration systems. Tecochill products are
equipped with microprocessor controls allowing fully automated, unattended
operation. Tecochill units can be programmed to run at different speeds to
follow variable cooling loads for greater efficiency than conventional
electric motor-driven air conditioners that run at a constant speed. These
units are self-contained packages that are delivered to customer sites as
finished products for standard installation. Tecochill units can be fitted
with optional heat-recovery packages yielding hot water. The Company has
sold approximately 300 of its Tecochill units to date, which are operating
in 26 states and four foreign countries. The Company is currently offering
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additional gas-fueled rooftop air conditioning equipment, ranging in size
from 50 to 800 tons, for use in multi-unit residential buildings, nursing
homes, hospitals, and similar institutions. The Company is currently
developing packaged cooling for more than 1,000 tons under funding from the
Gas Research Institute (GRI). Although the purchase price of the Company's
Tecochill units is approximately 100-200% higher than that of electric
motor-driven air conditioners of comparable sizes, lower operating costs
associated with the use of Tecochill units generally lead to payback of the
incremental capital cost in approximately four years. The average expected
useful life of a Tecochill unit is comparable to that of an electric
motor-driven air conditioner, typically 15 years.
Revenues from cooling systems were $4,956,000, $3,772,000, and
$4,609,000 in fiscal 1995, 1994, and 1993, respectively.
Tecogen Cogeneration Systems. In 1983, the Company introduced its
first Tecogen packaged cogeneration system, the 60-kilowatt (kW) CM-60
model powered by the Company's TecoDrive engine. Approximately 600 CM-60
and CM-75 units have been installed at approximately 350 sites across the
United States. The Company also provides 225-kW models. These systems are
automated, self-contained cogeneration packages that are delivered as
finished units to customer sites. In general, these systems are
manufactured to standard designs and are assembled and tested on a
production-line basis. Some modifications are made to the larger
cogeneration systems in order to accommodate the demands of individual
sites. The cogeneration systems use a single fuel source, natural gas, to
simultaneously produce electricity and thermal energy in the form of hot
water or steam. By using energy that would otherwise be wasted, the
Company's cogeneration systems operate at a cost that can be comparable to
the cost of producing hot water alone in conventional systems. The
electricity produced is used principally to meet on-site energy
requirements and replaces electricity that would otherwise be purchased
from a utility.
Revenues from cogeneration systems were $1,594,000, $873,000, and
$1,077,000 in fiscal 1995, 1994, and 1993, respectively.
Sponsored Research and Development. The Company conducts research and
development supported by outside sponsors. Revenues from sponsored research
and development contracts were $4,917,000, $5,209,000, and $6,457,000 in
fiscal 1995, 1994, and 1993, respectively. See "Research and Development."
Regulation
The demand for most of the Company's products is affected by various
federal, state, and local energy and environmental laws and regulations.
All of these laws and regulations are subject to revocation or amendment,
and the Company cannot predict what effect revocation or amendment may have
on the Company's sales, business, or operations.
Industrial Refrigeration Systems
--------------------------------
The Company's ammonia-based refrigeration equipment and alternative-
refrigerant commercial cooling systems benefit from the worldwide phaseout
of CFC refrigerants. The Montreal Protocol was negotiated in 1987 under the
sponsorship of the United Nations Environmental Program (UNEP) to protect
the ozone layer. This agreement establishes a process to control substances
that could deplete the ozone layer, including CFCs. The most recent
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regulations for CFCs were developed in 1992 by governments of the nations
participating in UNEP. These representatives agreed on a gradual phaseout
of CFC production, such as R-12 and R-11, to be completed by January 1996.
Engines
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In October 1994, the EPA proposed new regulations to limit air
emissions from gasoline and diesel marine engines. Under the rule that
takes effect in model year 1998, hydrocarbon exhaust from gasoline marine
engines would be reduced by 75%. Meeting these new standards will be more
difficult for companies that manufacture two-stroke engines that emit
larger quantities of hydrocarbons than the four-stroke engines manufactured
by Crusader. The Company is already manufacturing engines using an
electronic fuel-injection feature with significantly reduced emissions and
believes its engines will meet the requirements using similar technologies
before the mandate takes effect.
The market for the Company's TecoDrive natural gas engine is
influenced by federal legislation that allows states to establish programs
encouraging the use of alternative fuels, including natural gas, methanol,
and ethanol. More than half of the states have some type of alternative-
fuel vehicles commission, legislation, or tax incentives. In 1995, there
are a total of 22 U.S. cities that have been classified as nonattainment
areas for acceptable air quality by the EPA. By model year 1998, 50% of
heavy-duty vehicles bought for fleets with 10 or more vehicles capable of
refueling in these smoggiest cities must be clean-fuel vehicles.
Under the Clean Air Act Amendments of 1990, the EPA issued regulations
that delineate clean fuel requirements and vehicle emissions standards. In
September 1994, the EPA published its final rule on certification for
propane and natural gas vehicles. With certain exceptions, the rule becomes
mandatory in model year 1997. In November 1995, the Company became the
first engine manufacturer to receive EPA certification of a heavy-duty
natural gas engine for Ultra Low-Emission Vehicles (ULEVs). This
certificate certifies that a certain vehicle type or engine meets
requirements of the most current applicable emissions regulations.
Natural gas is one of many alternative fuels that is addressed by
these laws and regulations. Others include methanol, ethanol, liquefied
petroleum gas, hydrogen, electricity, and reformulated gasoline. There can
be no assurance that natural gas will become a preferred alternative fuel
for vehicles or that existing and future laws or regulations or their
enforcement will create material long-term demand for NGVs.
Cooling and Cogeneration Systems
--------------------------------
The passage by Congress of the Public Utility Regulatory Policies Act
of 1978 (PURPA), the adoption of regulations thereunder by the Federal
Energy Regulatory Commission (FERC), and related state laws and regulations
provide incentives for the development of qualifying small-power production
and cogeneration systems such as those offered by the Company. PURPA and
FERC regulations promulgated thereunder address three issues of importance
to users that own or operate cogeneration systems, including those sold by
the Company. First, PURPA exempts qualifying users from most federal and
state regulations that pertain to electric utilities. Second, PURPA
requires electric utilities to allow qualifying cogenerators to connect
their cogeneration facilities to utilities' electric power systems. This
mandatory connection enables users to purchase utility-generated
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electricity to start their cogeneration systems and assures users of a
back-up source of electricity during peak periods of use and when the
cogeneration systems are shut down for maintenance and repair. Third, PURPA
requires utilities to purchase electricity produced by qualifying
cogenerators at a price equivalent to utilities' avoided costs.
Like all electric power-generating and other fossil fuel-burning
systems, the Company's cooling and cogeneration products must comply with
federal, state, and local environmental laws and regulations. Regulation of
systems such as those sold by the Company is conducted primarily at the
state and local level, where standards can vary. In particular, applicable
environmental standards in California are stricter than comparable federal
guidelines. The Company believes that its existing Tecochill and other
Tecogen products comply with applicable federal and state environmental
standards, including those currently in effect in California, excluding the
Los Angeles region, though the Company cannot predict whether its products
will comply with all environmental standards promulgated in the future.
(ii) New Products
------------
In March 1995, the Company formed its ThermoLyte subsidiary to develop
and commercialize a line of propane-powered flashlights, emergency lights,
area lights, and other lighting products. ThermoLyte's lighting products
will be based on the Company's patented technology for a rigid mantle, the
"bulb" in gas lights. Because this mantle is more durable than the mantles
typically used in gas lighting, the Company will design these products to
be highly portable.
The Company is continuing the development of a propane-powered
flashlight that is designed to offer a potentially infinite shelf life,
substantially longer operating hours, constant brightness, and no battery
disposal. The Company intends to initially market these products to
specialty catalogs and retail stores, and to broaden its distribution lines
to include mass-market merchandisers when these products gain market
acceptance. The initial commercial launch of this flashlight is planned for
1996.
(iii) Raw Materials
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The Company purchases engine blocks for its marine and certain other
engines, as well as engines for its larger cooling and cogeneration
products, from a sole supplier. It does not have a firm contract with this
supplier. The Company generally maintains inventories of engine blocks
sufficient to meet its needs for a three-month period. However, the
inability of the Company to obtain either engines or engine blocks from
this supplier would have a material adverse effect upon the Company's
operations.
(iv) Patents, Licenses, and Trademarks
---------------------------------
The Company considers its patents and licenses to be important in the
present operation of its business. The Company, however, does not consider
any one of its patents or related group of patents to be of such importance
that its expiration, termination, or invalidity would materially affect the
Company's business.
The Company has research and development arrangements with the natural
gas industry and various governmental agencies, and is required to pay
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royalties for any technologies developed or products commercialized under
several of these arrangements.
(v) Seasonal Influences
-------------------
Crusader's marine engine sales historically have been stronger in the
first quarter of each calendar year, when boat builders purchase engines
for boats to be sold for the upcoming boating season. Sales of marine
engines generally decline gradually during the last three quarters of the
calendar year, reaching their lowest levels in the fourth quarter. In
addition, the demand for NuTemp's equipment typically has been highest in
the summer period. There are no significant seasonal influences in the
Company's other lines of business.
(vi) Working Capital Requirements
----------------------------
There are no special inventory requirements or credit terms extended
to customers that would have a material adverse effect on the Company's
working capital.
(vii) Dependency on a Single Customer
-------------------------------
No single customer accounted for more than 10% of the Company's total
revenues in fiscal 1995, 1994, and 1993. In fiscal 1995, revenues from
Carver and Silverton accounted for 20% and 10%, respectively, of Engines
segment revenues. The loss of one or both of these customers would have a
material adverse effect on the Engines segment.
(viii) Backlog
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The backlog of firm orders for the Industrial Refrigeration Systems
segment was $17.4 million as of September 30, 1995, compared with $10.6
million as of October 1, 1994. The backlog of firm orders for the Engines
segment was $4.2 million as of September 30, 1995, compared with $0.8
million as of October 1, 1994. The backlog of firm orders for the Cooling
and Cogeneration Systems segment was $6.0 million as of September 30, 1995,
compared with $4.7 million as of October 1, 1994. The Company believes that
the majority of this backlog will be shipped during fiscal 1996. The
Company does not believe that the size of its backlog is necessarily
indicative of intermediate- or long-term trends in its business.
(ix) Government Contracts
--------------------
Not applicable.
(x) Competition
-----------
The Company experiences competition in most of its product lines.
Additional competition may arise if markets in which the Company is active
develop significantly. The Company is aware of several competitors for its
product lines, some of whom have financial, marketing, and other resources
greater than those of the Company.
Industrial Refrigeration Systems
The Company's sale of industrial refrigeration systems is subject to
intense competition. The industrial refrigeration market is mature, highly
fragmented, and extremely dependent on close customer contacts. Major
11PAGE
<PAGE>
industrial refrigeration companies, of which FES is one, account for
approximately one-half of worldwide sales, with the balance generated by
many smaller companies. The Company believes that FES competes on the basis
of its advanced control systems and overall quality, reliability, service,
and to a lesser extent, price.
The worldwide market is characterized by strong local manufacturers.
The market leader worldwide as well as in North America is Frick Company
and its affiliates, subsidiaries of York International Corporation (York).
Though comprehensive surveys on the industrial refrigeration market do not
exist, the Company believes it accounts for approximately 20% of the North
American market, 5% of the European market, 8% of the Asia-Pacific market,
and 7% of the Latin American market.
The Company believes NuTemp is the world leader in remanufactured
refrigeration equipment. As part of its rental program, NuTemp offers an
option to buy, a service which is unique in the industry. NuTemp's largest
competitor is Aggreko, a subsidiary of Christian Salverson Company. Aggreko
is a major supplier of rental equipment for the industrial refrigeration
and commercial cooling markets. The Company believes that NuTemp competes
on the basis of price, delivery time, and customized equipment.
Engines
Once the NGV and alternative-fuel engine markets are fully developed,
the Company anticipates that competition will be intense, and potential
competitors in some or all segments of these markets may include major
automotive and natural gas companies and other companies that have greater
financial resources than those of the Company.
The Company believes it has the second largest share of the inboard
marine engine market for cruiser class boats in the United States, with
about 25% market share, behind the Mercury division of Brunswick
Corporation. Crusader has experienced intense competition in the marine
engine business in recent years, primarily from vertical integration of
boat and engine manufacturers that has led to the acquisition of former
customers of Crusader by competing engine manufacturers. The Company
believes that Crusader competes on the basis of quality, reliability, and
service.
Cooling and Cogeneration Systems
The Company's Tecochill products are subject to competition from
absorption air conditioning systems and electric motor-driven vapor
compressor systems. Other manufacturers of natural gas-fueled engine-driven
cooling systems have also entered the market. The Company believes it
competes with producers of conventional equipment on the basis of relative
operating costs at times of peak electrical demand, and with other
producers of natural gas-fueled cooling systems on the basis of quality,
reliability, service, operational savings, and track record.
In 1995, Enchill by MKW Power Systems, one of the Company's major
competitors, ceased operations in the gas-cooling market. Also in 1995,
York entered the gas-engine cooling market, in partnership with
Caterpillar, and is expected to be a major competitor in large-capacity
(+400 tons) cooling equipment. However, the Company's most competitive
range is in smaller-capacity equipment. The Company believes that York's
12PAGE
<PAGE>
entry into this market may actually expand the total market by further
legitimizing the technology.
The Company's sale of cogeneration systems is subject to intense
competition, both direct and indirect. Direct competitors consist of
companies that sell cogeneration products resembling those sold by the
Company. In addition, electric utility pricing programs provide competition
for the Company's cogeneration products. Indirect competitors include
manufacturers of conventional water heaters, air conditioners, and electric
generator sets, since the economic benefits of the Company's cogeneration
and cooling systems depend on the cost of conventional energy systems. The
Company believes that it competes on the basis of several factors,
including product quality and reliability, operational savings, ease of
installation, service, and pricing.
The Company's sponsored research and development is also subject to
intense competition from many larger and smaller firms, universities, and
other private and public research facilities. The Company competes for
sponsored research and development contracts on the basis of several
factors, including technical expertise, market experience, and past
performance.
(xi) Research and Development
------------------------
The Company has conducted research and development on applications of
thermal energy for more than 30 years. The Company's research and
development capability and expertise in engine, instrumentation, control,
and heat-recovery technologies have enabled it to obtain support from
outside sponsors, develop new products, and support existing products.
Since 1980, the Company has spent approximately $92 million of internal and
external funds on research, development, and commercialization of its
natural gas engine, cooling, cogeneration, and other products. Since 1983,
approximately 52% of sponsored research and development has been for the
Company's natural gas engine-related products. The Company is currently
conducting sponsored research to expand the use of TecoDrive engines in
NGVs and industrial equipment and in its cooling and cogeneration systems
by upgrading power output and permitting greater flexibility to meet
varying loads.
The Company's sponsored programs have been supported principally by
the domestic natural gas industry and the federal government. Within the
natural gas industry, the Company's principal sponsors have been the GRI
and the Southern California Gas Company, which is the nation's largest gas
utility. The Company has also obtained research and development funding
from federal and state governments, industrial companies, and from the
Electric Power Research Institute. Sponsors of the Company's research and
development generally own the rights to technology that is developed under
these programs.
The Company conducts significant sponsored research and development in
areas that, while not directly related to its current product lines, can
take advantage of the Company's expertise in engine or thermal
technologies. Current projects involve research into general pollution-
abatement techniques utilizing the electrical breakdown of oxides of
nitrogen into their constituent elements, and industrial applications of
the Company's heat-recovery and heat-exchange techniques for air
conditioning and refrigeration equipment for users such as supermarkets.
13PAGE
<PAGE>
Projects also include programs for the development of commercial cooling
appliances and a gas-fueled heating system fueled by coal slurry.
As part of the Company's research and development of combustion
technologies, the Company's ThermoLyte subsidiary is developing a family of
propane-powered flashlights, emergency lights, area lights, and other
lighting products, which will offer a longer shelf life and more operating
ours than battery-powered versions. ThermoLyte products will all be based
on the Company's patented technology for a rigid mantle, the "bulb" in gas
lights. By incorporating this durable mantle into its lights, the Company
can use propane as an energy source instead of batteries. Based on the same
rigid-mantle technology used in the Company's lighting products, the
Company will be developing and demonstrating Thermophotovoltaic (TPV)
systems under a contract from the National Aeronautics and Space
Administration (NASA) Lewis Research Center. TPV is a direct
energy-conversion technique to produce electric power by burning a fuel on
a selective emitting ceramic burner and radiating the light onto
photovoltaic cells. Potential applications for TPV are power generation for
recreational, commercial, and military uses, as well as power cells for
electronic devices.
Certain of the Company's research on TPV was performed pursuant to
contracts with the GRI. The GRI has retained the rights to all proprietary
information developed pursuant to these contracts and can license such
information to third parties, in certain circumstances on an exclusive
basis. In addition, if the use of the Company's proprietary technology is
required to use the information developed pursuant to these contracts, the
GRI can require the Company to license its technology to third parties at a
reasonable royalty rate. The development of TPV is in the very preliminary
stages, and the Company does not know if it is feasible to develop a
commercially viable TPV product. In addition, the Company is aware of other
companies performing research and development on TPV, one of which may have
patents covering such technology. No assurance can be given that the
Company will be able to develop a commercially viable TPV product or that
if developed such product would not infringe the patent rights of others.
In March 1991, the Company acquired engine testing equipment at an
engine test facility located in Marlborough, Massachusetts, to augment its
existing engine research capability. The laboratory is used primarily to
develop CNG engines for vehicle and stationary applications. This test
facility includes dynamometers for engine power and durability testing, as
well as systems for emissions measurement and high-speed data collection.
The Company has developed a system for converting a diesel engine to
operate solely on natural gas without major modifications to the engine.
This low-cost conversion system, which was developed on a 7.6-liter
Navistar engine, will allow fleet managers to convert their diesel engines
to operate solely on natural gas, without removing the engine from the
vehicle. The conversion kit is designed to bring diesel engines into
compliance with government regulations mandating the use of alternative
fuels in vehicles to reduce emissions. The engine conversion system is
being demonstrated on a school bus owned by the Company. A field
demonstration of the diesel conversion system will be conducted on vehicles
in California in 1996.
During fiscal 1995, 1994, and 1993, the Company spent $3,065,000,
$1,622,000, and $995,000, respectively, on internally funded research and
development, and $3,548,000, $4,197,000, and $5,310,000, respectively, on
research and development sponsored by others.
14PAGE
<PAGE>
(xii) 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.
(xiii) Number of Employees
-------------------
As of September 30, 1995, the Company employed approximately 500
people. Approximately 44 employees at the Company's Crusader division are
represented by a labor union under a three-year collective bargaining
agreement expiring on October 15, 1997. The Company has experienced no work
stoppages in the past, and considers its relations with employees to be
good.
(xiv) Marketing
---------
Industrial Refrigeration Systems
FES's products are distributed primarily through independent sales
representatives who are typically specialists in industrial refrigeration,
and they are also sold directly to end users. Approximately 75% of FES's
sales are in North America. Of the sales generated in North America, 70%
are made by independent sales representatives, 5% by FES sales employees,
and 25% through direct orders from existing customers. FES has 19
independent sales representatives serving 25 business regions throughout
the United States. All of the independent sales representatives are
engineers who have the ability to provide customers with quotes on entire
refrigeration plants. The representatives make sales contacts with
refrigeration contractors, end users, and consulting engineers. Sales of
FES's standard food and beverage packages are generally made to
refrigeration contractors, who are responsible for installation of the
total refrigeration plant at the facility of an end user. Sales of FES's
custom systems are generally made directly to end users.
