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 April 4, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-12636
THERMO REMEDIATION INC.
(Exact name of Registrant as specified in its charter)
Delaware 59-3203761
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Damonmill Square
9 Pond Lane, Suite 5A
Concord, MA 01742-2851
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to the filing requirements for
at least the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of May 29, 1998, was approximately $20,417,000.
As of May 29, 1998, the Registrant had 12,934,652 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Fiscal 1998 Annual Report to Shareholders for the
year ended April 4, 1998, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on September 15, 1998, are incorporated by reference
into Part III.
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PART I
Item 1. Business
(a) General Development of Business
Thermo Remediation Inc. (the Company or the Registrant) is a national
provider of environmental-liability management services. Through a
nationwide network of offices, the company offers these and related
consulting services in five areas: industrial remediation, nuclear
remediation, waste-fluids collection and recycling, soil remediation, and
environmental-management and information-technology systems.
The Company's industrial remediation businesses provide consultation,
engineering, and on-site services to help clients manage problems associated
with environmental compliance, waste management, and the remediation of
industrial sites contaminated with organic and inorganic wastes and residues.
The Company also performs the cleanup of hazardous waste sites for government
and industry as a prime construction contractor and completes predesigned
remedial action contracts at sites containing hazardous, toxic, and radioactive
wastes. In May 1997, the Company acquired TriTechnics Corporation, an
environmental engineering and consulting firm, for $1.6 million in cash.
In the nuclear-remediation area, the Company provides services to remove
radioactive contaminants from sand, gravel, and soil, as well as health physics
services, radiochemistry laboratory services, radiation dosimetry services,
radiation-instrument calibration and repair services, and radiation-source
production. In November 1997, the Company acquired Benchmark Environmental
Corporation, a provider of nuclear-remediation and waste-management services to
government and private sector clients, for 85,106 shares of the Company's common
stock, valued at $450,000, and $2,900,000 in cash.
The Company also collects, tests, processes, and recycles used motor oil
and other industrial fluids.
The Company designs and operates facilities for the remediation of
nonhazardous soil, and operates such facilities on the East and West Coasts. The
Company also designs and operates mobile equipment for the on-site remediation
of such wastes.
The Company develops and implements management and computer-based systems
that aid in the collection and application of environmental data, helping to
establish or improve a customer's environmental-compliance program while
controlling the related costs. In August 1997, the Company acquired RPM Systems,
Inc., an environmental-management, planning, and information technology company,
for 374,507 shares of the Company's common stock, valued at $2,400,000, and
$600,000 in cash.
The Company was incorporated in November 1991 as an indirect, wholly owned
subsidiary of Thermo TerraTech Inc. On October 1, 1993, pursuant to a
reorganization, Thermo TerraTech contributed to the Company certain additional
assets and liabilities pertaining to its soil-remediation business. As of April
4, 1998, Thermo TerraTech owned 8,874,551 shares of the common stock of the
Company, representing 69% of such stock
2<PAGE>
outstanding. Thermo TerraTech intends, for the foreseeable future, to maintain
at least 50% ownership of the Company. A publicly traded subsidiary of Thermo
Electron Corporation, Thermo TerraTech provides industrial outsourcing services
and manufacturing support encompassing a broad range of specializations,
including infrastructure engineering, design and construction, environmental
compliance, laboratory testing, and metal treating.
As of April 4, 1998, Thermo Electron owned 193,900 shares of the
Company's common stock, representing 1.5% of such stock outstanding. Thermo
Electron develops, manufactures, and markets analytical and monitoring
instruments; biomedical products including heart-assist devices,
respiratory-care equipment, and mammography systems; paper recycling and
papermaking equipment; alternative-energy systems; industrial process equipment;
and other specialized products. Thermo Electron also provides industrial
outsourcing, laboratory, and metallurgical services, and conducts
advanced-technology research and development. Thermo Electron and Thermo
TerraTech may purchase shares of the Company's common stock from time to time in
the open market or in negotiated transactions. During fiscal 19981, Thermo
Electron and Thermo TerraTech purchased 8,500 shares of the Company's common
stock in the open market for $62,000.
Forward-looking Statements
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report on Form
10-K. For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
"seeks," "estimates," and similar expressions are intended to identify
forward-looking statements. There are a number of important factors that could
cause the results of the Company to differ materially from those indicated by
such forward-looking statements, including those detailed under the heading
"Forward-looking Statements" in the Registrant's Fiscal 1998 Annual Report to
Shareholders, which statements are incorporated herein by reference.
(b) Financial Information About Industry Segments
The Company conducts business in one industry segment: environmental
services. Within this segment, the principal products and services are
industrial-remediation services, nuclear-remediation services, waste-fluids
collection and recycling services, soil-remediation services, and
environmental-management and information-technology systems.
- --------
1 References to fiscal 1998, 1997, and 1996 herein are for the fiscal years
ended April 4, 1998, March 29, 1997, and March 30, 1996, respectively.
3
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(c) Description of Business
(i) Principal Products and Services
Industrial-remediation Services
The Company provides environmental consulting and remediation construction
management to clients in the transportation, refining, chemical, wood treating,
gas, and electric utility industries across the nation. Through its consulting,
engineering, and on-site services, the Company offers a broad array of remedial
solutions, all of which are applied from a risk-management perspective, to help
clients manage problems associated with environmental compliance, waste
management, and the remediation of industrial sites contaminated with various
wastes and residues. The Company provides particular expertise in
bioremediation, and in managing wastes from manufactured-gas plants, refineries,
and railroad properties.
The Company performs cleanups of hazardous waste sites for government and
industry as a prime construction contractor and completes predesigned remedial
action contracts at sites containing hazardous, toxic, and radioactive wastes.
Under contracts with federal and state governments, and other public- and
private-sector clients, the Company also provides project management and
construction services for the remediation of hazardous and nonhazardous wastes.
Most of this contract work is obtained through a bid process, with the job being
awarded to the lowest qualified bidder.
Nuclear-remediation Services
The Company provides services to remove radioactive contaminants from soil,
as well as health physics services, radiochemistry laboratory services,
radiation dosimetry services, radiation-instrument calibration and repair
services, and radiation-source production. As part of its radiation and
nuclear/health physics services business, the Company provides site surveys for
radioactive materials and on-site samples, as well as analysis in support of
decontamination programs and dosimetry services to measure personnel exposure.
In addition, using its proprietary segmented-gate system technology, the Company
removes radioactive contaminants from soil. A substantial part of the Company's
health physics services has been performed under the U.S. Department of Energy's
remedial action programs.
Waste-fluids Collection and Recycling Services
The Company collects, tests, processes, and recycles used motor oil and
other industrial fluids. In addition, the Company collects and recycles oily
water and oil filters. The Company has processing facilities in Phoenix and
Tucson, Arizona; Las Vegas, Nevada; Nampa, Idaho; Commerce City, Colorado; and
Portland, Oregon from which it operates a fleet of oil and water collection
trucks to pick up waste oils and oily water. Each facility consists of a series
of tanks set in protective enclosures used to store the fluids before
processing. Processing of oil consists of straining, filtering, and blending.
4
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Once processed, the oil is sold as burner fuel for a variety of industrial uses,
including use in cement and asphalt kilns, industrial furnaces, and as "cutter
stock" to make marine diesel fuel for large, oceangoing vessels. Water is
processed to reclaim all usable oil and remove solid contaminants until the
water meets sewer-discharge standards.
Soil-remediation Services
The Company designs and operates facilities for the remediation of
nonhazardous soil. The Company's soil-remediation centers are environmentally
secure facilities for receiving, storing, and processing petroleum-contaminated
soils. Each site consists principally of a soil-remediation unit and a
soil-storage area. The Company currently provides soil-remediation services at
facilities in California, Oregon, Washington, South Carolina, Maryland, and New
York.