Approximately 25% of FES's fiscal 1995 sales were to export customers.
FES uses a combination of Carrier Corporation representatives with
demonstrated industrial refrigeration expertise and several independent
representatives located in various countries, including Thailand, Taiwan,
the People's Republic of China, and Russia.
NuTemp markets its products through direct marketing techniques,
including direct mailing, and sends representatives to numerous trade shows
each year. NuTemp is also marketing its products through FES sales
employees and independent sales representatives. NuTemp's sales are solely
in the United States.
Engines
The Company markets its TecoDrive natural gas engines principally
through a series of nonexclusive OEM and distributor arrangements. Blue
Bird currently offers TecoDrive engines as a production option in school
buses. The Company also sells its TecoDrive engines to a manufacturer in
Italy for stationary applications in Europe and is actively pursuing the
distribution of TecoDrive engines in Canada. The Company has a sales
representative who markets the Company's engines through an expanded
network of distributors. By working through a distributor with
15PAGE
<PAGE>
comprehensive overhaul, repair, spare parts, field service, and training
capabilities, the Company's engine customers in the United States and
Canada can receive aftermarket support.
The Company has marketed TecoDrive engines for irrigation applications
through a variety of channels. The engines have been exhibited at a number
of agriculture industry trade shows, and they have been featured in
advertisements in agricultural trade journals. The Company has organized a
network of dealers in Arizona, California, Nebraska, Kansas, Oklahoma, and
Ontario, Canada, which is independent of the distribution network discussed
above, specifically for the distribution of TecoDrive engines for
irrigation applications. Southwest Gas Company in Arizona is also
supporting the Company's marketing effort for irrigation engines by
offering cash rebates to farmers purchasing TecoDrive engines to replace
electric motors in pumping service.
Cooling and Cogeneration Systems
The Company markets its Tecochill cooling units primarily through a
network of distributors located throughout the United States. The Company
has established its own network of sales representatives, and the Company's
marketing effort in the United States is also supported by a consortium of
gas and combined gas-electric utilities. The Company markets its
cogeneration units in the United States through its own sales force, and in
certain areas, through a team of distributors. The Company has commenced
some sales of its smaller cogeneration products outside the United States.
(d) Financial Information about Exports by Domestic Operations.
----------------------------------------------------------
Financial information about exports by domestic operations is
summarized in Note 11 to Consolidated Financial Statements in the
Registrant's Fiscal 1995 Annual Report to Shareholders and is incorporated
herein by reference.
(e) Executive Officers of the Registrant.
------------------------------------
Present Title (Year First Became Executive
Name Age Officer)
--------------------- --- --------------------------------------------
Marshall J. Armstrong 60 Chief Executive Officer (1991)
J. Timothy Corcoran 49 President (1992)
Chester G. Janssens 63 Vice President (1992)
Ravinder K. Sakhuja 51 Vice President (1985)
John N. Hatsopoulos * 61 Vice President and Chief Financial
Officer (1988)
Paul F. Kelleher 53 Chief Accounting Officer (1985)
* John N. Hatsopoulos and George N. Hatsopoulos, a director of the Company,
are brothers.
Each executive officer serves until his successor is chosen or
appointed by the Board of Directors and qualified or until earlier
resignation, death, or removal. Messrs. Hatsopoulos and Kelleher have held
these positions for at least five years either with the Company or with its
parent company, Thermo Electron. Mr. Armstrong has been Chief Executive
Officer of the Company since April 1991. He has been a Vice President of
Thermo Electron since November 1986. Mr. Corcoran has been President of the
Company since April 1995. From November 1992 to April 1995, Mr. Corcoran
16PAGE
<PAGE>
was a Vice President of the Company, and has been President of FES since
June 1990. Mr. Janssens has been a Vice President of the Company since 1992
and President of Crusader since 1974. Dr. Sakhuja has been a Vice President
of the Company since 1992, and President of the Company's Tecogen
operations for more than 5 years. From 1985 to 1992 he was President of the
Company and also Chief Executive Officer from 1985 to 1991. Each of the
above-named officers is a full-time employee of the Company except for
Messrs. Armstrong, Hatsopoulos, and Kelleher, who are full-time employees
of Thermo Electron, but devote such time to the affairs of the Company as
the Company's needs reasonably require from time to time.
Item 2. Properties
----------
The location and general character of the Company's principal
properties by industry segment as of September 30, 1995, are as follows:
Industrial Refrigeration Systems
The Company owns approximately 136,000 square feet of office and
manufacturing space in York, Pennsylvania, subject to a mortgage on the
property, and approximately 15,000 square feet of manufacturing space in
Humble, Texas. The Company also occupies approximately 164,000 square feet
of office and manufacturing space in Chicago, Illinois, under a lease
expiring in 1997.
Engines
The Company occupies approximately 104,000 square feet of
manufacturing, engineering, and office space in Sterling Heights, Michigan,
under leases expiring in 2000 and 2004.
Cooling and Cogeneration Systems
The Company occupies approximately 40,000 square feet of office and
laboratory space in Waltham, Massachusetts, under an agreement providing
for the sublease of the facility from Thermo Electron expiring in 1997. In
addition, the Company leases approximately 14,000 square feet of engine
testing and office space in Marlborough, Massachusetts, under a lease
agreement with an unrelated party expiring in 1997. The term of the lease
may be extended at the option of the Company for a successive three-year
period.
In addition, the Company leases approximately 300 square feet of
office space in Thermo Electron's corporate headquarters in Waltham,
Massachusetts. The Company believes that its facilities are in good
condition and are suitable and adequate for its present operations.
Item 3. Legal Proceedings
-----------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
17PAGE
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
-------------------------------------------------------------
Matters
-------
Information concerning the market and market price for the
Registrant's Common Stock, $.10 par value, and dividend policy is included
under the sections labeled "Common Stock Market Information" and "Dividend
Policy" in the Registrant's Fiscal 1995 Annual Report to Shareholders and
is incorporated herein by reference.
Item 6. Selected Financial Data
-----------------------
The information required under this item is included under the
sections labeled "Selected Financial Information" and "Dividend Policy" in
the Registrant's Fiscal 1995 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 1995 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 September 30,
1995, and Supplementary Data are included in the Registrant's Fiscal 1995
Annual Report to Shareholders and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
18PAGE
<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.
19PAGE
<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 in the notes thereto.
(b) Reports on Form 8-K.
-------------------
During the fiscal quarter ended September 30, 1995, the
Registrant was not required to file, and did not file, any
Current Report on Form 8-K.
(c) Exhibits.
--------
See Exhibit Index on the page immediately preceding exhibits.
20PAGE
<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: December 5, 1995 THERMO POWER CORPORATION
By: Marshall J. Armstrong
----------------------------
Marshall J. Armstrong
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 December 5, 1995.
Signature Title
--------- -----
By:Marshall J. Armstrong Chairman of the Board, Chief Executive
---------------------------
Marshall J. Armstrong Officer and Director
By:John N. Hatsopoulos Vice President, Chief Financial Officer
---------------------------
John N. Hatsopoulos and Director
By:Paul F. Kelleher Chief Accounting Officer
---------------------------
Paul F. Kelleher
By:Peter O. Crisp Director
---------------------------
Peter O. Crisp
By:George N. Hatsopoulos Director
---------------------------
George N. Hatsopoulos
By:Robert C. Howard Director
---------------------------
Robert C. Howard
By:Donald E. Noble Director
---------------------------
Donald E. Noble
By: Director
---------------------------
Paul E. Tsongas
21PAGE
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To the Shareholders and Board of Directors of Thermo Power Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Thermo Power
Corporation's Annual Report to Shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated November 3, 1995.
Our audits were made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in Item 14 on page 20 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
November 3, 1995
22PAGE
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Charges to/
(Reductions
in) Bad Ac-
Balance at Costs Debts counts Balance
Beginning and Re- Written at End
Description of Year Expenses covered Off Other(a) of Year
--------------------------------------------------------------------------
Year Ended
September 30, 1995
Allowance for
Doubtful
Accounts $ 590 $ 3 $ 16 $ (79) $ - $ 530
Year Ended
October 1, 1994
Allowance for
Doubtful
Accounts $ 561 $ (2) $ 83 $ (102) $ 50 $ 590
Year Ended
October 2, 1993
Allowance for
Doubtful
Accounts $1,079 $ (149) $ 9 $ (545) $ 167 $ 561
(a) Allowance of business acquired during the year as described in Note 3
to Consolidated Financial Statements in the Registrant's Fiscal 1995
Annual Report to Shareholders.
23PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- -------------------------------------------------------- ----
3.1 Articles of Organization of the Registrant, as amended
(filed as Exhibit 3(a) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended April 3, 1993
[File No. 1-10573] and incorporated herein by
reference).
3.2 By-laws of the Registrant, as amended (filed as Exhibit
3(b) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 2, 1993 [File No. 1-10573]
and incorporated herein by reference).
4.1 Specimen Common Stock Certificate (filed as Exhibit 4(b)
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 2, 1993 [File No. 1-10573] and
incorporated herein by reference).
10.1 Stock Purchase Agreement among the Registrant, NuTemp,
Inc. and Michael S. Lazar, dated May 13, 1994 (filed as
Exhibit 2.1 to the Registrant's Current Report on Form
8-K relating to events occurring on May 13, 1994 [File
No. 1-10573] and incorporated herein by reference).
10.2 Amended and Restated Corporate Services Agreement
between the Registrant and Thermo Electron, dated as of
January 3, 1993 (filed as Exhibit 10(b) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended September 26, 1992 [File No. 1-10573] and
incorporated herein by reference).
10.3 First Amendment to Lease dated September 30, 1994,
between the Registrant and Thermo Electron Corporation
(filed as Exhibit 10.2 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended October 1, 1994
[File No. 1-10573] and incorporated herein by
reference).
10.4 Form of Indemnification Agreement between the Registrant
and its directors and officers (filed as Exhibit 10(e)
to the Registrant's Registration Statement on Form S-1
[Reg. No. 33-14017] and incorporated herein by
reference).
10.5 Tax Allocation Agreement dated September 25, 1985,
between the Registrant and Thermo Electron (filed as
Exhibit 10(f) to the Registrant's Annual Report on Form
10-K for the fiscal year ended October 3, 1987 [File No.
0-15920] and incorporated herein by reference).
10.6 Thermo Electron Corporate Charter, as amended and
restated effective January 3, 1993 (filed as Exhibit
10(n) to the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 26, 1992 [File No.
1-10573] and incorporated herein by reference).
24PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.7 Master Repurchase Agreement dated January 1, 1994
between the Registrant and Thermo Electron Corporation
(filed as Exhibit 10.6 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended October 1, 1994
[File No. 1-10573] and incorporated herein by
reference).
10.8 Master Reimbursement Agreement dated as of January 2,
1994 between the Registrant and Thermo Electron
Corporation (filed as Exhibit 10.7 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
October 1, 1994 [File No. 1-10573] and incorporated
herein by reference).
10.9 Lease, dated as of January 20, 1988, between Thermo
Electron and Michael I. Gilson, Trustee (subsequently
assigned to the Registrant) (filed as Exhibit 10(q) to
the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 26, 1992 [File No. 1-10573]
and incorporated herein by reference).
10.10 Agreement, dated October 15, 1991, between Thermo
Electron and International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America
Local 203 (subsequently assigned to the Registrant)
(filed as Exhibit 10(r) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
26, 1992 [File No. 1-10573] and incorporated herein by
reference).
10.11 Form of Redemption Rights of ThermoLyte Corporation and
related Guarantee of Thermo Electron Corporation.
10.12 Guarantee Agreement between ThermoLyte Corporation and
Thermo Electron Corporation.
10.13 Incentive Stock Option Plan of the Registrant, as
amended (filed as Exhibit 10(h) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
April 3, 1993 [File No. 1-10573] 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 950,000 shares, after
adjustment to reflect share increases approved in 1990,
1992 and 1993).
10.14 Nonqualified Stock Option Plan of the Registrant, as
amended (filed as Exhibit 10(i) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
April 3, 1993 [File No. 1-10573] 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 950,000 shares, after adjustment to
reflect share increases approved in 1990, 1992 and
1993).
25PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.15 Equity Incentive Plan of the Registrant (filed as
Attachment A to the Proxy Statement dated February 18,
1994 of the Registrant [File No. 1-10573] and
incorporated herein by reference).
10.16 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. 33-14017]
and incorporated herein by reference).
10.17 Directors' Stock Option Plan of the Registrant, as
amended (filed as Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
April 1, 1995 [File No. 1-10573] and incorporated herein
by reference).
In addition to the stock-based compensation plans of the
Registrant, the executive officers of the Registrant may
be granted awards under stock-based compensation plans
of the Registrant's parent, Thermo Electron Corporation,
and its subsidiaries, for services rendered to the
Registrant or to such affiliated corporations. Such
plans are listed under Exhibits 10.18 - 10.71.
10.18 Thermo Electron Corporation Incentive Stock Option Plan
(filed as Exhibit 4(d) to Thermo Electron's Registration
Statement on Form S-8 [Reg. No. 33-8993] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Electron Nonqualified Stock Option Plan is
9,035,156 shares, after adjustment to reflect share
increases approved in 1984 and 1986, share decrease
approved in 1989, and 3-for-2 stock splits effected in
October 1986, October 1993 and May 1995).
10.19 Thermo Electron Corporation Nonqualified Stock Option
Plan (filed as Exhibit 4(e) to Thermo Electron's
Registration Statement on Form S-8 [Reg. No. 33-8993]
and incorporated herein by reference). (Plan amended in
1984 to extend expiration date to December 14, 1994;
maximum number of shares issuable in the aggregate under
this plan and the Thermo Electron Incentive Stock Option
Plan is 9,035,156 shares, after adjustment to reflect
share increases approved in 1984 and 1986, share
decrease approved in 1989, and 3-for-2 stock splits
effected in October 1986, October 1993 and May 1995).
26PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.20 Thermo Electron Corporation Equity Incentive Plan (filed
as Exhibit 10.1 to Thermo Electron's Quarterly Report on
Form 10-Q for the quarter ended July 2, 1994 [File No.
1-8002] and incorporated herein by reference). (Plan
amended in 1989 to restrict exercise price for SEC
reporting persons to not less than 50% of fair market
value or par value; maximum number of shares issuable is
7,050,000 shares, after adjustment to reflect 3-for-2
stock splits effected in October 1993 and May 1995 and
share increase approved in 1994).
10.21 Thermo Electron Corporation - Thermedics Inc.
Nonqualified Stock Option Plan (filed as Exhibit 4 to a
Registration Statement on Form S-8 of Thermedics [Reg.
No. 2-93747] and incorporated herein by reference).
(Maximum number of shares issuable is 450,000 shares,
after adjustment to reflect share increase approved in
1988, 5-for-4 stock split effected in January 1985,
4-for-3 stock split effected in September 1985 and
3-for-2 stock splits effected in October 1986 and
November 1993).
10.22 Thermo Electron Corporation - Thermo Instrument Systems
Inc. (formerly Thermo Environmental Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 4(c) to
a Registration Statement on Form S-8 of Thermo
Instrument [Reg. No. 33-8034] and incorporated herein by
reference). (Maximum number of shares issuable is
337,500 shares, after adjustment to reflect 3-for-2
stock splits effected in July 1993 and April 1995).
10.23 Thermo Electron Corporation - Thermo Instrument Systems
Inc. Nonqualified Stock Option Plan (filed as Exhibit
10.12 to Thermo Electron's Annual Report on Form 10-K
for the fiscal year ended January 3, 1987 [File No.
1-8002] and incorporated herein by reference). (Maximum
number of shares issuable is 480,228 shares, after
adjustment to reflect share increase approved in 1988
and 3-for-2 stock splits effected in January 1988, July
1993 and April 1995).
10.24 Thermo Electron Corporation - Thermo Process Systems
Inc. Nonqualified Stock Option Plan (filed as Exhibit
10.13 to Thermo Electron's Annual Report on Form 10-K
for the fiscal year ended January 3, 1987 [File No.
1-8002] and incorporated herein by reference). (Maximum
number of shares issuable is 108,000 shares, after
adjustment to reflect 6-for-5 stock splits effected in
July 1988 and March 1989 and 3-for-2 stock split
effected in September 1989).
27PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.25 Thermo Electron Corporation - Thermo Power Corporation
(formerly Tecogen Inc.) Nonqualified Stock Option Plan
(filed as Exhibit 10.14 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 3,
1987 [File No. 1-8002] and incorporated herein by
reference). (Amended in September 1995 to extend the
plan expiration date to December 31, 2005).
10.26 Thermo Electron Corporation - Thermo Cardiosystems Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.11
to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 [File No. 1-8002]
and incorporated herein by reference). (Maximum number
of shares issuable is 130,500 shares, after adjustment
to reflect share increases approved in 1990 and 1992,
3-for-2 stock split effected in January 1990, 5-for-4
stock split effected in May 1990 and 2-for-1 stock split
effected in November 1993).
10.27 Thermo Electron Corporation - Thermo Ecotek Corporation
(formerly Thermo Energy Systems Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 10.12
to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 [File No. 1-8002]
and incorporated herein by reference).
10.28 Thermo Electron Corporation - ThermoTrex Corporation
(formerly Thermo Electron Technologies Corporation)
Nonqualified Stock Option Plan (filed as Exhibit 10.13
to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990 [File No. 1-8002]
and incorporated herein by reference). (Maximum number
of shares issuable is 180,000 shares, after adjustment
to reflect 3-for-2 stock split effected in October
1993).
10.29 Thermo Electron Corporation - Thermo Fibertek Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10.14
to Thermo Electron's Annual Report on Form 10-K for the
fiscal year ended December 28, 1991 [File No. 1-8002]
and incorporated herein by reference). (Maximum number
of shares issuable is 600,000 shares, after adjustment
to reflect 2-for-1 stock split effected in September
1992 and 3-for-2 stock split effected in September
1995).
10.30 Thermo Electron Corporation - Thermo Voltek Corp.
(formerly Universal Voltronics Corp.) Nonqualified Stock
Option Plan (filed as Exhibit 10.17 to Thermo Electron's
Annual Report on Form 10-K for the fiscal year ended
January 2, 1993 [File No. 1-8002] and incorporated
herein by reference). (Maximum number of shares issuable
is 57,500 shares, after adjustment to reflect 3-for-2
stock split effected in November 1993 and share increase
approved in September 1995).
28PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.31 Thermo Electron Corporation - Thermo BioAnalysis
Corporation Nonqualified Stock Option Plan.
10.32 Thermo Electron Corporation - ThermoLyte Corporation
Nonqualified Stock Option Plan.
10.33 Thermo Electron Corporation - Thermo Remediation Inc.
Nonqualified Stock Option Plan.
10.34 Thermo Electron Corporation - ThermoSpectra Corporation
Nonqualified Stock Option Plan.
10.35 Thermo Electron Corporation - ThermoLase Corporation
Nonqualified Stock Option Plan.
10.36 Thermo Ecotek Corporation (formerly Thermo Energy
Systems Corporation) Incentive Stock Option Plan (filed
as Exhibit 10.18 to Thermo Electron's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993
[File No. 1-8002] and incorporated herein by reference).
(Maximum number of shares issuable in the aggregate
under this plan and the Thermo Ecotek Nonqualified Stock
Option Plan is 900,000 shares, after adjustment to
reflect share increase approved in December 1993).