The market for remediation of petroleum-contaminated soils, as with many
other waste markets, was created by environmental regulations. The market for
soil-remediation services has been driven largely by state programs to enforce
the EPA's underground storage tank (UST) regulations and to fund cleanups. UST
compliance requirements and attendant remediation costs are often beyond the
financial capabilities of individuals and smaller companies. To address this
problem, some states established tax-supported trust funds to assist in the
financing of UST compliance and remediation. Many states have realized that the
number of sites requiring remediation and the costs of compliance are
substantially higher than were originally estimated. As a result, several states
have significantly reduced compliance requirements and altered regulatory
approaches and standards in order to reduce the costs of cleanup. More lenient
regulatory standards, reduced enforcement, and uncertainty with respect to such
changes have resulted in lower levels of cleanup activity in most states where
the Company conducts business, which has had a material adverse effect on the
Company's business. In addition, underground and aboveground tank regulations,
clean water legislation, and real estate transfer and financing transactions
also influence demand for soil-remediation services.
Environmental-Management and Information-Technology Services
The Company helps public utilities, government institutions, and Fortune
500 companies develop and implement management and computer-based systems that
aid in the collection and application of environmental data. By helping to
establish or improve a customer's environmental-compliance program, the
Company's customized services promote and support the integration of
environmental-management functions with everyday business activities. The
Company's services help multinational companies accurately estimate and control
the cost of their environmental- compliance and health and safety efforts. The
Company also develops measurement systems that track clients' progress toward
their stated environmental-performance goals.
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(ii) New Products
The Company has made no commitments to new products that would require the
investment of a material amount of the Company's assets.
(iii) Raw Materials
Supplies purchased by the Company are available either from a number of
different suppliers or from alternative sources that could be developed without
a material adverse effect on the Company's business. To date, the Company has
experienced no difficulties in obtaining these materials.
(iv) Patents, Licenses, and Trademarks
The Company currently owns or has rights under licenses to a number of U.S.
patents. Although the Company believes that patent protection provides it with
competitive advantages with respect to certain portions of its business and will
continue to seek patent protection when appropriate, the Company also believes
that its business depends primarily upon trade secrets and the technical and
marketing expertise of its personnel.
The Company has a perpetual, exclusive, and royalty-free license from
Thermo TerraTech to develop, own, and operate soil-remediation centers and to
employ mobile remediation equipment incorporating Thermo TerraTech's technology
throughout North America (other than in Massachusetts and New Hampshire).
(v) Seasonal Influences
A majority of the Company's businesses experience seasonal fluctuations. A
majority of the Company's soil-remediation sites, as well as the Company's
fluids-recycling sites, experience declines in revenues if severe weather
conditions occur. Site remediation work and certain environmental testing
services may decline in winter months as a result of severe weather conditions.
(vi) Working Capital Requirements
In general, there are no special credit terms extended to customers that
would have a material adverse effect on the Company's working capital.
(vii) Dependency on a Single Customer
A substantial portion of the Company's nuclear-remediation services have
been provided to the U.S. government. One subcontract for the U.S. government
accounted for approximately 5% and 10% of the Company's total revenues in fiscal
1997 and 1996, respectively. All other U.S. government agencies accounted for
10%, 25%, and 16% of the Company's total revenues in fiscal 1998, 1997, and
1996, respectively.
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(viii) Backlog
The Company's backlog of firm orders was approximately $51,860,000 and
$36,927,000 as of April 4, 1998, and March 29, 1997, respectively. The Company
believes that substantially all of the backlog at April 4, 1998, will be
completed during the next 12 months. Certain of these orders are subject to
cancellation by the customer upon payment of a cancellation charge and all
federal government contracts are subject to termination at any time by the
government without penalty. Soil-remediation and waste-fluids recycling services
are provided on a current basis pursuant to purchase orders. Accordingly, there
is no backlog for these services.
(ix) Government Contracts
See Dependency on a Single Customer.
(x) Competition
Many of the Company's businesses are engaged in highly competitive,
regional markets, with competition coming from numerous small firms offering
limited services, as well as much larger firms that offer an array of services.