10.37 Thermo Ecotek Corporation (formerly Thermo Energy
Systems Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10.19 to Thermo Electron's Annual
Report on Form 10-K for the fiscal year ended January 2,
1993 [File No. 1-8002] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermo Ecotek
Incentive Stock Option Plan is 900,000 shares, after
adjustment to reflect share increase approved in
December 1993).
10.38 Thermo Ecotek Corporation (formerly Thermo Energy
Systems Corporation) Equity Incentive Plan (filed as
Exhibit 10.46 to Thermo Process' Annual Report on Form
10-K for the fiscal year ended April 2, 1994 [File No.
1-9549] and incorporated herein by reference).
10.39 Thermedics Inc. Incentive Stock Option Plan (filed as
Exhibit 10(d) to Thermedics' Registration Statement on
Form S-1 [Reg. No. 33-84380] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermedics
Nonqualified Stock Option Plan is 1,931,923 shares,
after adjustment to reflect share increases approved in
1986 and 1992, 5-for-4 stock split effected in January
1985, 4-for-3 stock split effected in September 1985 and
3-for-2 stock splits effected in October 1986 and
November 1993).
29PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.40 Thermedics Inc. Nonqualified Stock Option Plan (filed as
Exhibit 10(e) to Thermedics' Registration Statement on
Form S-1 [Reg. No. 33-84380] and incorporated herein by
reference). (Maximum number of shares issuable in the
aggregate under this plan and the Thermedics Incentive
Stock Option Plan is 1,931,923 shares, after adjustment
to reflect share increases approved in 1986 and 1992,
5-for-4 stock split effected in January 1985, 4-for-3
stock split effected in September 1985 and 3-for-2 stock
splits effected in October 1986 and November 1993).
10.41 Thermedics Inc. Equity Incentive Plan (filed as Appendix
A to the Proxy Statement dated May 10, 1993 of
Thermedics [File No. 1-9567] and incorporated herein by
reference). (Maximum number of shares issuable is
1,500,000, after adjustment to reflect 3-for-2 stock
split effected in November 1993).
10.42 Thermedics Inc. - Thermedics Detection Inc. Nonqualified
Option Plan (filed as Exhibit 10.20 to Thermo Electron's
Annual Report on Form 10-K for the fiscal year ended
January 2, 1993 [File No. 1-8002] and incorporated
herein by reference).
10.43 Thermo Cardiosystems Inc. Incentive Stock Option Plan
(filed as Exhibit 10(f) to Thermo Cardiosystems'
Registration Statement on Form S-1 [Reg. No. 33-25144]
and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and
the Thermo Cardiosystems Nonqualified Stock Option Plan
is 1,143,750 shares, after adjustment to reflect share
increase approved in 1992, 3-for-2 stock split effected
in January 1990, 5-for-4 stock split effected in May
1990 and 2-for-1 stock split effected in November 1993).
10.44 Thermo Cardiosystems Inc. Nonqualified Stock Option Plan
(filed as Exhibit 10(g) to Thermo Cardiosystems'
Registration Statement on Form S-1 [Reg. No. 33-25144]
and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and
the Thermo Cardiosystems Incentive Stock Option Plan is
1,143,750 shares, after adjustment to reflect share
increase approved in 1992, 3-for-2 stock split effected
in January 1990, 5-for-4 stock split effected in May
1990 and 2-for-1 stock split effected in November 1993).
10.45 Thermo Cardiosystems Inc. Equity Incentive Plan (filed
as Attachment A to the Proxy Statement dated May 5, 1994
of Thermo Cardiosystems [File No. 1-10114] and
incorporated herein by reference).
30PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.46 Thermo Voltek Corp. (formerly Universal Voltronics
Corp.) 1985 Stock Option Plan (filed as Exhibit 10.14 to
Thermo Voltek's Annual Report on Form 10-K for the
fiscal year ended June 30, 1985 [File No. 0-8245] and
incorporated herein by reference). (Maximum number of
shares issuable is 200,000 shares, after adjustment to
reflect 1-for-3 reverse stock split effected in November
1992 and 3-for-2 stock split effected in November 1993).
10.47 Thermo Voltek Corp. (formerly Universal Voltronics
Corp.) 1990 Stock Option Plan (filed as Exhibit 10.2 to
Thermo Voltek's Annual Report on Form 10-K for the
fiscal year ended June 30, 1990 [File No. 1-10574] and
incorporated herein by reference). (Maximum number of
shares issuable is 400,000 shares, after adjustment to
reflect share increases in 1993 and 1994, 1-for-3
reverse stock split effected in November 1992 and
3-for-2 stock split effected in November 1993).
10.48 Thermo Voltek Corp. Equity Incentive Plan (filed as
Exhibit 10.49 to Thermo Instrument's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994
[File No. 1-9786] and incorporated herein by reference).
10.49 Thermo Instrument Systems Inc. Incentive Stock Option
Plan (filed as Exhibit 10(c) to Thermo Instrument's
Registration Statement on Form S-1 [Reg. No. 33-6762]
and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and
the Thermo Instrument Nonqualified Stock Option Plan is
2,250,000 shares, after adjustment to reflect share
increase approved in 1990 and 3-for-2 stock splits
effected in January 1988, July 1993 and April 1995).
10.50 Thermo Instrument Systems Inc. Nonqualified Stock Option
Plan (filed as Exhibit 10(d) to Thermo Instrument's
Registration Statement on Form S-1 [Reg. No. 33-6762]
and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and
the Thermo Instrument Incentive Stock Option Plan is
2,250,000 shares, after adjustment to reflect share
increase approved in 1990 and 3-for-2 stock splits
effected in January 1988, July 1993 and April 1995).
10.51 Thermo Instrument Systems Inc. Equity Incentive Plan
(filed as Appendix A to the Proxy Statement dated April
27, 1993 of Thermo Instrument [File No. 1-9786] and
incorporated herein by reference). (Maximum number of
shares issuable is 3,225,000 shares, after adjustment to
reflect share increase approved in December 1993 and
3-for-2 stock splits effected in July 1993 and April
1995).
31PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.52 Thermo Instrument Systems Inc. (formerly Thermo
Environmental Corporation) Incentive Stock Option Plan
(filed as Exhibit 10(d) to Thermo Environmental's
Registration Statement on Form S-1 [Reg. No. 33-329] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Instrument (formerly Thermo Environmental)
Nonqualified Stock Option Plan is 928,125 shares, after
adjustment to reflect share increase approved in 1987
and 3-for-2 stock splits effected in July 1993 and April
1995).
10.53 Thermo Instrument Systems Inc. (formerly Thermo
Environmental Corporation) Nonqualified Stock Option
Plan (filed as Exhibit 10(e) to Thermo Environmental's
Registration Statement on Form S-1 [Reg. No. 33-329] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Instrument (formerly Thermo Environmental)
Incentive Stock Option Plan is 928,125 shares, after
adjustment to reflect share increase approved in 1987
and 3-for-2 stock splits effected in July 1993 and April
1995).
10.54 Thermo Instrument Systems Inc. - ThermoSpectra
Corporation Nonqualified Stock Option Plan (filed as
Exhibit 10.45 to the Registrant's Annual Report on Form
10-K for the fiscal year ended October 1, 1994 [File No.
1-10573] and incorporated herein by reference).
10.55 ThermoSpectra Corporation Equity Incentive Plan (filed
as Exhibit 10.59 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended October 1, 1994
[File No. 1-10573] and incorporated herein by
reference).
10.56 ThermoTrex Corporation (formerly Thermo Electron
Technologies Corporation) Incentive Stock Option Plan
(filed as Exhibit 10(h) to ThermoTrex's Registration
Statement on Form S-1 [Reg. No. 33-40972] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoTrex Nonqualified Stock Option Plan is 1,945,000
shares, after adjustment to reflect share increases
approved in 1992 and 1993 and 3-for-2 stock split
effected in October 1993).
32PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.57 ThermoTrex Corporation (formerly Thermo Electron
Technologies Corporation) Nonqualified Stock Option Plan
(filed as Exhibit 10(i) to ThermoTrex's Registration
Statement on Form S-1 [Reg. No. 33-40972] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoTrex Incentive Stock Option Plan is 1,945,000
shares, after adjustment to reflect share increases
approved in 1992 and 1993 and 3-for-2 stock split
effected in October 1993).
10.58 ThermoTrex Corporation - ThermoLase Corporation
(formerly ThermoLase Inc.) Nonqualified Stock Option
Plan (filed as Exhibit 10.53 to Thermedics' Annual
Report on Form 10-K for the fiscal year ended January 1,
1994 [File No. 1-9567] and incorporated herein by
reference).
10.59 ThermoLase Corporation (formerly ThermoLase Inc.)
Incentive Stock Option Plan (filed as Exhibit 10.55 to
Thermedics' Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 [File No. 1-9567] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoLase Nonqualified Stock Option Plan is 2,800,000
shares, after adjustment to reflect share increase
approved in 1993 and 2-for-1 stock splits effected in
March 1994 and June 1995).
10.60 ThermoLase Corporation (formerly ThermoLase Inc.)
Nonqualified Stock Option Plan (filed as Exhibit 10.54
to Thermedics' Annual Report on Form 10-K for the fiscal
year ended January 1, 1994 [File No. 1-9567] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
ThermoLase Incentive Stock Option Plan is 2,800,000
shares, after adjustment to reflect increase approved in
1993 and 2-for-1 stock splits effected in March 1994 and
June 1995).
10.61 ThermoLase Corporation Equity Incentive Plan (filed as
Exhibit 10.81 to Thermo Process' Annual Report on Form
10-K for the fiscal year ended July 1, 1995 [File No.
1-9549] and incorporated herein by reference).
10.62 Thermo Fibertek Inc. Incentive Stock Option Plan (filed
as Exhibit 10(k) to Thermo Fibertek's Registration
Statement on Form S-1 [Reg. No. 33-51172] and
incorporated herein by reference).
10.63 Thermo Fibertek Inc. Nonqualified Stock Option Plan
(filed as Exhibit 10(l) to Thermo Fibertek's
Registration Statement on Form S-1 [Reg. No. 33-51172]
and incorporated herein by reference).
33PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
10.64 Thermo Fibertek Inc. Equity Incentive Plan (filed as
Attachment A to the Proxy Statement dated May 3, 1994 of
Thermo Fibertek [File No. 1-11406] and incorporated
herein by reference).
10.65 Thermo Process Systems Inc. Incentive Stock Option Plan
(filed as Exhibit 10(h) to Thermo Process' Registration
Statement on Form S-1 [Reg. No. 33-6763] and
incorporated herein by reference). (Maximum number of
shares issuable in the aggregate under this plan and the
Thermo Process Nonqualified Stock Option Plan is
1,850,000 shares, after adjustment to reflect share
increases approved in 1987, 1989 and 1992, 6-for-5 stock
splits effected in July 1988 and March 1989 and 3-for-2
stock split effected in September 1989).
10.66 Thermo Process Systems Inc. Nonqualified Stock Option
Plan (filed as Exhibit 10(i) to Thermo Process'
Registration Statement on Form S-1 [Reg. No. 33-6763]
and incorporated herein by reference). (Maximum number
of shares issuable in the aggregate under this plan and
the Thermo Process Incentive Stock Option Plan is
1,850,000 shares, after adjustment to reflect share
increases approved in 1987, 1989 and 1992, 6-for-5 stock
splits effected in July 1988 and March 1989 and 3-for-2
stock split effected in September 1989).
10.67 Thermo Process Systems Inc. Equity Incentive Plan (filed
as Exhibit 10.63 to Thermedics' Annual Report on Form
10-K for the fiscal year ended January 1, 1994 [File No.
1-9567] and incorporated herein by reference). (Maximum
number of shares issuable is 1,750,000 shares, after
adjustment to reflect share increase approved in 1994).
10.68 Thermo Process Systems Inc. - Thermo Remediation Inc.
Nonqualified Stock Option Plan (filed as Exhibit 10(l)
to Thermo Process' Quarterly Report on Form 10-Q for the
fiscal quarter ended January 1, 1994 [File No. 1-9549]
and incorporated herein by reference).
10.69 Thermo Remediation Inc. Equity Incentive Plan (filed as
Exhibit 10.7 to Thermo Remediation's Registration
Statement on Form S-1 [Reg. No. 33-70544] and
incorporated herein by reference).
10.70 Thermedics Detection Inc. Equity Incentive Plan (filed
as Exhibit 10.69 to Thermo Instrument's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994
[File No. 1-9786] and incorporated herein by reference).
10.71 ThermoLyte Corporation Equity Incentive Plan.
34PAGE
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
--------- ---------------------------------------------------- ----
13 Annual Report to Shareholders for the fiscal year ended
September 30, 1995 (only those portions incorporated
herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
35PAGE
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS, AND SUCH SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
REGISTRATION AND QUALIFICATION UNDER ALL APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO EXEMPTIONS THEREFROM.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO CERTAIN TERMS AND RESTRICTIONS, INCLUDING RESTRICTIONS
ON TRANSFER, CONTAINED IN A SECURITIES PURCHASE AGREEMENT DATED
MARCH 7, 1995.
Redemption Right No.:
Number of Redemption
Rights:
THERMOLYTE CORPORATION
REDEMPTION RIGHTS
This certifies that for value received ____________________
(the "Holder") has the right, in each of the calendar years 1998
and 1999, during the last twenty business days of December and
ending at 5:00 p.m., New York City Time, on the twentieth such
day (the "Annual Exercise Period"), to require ThermoLyte
Corporation (the "Corporation") to redeem _______________
(_________) Shares of Common Stock of ThermoLyte Corporation in
accordance with the terms set forth in this Certificate. Each
right represented by this Certificate to require the redemption
of one such Share is sometimes hereinafter referred to as a
"Right" and the aggregate of such rights represented by this
Certificate to require the redemption of one such Share is
sometimes hereinafter referred to as the "Rights." The aggregate
of all rights substantially identical to these Rights that are
outstanding from time to time, including these Rights, are
sometime hereinafter referred to as the "Redemption Rights."
A. Exercise. (1) During the Annual Exercise Period in
each of the calendar years 1998 and 1999, the Holder may exercise
all or any portion of his right to require the Corporation to
redeem up to _____________________ (___________) Shares (as
defined below) as provided herein. Notwithstanding anything to
the contrary, (a) any such redemption and the procedures relating
to the redemption and offer of redemption set forth herein (the
"Redemption") shall be conducted in compliance with all
applicable laws, including all Federal securities laws, and (b)
the obligation of the Corporation to redeem shares is contingent
upon compliance with Delaware General Corporation Law Section 160
PAGE
<PAGE>
and if at any time the Corporation is insolvent or would be
rendered insolvent by making a redemption of the Shares or if the
Corporation is otherwise prohibited by law from redeeming the
Shares, the redemption will occur to the extent permissible and,
to the extent permitted, as soon as possible after such legal
prohibition or impediment is no longer applicable. "Shares"
shall mean all of the shares of Common Stock of the Corporation
and the term "Affiliated Corporation" shall mean and include
Thermo Electron Corporation, its subsidiaries, any other
corporation owning a majority of the Common Stock of the
Corporation or any other entity that is not a natural person or a
trust forming a part of an employee benefit plan sponsored by
Thermo Electron Corporation and that is an "affiliate" (as that
term is defined in Rule 405 under the Securities Act of 1933) of
Thermo Electron Corporation or such other entity.
(2) In each of the Annual Exercise Periods, the Corporation
shall be obligated to redeem at the option of the registered
holders of the Redemption Rights (the "Holders"), up to ________
Shares in the aggregate, subject to adjustment as provided herein
and subject to increase at the discretion of the Corporation.
B. Consideration to be Received. Upon the valid exercise
of these Rights, in whole or in part, the Holder shall be
entitled to receive from the Corporation, upon surrender to the
Corporation of such Rights and Shares as provided below $10.00
per Share redeemed, adjusted as provided herein (the "Redemption
Price").
C. Notice to Shareholders. The Corporation shall mail
notice to the Holders at their registered addresses, not less
than 15 nor more than 45 days prior to the commencement of each
Annual Exercise Period, a notice (the "Notice"). Such Notice
shall state the number of Redemption Rights outstanding that are
eligible for exercise on the date of such Notice, the address of
the Corporation or its agent at which Holders may surrender their
Shares (accompanied by Redemption Rights) for redemption and any
other procedures determined by the Board of Directors for
exercise of the Redemption Rights in accordance with the terms of
this Certificate and the other certificates for Redemption
Rights.
D. Exercise of Redemption Rights. (1) Holders may exercise
their right to have the Corporation redeem Shares upon surrender
to the Corporation or its agent (as specified in the Notice)
during the Annual Exercise Period at the Corporation's office or
the office of its agent (at the address specified in the Notice)
the certificate or certificates evidencing their Redemption
Rights with the form on the reverse thereof indicating the number
of Shares being tendered for redemption completed and duly signed
along with the certificate or certificates representing the
Shares to be redeemed, such certificate or certificates
representing the Shares to be duly endorsed in blank. The Holder
of this certificate may require the Corporation to redeem up to
2PAGE
<PAGE>
the number of Shares set forth above. The signatures on the
certificates representing the Redemption Rights and the Shares
shall be guaranteed by a bank or trust company or a broker that
is a member of a national securities exchange. The Holder will
be entitled to revoke an election to redeem so long as written
notice of revocation is received by the Corporation or its agent,
as specified in the Notice, before expiration of the Annual
Exercise Period. The Corporation or its agent will hold 3 such
certificates in trust for the Holder until payment shall have
been made in accordance with Section E hereof.
(2) In the event that the Holder exercises the right to
have the Corporation redeem Shares as provided herein and
surrenders Rights and Shares in that connection and the
Corporation's acceptance of all Redemption Rights tendered during
a particular Annual Exercise Period is prorated among tendering
Holders, or in the event the Holder exercises fewer Rights than
represented by this Certificate, or elects to redeem fewer Shares
than represented by the stock certificate surrendered, the
Corporation or the transfer agent for the Corporation's
redemption Rights and Common Stock shall issue a new certificate
or certificates of Common Stock or Redemption Rights for the
balance of the number of Rights not exercised or shares of Common
Stock not redeemed by the Corporation, except that no such
certificate shall be delivered to Holders relating to unexercised
Redemption Rights after the 1999 Annual Exercise Period. Any
proration among Holders tendering Redemption Rights during an
Annual Exercise Period will be based on the number of Redemption
Rights and Shares tendered during such Annual Exercise Period.
E. Manner of Payment. The Corporation shall within five
business days after the end of each Annual Exercise Period pay,
or cause payment to be made, in the form of a check mailed to the
redeeming Holders, for the Shares redeemed as provided in the
Redemption Rights.
F. Adjustment of Amounts. If at any time or from time to
time on or after March 7, 1995 and prior to January 1, 1999 there
shall be (1) a capital reorganization of the Common Stock, (ii) a
merger or consolidation of the Corporation with or into another
corporation, (iii) the liquidation or dissolution of the
Corporation or the sale of all or substantially all of the
Corporation's assets to any other person, (iv) payment of a
dividend in shares of Common Stock or Redemption Rights or a
distribution made in shares of Common Stock or Redemption Rights,
or a distribution to all holders of Common Stock of a security or
right convertible into or exchangeable for shares of Common
Stock, (v) a subdivision of outstanding shares of Common Stock or
Redemption Rights; (vi) the combination of the outstanding shares
of Common Stock or Redemption Rights into a smaller number of
shares of Common Stock or Redemption Rights; or (vii) the
issuance of other securities of the Corporation by
reclassification of the Corporation's Shares of Common Stock or
Redemption Rights (including any such reclassification in
3PAGE
<PAGE>
connection with a consolidation or merger in which the
Corporation is the surviving corporation) or similar event, then
as a part of such event, effective provision shall be made in a
manner determined by the Board of Directors of the Corporation so
that the Holders shall thereafter be entitled to redeem the
number of shares of stock or other securities or property of the
Corporation, or of the successor corporation resulting from such
event, to the end that the provisions herein provided shall be
applicable after that event in as nearly equivalent a manner as
may be practicable. Whenever an adjustment as provided above is
made, the Corporation shall send by first class mail, postage
prepaid, to each Holder notice of such adjustment setting forth
the details of such adjustment.
G. Expiration of Redemption Rights. The Redemption Rights
will expire and become worthless in the event the Company's
Common Stock becomes publicly traded and the closing price of
such Common Stock as reported on the principal trading market for
such Common Stock has been at least 150% of the Redemption Price,
as adjusted as provided above, for 20 of any 30 consecutive
trading days and provided that during such time the Shares issued
in connection with the issuance of the Redemption Rights
represented by this Certificate are either registered for resale
pursuant to an effective Registration Statement filed with the
Securities and Exchange Commission or are otherwise permitted to
be sold publicly pursuant to Securities and Exchange Commission
Rule 144(k) or otherwise.
H. Interest. In the event that any redemption is deferred
as provided in Section A hereof, the Redemption Price applicable
to the deferred Annual Exercise Period will continue to compound
annually at an annual rate equal to the Base Rate of the First
National Bank of Boston and the amounts payable to Holders of the
Redemption Rights in respect of the deferred Annual Exercise
Period will be calculated on such adjusted Redemption Price.
I. Definition. As used herein, the term "business day"
shall mean any day in which the American Stock Exchange is open
for trading.
J. Amendments. The Redemption Rights and this Redemption
Rights Certificate may not be amended in any manner that dilutes
or impairs the right of Holders to require the Corporation to
redeem Shares without the consent of a majority in interest of
Holders of outstanding Redemption Rights (which need not include
the Holder) other than Affiliated Corporations; provided,
however, that any such amendment in accordance with Section F
above shall not require any such consent.
K. Exchange of Certificates. This Certificate may be
exchanged at the office of the Corporation upon its surrender,
duly endorsed either separately or in combination with one or
more other Redemption Right Certificates for one or more new
Redemption Rights Certificates evidencing the same aggregate
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number of Redemption Rights evidenced by the Redemption Right
Certificate or Certificates exchanged. This redemption Right
Certificate is transferable at the office of the Corporation in
the manner and subject to the limitations set forth herein. No
fractional Redemption Rights will be issued.
L. Securities Purchase Agreements. The Redemption Rights
are subject to the terms and conditions contained within the
Securities Purchase Agreement dated March 7, 1995.
M. Other Provisions. The Holder hereof may be treated by
the Corporation and all other persons dealing with this
Redemption Rights Certificate as the absolute owner hereof for
any purpose and as the person entitled to exercise the Rights
represented hereby or to the transfer hereon on the books of the
Corporation any notice to the contrary notwithstanding, and until
such transfer on such books, the Corporation may treat the Holder
hereof as the owner for all purposes.
This Redemption Rights Certificate does not entitle any
Holder hereof to any of the rights of a shareholder of the
Corporation.
By accepting this Certificate the Holder hereby consents to
its terms.
IN WITNESS WHEREOF, ThermoLyte Corporation has caused this
Redemption Right Certificate to be signed manually or by
facsimile by the Chairman of the Board, and a facsimile of its
corporate seal to be imprinted hereon and attested by its
Assistant Secretary.
Dated:
THERMOLYTE CORPORATION
By:_______________________________
Chairman of the Board
By:________________________________
Secretary
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EXERCISE FORM
The undersigned hereby irrevocably exercises _________ of
the Rights represented by the within Certificate and hereby
surrenders to the Corporation an equal number of Shares, and
requests that the consideration to be received by the undersigned
upon such exercise be issued in the name of:
________________________________________________________________
(Please Print Name, Address and Taxpayer Identification No.)
If the number of Rights represented by this Certificate
and/or the number of Shares represented by the stock certificate
or certificates enclosed herewith is greater than the number of
Rights exercised or Shares surrendered, the undersigned requests
that a new Redemption Rights Certificate and/or stock certificate
for the balance of Rights and/or Shares remaining be registered
in the name of the undersigned Holder as indicated below and
delivered to the address stated below.
Date:_________________, 199_.
Name of
Holder:_________________________________________________________
(Please Print)
Address:________________________________________________________
________________________________________________________________
Signature:______________________________________________________
Taxpayer Identification
No.:_______________________________________________________
Signature Guaranteed:
NOTE: The above signature must correspond with the name as
written upon the face of this Redemption Rights Certificate
in every particular, without alteration or enlargement or
any change whatever, and be guaranteed by a bank or trust
company or a broker who is a member of a national
securities exchange.
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<PAGE>
ASSIGNMENT
(To be signed by the registered Holder only upon assignment of
Rights)
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE:
________________________________________________________________
________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers into
________________________________________________________________
(Name and Address of Assignee Must be Printed or Typewritten)
the within Redemption Rights, represented by this Redemption
Right Certificate, and hereby irrevocably constitutes and
appoints __________________________ attorney to transfer said
Rights on the books of the Corporation, with full power of
substitution in the premises.
Date:___________, 19__
______________________________________
Signature of Registered Holder
Signature Guaranteed:
NOTE: The above signature must correspond with the name as
written upon the face of this Redemption Rights
Certificate in every particular, without alteration or
enlargement or any change whatever, and be guaranteed by
an eligible guarantor institution which is a participant
in the securities transfer association recognized program
(otherwise known as the Medallion Signature Guarantee
Program).
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<PAGE>
THERMO ELECTRON CORPORATION
GUARANTEE
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 Rights
represented by the Certificate upon which this Guarantee is
endorsed (the "Holder") the due and punctual payment of any
amounts due from ThermoLyte Corporation ("TLT") to the Holder
pursuant to TLT's obligation to redeem shares of its outstanding
Common Stock during Annual Exercise Periods, as that term is
defined on this Certificate, in case of the failure of TLT to
make any such payment to be made punctually when and as the same
shall become due and payable.
2. The Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of TLT's redemption obligation and
shall be applicable without regard to the provisions of Section
160 of the Delaware General Corporation Law or other legal
prohibition or impediment and irrespective of the absence of any
action to enforce the same, any waiver or consent by the Holder,
the recovery of any judgment against TLT or any action to enforce
the same or any other circumstances that 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 TLT, any right to require a
proceeding first against TLT, protest or notice with respect to
redemption of TLT's Common Stock as provided in this Certificate
relating to redemption of its Common Stock and of this Guarantee.
3. (a) Prior to satisfaction in full of the aforesaid
redemption obligations and this Guarantee, the Guarantor will not
merge or consolidate with, or sell or convey all or substantially
all of its assets to, any other corporation or entity, unless (i)
either (A) the Guarantor shall be the surviving corporation in
the case of a merger or (B) the surviving, resulting or
transferee corporation or entity shall expressly assume the due
and punctual performance of all of the covenants and obligations
of the Guarantor under this Guarantee 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 this Guarantee.
(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 this Guarantee with the same
effect as if such successor or assuming corporation had been
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<PAGE>
named as the guarantor therein and herein and the Guarantor shall
be released from its liability as obligor under this Guarantee.
4. (a) The Guarantor, for itself, its successors and
assigns, covenants and agrees, and each Holder by his acceptance
of the Rights likewise covenants and agrees, that all obligations
of the Guarantor relating to payment of any amounts due for the
redemption of TLT Common Stock pursuant to the terms set forth in
this Certificate are 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 Superior Indebtedness of the
Guarantor.
"Superior Indebtedness" shall mean the principal of (and
premium, if any) and interest on the following, whether
outstanding at the date hereof or hereafter created or incurred:
(i) any indebtedness of the Guarantor for money
borrowed by the Guarantor (including purchase money obligations
and non-contingent obligations to reimburse any bank or other
person in respect of amounts paid under letter of credit), as
evidenced by debentures, bonds, notes or similar instruments
issued or assumed by the Guarantor and whether outstanding on the
date of this Guarantee or thereafter created or incurred;
provided, however, that Superior Indebtedness shall not include
(i) the Guarantees, (ii) the Guarantor's 4-7/8% Convertible
Subordinated Debentures due 1997, obligations represented by
which rank pari passu with the obligations represented by this
Guarantee in right of payment, and (iii) the Guarantor's
subordinated guarantees of the principal of (and premium, if
any), and interest on the 6-5/8% Convertible Subordinated
Debentures of Thermo Instrument Systems Inc. due 2001, the
6-1/2% Convertible Debentures due 1997 of Thermo Process Systems
Inc., the 6-1/2% Convertible Subordinated Debentures due 1998 of
Thermedics Inc., the 5-1/2% Convertible Subordinated Debentures
due 2002 and the Noninterest-bearing Convertible Subordinated
Notes due 1997 of Thermo Cardiosystems Inc., and the 3-3/4%
Convertible Subordinated Debentures due 2000 of Thermo Voltek
Corp., the obligations represented by which rank pari passu with
the obligations represented by this Guarantee in right of
payment;
(ii) leases for real property, equipment or other
assets used in the Guarantor's business, which leases are
capitalized in the Guarantor's consolidated financial
statements in accordance with generally accepted accounting
principles;
(iii) commitment or standby fees due and payable to
lending institutions with respect to credit facilities
available to the Guarantor;
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(iv) obligations under interest rate and currency
swaps, floors, caps or other similar arrangements intended
to fix interest rate obligations;
(v) indebtedness secured by any mortgage, pledge,
lien or other encumbrance existing 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;
(vi) obligations of the Guarantor constituting a
guarantee of indebtedness of or joint obligation with
another or others which would be included in the preceding
clauses (i), (ii), (iii), (iv), or (v) if an obligation of
the Guarantor; or
(viii) renewals, extensions or refundings of any of the
indebtedness, leases, fees or obligations referred to in the
preceding clauses (i), (ii), (iii) (iv), (v) and (vi);
provided that Superior Indebtedness shall not include (A) any
particular indebtedness, lease, fee, obligation, renewal,
extension or refunding 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 renewal, extension or refunding thereof 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 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 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 marshaling of assets of the Guarantor, then the
holders of Superior 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, on all Superior Indebtedness of the Guarantor
before the holders of any of the Redemption Rights shall be
entitled to receive any payment on account of the
obligations of the Guarantor pursuant to Section 1, and to
that end the holders of Superior 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 to obligations of the Guarantor relating to the
Redemption Rights other than securities of the Guarantor as
3PAGE
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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 Redemption Rights, to the payment of all Superior
Indebtedness of the Guarantor, provided that the rights of
the Holders of Superior Indebtedness of the Guarantor are
not altered by such reorganization or readjustment. For the
purposes of this Section, 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
(b)(i) of this Section, and notwithstanding the 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 with respect to the obligations of the Guarantor
relating to the Redemption Rights, to the payment of all
Superior Indebtedness of the Guarantor provided that the
rights of the holders of Superior Indebtedness of the
Guarantor are not altered by such reorganization or
readjustment) would otherwise be received by the holders of
the Redemption Rights in respect of the obligations of the
Guarantor before the principal of (and premium, if any) and
interest on all Superior Indebtedness of the Guarantor is
paid in full, such payment or distribution shall be paid
over to the holders of Superior Indebtedness of the
Guarantor, ratably, for application to the payment of the
principal of (and premium, if any) and interest on all
Superior Indebtedness of the Guarantor remaining unpaid
until all the principal of (and premium, if any) and
interest on all Superior Indebtedness of the Guarantor shall
have been paid in full, after giving effect to any
concurrent payment or distribution to the holders of such
Superior Indebtedness of the Guarantor.
(iii) Upon any distribution of assets of the Guarantor
referred to in this Section, the holders of the Redemption
Rights 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 the Redemption
Rights shall be entitled to rely upon a certificate of the
liquidating trustee or agent or other person making any
distribution to the holders of the Redemption Rights for the
purpose of ascertaining the persons entitled to participate
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in such distribution, the holders of Superior 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 Superior 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 (b) above, 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 Redemption
Rights.
(ii) Upon the happening of an event of default with respect
to any Superior Indebtedness of the Guarantor, as 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 Guarantor, directly or indirectly, on
account of the obligations of the Guarantor relating to the
Redemption Rights.
(d) In case cash, securities or other property otherwise payable
or deliverable to the holders of the Redemption Rights on account
of the Guarantee shall have been applied, pursuant to Section (b)
or (c), to the payment of Superior Indebtedness of the Guarantor,
then, upon the payment in full of the principal of (and premium,
if any) and interest on all Superior Indebtedness of the
Guarantor, the holders of the Redemption Rights shall be
subrogated to any rights of any holders of Superior Indebtedness
of the Guarantor, to receive any further payments or
distributions applicable to Superior Indebtedness of the
Guarantor until the obligation of the Guarantor in respect of
this Guarantee shall have been discharged in full, and such
payments or distributions received by the holders of the
Redemption Rights by reason of such subrogation, of cash,
securities or other property that otherwise would be paid or
distributed to the holders of Superior Indebtedness of the
Guarantor, shall, as between the Guarantor and its creditors
other than the holders of Superior Indebtedness of the Guarantor,
on the one hand, and the holders of the Redemption Rights on
account of this Guarantee, on the other hand, be deemed to be a
payment by the Guarantor on account of Superior Indebtedness of
the Guarantor and not on account of the Redemption Rights.
(e) No present or future holder of any Superior Indebtedness of
the Guarantor shall be prejudiced in any way in the right to
enforce the subordination of this Guarantee by any act or failure
to act on the part of the Guarantor. The provisions of this
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Section 4 are solely for the purpose of defining the relative
rights of the holders of Superior Indebtedness of the Guarantor,
on the one hand, and the holders of the Redemption Rights on
account of this Guarantee, 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
Redemption Rights, the obligation of the Guarantor, which is
unconditional and absolute, to perform in accordance with the
terms of this Guarantee or prevent the holder of any Redemption
Rights, upon default hereunder or under the terms of such
Redemption Rights, 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 Superior
Indebtedness of the Guarantor under this Section 4 to receive
cash, property or securities otherwise payable or deliverable to
the holders of the Redemption Rights on account of this
Guarantee.
(f) Nothing contained in this Section 4 shall prevent at any
time, except under the conditions described in Section 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 this
Guarantee.
5. The Guarantor shall be subrogated to all rights of the
holders of the Redemption Rights against TLT in respect of any
amounts paid by the Guarantor pursuant to the provisions of this
Guarantee to the end that the Guarantor shall be entitled to
receive the shares of TLT Common Stock as to which it makes
payments in respect of TLT's redemption obligations hereunder.
6. This Guarantee shall be governed by and construed in
accordance with the laws of Commonwealth of Massachusetts.
7. 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 valid obligation of the
Guarantor have been done and performed and have happened in due
compliance with all applicable laws.
8. By his acceptance hereof, each Holder acknowledges and agrees
that this Guarantee supersedes any and all prior guarantees by
Guarantor to such Holder with respect to any redemption
obligations of TLT as to its Common Stock.
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee
to be duly executed.
Dated as of November 27, 1995
THERMO ELECTRON CORPORATION
By:________________________________
Treasurer
Attest:
By:_____________________________
AA953340018
GUARANTEE AGREEMENT
Thermo Electron Corporation, a Delaware corporation ("Thermo
Electron"), and ThermoLyte Corporation, a Delaware corporation
("TLT"), agree as follows:
WHEREAS, TLT plans to issue and sell in a private placement
up to 1,845,000 shares of Common Stock (the "TLT Common Stock")
and 1,845,000 redemption rights providing the holder the right to
require TLT to repurchase TLT Common Stock during certain annual
exercise periods (the "Redemption Rights"); and
WHEREAS, such sale of TLT Common Stock will be materially
enhanced by the existence of a subordinated guarantee by Thermo
Electron of the Redemption Rights.
NOW, THEREFORE, Thermo Electron and TLT do hereby covenant
and agree as follows:
Article 1. Thermo Electron agrees to guarantee as
provided in the Guarantee dated the date hereof and attached
hereto as Exhibit A, on a subordinated basis, the due and
punctual payment of any amounts due from TLT to its holders of
Common Stock pursuant to the Redemption Rights. For purposes of
this Agreement, all of the Guarantees of the Redemption Rights
referred to in the preceding sentence shall be referred to as the
"Guaranty."
Article 2. The text of the Guaranty shall be endorsed on
the back of each Redemption Right certificate and shall be
executed by duly authorized officer of Thermo Electron, which
execution shall be attested. Such signatures may be manual or
facsimile.
Article 3. Upon the failure or prospective failure of
TLT to meet its redemption obligations during any Annual
Redemption Period, as that term is defined in the Redemption
Rights, TLT shall deliver to Thermo Electron, a statement of the
failure or prospective failure of TLT to meets its obligations
and the correct amount to be paid in respect of such redemption.
This statement shall be delivered at the earliest practicable
time. Failure of TLT to deliver such a statement shall not
relieve Thermo Electron of its obligations under this Agreement
or the Guaranty.
Article 4. This Agreement may be amended only by written
amendment signed by both parties and no such amendment that is
materially adverse to the rights of any holder of the Redemption
Rights shall be effective against the holders of the Redemption
Rights without the consent of a two-thirds in interest of such
holders other than Thermo Electron, its subsidiaries, any other
corporation owning a majority of the Common Stock of TLT or any
other entity that is not a natural person and that is an
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"affiliate" (as that term is defined in Rule 405 under the
Securities Act of 1933) of Thermo Electron Corporation or such
other entity.
Article 5. This Agreement is effective as of the 7th day
of March, 1995 and shall terminate on the date that the
redemption obligations of TLT under the Redemption Rights have
been satisfied in full.
Article 6. This Agreement has been entered into by TLT
and Thermo Electron for the benefit of the holders of the
Redemption Rights and such holders are third party beneficiaries
hereof.
Executed as a sealed instrument.
THERMOLYTE CORPORATION
By: Marshall J. Armstrong
THERMO ELECTRON CORPORATION
By: Jonathan W. Painter
Exhibit 10.31
THERMO ELECTRON CORPORATION
THERMO BIOANALYSIS NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.001 par value (the
"Common Stock"), of Thermo BioAnalysis Corporation
("Subsidiary"), a subsidiary of Thermo Electron Corporation (the
"Company"), by persons selected by the Board of Directors (or a
committee thereof) in its sole discretion, including directors,
executive officers, key employees and consultants of the Company
and its subsidiaries, and to provide additional incentive for
them to promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 100,000 shares, subject however to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
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advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
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that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Options shall not be transferable, otherwise than by will or
the laws of descent and distribution, except pursuant to the
terms of a qualified domestic relations order as defined in the
Internal Revenue Code. Options may be exercised during the life
of the Optionee only by the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
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<PAGE>
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
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Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
PAGE
<PAGE>
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2005 and no options shall be granted
hereunder thereafter.
Exhibit 10.32
THERMO ELECTRON CORPORATION
THERMOLYTE NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.001 par value (the
"Common Stock"), of ThermoLyte Corporation ("Subsidiary"), a
subsidiary of Thermo Electron Corporation (the "Company"), by
persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive
officers, key employees and consultants of the Company and its
subsidiaries, and to provide additional incentive for them to
promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 100,000 shares, subject however to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
PAGE
<PAGE>
advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
PAGE
<PAGE>
that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Options shall not be transferable, otherwise than by will or
the laws of descent and distribution, except pursuant to the
terms of a qualified domestic relations order as defined in the
Internal Revenue Code. Options may be exercised during the life
of the Optionee only by the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
PAGE
<PAGE>
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
PAGE
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Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
PAGE
<PAGE>
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2005 and no options shall be granted
hereunder thereafter.