In the market for industrial-remediation services, the Company competes
with numerous regional and local companies as well as a number of national
remediation contractors. The Company competes primarily based on value, with the
vast majority of the contracts it seeks awarded on the basis of scope,
effectiveness, and cost. Other competitive factors for the Company's
industrial-remediation businesses include: reputation; experience; breadth and
quality of services offered; and technical, managerial, and business
proficiency.
The type of nuclear-remediation services offered by the Company are also
offered by many large national companies. The Company competes primarily on the
basis of its proprietary technology and price.
The Company operates the largest fleet of waste-fluids collection vehicles
in Arizona and Nevada. The Company competes with numerous smaller and several
larger collection companies in its current market primarily on the basis of
quality of service and price.
Competition in the soil-remediation business is intense. The Company's
principal competitors are landfills, including major landfill companies. The
Company also currently competes with companies offering a wide range of disposal
options, including other fixed-site, thermal-treatment facilities, operators of
mobile thermal-treatment facilities, bioremediation and vapor-extraction
facilities, and, in certain states, with asphalt plants and brick kilns that use
the contaminated soil in their production processes. Competition in the
soil-remediation market has always been highly localized, consisting mostly of
single-site or single-unit operators. Competitive conditions limit the prices
charged by the Company in each local market for soil-remediation services.
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Pricing is therefore a major competitive factor for the Company. The Company
believes competition and price pressure will remain intense for the foreseeable
future.
Approximately 20 companies offer environmental management and information
systems of the type provided by the Company. While some of these companies
possess resources similar to those of the Company, many are large, national
consulting firms that devote a relatively small percentage of their resources to
this area. The Company competes for business, both regionally and nationally,
primarily on the basis of reputation and the quality of it services and, to a
lesser extent, on price. Less than 10% of the Company's work in this area is
obtained through a bidding process.
(xi) Environmental Protection Regulations
The Company believes that compliance by the Company with federal, state,
and local environmental protection regulations will not have a material adverse
effect on its capital expenditures, earnings, or competitive position.
(xii) Number of Employees
As of April 4, 1998, the Company employed a total of 952 persons.
(d) Financial Information About Exports by Domestic Operations and About
Foreign Operations
Not applicable.
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(e) Executive Officers of the Registrant
Present Title (Fiscal Year First
Name Age Became Executive Officer)
---------------------------------------------------------------------
Dr. Robert W. Dunlap 61 President and Chief Executive
Officer (1996)
John N. Hatsopoulos 63 Chief Financial Officer and
Senior Vice President (1993)
Jeffrey L. Powell 39 Senior Vice President (1993)
Nels R. Johnson 47 Vice President (1995)
James Lousararian 39 Vice President (1991)
Norman A. Pedersen 40 Vice President (1997)
Paul F. Kelleher 55 Chief Accounting Officer (1993)
Each executive officer serves until his successor is chosen or appointed by
the Board of Directors and qualified or until earlier resignation, death, or
removal. All executive officers except Messrs. Dunlap, Powell, Johnson, and
Pedersen have held comparable positions for at least five years, with either the
Company, Thermo TerraTech, or Thermo Electron. Dr. Dunlap has been President and
Chief Executive Officer of the Company since April 1998, was a Vice President of
the Company from 1996 through April 1998, and has served as President of ReTec,
which he helped found, since 1985. Mr. Powell served as President of the Company
since its inception in 1993, and as its Chief Executive Officer from May 1997
until April 1998, when he was named Senior Vice President. Mr. Johnson has been
Vice President of the Company since 1995. He has served as President of the
Company's Thermo Nutech business since 1988. Mr. Pedersen has been Vice
President of ReTec since 1995. He has also served as Director of Business
Development for the Company and other Thermo Electron entities since 1991.
Messrs. Dunlap, Powell, Johnson, Lousararian, and Pedersen are full-time
employees of the Company. Messrs. Hatsopoulos and Kelleher are full-time
employees of Thermo Electron, but devote such time to the affairs of the Company
as the Company's needs reasonably require.
Item 2. Properties
The Company occupies approximately 116,000 square feet, pursuant to leases
expiring in fiscal 1999 through 2003, primarily in Colorado, Pennsylvania,
Massachusetts, Washington, Texas, Indiana, and North Carolina, from which it
provides industrial remediation services.