Exhibit 10.33
THERMO ELECTRON CORPORATION
THERMO REMEDIATION NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of Thermo Remediation Corporation
("Subsidiary"), a subsidiary of Thermo Electron Corporation (the
"Company"), by persons selected by the Board of Directors (or a
committee thereof) in its sole discretion, including directors,
executive officers, key employees and consultants of the Company
and its subsidiaries, and to provide additional incentive for
them to promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 100,000 shares, subject however to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
PAGE
<PAGE>
advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
PAGE
<PAGE>
that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Options shall not be transferable, otherwise than by will or
the laws of descent and distribution, except pursuant to the
terms of a qualified domestic relations order as defined in the
Internal Revenue Code. Options may be exercised during the life
of the Optionee only by the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
PAGE
<PAGE>
the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
PAGE
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Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
PAGE
<PAGE>
with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2005 and no options shall be granted
hereunder thereafter.
Exhibit 10.34
THERMO ELECTRON CORPORATION
THERMOSPECTRA NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of ThermoSpectra Corporation ("Subsidiary"), a
subsidiary of Thermo Electron Corporation (the "Company"), by
persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive
officers, key employees and consultants of the Company and its
subsidiaries, and to provide additional incentive for them to
promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 100,000 shares, subject however to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
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advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
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that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Options shall not be transferable, otherwise than by will or
the laws of descent and distribution, except pursuant to the
terms of a qualified domestic relations order as defined in the
Internal Revenue Code. Options may be exercised during the life
of the Optionee only by the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
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the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
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Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
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with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2005 and no options shall be granted
hereunder thereafter.
Exhibit 10.35
THERMO ELECTRON CORPORATION
THERMOLASE NONQUALIFIED STOCK OPTION PLAN
1. Purpose
This Nonqualified Stock Option Plan (the "Plan") is intended
to encourage ownership of Common Stock, $0.01 par value (the
"Common Stock"), of ThermoLase Corporation ("Subsidiary"), a
subsidiary of Thermo Electron Corporation (the "Company"), by
persons selected by the Board of Directors (or a committee
thereof) in its sole discretion, including directors, executive
officers, key employees and consultants of the Company and its
subsidiaries, and to provide additional incentive for them to
promote the success of the business of the Company and
Subsidiary. The Plan is intended to be a nonstatutory stock
option plan.
2. Effective Date of the Plan
The Plan shall become effective when adopted by the Board of
Directors of the Company.
3. Stock Subject to Plan
At no time shall the number of shares of the Common Stock
then outstanding which are attributable to the exercise of
options granted under the Plan plus the number of shares then
issuable upon the exercise of outstanding options granted under
the Plan exceed 300,000 shares, subject however to the
provisions of paragraph 11 of the Plan. Shares to be issued upon
the exercise of options granted under the Plan shall be shares of
Subsidiary beneficially owned by the Company. If any option
expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall
again be available for options thereafter to be granted.
4. Administration
The Plan shall be administered by a committee (the
"Committee") composed of the members of the Board of Directors of
the Company, no member of which shall act upon any matter
exclusively affecting any option granted or to be granted to
himself or herself under the Plan. Subject to the provisions of
the Plan, the Committee shall have complete authority, in its
discretion, to make the following determinations with respect to
each option to be granted by the Company: (a) the person to
receive the option (the "Optionee"); (b) the time of granting the
option; (c) the number of shares subject thereto; (d) the option
price; (e) the option period; and (f) the terms of the option and
form of option agreement (which need not be identical, but which
shall conform to the applicable terms and conditions of the Plan
and contain such other provisions as the Board of Directors deems
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advisable and not inconsistent with the Plan). In making such
determinations, the Committee may take into account the nature of
the services rendered by the Optionees, their present and
potential contributions to the success of the Company and/or one
or more of its subsidiaries, and such other factors as the
Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it, to determine the terms and
provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's
determinations on the matters referred to in this paragraph 4
shall be conclusive.
5. Eligibility
An option may be granted to any person selected by the
Committee in its sole discretion.
6. Time of Granting Options
The granting of an option shall take place at the time
specified by the Committee. Only if expressly so provided by the
Committee shall the granting of an option be regarded as taking
place at the time when a written option agreement shall have been
duly executed and delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted. The agreement
shall provide, among other things, that it does not confer upon
an Optionee any right to continue in the employ of the Company
and/or one or more of its subsidiaries or to continue as a
director or consultant of the Company, and that it does not
interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any
time if the Optionee is an employee, to remove the Optionee as a
director of the Company if the Optionee is a director, or to
terminate the services of the Optionee if the Optionee is a
consultant.
7. Option Period
An option may become exercisable immediately or in such
installments, cumulative or noncumulative, as the Committee may
determine.
8. Exercise of Option
An option may be exercised in accordance with its terms by
written notice of intent to exercise the option, specifying the
number of shares of stock with respect to which the option is
then being exercised. The notice shall be accompanied by payment
in the form of cash or shares of Subsidiary Common Stock (the
"Tendered Shares") with a then current market value equal to the
option price of the shares to be purchased; provided, however,
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that such Tendered Shares shall have been acquired by the
Optionee more than six months prior to the date of exercise,
unless such requirement is waived in writing by the Company.
Against such payment the Company shall deliver or cause to be
delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or
other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other
body having jurisdiction in the premises shall require the
Company, Subsidiary or the Optionee to take any action in
connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or
certificates for such shares shall be postponed until completion
of the necessary action, which shall be taken at the Company's
expense.
9. Transferability
Options shall not be transferable, otherwise than by will or
the laws of descent and distribution, except pursuant to the
terms of a qualified domestic relations order as defined in the
Internal Revenue Code. Options may be exercised during the life
of the Optionee only by the Optionee.
10. Vesting, Restrictions and Termination of Options
The Committee, in its sole discretion, may determine the
manner in which options shall vest, the rights of the Company to
repurchase the shares issued upon the exercise of any option and
the manner in which such rights shall lapse, and the terms upon
which any option granted shall terminate. The Board of Directors
shall have the right to accelerate the date of exercise of any
installment or to accelerate the lapse of the Company's
repurchase rights. All of such terms shall be specified in a
written option agreement executed and delivered by or on behalf
of the Company and the Optionee to whom such option shall be
granted.
11. Adjustment of Number of Shares
Each stock option agreement shall provide that in the event
of any stock dividend payable in the Common Stock or any split-up
or contraction in the number of shares of the Common Stock
occurring after the date of the agreement and prior to the
exercise in full of the option, the number of shares for which
the option may thereafter be exercised shall be proportionately
adjusted and the price to be paid for each share subject to the
option shall be proportionately adjusted. Each such agreement
shall also provide that in case of any reclassification or change
of outstanding shares of the Common Stock or in case of any
consolidation or merger of Subsidiary with or into another
company or in case of any sale or conveyance to another company
or entity of the property of Subsidiary as a whole or
substantially as a whole, the Optionee shall, upon exercise of
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the option, be entitled to receive shares of stock or other
securities in its place equivalent in kind and value to those
shares which he would have received if he had exercised the
option in full immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and had
continued to hold the shares subject to the option (together with
all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the option;
provided , that if any recapitalization is to be effected through
an increase in the par value of the Common Stock without an
increase in the number of authorized shares and such new par
value will exceed the option price under such agreement, the
Company shall notify the Optionee of such proposed
recapitalization, and the Optionee shall then have the right,
exercisable at any time prior to such recapitalization becoming
effective, to purchase all of the shares subject to the option
which he has not theretofore purchased (anything in such
agreement to the contrary notwithstanding), but if the Optionee
fails to exercise such right before such recapitalization becomes
effective, the option price under such agreement shall be
appropriately adjusted. Each such agreement shall further
provide that upon dissolution or liquidation of Subsidiary, the
option shall terminate, but the Optionee (if at the time an
employee or director of the Company and/or any one or more of its
subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the option to the full
extent not theretofore exercised; that no adjustment provided for
above shall apply to any share with respect to which the option
has been exercised prior to the effective date of such
adjustment; and that no fraction of a share or fractional shares
shall be purchasable or deliverable under such agreement, but in
the event any adjustment thereunder of the number of shares
covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares. In the event of changes
in the outstanding Common Stock by reason of any stock dividend,
split-up, contraction, reclassification, or change of outstanding
shares of the Common Stock of the nature contemplated by this
paragraph 11, the number of shares of Common Stock available for
the purpose of the Plan as stated in paragraph 3 hereof shall be
correspondingly adjusted by the Committee.
12. Limitation of Rights in Option Stock
The Optionees shall have no rights as stockholders in
respect of shares as to which their options shall not have been
exercised, certificates issued and delivered and payment as
herein provided made in full, and shall have no rights with
respect to such shares not expressly conferred by this Plan.
13. Stock Reserved
The Company shall at all times during the term of the
options reserve and keep available such number of shares of the
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Common Stock as will be sufficient to satisfy the requirements of
this Plan and shall pay all other fees and expenses necessarily
incurred by the Company in connection therewith.
14. Securities Laws Restrictions
Each Optionee exercising an option, at the request of the
Company, will be required to give a representation in form
satisfactory to counsel for the Company that he will not
transfer, sell or otherwise dispose of the shares received upon
exercise of the option at any time purchased by him, upon
exercise of any portion of the option, in a manner which would
violate the Securities Act of 1933, as amended, and the
regulations of the Securities and Exchange Commission thereunder
and the Company may, if required or at its discretion, make a
notation on any certificates issued upon exercise of options to
the effect that such certificate may not be transferred except
after receipt by the Company of an opinion of counsel
satisfactory to it to the effect that such transfer will not
violate such Act and such regulations.
15. Tax Withholding
The Company shall have the right to deduct from payments of
any kind otherwise due to an Optionee any federal, state or local
taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under the Plan (the
"withholding requirements"). The Committee will have the right
to require that the Optionee or other appropriate person remit to
the Company an amount sufficient to satisfy the withholding
requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery
of any Common Stock pursuant to exercise of an option. If and to
the extent that such withholding is required, the Committee may
permit the Optionee or such other person to elect at such time
and in such manner as the Committee provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirements.
16. Termination and Amendment of Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at
any time the approval of the Stockholders of the Company is
required as to such modification or amendment under Rule 16b-3,
the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan
shall not, without the consent of an Optionee, affect his or her
rights under an option previously granted to him or her. With
the consent of the Optionees affected, the Board of Directors may
amend outstanding option agreements in a manner not inconsistent
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with the Plan. The Board of Directors shall have the right to
amend or modify the terms and provisions of the Plan and of any
outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
Notwithstanding any other provisions hereof, the Plan shall
terminate on December 31, 2005 and no options shall be granted
hereunder thereafter.
Exhibit 10.71
THERMOLYTE CORPORATION
EQUITY INCENTIVE PLAN
1. Purpose
The purpose of this Equity Incentive Plan (the "Plan") is to
secure for ThermoLyte Corporation (the "Company") and its
Stockholders the benefits arising from capital stock ownership by
employees, officers and Directors of, and consultants to, the
Company and its subsidiaries or other persons who are expected to
make significant contributions to the future growth and success
of the Company and its subsidiaries. The Plan is intended to
accomplish these goals by enabling the Company to offer such
persons equity-based interests, equity-based incentives or
performance-based stock incentives in the Company, or any
combination thereof ("Awards").
2. Administration
The Plan will be administered by the Board of Directors of
the Company (the "Board"). The Board shall have full power to
interpret and administer the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan and Awards,
and full authority to select the persons to whom Awards will be
granted ("Participants"), determine the type and amount of Awards
to be granted to Participants (including any combination of
Awards), determine the terms and conditions of Awards granted
under the Plan (including terms and conditions relating to events
of merger, consolidation, dissolution and liquidation, change of
control, vesting, forfeiture, restrictions, dividends and
interest, if any, on deferred amounts), waive compliance by a
participant with any obligation to be performed by him or her
under an Award, waive any term or condition of an Award, cancel
an existing Award in whole or in part with the consent of a
Participant, grant replacement Awards, accelerate the vesting or
lapse of any restrictions of any Award and adopt the form of
instruments evidencing Awards under the Plan and change such
forms from time to time. Any interpretation by the Board of the
terms and provisions of the Plan or any Award thereunder and the
administration thereof, and all action taken by the Board, shall
be final, binding and conclusive on all parties and any person
claiming under or through any party. No Director shall be liable
for any action or determination made in good faith. The Board
may, to the full extent permitted by law, delegate any or all of
its responsibilities under the Plan to a committee (the
"Committee") appointed by the Board and consisting of two or more
members of the Board, each of whom shall be deemed a
"disinterested person" within the meaning of Rule 16b-3 (or any
successor rule) of the Securities Exchange Act of 1934 (the
"Exchange Act").
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2
3. Effective Date
The Plan shall be effective as of the date first approved by
the Board of Directors, subject to the approval of the Plan by
the Corporation's Stockholders. Grants of Awards under the Plan
made prior to such approval shall be effective when made (unless
otherwise specified by the Board at the time of grant), but shall
be conditioned on and subject to such approval of the Plan.
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 10.6, the total
number of shares of the common stock, $.001 par value per share,
of the Company (the "Common Stock"), reserved and available for
distribution under the Plan shall be 500,000 shares. Such shares
may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
If any Award of shares of Common Stock requiring exercise by
the Participant for delivery of such shares terminates without
having been exercised in full, is forfeited or is otherwise
terminated without a payment being made to the Participant in the
form of Common Stock, or if any shares of Common Stock subject to
restrictions are repurchased by the Company pursuant to the terms
of any Award or are otherwise reacquired by the Company to
satisfy obligations arising by virtue of any Award, such shares
shall be available for distribution in connection with future
Awards under the Plan.
5. Eligibility
Employees, officers and Directors of, and consultants to,
the Company and its subsidiaries, or other persons who are
expected to make significant contributions to the future growth
and success of the Company and its subsidiaries shall be eligible
to receive Awards under the Plan. The Board, or other
appropriate committee or person to the extent permitted pursuant
to the last sentence of Section 2, shall from time to time select
from among such eligible persons those who will receive Awards
under the Plan.
6. Types of Awards
The Board may offer Awards under the Plan in any form of
equity-based interest, equity-based incentive or
performance-based stock incentive in Common Stock of the Company
or any combination thereof. The type, terms and conditions and
restrictions of an Award shall be determined by the Board at the
time such Award is made to a Participant; provided however that
the maximum number of shares permitted to be granted under any
Award or combination of Awards to any Participant during any one
calendar year may not exceed 5% of the shares of Common Stock
outstanding at the beginning of such calendar year.
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3
An Award shall be made at the time specified by the Board
and shall be subject to such conditions or restrictions as may be
imposed by the Board and shall conform to the general rules
applicable under the Plan as well as any special rules then
applicable under federal tax laws or regulations or the federal
securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the
following forms and shall be subject to the following rules and
conditions:
6.1 Options
An option is an Award that entitles the holder on exercise
thereof to purchase Common Stock at a specified exercise price.
Options granted under the Plan may be either incentive stock
options ("incentive stock options") that meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or options that are not intended to meet the
requirements of Section 422 ("non-statutory options").
6.1.1 Option Price. The price at which Common Stock may
be purchased upon exercise of an option shall be determined by
the Board, provided however, the exercise price shall not be less
than the par value per share of Common Stock.
6.1.2 Option Grants . The granting of an option shall
take place at the time specified by the Board. Options shall be
evidenced by option agreements. Such agreements shall conform to
the requirements of the Plan, and may contain such other
provisions (including but not limited to vesting and forfeiture
provisions, acceleration, change of control, protection in the
event of merger, consolidations, dissolutions and liquidations)
as the Board shall deem advisable. Option agreements shall
expressly state whether an option grant is intended to qualify as
an incentive stock option or non-statutory option.
6.1.3 Option Period . An option will become exercisable
at such time or times (which may be immediately or in such
installments as the Board shall determine) and on such terms and
conditions as the Board shall specify. The option agreements
shall specify the terms and conditions applicable in the event of
an option holder's termination of employment during the option's
term.
Any exercise of an option must be in writing, signed by the
proper person and delivered or mailed to the Company, accompanied
by (1) any additional documents required by the Board and (2)
payment in full in accordance with Section 6.1.4 for the number
of shares for which the option is exercised.
6.1.4 Payment of Exercise Price. Stock purchased on
exercise of an option shall be paid for as follows: (1) in cash
or by check (subject to such guidelines as the Company may
PAGE
<PAGE>
4
establish for this purpose), bank draft or money order payable to
the order of the Company or (2) if so permitted by the instrument
evidencing the option (or in the case of a non-statutory option,
by the Board at or after grant of the option), (i) through the
delivery of shares of Common Stock that have been outstanding for
at least six months (unless the Board expressly approves a
shorter period) and that have a fair market value (determined in
accordance with procedures prescribed by the Board) equal to the
exercise price, (ii) by delivery of a promissory note of the
option holder to the Company, payable on such terms as are
specified by the Board, (iii) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the exercise price, or (iv) by
any combination of the permissible forms of payment.
6.1.5 Buyout Provision. The Board may at any time offer
to buy out for a payment in cash, shares of Common Stock,
deferred stock or restricted stock, an option previously granted,
based on such terms and conditions as the Board shall establish
and communicate to the option holder at the time that such offer
is made.
6.1.6 Special Rules for Incentive Stock Options .Each
provision of the Plan and each option agreement evidencing an
incentive stock option shall be construed so that each incentive
stock option shall be an incentive stock option as defined in
Section 422 of the Code or any statutory provision that may
replace such Section, and any provisions thereof that cannot be
so construed shall be disregarded. Instruments evidencing
incentive stock options must contain such provisions as are
required under applicable provisions of the Code. Incentive
stock options may be granted only to employees of the Company and
its subsidiaries. The exercise price of an incentive stock
option shall not be less than 100% (110% in the case of an
incentive stock option granted to a more than ten percent
Stockholder of the Company) of the fair market value of the
Common Stock on the date of grant, as determined by the Board.
An incentive stock option may not be granted after the tenth
anniversary of the date on which the Plan was adopted by the
Board and the latest date on which an incentive stock option may
be exercised shall be the tenth anniversary (fifth anniversary,
in the case of any incentive stock option granted to a more than
ten percent Stockholder of the Company) of the date of grant, as
determined by the Board.
6.2 Restricted and Unrestricted Stock
An Award of restricted stock entitles the recipient thereof
to acquire shares of Common Stock upon payment of the purchase
price subject to restrictions specified in the instrument
evidencing the Award.
6.2.1 Restricted Stock Awards . Awards of restricted
stock shall be evidenced by restricted stock agreements. Such
PAGE
<PAGE>
5
agreements shall conform to the requirements of the Plan, and may
contain such other provisions (including restriction and
forfeiture provisions, change of control, protection in the event
of mergers, consolidations, dissolutions and liquidations) as the
Board shall deem advisable.
6.2.2 Restrictions. Until the restrictions specified in
a restricted stock agreement shall lapse, restricted stock may
not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of, and upon certain conditions specified
in the restricted stock agreement, must be resold to the Company
for the price, if any, specified in such agreement. The
restrictions shall lapse at such time or times, and on such
conditions, as the Board may specify. The Board may at any time
accelerate the time at which the restrictions on all or any part
of the shares shall lapse.