The Company leases approximately 38,000 square feet, pursuant to leases
expiring in fiscal 1999 through 2001, in New Mexico and Tennessee, and owns
approximately 34,000 square feet in New Mexico and California, from which it
provides nuclear-remediation services.
The Company owns approximately 50,000 square feet in Idaho and Arizona and
occupies an aggregate of approximately six acres on a site in Arizona and one
site in Nevada pursuant to leases expiring in fiscal 1999, consisting of office
space, fluids-recycling and maintenance facilities, and sites for fluids storage
tanks.
9
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The Company owns approximately 72 acres in Maryland, California, and
Oregon, from which it provides soil-remediation services. The Company occupies
approximately 19 acres in New York, Washington, California, and South Carolina,
pursuant to leases expiring in fiscal 1999 through 2006, from which it provides
soil-remediation services. The Company also occupies approximately 12,000 square
feet of office and engineering space in Florida, pursuant to a lease expiring in
fiscal 1999.
The Company believes that these facilities are adequate for its present
operations and that other suitable space is readily available if any of such
leases are not extended.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
10
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PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters
Information concerning the market and market price for the Registrant's
Common Stock, $.01 par value, and dividend policy are included under the
sections labeled "Common Stock Market Information" and "Dividend Policy" in the
Registrant's Fiscal 1998 Annual Report to Shareholders and is incorporated
herein by reference.
Item 6. Selected Financial Data
The information concerning the Registrant's selected financial data is
included under the sections labeled "Selected Financial Information" and
"Dividend Policy" in the Registrant's Fiscal 1998 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 1998 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 April 4, 1998, are
included in the Registrant's Fiscal 1998 Annual Report to Shareholders and are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
The information concerning Directors required under this item is
incorporated herein by reference from the material contained under the caption
"Election of Directors" in the Registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission pursuant to Regulation 14A,
not later than 120 days after the close of the fiscal year. The information
concerning delinquent filers pursuant to Item 405 of Regulation S-K is
incorporated herein by reference from the material contained under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance" under the caption
"Stock Ownership" in the Registrant's definitive proxy statement to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A, not
later than 120 days after the close of the fiscal year.
Item 11. Executive Compensation
The information required under this item is incorporated herein by
reference from the material contained under the caption "Executive Compensation"
in the Registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120 days
after the close of the fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required under this item is incorporated herein by
reference from the material contained under the caption "Stock Ownership" in the
Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required under this item is incorporated herein by
reference from the material contained under the caption "Relationship with
Affiliates" in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later than
120 days after the close of the fiscal year.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a,d) Financial Statements and Schedules
(1) The consolidated financial statements set forth in the list below
are filed as part of this Report.
(2) The consolidated financial statement schedule set forth in the
list below is filed as part of this Report.
(3) Exhibits filed herewith or incorporated herein by reference are
set forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this
Item 14
Information incorporated by reference from Exhibit 13 filed herewith:
Consolidated Statement of Operations
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or not
required, or because the required information is shown either in the
financial statements or the notes thereto.
(b) Reports on Form 8-K
None.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
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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: June 11, 1998 THERMO REMEDIATION INC.
By: Robert W. Dunlap
------------------------------
Robert W. Dunlap
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of June 29, 1998.
Signature Title
By: Robert W. Dunlap President, Chief Executive Officer,
----------------------- and Director
Robert W. Dunlap
By: John N. Hatsopoulos Chief Financial Officer and
----------------------- Senior Vice President
John N. Hatsopoulos
By: Paul F. Kelleher Chief Accounting Officer
-----------------------
Paul F. Kelleher
By: John P. Appleton Chairman of the Board and Director
-----------------------
John P. Appleton
By: Elias P. Gyftopoulos Director
-----------------------
Elias P. Gyftopoulos
By: Fred Holubow Director
-----------------------
Fred Holubow
By: Theo Melas-Kyriazi Director
-----------------------
Theo Melas-Kyriazi
By: Frank E. Morris Director
-----------------------
Frank E. Morris
By: William A. Rainville Director
-----------------------
William A. Rainville
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Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Remediation Inc.:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in Thermo Remediation Inc.'s
Annual Report to Shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated May 12, 1998. 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 13 is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the consolidated financial data
required to be set forth therein in relation to the basic consolidated financial
statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
May 12, 1998
15
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SCHEDULE II
THERMO REMEDIATION INC.
VALUATION and QUALIFYING ACCOUNTS
(In thousands)
Balance
at Provision Accounts Balance
Beginning Charged to Accounts Written- at End
Description of Year Expense Recovered off Other(a) of Year
- ---------------------------------------------------------------------------
Allowance for
Doubtful Accounts
Fiscal Year Ended
April 4, 1998 $1,557 $ 193 $ - $ (144) $ 84 $1,690
Fiscal Year Ended
March 29, 1997 $ 786 $ 162 $ 5 $ (191) $ 795 $1,557
Fiscal Year Ended
March 30, 1996 $ 394 $ (184) $ 12 $ (96) $ 660 $ 786
(a) Includes allowances of businesses acquired during the year as described in
Note 3 to Consolidated Financial Statements in the Registrant's Fiscal 1998
Annual Report to Shareholders.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
2.1 Form of Agreement of Merger between Thermo Remediation Inc.
(California) and Thermo Remediation Inc. (Delaware) (filed as
Exhibit 2.1 to the Registrant's Registration Statement on Form S-1
[Reg. No. 33-70544] and incorporated herein by reference).
2.2 Securities Purchase Agreement dated as of September 27,
1993, between TPS Technologies Inc. and the Registrant
(filed as Exhibit 2.2 to the Registrant's Registration
Statement on Form S-1 [Reg. No. 33-70544] and
incorporated herein by reference).
2.3 Asset Transfer Agreement dated as of October 1, 1993,
among Thermo TerraTech Inc. (formerly Thermo Process
Systems Inc.), TPS Technologies Inc., and the
Registrant (filed as Exhibit 2.3 to the Registrant's
Registration Statement on Form S-1 [Reg. No. 33-70544]
and incorporated herein by reference).
2.4 Exclusive License Agreement dated as of October 1,
1993, among Thermo TerraTech Inc. (formerly Thermo
Process Systems Inc.), TPS Technologies Inc., and the
Registrant (filed as Exhibit 2.4 to the Registrant's
Registration Statement on Form S-1 [Reg. No. 33-70544]
and incorporated herein by reference).
2.5 Non-Competition and Non-Disclosure Agreement dated as
of October 1, 1993, among Thermo TerraTech Inc.
(formerly Thermo Process Systems Inc.), TPS
Technologies Inc., and the Registrant (filed as Exhibit
2.5 to the Registrant's Registration Statement on Form
S-1 [Reg. No. 33-70544] and incorporated herein by
reference).
3.1 Certificate of Incorporation of the Registrant (filed as Exhibit
3.1 to the Registrant's Registration Statement on Form S-1 [Reg.
No. 33-70544] and incorporated herein by reference).
3.2 Bylaws of the Registrant (filed as Exhibit 3.2 to the
Registrant's Registration Statement on Form S-1 [Reg.
No. 33-70544] and incorporated herein by reference).
3.3 Fiscal Agency Agreement dated as of May 5, 1995, among the
Registrant, Thermo Electron Corporation, and Chemical Bank, as
Fiscal Agent, with respect to the Registrant's 4 7/8% convertible
subordinated debentures due 2000.
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Exhibit
Number Description of Exhibit
10.1 Corporate Services Agreement dated June 1, 1992, between Thermo
Electron Corporation and the Registrant (filed as Exhibit 10.1 to
the Registrant's Registration Statement on Form S-1 [Reg. No.
33-70544] and incorporated herein by reference).
10.2 Thermo Electron Corporate Charter, as amended and restated
effective January 3, 1993 (filed as Exhibit 10.1 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).