6.2.3 Rights as a Stockholder. A Participant who
acquires shares of restricted stock will have all of the rights
of a Stockholder with respect to such shares including the right
to receive dividends and to vote such shares. Unless the Board
otherwise determines, certificates evidencing shares of
restricted stock will remain in the possession of the Company
until such shares are free of all restrictions under the Plan.
6.2.4 Purchase Price . The purchase price of shares of
restricted stock shall be determined by the Board, in its sole
discretion, but such price may not be less than the par value of
such shares.
6.2.5 Other Awards Settled With Restricted Stock . The
Board may provide that any or all the Common Stock delivered
pursuant to an Award will be restricted stock.
6.2.6 Unrestricted Stock. The Board may, in its sole
discretion, sell to any Participant shares of Common Stock free
of restrictions under the Plan for a price determined by the
Board, but which may not be less than the par value per share of
the Common Stock.
6.3 Deferred Stock
6.3.1 Deferred Stock Award. A deferred stock Award
entitles the recipient to receive shares of deferred stock which
is Common Stock to be delivered in the future. Delivery of the
Common Stock will take place at such time or times, and on such
conditions, as the Board may specify. The Board may at any time
accelerate the time at which delivery of all or any part of the
Common Stock will take place.
6.3.2 Other Awards Settled with Deferred Stock. The
Board may, at the time any Award described in this Section 6 is
granted, provide that, at the time Common Stock would otherwise
be delivered pursuant to the Award, the Participant will instead
PAGE
<PAGE>
6
receive an instrument evidencing the right to future delivery of
deferred stock.
6.4 Performance Awards
6.4.1 Performance Awards . A performance Award entitles
the recipient to receive, without payment, an Amount, in cash or
Common Stock or a combination thereof (such form to be determined
by the Board), following the attainment of performance goals.
Performance goals may be related to personal performance,
corporate performance, departmental performance or any other
category of performance deemed by the Board to be important to
the success of the Company. The Board will determine the
performance goals, the period or periods during which performance
is to be measured and all other terms and conditions applicable
to the Award.
6.4.2 Other Awards Subject to Performance Conditions.
The Board may, at the time any Award described in this Section 6
is granted, impose the condition (in addition to any conditions
specified or authorized in this Section 6 of the Plan) that
performance goals be met prior to the Participant's realization
of any payment or benefit under the Award.
7. Purchase Price and Payment
Except as otherwise provided in the Plan, the purchase price
of Common Stock to be acquired pursuant to an Award shall be the
price determined by the Board, provided that such price shall not
be less than the par value of the Common Stock. Except as
otherwise provided in the Plan, the Board may determine the
method of payment of the exercise price or purchase price of an
Award granted under the Plan and the form of payment. The Board
may determine that all or any part of the purchase price of
Common Stock pursuant to an Award has been satisfied by past
services rendered by the Participant. The Board may agree at any
time, upon request of the Participant, to defer the date on which
any payment under an Award will be made.
8. Loans and Supplemental Grants
The Company may make a loan to a Participant, either on or
after the grant to the Participant of any Award, in connection
with the purchase of Common Stock under the Award or with the
payment of any obligation incurred or recognized as a result of
the Award. The Board will have full authority to decide whether
the loan is to be secured or unsecured or with or without
recourse against the borrower, the terms on which the loan is to
be repaid and the conditions, if any, under which it may be
forgiven.
In connection with any Award, the Board may at the time such
Award is made or at a later date, provide for and make a cash
payment to the participant not to exceed an amount equal to (a)
PAGE
<PAGE>
7
the amount of any federal, state and local income tax or ordinary
income for which the Participant will be liable with respect to
the Award, plus (b) an additional amount on a grossed-up basis
necessary to make him or her whole after tax, discharging all the
participant's income tax liabilities arising from all payments
under the Plan.
9. Change in Control
9.1 Impact of Event
In the event of a "Change in Control" as defined in Section
9.2, the following provisions shall apply, unless the agreement
evidencing the Award otherwise provides:
(a) Any stock options or other stock-based Awards awarded
under the Plan that were not previously exercisable and
vested shall become fully exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards
subject to restrictions and to the extent not fully vested,
shall become fully vested and all such restrictions shall
lapse so that shares issued pursuant to such Awards shall be
free of restrictions.
(c) Deferral limitations and conditions that relate solely
to the passage of time, continued employment or affiliation,
will be waived and removed as to deferred stock Awards and
performance Awards. Performance of other conditions (other
than conditions relating solely to the passage of time,
continued employment or affiliation) will continue to apply
unless otherwise provided in the agreement evidencing the
Awards or in any other agreement between the Participant and
the Company or unless otherwise agreed by the Board.
9.2 Definition of "Change in Control"
"Change in Control" means any one of the following events:
(i) when, any Person is or becomes the beneficial owner (as
defined in Section 13(d) of the Exchange Act and the Rules and
Regulations thereunder), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General
Rules and Regulations of the Exchange Act) of such Person,
directly or indirectly, of 50% or more of the outstanding Common
Stock of the Company or its parent corporation, Thermo Power
Corporation ("Power "), or the beneficial owner of 25% or more of
the outstanding common stock of Thermo Electron Corporation
("Thermo Electron"), without the prior approval of the Prior
Directors of the applicable issuer, (ii) the failure of the Prior
Directors to constitute a majority of the Board of Directors of
the Company, Power or Thermo Electron, as the case may be, at any
time within two years following any Electoral Event, or (iii) any
other event that the Prior Directors shall determine constitutes
an effective change in the control of the Company, Power or
PAGE
<PAGE>
8
Thermo Electron. As used in the preceding sentence, the
following capitalized terms shall have the respective meanings
set forth below:
(a) "Person" shall include any natural person, any entity,
any "affiliate" of any such natural person or entity as such
term is defined in Rule 405 under the Securities Act of 1933
and any "group" (within the meaning of such term in Rule
13d-5 under the Exchange Act);
(b) "Prior Directors" shall mean the persons sitting on the
Company's, Power's or Thermo Electron's Board of Directors,
as the case may be, immediately prior to any Electoral Event
(or, if there has been no Electoral Event, those persons
sitting on the applicable Board of Directors on the date of
this Agreement) and any future director of the Company,
Power or Thermo Electron who has been nominated or elected
by a majority of the Prior Directors who are then members of
the Board of Directors of the Company, Power or Thermo
Electron, as the case may be; and
(c) "Electoral Event" shall mean any contested election of
Directors, or any tender or exchange offer for the
Company's, Power's or Thermo Electron's Common Stock, not
approved by the Prior Directors, by any Person other than
the Company, Power, Thermo Electron or a majority-owned
subsidiary of Thermo Electron.
10. General Provisions
10.1 Documentation of Awards
Awards will be evidenced by written instruments, which may
differ among Participants, prescribed by the Board from time to
time. Such instruments may be in the form of agreements to be
executed by both the Participant and the Company or certificates,
letters or similar instruments which need not be executed by the
participant but acceptance of which will evidence agreement to
the terms thereof. Such instruments shall conform to the
requirements of the Plan and may contain such other provisions
(including provisions relating to events of merger,
consolidation, dissolution and liquidations, change of control
and restrictions affecting either the agreement or the Common
Stock issued thereunder), as the Board deems advisable.
10.2 Rights as a Stockholder
Except as specifically provided by the Plan or the
instrument evidencing the Award, the receipt of an Award will not
give a Participant rights as a Stockholder with respect to any
shares covered by an Award until the date of issue of a stock
certificate to the participant for such shares.
PAGE
<PAGE>
9
10.3 Conditions on Delivery of Stock
The Company will not be obligated to deliver any shares of
Common Stock pursuant to the Plan or to remove any restriction
from shares previously delivered under the Plan (a) until all
conditions of the Award have been satisfied or removed, (b)
until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulations have been complied with,
(c) if the outstanding Common Stock is at the time listed on any
stock exchange, until the shares have been listed or authorized
to be listed on such exchange upon official notice of issuance,
and (d) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the
Company's counsel. If the sale of Common Stock has not been
registered under the Securities Act of 1933, as amended, the
Company may require, as a condition to exercise of the Award,
such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such act and may
require that the certificates evidencing such Common Stock bear
an appropriate legend restricting transfer.
If an Award is exercised by the participant's legal
representative, the Company will be under no obligation to
deliver Common Stock pursuant to such exercise until the Company
is satisfied as to the authority of such representative.
10.4 Tax Withholding
The Company will withhold from any cash payment made
pursuant to an Award an amount sufficient to satisfy all federal,
state and local withholding tax requirements (the "withholding
requirements").
In the case of an Award pursuant to which Common Stock may
be delivered, the Board will have the right to require that the
participant or other appropriate person remit to the Company an
amount sufficient to satisfy the withholding requirements, or
make other arrangements satisfactory to the Board with regard to
such requirements, prior to the delivery of any Common Stock. If
and to the extent that such withholding is required, the Board
may permit the participant or such other person to elect at such
time and in such manner as the Board provides to have the Company
hold back from the shares to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the
withholding requirement.
PAGE
<PAGE>
10
10.5 Nontransferability of Awards
Except as otherwise specifically provided by the Board in
the case of participants who are not reporting persons under
Section 16 of the Exchange Act, no Award (other than an Award in
the form of an outright transfer of cash or Common Stock not
subject to any restrictions) may be transferred other than by the
laws of descent and distribution, except pursuant to the terms of
a qualified domestic relations order as defined in the Code, and
during a Participant's lifetime an Award requiring exercise may
be exercised only by him or her (or in the event of incapacity,
the person or persons properly appointed to act on his or her
behalf).
10.6 Adjustments in the Event of Certain Transactions
(a) In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the
Company's capitalization, or other distribution with respect to
common Stockholders other than normal cash dividends, the Board
will make (i) appropriate adjustments to the maximum number of
shares that may be delivered under the Plan under Section 4
above, and (ii) appropriate adjustments to the number and kind of
shares of stock or securities subject to Awards then outstanding
or subsequently granted, any exercise prices relating to Awards
and any other provisions of Awards affected by such change.
(b) The Board may also make appropriate adjustments to take
into account material changes in law or in accounting practices
or principles, mergers, consolidations, acquisitions,
dispositions, repurchases or similar corporate transactions, or
any other event, if it is determined by the Board that
adjustments are appropriate to avoid distortion in the operation
of the Plan, but no such adjustments other than those required by
law may adversely affect the rights of any Participant (without
the Participant's consent) under any Award previously granted.
10.7 Employment Rights
Neither the adoption of the Plan nor the grant of Awards
will confer upon any person any right to continued employment
with the Company or any subsidiary or interfere in any way with
the right of the Company or subsidiary to terminate any
employment relationship at any time or to increase or decrease
the compensation of such person. Except as specifically provided
by the Board in any particular case, the loss of existing or
potential profit in Awards granted under the Plan will not
constitute an element of damages in the event of termination of
an employment relationship even if the termination is in
violation of an obligation of the Company to the employee.
Whether an authorized leave of absence, or absence in
military or government service, shall constitute termination of
employment shall be determined by the Board at the time. For
PAGE
<PAGE>
11
purposes of this Plan, transfer of employment between the Company
and its subsidiaries shall not be deemed termination of
employment.
10.8 Other Employee Benefits
The value of an Award granted to a Participant who is an
employee, and the amount of any compensation deemed to be
received by an employee as a result of any exercise or purchase
of Common Stock pursuant to an Award or sale of shares received
under the Plan, will not constitute "earnings" or "compensation"
with respect to which any other employee benefits of such
employee are determined, including without limitation benefits
under any pension, stock ownership, stock purchase, life
insurance, medical, health, disability or salary continuation
plan.
10.9 Legal Holidays
If any day on or before which action under the Plan must be
taken falls on a Saturday, Sunday or legal holiday, such action
may be taken on the next succeeding day not a Saturday, Sunday or
legal holiday.
10.10 Foreign Nationals
Without amending the Plan, Awards may be granted to persons
who are foreign nationals or employed outside the United States
or both, on such terms and conditions different from those
specified in the Plan, as may, in the judgment of the Board, be
necessary or desirable to further the purpose of the Plan.
11. Termination and Amendment
The Plan shall remain in full force and effect until
terminated by the Board. Subject to the last sentence of this
Section 11, the Board may at any time or times amend the Plan or
any outstanding Award for any purpose that may at the time be
permitted by law, or may at any time terminate the Plan as to any
further grants of Awards. No amendment, unless approved by the
Stockholders, shall be effective if it would cause the Plan to
fail to satisfy the requirements of the federal tax law or
regulation relating to incentive stock options or the
requirements of Rule 16b-3 (or any successor rule) of the
Exchange Act. No amendment of the Plan or any agreement
evidencing Awards under the Plan may adversely affect the rights
of any participant under any Award previously granted without
such participant's consent.
Exhibit 13
THERMO POWER CORPORATION
Consolidated Financial Statements as of September 30, 1995
PAGE
<PAGE>
Thermo Power Corporation
Consolidated Statement of Income
Year Ended
---------------------------------------
(In thousands except September 30, October 1, October 2,
per share amounts) 1995 1994 1993
-------------------------------------------------------------------------
Revenues (Note 11) $103,255 $ 89,334 $ 75,429
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 79,823 70,026 60,855
Selling, general and administrative
expenses (Note 8) 15,886 14,203 11,846
Research and development expenses 3,065 1,622 995
-------- -------- --------
98,774 85,851 73,696
-------- -------- --------
Operating Income 4,481 3,483 1,733
Interest Income 1,919 1,278 1,161
Interest Expense (includes $37 and
$307 to parent company in fiscal
1994 and 1993) (23) (61) (342)
Gain on Sale of Investments, Net
(includes $768, $616 and $404 on
sale of related party investments)
(Note 8) 730 582 576
-------- -------- --------
Income Before Provision for Income
Taxes and Minority Interest 7,107 5,282 3,128
Provision for Income Taxes (Note 7) 2,737 2,034 1,205
Minority Interest Expense 182 - -
-------- -------- --------
Net Income $ 4,188 $ 3,248 $ 1,923
======== ======== ========
Earnings per Share $ .34 $ .26 $ .18
======== ======== ========
Weighted Average Shares 12,372 12,291 10,676
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2PAGE
<PAGE>
Thermo Power Corporation
Consolidated Balance Sheet
September 30, October 1,
(In thousands) 1995 1994
-------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 23,504 $ 7,474
Available-for-sale investments, at quoted
market value (amortized cost of $10,624)
(includes $429 of related party investments)
(Notes 2 and 8) 10,666 -
Short-term investments, at cost (quoted market
value of $20,723) (includes $800 of related
party investments) - 20,405
Accounts receivable, less allowances of $530
and $590 18,203 13,638
Unbilled contract costs and fees 6,228 5,236
Inventories 22,249 14,862
Prepaid income taxes (Note 7) 3,213 3,003
Other current assets 752 135
-------- --------
84,815 64,753
-------- --------
Rental Assets, at Cost, Net 6,406 4,195
-------- --------
Property, Plant and Equipment, at Cost, Net 8,467 7,679
-------- --------
Long-term Available-for-sale Investments,
at Quoted Market Value (amortized cost of $471)
(includes $339 invested in parent company common
stock) (Notes 2 and 8) 733 -
-------- --------
Long-term Investments, at Cost (quoted market
value of $565) (includes $18 invested in parent
company common stock) - 471
-------- --------
Other Assets 223 -
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 3) 7,773 5,523
-------- --------
$108,417 $ 82,621
======== ========
3PAGE
<PAGE>
Thermo Power Corporation
Consolidated Balance Sheet (continued)
September 30, October 1,
(In thousands except share amounts) 1995 1994
-------------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Accounts payable $ 13,262 $ 9,929
Accrued payroll and employee benefits 2,732 2,466
Customer advances 971 1,139
Accrued warranty costs 2,100 3,368
Accrued income taxes 1,368 924
Other accrued expenses 4,242 3,510
Due to Thermo Electron Corporation and
affiliated companies - 274
-------- --------
24,675 21,610
-------- --------
Deferred Income Taxes (Note 7) 118 192
-------- --------
Long-term Obligations (Note 10) 364 344
-------- --------
Commitments (Notes 8 and 9)
Common Stock of Subsidiary Subject to Redemption
($18,450 redemption value) (Note 1) 17,435 -
-------- --------
Shareholders' Investment (Notes 4 and 5):
Common stock, $.10 par value, 30,000,000 shares
authorized; 12,478,544 and 12,425,273 shares
issued 1,248 1,243
Capital in excess of par value 53,898 53,211
Retained earnings 10,822 6,634
Treasury stock at cost, 49,758 and 121,140 shares (341) (613)
Net unrealized gain on available-for-sale
investments (Note 2) 198 -
-------- --------
65,825 60,475
-------- --------
$108,417 $ 82,621
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4PAGE
<PAGE>
Thermo Power Corporation
Consolidated Statement of Cash Flows
Year Ended
---------------------------------------
September 30, October 1, October 2,
(In thousands) 1995 1994 1993
-------------------------------------------------------------------------
Operating Activities:
Net income $ 4,188 $ 3,248 $ 1,923
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,082 1,867 1,298
Provision for losses on accounts
receivable 3 (2) (149)
Gain on sale of investments, net
(Note 8) (730) (582) (576)
Minority interest expense 182 - -
Increase (decrease) in deferred
income taxes (166) - 391
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable (4,568) (1,236) (1,337)
Inventories and unbilled
contract costs and fees (8,881) 693 (2,329)
Other current assets (558) 366 (510)
Accounts payable 3,333 767 1,109
Other current liabilities 196 (677) 2,999
Other (191) 85 -
-------- -------- --------
Net cash provided by (used in)
operating activities (5,110) 4,529 2,819
-------- -------- --------
Investing Activities:
Acquisitions, net of cash
acquired (Note 3) (2,500) (7,947) (13,185)
Purchases of available-for-sale
investments (365) - -
Proceeds from sale and maturities of
available-for-sale investments 9,074 - -
Proceeds from sale of related party
investments 1,599 1,462 447
(Increase) decrease in short-term
investments - 9,326 (23,657)
Purchases of long-term investments - (453) -
Purchases of property, plant and
equipment (2,101) (875) (661)
Increase in rental assets (2,848) (1,856) -
Other 273 66 423
-------- -------- --------
Net cash provided by (used in)
investing activities $ 3,132 $ (277) $(36,633)
-------- -------- --------
5PAGE
<PAGE>
Thermo Power Corporation
Consolidated Statement of Cash Flows (continued)
Year Ended
---------------------------------------
September 30, October 1, October 2,
(In thousands) 1995 1994 1993
-------------------------------------------------------------------------
Financing Activities:
Net proceeds from issuance of
Company and subsidiary common
stock (Note 1) $ 18,064 $ 266 $ 36,133
Issuance of obligations to
parent company - - 5,000
Repayment of obligations to
parent company (Note 8) - (3,000) (5,000)
Repayment of long-term obligations (56) (198) (232)
-------- -------- --------
Net cash provided by (used in)
financing activities 18,008 (2,932) 35,901
-------- -------- --------
Increase in Cash and Cash Equivalents 16,030 1,320 2,087
Cash and Cash Equivalents at
Beginning of Year 7,474 6,154 4,067
-------- -------- --------
Cash and Cash Equivalents at
End of Year $ 23,504 $ 7,474 $ 6,154
======== ======== ========
Cash Paid For:
Interest $ 23 $ 61 $ 343
Income taxes $ 2,796 $ 1,575 $ 1,169
Noncash Investing Activities:
Fair value of assets of acquired
companies $ 2,500 $ 10,571 $ 21,897
Cash paid for acquired companies (2,500) (7,947) (13,185)
-------- -------- --------
Liabilities assumed of acquired
companies $ - $ 2,624 $ 8,712
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
6PAGE
<PAGE>
Thermo Power Corporation
Consolidated Statement of Shareholders' Investment
Net
Unrealized
Common Gain on
Stock, Capital in Available-
$.10 Par Excess of Retained Treasury for-sale
(In thousands) Value Par Value Earnings Stock Investments
- --------------------------------------------------------------------------------
Balance September 26, 1992 $ 811 $16,876 $ 1,463 $ (848) $ -
Net income - - 1,923 - -
Net proceeds from public
offering of common stock 431 35,567 - - -
Issuance of stock under
employees' and directors'
stock plans - 43 - 92 -
Tax benefit related to
employees' and directors'
stock plans - 241 - - -
------- ------- ------- ------- ---------
Balance October 2, 1993 1,242 52,727 3,386 (756) -
Net income - - 3,248 - -
Issuance of stock under
employees' and directors'
stock plans 1 122 - 143 -
Tax benefit related to
employees' and directors'
stock plans - 362 - - -
------- ------- ------- ------- ---------
Balance October 1, 1994 1,243 53,211 6,634 (613) -
Net income - - 4,188 - -
Issuance of stock under
employees' and directors'
stock plans 5 534 - 272 -
Tax benefit related to
employees' and directors'
stock plans - 153 - - -
Effect of change in
accounting principle
(Note 2) - - - - 268
Change in net unrealized
gain on available-for-
sale investments (Note 2) - - - - (70)
------- ------- ------- ------- ---------
Balance September 30, 1995 $ 1,248 $53,898 $10,822 $ (341) $ 198
======= ======= ======= ======= =========
The accompanying notes are an integral part of these consolidated financial
statements.
7PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Relationship with Thermo Electron Corporation
Thermo Power Corporation (the Company) was incorporated on June 6, 1985, as
a wholly owned subsidiary of Thermo Electron Corporation (Thermo Electron).
As of September 30, 1995, Thermo Electron owned 7,832,326 shares of the
Company's common stock, representing 63% of such stock outstanding.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company,
its wholly owned subsidiaries, and its 78%-owned privately held subsidiary,
ThermoLyte Corporation (ThermoLyte). All significant intercompany accounts
and transactions have been eliminated.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest September
30. References to fiscal 1995, 1994, and 1993 are for the fiscal years
ended September 30, 1995, October 1, 1994, and October 2, 1993,
respectively. Fiscal years 1995 and 1994 each included 52 weeks; 1993
included 53 weeks. The 53-week year did not have a material impact on the
Company's results of operations.
Revenue Recognition
The Company recognizes revenues upon shipment of its products or upon
completion of services it renders, and recognizes rental revenues on a
straight-line basis over the term of the rental contract. The Company
provides a reserve for its estimate of warranty costs at the time of
shipment. Revenues and profits on contracts are recognized using the
percentage-of-completion method. Revenues recorded under the
percentage-of-completion method, including revenues from research and
development contracts, were $53,045,000 in fiscal 1995, $51,862,000 in
fiscal 1994, and $43,622,000 in fiscal 1993. The percentage of completion
is determined by relating the actual costs incurred to date to management's
estimate of total costs 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. Contracts at the Company's FES division generally provide for
billing of customers on a fixed-price basis upon contract completion.
Contracts at the Company's Tecogen division generally provide for billing
of customers on a cost-plus-fixed-fee basis as costs are incurred. 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.
Research and Development Arrangements
The Company has research and development arrangements with the natural gas
industry and various governmental agencies. Revenues in the accompanying
statement of income include $4,917,000, $5,209,000, and $6,457,000, and
cost of revenues include $3,548,000, $4,197,000, and $5,310,000 related to
these arrangements in fiscal 1995, 1994, and 1993, respectively. The
Company is required to pay royalties for any technologies developed or
products commercialized under several of these arrangements. Selling,
general and administrative expenses in the accompanying statement of income
8PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
include royalty expense related to these arrangements of $51,000, $75,000,
and $80,000 in fiscal 1995, 1994, and 1993, respectively.
Income Taxes
Pursuant to a tax allocation agreement between the Company and Thermo
Electron, the Company was included in the consolidated income tax returns
filed by Thermo Electron for the period from September 27, 1992 through
February 10, 1993. The agreement provided that the Company would pay to
Thermo Electron amounts comparable to the taxes the Company would have paid
if it had filed separate tax returns. Subsequent to the Company's public
offering of common stock in February 1993, Thermo Electron's equity
ownership of the Company was reduced below 80% and, as a result, the
Company is required to file its own income tax returns.
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," the Company recognizes deferred
income taxes based on the expected future tax consequences of differences
between the financial statement basis and the tax basis of assets and
liabilities calculated using enacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax return.
Earnings per Share
Earnings per share have been computed based on the weighted average number
of shares outstanding during the year. Because the effect of the exercise
of stock options would be immaterial, they have been excluded from the
earnings per share calculation. Fully diluted earnings per share have not
been presented because the effect of the exercise of stock options and the
conversion of the Company's subordinated convertible note, which was repaid
in December 1993, would be immaterial or antidilutive.
Cash and Cash Equivalents
As of September 30, 1995, $22,381,000 of the Company's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Company in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralizes with investments principally
consisting of corporate notes, U.S. government agency securities, money
market funds, commercial paper, and other marketable securities, in the
amount of at least 103% of such obligation. The Company's funds subject to
the repurchase agreement are readily convertible into cash by the Company
and have an original maturity of three months or less. The repurchase
agreement earns a rate based on the Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter. Cash equivalents are
carried at cost, which approximates market value.
Available-for-sale Investments
Pursuant to SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," effective October 2, 1994, the Company's debt and
marketable equity securities are accounted for at market value (Note 2).
Prior to fiscal 1995, these investments were carried at the lower of cost
or market value.
9PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market value and include materials, labor, and manufacturing
overhead. The components of inventories are as follows:
(In thousands) 1995 1994
------------------------------------------------------------------------
Raw materials and supplies $17,453 $11,568
Work in process and finished goods 4,796 3,294
------- -------
$22,249 $14,862
======= =======
Rental Assets
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation over the estimated useful lives of the rental assets, which
range from five to seven years. Accumulated depreciation was $985,000 and
$348,000 at fiscal year-end 1995 and 1994, respectively.
Property, Plant and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the
estimated useful lives of the property as follows: buildings - 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. Property, plant
and equipment consist of the following:
(In thousands) 1995 1994
------------------------------------------------------------------------
Land and buildings $ 4,993 $ 4,378
Machinery, equipment and leasehold improvements 10,239 9,032
------- -------
15,232 13,410
Less: Accumulated depreciation and amortization 6,765 5,731
------- -------
$ 8,467 $ 7,679
======= =======
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $300,000 and $142,000 at fiscal year-end 1995 and 1994,
respectively. The Company assesses the future useful life of this asset
whenever events or changes in circumstances indicate that the current
useful life has diminished. The Company considers the future undiscounted
cash flows of the acquired businesses in assessing the recoverability of
this asset.
10PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (continued)
Common Stock of Subsidiary Subject to Redemption
In March 1995, the Company's ThermoLyte subsidiary sold 1,845,000 units,
each unit consisting of one share of ThermoLyte common stock, $.001 par
value, and one redemption right, at $10.00 per unit, for net proceeds of
$17,253,000. Holders of the common stock purchased in the offering will
have the option to require ThermoLyte to redeem in December 1998 or 1999
any or all of their shares at $10.00 per share. The redemption rights 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. The difference between the
redemption value and the original carrying amount of common stock of
subsidiary subject to redemption is accreted using the straight-line method
over the period ending December 1998, which corresponds to the first
redemption period. The accretion is charged to minority interest expense in
the accompanying statement of income. ThermoLyte is developing a line of
propane-fueled lighting products, including flashlights, area lights or
lanterns, and hazard lights. Following the offering, the Company owned 78%
of ThermoLyte's outstanding common stock.
2. Available-for-sale Investments
Effective October 2, 1994, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." In accordance with
SFAS No. 115, the Company's debt and marketable equity securities are
considered "Available-for-sale investments" in the accompanying balance
sheet and are carried at market value, with the difference between cost and
market value, net of related tax effects, recorded currently as a component
of shareholders' investment titled "Net unrealized gain on available-for-
sale investments." Effect of change in accounting principle in the
accompanying statement of shareholders' investment represents the
unrealized gain, net of related tax effects, pertaining to available-for-
sale investments held by the Company on October 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 September 30, 1995, are as follows:
Gross Gross
Market Cost Unrealized Unrealized
(In thousands) Value Basis Gains Losses
-------------------------------------------------------------------------
Tax-exempt securities $ 5,002 $ 5,000 $ 2 $ -
Government agency securities 5,082 5,106 - 24
Corporate bonds 429 365 64 -
Other 886 624 322 60
------- ------- ------- -------
$11,399 $11,095 $ 388 $ 84
======= ======= ======= =======
Short- and long-term available-for-sale investments in the
accompanying balance sheet at September 30, 1995, include $9,209,000 with
11PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
2. Available-for-sale Investments (continued)
contractual maturities of one year or less, $1,457,000 with contractual
maturities of more than one year through five years, and $733,000 with
contractual maturities of more than five years. Actual maturities may
differ from contractual maturities as a result of the Company's intent to
sell these securities prior to maturity and as a result of put and call
options that enable either the Company and/or the issuer to redeem these
securities at an earlier date.
The cost of available-for-sale investments that were sold was based on
specific identification in determining realized gains and losses recorded
in the accompanying statement of income. Gain on sale of investments, net
in the accompanying statement of income for the year ended September 30,
1995, resulted from gross realized gains of $768,000 and gross realized
losses of $38,000 relating to the sale of available-for-sale investments.
3. Acquisition
Effective May 1, 1994, the Company acquired NuTemp, Inc. (NuTemp) for
$7,947,000 in cash. In fiscal 1995, the Company paid an additional
$2,500,000 as a result of NuTemp having achieved certain previously agreed
upon performance goals through the period ending May 1, 1995. NuTemp is a
supplier of both remanufactured and new industrial refrigeration and
commercial cooling equipment for sale or rental.
The acquisition of NuTemp has been accounted for using the purchase
method of accounting, and its results of operations have been included in
the accompanying financial statements from the effective date of
acquisition. The cost of this acquisition exceeded the estimated fair value
of the acquired net assets by $6,465,000, which is being amortized over 40
years. Allocation of the purchase price was based on an estimate of the
fair value of the net assets acquired. Pro forma data is not presented
since the acquisition of NuTemp was not material to the Company's financial
condition or results of operations.
4. Common Stock
At September 30, 1995, the Company had reserved 1,656,966 unissued shares
of its common stock for possible issuance under stock-based compensation
plans.
5. Stock-based Compensation Plans
The Company has stock-based compensation plans for its key employees,
directors, and others. Two of these plans, adopted in 1986, permit the
grant of nonqualified and incentive stock options. A third plan, adopted in
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,
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
12PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
5. Stock-based Compensation Plans (continued)
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 fair market value of the Company's stock on the date of
grant. To date, all options have been granted at fair market value. The Company
also has a directors' stock option plan, adopted in 1991 and amended in fiscal
1995, that provides for the grant of stock options in the Company and its
majority-owned subsidiaries to nonemployee directors pursuant to a formula
approved by the Company's shareholders. Options in the Company awarded under
this plan are exercisable six months after the date of grant and expire three or
seven years after the date of grant. In addition to the Company's stock-based
compensation plans, certain officers and key employees may also participate in
the stock-based compensation plans of Thermo Electron or its majority-owned
subsidiaries.
No accounting recognition is given to options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to equity. A summary of the Company's stock option
information is as follows:
1995 1994 1993
----------------- ----------------- ----------------
Range of Range of Range of
Number Option Number Option Number Option
(In thousands except of Prices of Prices of Prices
per share amounts) Shares per Share Shares per Share Shares per Share
- --------------------------------------------------------------------------------
Options outstanding, $ 4.20- $ 2.92- $ 2.92-
beginning of year 1,259 $10.15 536 $10.15 477 $10.15
8.95- 7.90- 8.00-
Granted 296 17.53 788 9.18 117 9.73
4.20- 2.92- 2.92-
Exercised (111) 9.58 (64) 7.58 (16) 8.33
7.45- 4.20- 2.92-
Lapsed or cancelled (38) 9.58 (1) 8.33 (42) 9.58
----- ----- -----
Options outstanding, $ 4.20- $ 4.20- $ 2.92-
end of year 1,406 $17.53 1,259 $10.15 536 $10.15
===== ===== =====
$ 4.20- $ 4.20- $ 2.92-
Options exercisable 1,406 $17.53 1,258 $10.15 534 $10.15
===== ===== =====
Options available for
grant 97 355 393
===== ===== =====
13PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
6. Employee Benefit Plans
Employee Stock Purchase Plan
Substantially all of the Company's full-time 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 will be 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 1995, 1994, and
1993, the Company issued 25,859 shares, 40,219 shares, and 11,602 shares of
its common stock, respectively, under this plan.
401(k) Savings Plan and Employee Stock Ownership Plan
The majority of the Company's employees are eligible to participate in
Thermo Electron's 401(k) savings plan and certain employees are eligible to
participate in Thermo Electron's employee stock ownership plan.
Contributions to the Thermo Electron 401(k) savings plan are made by both
the employee and the Company. Company contributions are based upon the
level of employee contributions. For these plans, the Company contributed
and charged to expense $653,000, $656,000, and $532,000 in fiscal 1995,
1994, and 1993, respectively.
Postemployment Benefits
Effective October 3, 1993, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 112 requires the
recognition of the cost of postemployment benefits if certain criteria are
met and the amount of benefits can be reasonably estimated. The adoption of
this statement did not have a material impact on the Company's financial
statements.
7. Income Taxes
The components of the provision for income taxes are as follows:
(In thousands) 1995 1994 1993
-----------------------------------------------------------------------
Currently payable:
Federal $2,150 $1,933 $ 724
State 525 493 336
------ ------ ------
2,675 2,426 1,060
------ ------ ------
Deferred (prepaid), net:
Federal 54 (333) 168
State 8 (59) (23)
------ ------ ------
62 (392) 145
------ ------ ------
$2,737 $2,034 $1,205
====== ====== ======
14PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
7. Income Taxes (continued)
The provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal
income tax rate of 34% to income before provision for income taxes and
minority interest due to the following:
(In thousands) 1995 1994 1993
-----------------------------------------------------------------------
Provision for income taxes at
statutory rate $2,416 $1,796 $1,064
Increases (decreases) resulting from:
State income taxes, net of
federal benefit 353 286 207
Income from tax-preferred securities (122) (213) (82)
Nondeductible expenses 83 73 26
Other 7 92 (10)
------ ------ ------
$2,737 $2,034 $1,205
====== ====== ======
Deferred income taxes and prepaid income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1995 1994
-------------------------------------------------------------
Deferred income taxes:
Available-for-sale investments $ 107 $ -
Depreciation - 167
Other 11 25
------ ------
$ 118 $ 192
====== ======
Prepaid income taxes:
Inventory basis difference $1,031 $ 481
Accrued warranty costs 819 1,289
Accrued compensation 590 505
Other accruals and reserves 496 494
Allowance for doubtful accounts 207 234
Depreciation and amortization 70 -
------ ------
$3,213 $3,003
====== ======
8. Related Party Transactions
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management,
certain employee benefit administration, tax advice and preparation of tax
returns, centralized cash management, and certain financial and other
services, for which the Company pays Thermo Electron annually an amount
equal to 1.20% of the Company's revenues. Prior to January 1, 1995, the
15PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
8. Related Party Transactions (continued)
Company paid an annual fee equal to 1.25% of the Company's revenues. Prior
to January 3, 1993, the Company paid an annual fee equal to 1% 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 $1,250,000, $1,117,000, and $898,000 in fiscal 1995, 1994, and
1993, respectively. Management believes that the service fee charged by
Thermo Electron is reasonable and that such fees are representative of the
expenses the Company would have incurred on a stand-alone basis. The
corporate services agreement is renewed annually but can be terminated upon
30 days' prior notice by the Company or upon the Company's withdrawal from
the Thermo Electron Corporate Charter (the Thermo Electron Corporate
Charter defines the relationships among Thermo Electron and its
majority-owned subsidiaries). For additional items such as employee benefit
plans, insurance coverage, and other identifiable costs, Thermo Electron
charges the Company based upon costs attributable to the Company.
Other Related Party Services
Prior to January 1995 and October 1993, the Company used contract
administration and other services and data processing services,
respectively, of a majority-owned subsidiary of Thermo Electron, which were
charged based on actual usage. For these services, the Company was charged
$31,000, $117,000, and $251,000 in fiscal 1995, 1994, and 1993,
respectively. As of January 1995 and October 1993, the Company provides
contract administration and other services and data processing services,
respectively, to one wholly owned and four majority-owned subsidiaries of
Thermo Electron, which are charged based on actual usage. For these
services, the Company charged $209,000 and $107,000 in fiscal 1995 and
1994, respectively.
Leases
The Company leases an office and laboratory facility from Thermo Electron
under an agreement expiring in September 1997. Prior to April 1993, the
Company subleased a portion of this facility to a majority-owned subsidiary
of Thermo Electron. The accompanying statement of income includes expenses
from this operating lease of $170,000, $170,000, and $133,000 in fiscal
1995, 1994, and 1993, respectively, net of sublease income of $37,000 in
fiscal 1993. The future minimum payments due under this operating lease as
of September 30, 1995, are $170,000 per year in fiscal 1996 and 1997. Total
future minimum lease payments are $340,000.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
Short-term Available-for-sale Investments
At September 30, 1995, the Company's short-term available-for-sale
investments included $429,000 of 6.5% subordinated convertible debentures
due 1997, which were purchased on the open market for $365,000. The
debentures have a par value of $365,000 and were issued by Thermo Process
Systems Inc., which is a majority-owned subsidiary of Thermo Electron.
Sale of Parent Company Common Stock
During fiscal 1993, the Company sold 18,000 shares of its Thermo Electron
common stock to an unrelated party for net proceeds of $447,000, which
resulted in a gain of $404,000. At September 30, 1995, the Company owned
16PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
8. Related Party Transactions (continued)
7,313 shares of Thermo Electron common stock that were purchased for
$18,000 and have market value of $339,000. The Company's investment in
Thermo Electron common stock is included in long-term available-for-sale
investments in the accompanying balance sheet. Share information for Thermo
Electron has been restated to reflect a three-for-two stock split effected
in May 1995.
Long-term Obligations
On May 4, 1987, the Company issued a $3,000,000 principal amount 6.2%
subordinated convertible note to Thermo Electron due May 1997, and
convertible into shares of the Company's common stock at $9.775 per share.
This note was repaid in December 1993.
9. Commitments
In addition to the lease described in Note 8, the Company leases equipment
and manufacturing, engine testing, service, and office facilities under
operating leases expiring at various dates through fiscal 2004. The
accompanying statement of income includes expenses from these operating
leases of $1,044,000, $711,000, and $640,000 in fiscal 1995, 1994, and
1993, respectively. Future minimum payments due under these operating
leases at September 30, 1995, are $1,047,000 in fiscal 1996; $815,000 in
fiscal 1997; $472,000 in fiscal 1998; $461,000 in fiscal 1999; $438,000 in
fiscal 2000; and $1,275,000 in fiscal 2001 and thereafter. Total future
minimum lease payments are $4,508,000.
10. Long-term Obligations
At September 30, 1995, the Company's long-term obligations included a
$305,000 mortgage loan, which is secured by property at the Company's FES
division with a net book value of $4,010,000. The loan is payable in equal
monthly installments with the final payment in fiscal 2002. The interest
rate on this loan is 75% of the prime rate, and averaged 6.42% and 5.0% in
fiscal 1995 and 1994, respectively.
The annual requirements for long-term obligations as of September 30,
1995, are $58,000 in fiscal 1996; $55,000 in fiscal 1997; $56,000 in fiscal
1998; $59,000 in fiscal 1999; $58,000 in fiscal 2000; and $136,000 in
fiscal 2001 and thereafter. Total requirements of long-term obligations are
$422,000.
11. Segment Data and Export Sales
The Company's principal businesses consist of manufacturing, marketing, and
servicing: industrial refrigeration and commercial cooling equipment;
gasoline engines for recreational boats, LPG (liquefied petroleum gas) and
gasoline engines for lift trucks, and natural gas engines for fleet
vehicles and industrial applications; and natural gas cooling and
cogeneration systems, as well as conducting research and development on
applications of thermal energy. In addition, the Company rents commercial
cooling and industrial refrigeration equipment, which is included in the
Industrial Refrigeration Systems segment.
Export revenues to Asia accounted for 10%, 10%, and 7% of the Company's
total revenues in fiscal 1995, 1994, and 1993, respectively. Other export
17PAGE
<PAGE>
Thermo Power Corporation
Notes to Consolidated Financial Statements
11. Segment Data and Export Sales (continued)
revenues accounted for 5%, 6%, and 5% of the Company's total revenues in
fiscal 1995, 1994, and 1993, respectively. In general, export sales are
denominated in U.S. dollars. Information for fiscal 1995, 1994, and 1993,
with respect to the Company's business segments, is shown in the following
table.
(In thousands) 1995 1994 1993
--------------------------------------------------------------------------
Revenues:
Industrial Refrigeration Systems $ 64,708 $ 57,372 $ 42,369
Engines 24,848 20,204 19,216
Cooling and Cogeneration Systems 15,873 13,192 14,862
Intersegment sales elimination (a) (2,174) (1,434) (1,018)
-------- -------- --------
$103,255 $ 89,334 $ 75,429
======== ======== ========
Operating income:
Industrial Refrigeration Systems $ 6,689 $ 5,206 $ 3,389
Engines (120) 188 (866)
Cooling and Cogeneration Systems 961 820 685
Corporate (b) (3,049) (2,731) (1,475)
-------- -------- --------
$ 4,481 $ 3,483 $ 1,733
======== ======== ========
Identifiable assets:
Industrial Refrigeration Systems $ 48,249 $ 36,980 $ 24,278
Engines 17,193 10,402 10,677
Cooling and Cogeneration Systems (c) 23,549 5,691 5,823
Corporate (d) 19,426 29,548 38,735
-------- -------- --------
$108,417 $ 82,621 $ 79,513
======== ======== ========
Depreciation and amortization:
Industrial Refrigeration Systems $ 1,551 $ 1,350 $ 757
Engines 329 314 304
Cooling and Cogeneration Systems 192 203 237
Corporate 10 - -
-------- -------- --------
$ 2,082 $ 1,867 $ 1,298
======== ======== ========
Capital expenditures:
Industrial Refrigeration Systems $ 1,545 $ 540 $ 266
Engines 344 223 270
Cooling and Cogeneration Systems 150 112 125
Corporate 62 - -
-------- -------- --------
$ 2,101 $ 875 $ 661
======== ======== ========
(a) Intersegment sales are accounted for at prices that are representative
of transactions with unaffiliated parties.
(b) Primarily corporate general and administrative expenses and other
expenses for new lines of business.
(c) Includes $17.3 million in net proceeds from ThermoLyte's fiscal 1995
private placement.
(d) Primarily cash, cash equivalents, and short-term investments.
18PAGE
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Thermo Power Corporation:
We have audited the accompanying consolidated balance sheet of Thermo Power
Corporation (a Massachusetts corporation and 63%-owned subsidiary of Thermo
Electron Corporation) and subsidiaries as of September 30, 1995 and October
1, 1994, and the related consolidated statements of income, shareholders'
investment, and cash flows for each of the three years in the period ended
September 30, 1995. 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 Power Corporation and subsidiaries as of September 30, 1995 and
October 1, 1994, and the results of their operations and their cash flows
for each of the three years in the period ended September 30, 1995, in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements,
effective October 2, 1994, the Company changed its method of accounting for
investments in debt and marketable equity securities.
Arthur Andersen LLP
Boston, Massachusetts
November 3, 1995
19PAGE
<PAGE>
Thermo Power Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview
The Company's business can be divided into three segments: Industrial
Refrigeration Systems, Engines, and Cooling and Cogeneration Systems.
Through the Company's FES division, the Industrial Refrigeration Systems
segment supplies standard and custom-designed refrigeration systems used
primarily by the food-processing, petrochemical, and pharmaceutical
industries. NuTemp, Inc. (NuTemp), which was acquired in May 1994, is a
supplier of both remanufactured and new industrial refrigeration and
commercial cooling equipment for sale or rental. NuTemp's industrial
refrigeration equipment is used primarily in the food-processing,
petrochemical, and pharmaceutical industries, and its commercial cooling
equipment is used primarily in institutions and commercial buildings, as
well as by service contractors. The demand for NuTemp's equipment is
typically highest in the summer period.
Within the Engines segment, the Company's Crusader Engines division
(Crusader) manufactures gasoline engines for recreational boats; natural
gas engines for vehicles, cooling, pumping, refrigeration, and other
industrial applications; and LPG (liquefied petroleum gas) and gasoline
engines for lift trucks.
The Cooling and Cogeneration Systems segment consists of the Company's
Tecogen division and the Company's ThermoLyte Corporation (ThermoLyte)
subsidiary, formed in March 1995. Tecogen designs, develops, markets, and
services packaged cooling and cogeneration systems fueled principally by
natural gas for sale to a wide range of commercial, institutional,
industrial, and multi-unit residential users. Certain large-capacity
cooling systems are manufactured by FES, and the cogeneration systems are
manufactured by Crusader. Tecogen also conducts research and development on
applications of thermal energy. The Company formed its ThermoLyte
subsidiary to complete the development and commercialization of a family of
propane-powered flashlights, emergency lights, area lights, and other
lighting products.
Results of Operations
Fiscal 1995 Compared With Fiscal 1994
Total revenues increased 16% to $103,255,000 in fiscal 1995 from
$89,334,000 in fiscal 1994. Industrial Refrigeration Systems segment
revenues increased 13% to $64,708,000 in 1995 from $57,372,000 in 1994.
Industrial Refrigeration Systems segment revenues increased $5,577,000 due
to the inclusion of sales for a full year from NuTemp, which was acquired
in May 1994. Engines segment revenues increased 23% to $24,848,000 in 1995
from $20,204,000 in 1994 primarily due to increased demand for Crusader's
inboard marine-engine related products and, to a lesser extent, natural
gas-fueled TecoDrive(R) engines. Results for 1994 included $1,632,000 of
revenues from sterndrive marine engine-related products. The Company's
sterndrive customer exited that market in fiscal 1994. Cooling and
Cogeneration Systems segment revenues increased 20% to $15,873,000 in 1995
from $13,192,000 in 1994 due to the inclusion of a fee of $1,187,000
received from one of the Company's distributors of packaged cogeneration
systems to satisfy the financial obligations under a minimum purchase
contract and an increase of $1,184,000 in revenues from gas-fueled cooling
systems. These increases were offset in part by a decrease in revenues from
packaged cogeneration systems.
20PAGE
<PAGE>
Thermo Power Corporation
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 23% in fiscal 1995 from 22% in
fiscal 1994. The gross profit margin for the Industrial Refrigeration
Systems segment increased to 25% in 1995 from 24% in 1994 primarily due to
the inclusion of higher-margin NuTemp revenues for the full year of 1995
compared with five months in 1994. The gross profit margin for the Engines
segment decreased to 11% in 1995 from 12% in 1994 primarily due to startup
costs associated with new products and, to a lesser extent, higher warranty
expenses in 1995 compared with 1994. The gross profit margin for the
Cooling and Cogeneration Systems segment increased to 29% in 1995 from 25%
in 1994 primarily due to the fee received from one of the Company's
distributors of packaged cogeneration systems discussed above.
Selling, general and administrative expenses as a percentage of
revenues decreased to 15% in fiscal 1995 from 16% in fiscal 1994 primarily
due to an increase in total revenues. Research and development expenses
increased to $3,065,000 in 1995 from $1,622,000 in 1994 primarily due to
development costs associated with natural gas-engine products and, to a
lesser extent, gas-fueled lighting products.
Interest income increased to $1,919,000 in fiscal 1995 from $1,278,000
in fiscal 1994, reflecting interest income earned on the proceeds from
ThermoLyte's March 1995 private placement and, to a lesser extent, higher
prevailing interest rates in 1995. The increase was offset in part by lower
average invested amounts as a result of the cash expended for the
acquisition of NuTemp in May 1994. Interest expense decreased to $23,000 in
1995 from $61,000 in 1994 due to the repayment of a $3,000,000 principal
amount 6.2% subordinated convertible note to Thermo Electron Corporation
(Thermo Electron) in the first quarter of fiscal 1994. The Company holds
certain investments in companies affiliated with Thermo Electron and has
sold, from time to time, a portion of these investments for a gain to the
Company. Gain on sale of investments, net, primarily represents a gain of
$768,000 in 1995 and $616,000 in 1994 relating to the sale of the Company's
investment in subordinated convertible debentures issued by Thermedics Inc.
(a majority-owned subsidiary of Thermo Electron). As of September 30, 1995,
the Company owned 7,313 shares of Thermo Electron common stock that were
purchased for $18,000 and have a market value of $339,000, and $429,000 of
6.5% subordinated convertible debentures due 1997 issued by Thermo Process
Systems Inc. (a majority-owned subsidiary of Thermo Electron) that were
purchased for $365,000. The Company may sell these investments from time to
time in the future.
The effective tax rate was 39% in both fiscal 1995 and 1994. This rate
exceeded the statutory federal income tax rate primarily due to the impact
of state income taxes.
Fiscal 1994 Compared With Fiscal 1993
Total revenues increased 18% to $89,334,000 in fiscal 1994 from $75,429,000
in fiscal 1993. Industrial Refrigeration Systems segment revenues increased
35% to $57,372,000 in 1994 from $42,369,000 in 1993 due to an increase in
demand for refrigeration packages and, to a lesser extent, the inclusion of
$5,804,000 in revenues from NuTemp. These increases were offset in part by
lower prices for refrigeration packages at the Company's FES division due
to increased competition in the refrigeration industry. Engines segment
21PAGE
<PAGE>
Thermo Power Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Fiscal 1994 Compared With Fiscal 1993 (continued)
revenues increased to $20,204,000 in 1994 from $19,216,000 in 1993 due to
an increase of $794,000 in revenues from natural gas-fueled TecoDrive
engines and, to a lesser extent, an increase in revenues from marine
products. Revenues from marine products increased due to greater demand for
Crusader's inboard marine engine-related products and a one-time sterndrive
spare parts stocking order in the first six months of fiscal 1994, offset
in part by a decrease in sterndrive marine engine-related sales as a result
of the Company's sterndrive customer exiting that market. Cooling and
Cogeneration Systems segment revenues decreased to $13,192,000 in 1994 from
$14,862,000 in 1993 primarily due to a decline of $837,000 in revenues from
gas-fueled cooling systems and a decline of $825,000 in revenues from
sponsored research and development contracts.
The gross profit margin increased to 22% in fiscal 1994 from 19% in
fiscal 1993. The gross profit margin for the Industrial Refrigeration
Systems segment was 24% in 1994, compared with 23% in 1993. The inclusion
of higher-margin NuTemp revenues was offset in part by a decrease in
margins at FES due to lower prices resulting from increased competition in
the refrigeration industry. NuTemp's gross profit margin was 44% for the
period from May 1, 1994 to October 1, 1994. The gross profit margin for the
Engines segment increased to 12% in 1994 from 8% in 1993 primarily due to a
shift in the sales mix of marine products and, to a lesser extent, improved
margins on natural gas-fueled TecoDrive engines resulting from increased
revenues. The gross profit margin for the Cooling and Cogeneration Systems
segment increased to 25% in 1994 from 22% in 1993 primarily due to improved
margins on the Company's gas-fueled cooling systems resulting from a
reduction in manufacturing costs.
Selling, general and administrative expenses as a percentage of
revenues were 16% in both fiscal 1994 and 1993. Research and development
expenses increased to $1,622,000 in 1994 from $995,000 in 1993 primarily
due to higher development costs associated with natural gas-engine
products.
Interest income increased to $1,278,000 in fiscal 1994 from $1,161,000
in fiscal 1993 due to higher average invested amounts as a result of the
Company's public offering of common stock in February 1993, offset in part
by the cash expended for the acquisition of NuTemp in May 1994. Interest
expense decreased to $61,000 in 1994 from $342,000 in 1993 due to the
repayment of a $3,000,000 principal amount 6.2% subordinated convertible
note to Thermo Electron in the first quarter of fiscal 1994 and, to a
lesser extent, the repayment of a $5,000,000 promissory note to Thermo
Electron and short-term borrowings from Thermo Electron in the second
quarter of fiscal 1993. Gain on sale of investments, net, primarily
represents a gain of $616,000 on the sale of a portion of the Company's
investment in Thermedics subordinated convertible debentures in 1994, and a
gain of $404,000 on the sale of 18,000 shares of Thermo Electron common
stock in 1993.
The effective tax rate was 39% in both fiscal 1994 and 1993. This rate
exceeded the statutory federal income tax rate primarily due to the impact
of state income taxes.
22PAGE
<PAGE>
Thermo Power Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Financial Condition
Liquidity and Capital Resources
Working capital was $60,140,000 at September 30, 1995, compared with
$43,143,000 at October 1, 1994. Included in working capital are cash, cash
equivalents, and short-term investments of $34,170,000 at September 30,
1995, compared with $27,879,000 at October 1, 1994. Of the $34,170,000
balance at September 30, 1995, $17,355,000 was held by ThermoLyte and the
remainder was held by the Company and its wholly owned subsidiaries. During
fiscal 1995, $5,110,000 of cash was used in operating activities. Accounts
receivable increased reflecting a higher sales level, while inventories
increased primarily due to a build-up of inventory at Crusader in
connection with several large orders for engines. Crusader began shipping
these orders in the first quarter of fiscal 1996. In March 1995, ThermoLyte
completed a private placement for net proceeds of $17,253,000 (Note 1). In
fiscal 1996, the Company expects to make capital expenditures of
approximately $4,500,000. The Company believes its existing resources are
sufficient to meet the capital requirements of its existing operations for
the foreseeable future.
23PAGE
<PAGE>
Thermo Power Corporation
Selected Financial Information
(In thousands except
per share amounts) 1995(a) 1994(b) 1993(c) 1992 1991
-------------------------------------------------------------------------
Statement of Income
Data:
Revenues $103,255 $ 89,334 $ 75,429 $ 34,137 $ 27,144
Net income (loss) 4,188 3,248 1,923 355 (1,538)
Earnings (loss)
per share .34 .26 .18 .04 (.20)
Balance Sheet Data:
Working capital $ 60,140 $ 43,143 $ 50,467 $ 19,173 $ 26,667
Total assets 108,417 82,621 79,513 28,675 36,071
Long-term
obligations 364 344 3,395 3,000 12,274
Common stock of
subsidiary subject
to redemption 17,435 - - - -
Shareholders'
investment 65,825 60,475 56,599 18,302 16,941
Quarterly Information (Unaudited)
(In thousands except per share amounts)
1995 First Second Third Fourth
------------------------------------------------------------------------
Revenues $22,314 $24,912 $27,514 $28,515
Gross profit 5,266 5,493 5,868 6,805
Net income 787 805 1,106 1,490
Earnings per share .06 .07 .09 .12
1994 First Second Third(b) Fourth
------------------------------------------------------------------------
Revenues $19,775 $22,014 $23,381 $24,164
Gross profit 3,785 4,395 5,234 5,894
Net income 631 729 912 976
Earnings per share .05 .06 .07 .08
(a)Reflects the net proceeds of the Company's ThermoLyte Corporation
subsidiary private placement in fiscal 1995.
(b)Reflects the May 1994 acquisition of NuTemp, Inc.
(c)Reflects the October 1992 acquisition of FES and the net proceeds of
the Company's February 1993 public offering of common stock.
24PAGE
<PAGE>
Thermo Power Corporation
Common Stock Market Information
The following table shows the market range for the Company's common stock
based on reported sales prices on the American Stock Exchange (symbol THP)
for fiscal 1995 and 1994.
1995 1994
---------------- -----------------
Quarter High Low High Low
--------------------------------------------------------------------
First $ 9 7/8 $ 8 5/8 $11 1/8 $ 8 3/4
Second 10 3/8 8 7/8 9 7/8 7 3/8
Third 18 7/8 9 3/4 8 1/2 7
Fourth 19 1/2 15 1/8 9 3/8 7 1/2
As of November 24, 1995, the Company had 493 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 November 24, 1995, was $14 1/4 per share.
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 Board of Directors and will depend upon, among
other factors, the Company's earnings, capital requirements, and financial
condition.
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 Power Corporation who desire information about the
Company are invited to contact John N. Hatsopoulos, Chief Financial
Officer, Thermo Power Corporation, 81 Wyman Street, P.O. Box 9046, Waltham,
Massachusetts 02254-9046, by letter or telephone at (617) 622-1111. A
mailing list is maintained to enable shareholders whose stock is held in
street name, and other interested individuals, to receive quarterly and
annual reports as quickly as possible. If you would like your name added to
the list, please notify this office.
25PAGE
<PAGE>
Thermo Power Corporation
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, as filed with the Securities and Exchange Commission,
may be obtained at no charge by writing to John N. Hatsopoulos, Chief
Financial Officer, Thermo Power Corporation, 81 Wyman Street, P.O. Box
9046, Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Monday, March 11, 1996,
at 10:00 a.m. at Thermo Electron Corporation, 81 Wyman Street, Waltham,
Massachusetts.
26PAGE
<PAGE>
Exhibit 21
THERMO POWER CORPORATION
SUBSIDIARIES OF THE REGISTRANT
At December 4, 1995, Thermo Power Corporation owned the following
companies:
State or Registrant's
Jurisdiction % of
Name of Incorporation Ownership
-------------------------------- ---------------- ------------
Takepine Limited United Kingdom 100%
Tecogen Securities Corporation Massachusetts 100%
NuTemp, Inc. Illinois 100%
ThermoLyte Corporation Massachusetts 78%
Exhibit 23
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated November 3, 1995, included
in or incorporated by reference into Thermo Power Corporation's Annual
Report on Form 10-K for the year ended September 30, 1995, into the
Company's previously filed Registration Statements as follows:
Registration Statement No. 33-19061 on Form S-8, Registration Statement No.
33-19062 on Form S-8, Registration Statement No. 33-25051 on Form S-8, and
Registration Statement No. 33-52814 on Form S-8.
Arthur Andersen LLP
Boston, Massachusetts
December 4, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
POWER CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 23,504
<SECURITIES> 10,666
<RECEIVABLES> 18,203
<ALLOWANCES> 530
<INVENTORY> 22,249
<CURRENT-ASSETS> 84,815
<PP&E> 15,232
<DEPRECIATION> 6,765
<TOTAL-ASSETS> 108,417
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<BONDS> 364
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0
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<OTHER-SE> 64,577
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<SALES> 103,255
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<CGS> 79,823
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