10.3 Tax Allocation Agreement dated as of June 1, 1992,
between Thermo TerraTech Inc. (formerly Thermo Process
Systems Inc.) and the Registrant (filed as Exhibit 10.3
to the Registrant's Registration Statement on Form S-1
[Reg. No. 33-70544] and incorporated herein by
reference).
10.4 Securities Purchase Agreement dated as of September 27,
1993, between Fred Holubow and the Registrant (filed as
Exhibit 10.5 to the Registrant's Registration Statement
on Form S-1 [Reg. No. 33-70544] and incorporated herein
by reference).
10.5 Master Repurchase Agreement dated January 1, 1994, between the
Registrant and Thermo Electron Corporation (filed as Exhibit 10.6
to the Registrant's Registration Statement on Form S-1 [Reg. No.
33-77818] and incorporated herein by reference).
10.6 Equity Incentive Plan of the Registrant (filed as
Exhibit 10.7 to the Registrant's Registration Statement
on Form S-1 [Reg. No. 33-70544] and incorporated herein
by reference).
10.7 Deferred Compensation Plan for Directors of the
Registrant (filed as Exhibit 10.8 to the Registrant's
Registration Statement on Form S-1 [Reg. No. 33-70544]
and incorporated herein by reference).
10.8 Amended and Restated Directors Stock Option Plan (filed as Exhibit
10.8 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended April 1, 1995 [File No. 1-12636] and incorporated
herein by reference).
18
<PAGE>
Exhibit
Number Description of Exhibit
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 Thermo
Electron and Thermo TerraTech for services rendered to the
Registrant or to such affiliated corporations. The terms of such
plans are substantially the same as those of the Registrant's
Equity Incentive Plan.
10.9 Form of Indemnification Agreement for Officers and
Directors (filed as Exhibit 10.10 to the Registrant's
Registration Statement on Form S-1 [Reg. No. 33-70544]
and incorporated herein by reference).
10.10 Stock Purchase and Note Issuance Agreement dated as of
November 22, 1993, between Thermo TerraTech Inc.
(formerly Thermo Process Systems Inc.) and the
Registrant (filed as Exhibit 10.11 to the Registrant's
Registration Statement on Form S-1 [Reg. No. 33-70544]
and incorporated herein by reference).
10.11 $2,650,000 principal amount Subordinated Convertible
Note dated as of November 22, 1993, made by the
Registrant, issued to Thermo TerraTech Inc. (formerly
Thermo Process Systems Inc.) (filed as Exhibit 10.12 to
the Registrant's Registration Statement on Form S-1
[Reg. No. 33-70544] and incorporated herein by
reference).
10.12 Note dated December 24, 1994, from the Registrant to Thermo
Electron Corporation (filed as Exhibit 10.12 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended April 1, 1995
[File No. 1-12636] and incorporated herein by reference).
10.13 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of February 12, 1998, between the Registrant
and Thermo Electron Corporation.
10.14 Amended and Restated Master Guarantee Reimbursement and Loan
Agreement dated as of February 26, 1998, between the Registrant
and Thermo TerraTech Inc.
19
<PAGE>
Exhibit
Number Description of Exhibit
10.15 Agreement and Plan of Merger dated as of December 1, 1995, by and
among the Registrant, TRI Acquisition Inc. and Remediation
Technologies, Inc. (filed as Exhibit 2(a) to Thermo TerraTech's
Current Report on Form 8-K relating to the events occurring on
December 8, 1995 [File No. 1-9549] and incorporated herein by
reference).
10.16 Agreement and Plan of Merger dated as of June 28, 1995, by and
among Thermo TerraTech Inc., Eberline Acquisition Inc., the
Registrant, and Eberline Holdings Inc. (filed as Appendix B to the
Registrant's Proxy Statement for the Annual Meeting held on
December 13, 1995 [File No. 1-12636] and incorporated herein by
reference).
10.17 Restated Stock Holdings Assistance Plan and Form of
Executive Loan.
13 Annual Report to Shareholders for the fiscal year ended April 4,
1998 (only those portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
20
Exhibit 3.3
FISCAL AGENCY AGREEMENT
dated as of
May 4, 1995
among
THERMO REMEDIATION INC.,
THERMO ELECTRON CORPORATION
and
CHEMICAL BANK,
as Fiscal Agent
<PAGE>
FISCAL AGENCY AGREEMENT, dated as of May 4, 1995, among THERMO REMEDIATION
INC., a corporation duly organized and validly existing under the laws of the
State of Delaware (the "Company"), THERMO ELECTRON CORPORATION, a corporation
duly organized and validly existing under the laws of the State of Delaware (the
"Guarantor"), and CHEMICAL BANK, a banking corporation duly organized and
validly existing under the laws of the State of New York (the "Fiscal Agent").
1. The Securities. The Company has by a Subscription Agreement, dated
April 26, 1995 (the "Subscription Agreement"), among the Company, the Guarantor
and the several managers named therein (the "Managers"), agreed to issue U.S.
$37,950,000 aggregate principal amount of its 4-7/8% Convertible Subordinated
Debentures Due 2000 (hereinafter referred to as the "Securities"). The amount of
Securities that may be issued hereunder may be increased by agreement between
the Company, the Guarantor and the Fiscal Agent, and such additional securities
shall be "Securities" hereunder. The due and punctual payment of principal,
premium, if any, and interest (and Additional Amounts payable pursuant to
Section 2 of the Securities) on the Securities when and as the same shall become
due and payable, whether at maturity, upon redemption or otherwise, are
unconditionally guaranteed on a subordinated basis by the Guarantor Interest on
the Securities shall be calculated on the basis of a 360-day year comprised of
twelve 30-day months. Except as set forth in the next sentence, the Securities
will initially be issued in temporary form, and may subsequently be exchanged
for Securities in printed definitive form either as bearer Securities ("Bearer
Securities"), in denominations of U.S. $1,000 and U.S. $10,000, with interest
coupons attached, representing the semiannual interest payable thereon, or as
fully registered Securities ("Registered Securities", which term shall include,
where the context so requires, the Restricted Securities as hereinafter
defined), in denominations of U.S. $1,000 and integral multiples thereof,
without coupons. In addition, the Managers (or their affiliates) may sell the
Securities to qualified institutional buyers pursuant to Rule 144A under the
United States Securities Act of 1933 (the "Securities Act of 1933") or may sell
the Securities pursuant to another applicable exemption under the Securities Act
of 1933 in accordance with the terms of this Agreement and the Subscription
Agreement (the "Restricted Securities", which may be in typewritten form and
later exchanged for a printed Security of an equivalent amount, and which, for
all purposes hereunder shall be a Definitive Security in the form of a
Registered Security). The Securities in definitive form will have endorsed
thereon the guarantees of the Guarantor (the "Guarantees") and shall contain
provisions granting the holders thereof the right to exchange the Securities,
under certain conditions, into shares of common stock of the Guarantor (the
"Exchange Options"), all substantially in the form of Exhibit A hereto (the
"Definitive Securities"). The Securities will be convertible as provided in
Section 4 of the Definitive Securities and Section 7 hereof. The Securities may
be redeemed by the Company as provided in Section 3 of the Definitive Securities
and Section 6 hereof. The temporary global debenture in respect of the
Securities will be issued in bearer form without coupons or conversion rights in
the aggregate principal amount of the entire issue of Securities (less the
aggregate principal amount of the Restricted Securities concurrently issued),
substantially in the form of Exhibit B hereto, having endorsed thereon a
Guarantee (the "Global Security"). The Definitive Securities and the Global
Security shall contain such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistent herewith, be determined by the
officer of the Company executing such Securities, as evidenced by his execution
of such Securities.
2. Appointment of Agents and Security Registrar.
(a) The Company and the Guarantor hereby appoint Chemical Bank, at
present having its principal corporate trust office at 450 W. 33rd Street, New
York, New York 10001 and having its main office in London at Chemical Bank
House, 125 London Wall, London EC2Y 5AJ, England, as their fiscal agent in
respect of the Securities and the Guarantees upon the terms and subject to the
conditions herein set forth. (Chemical Bank and its successor or successors as
such fiscal agent qualified and appointed in accordance with Section 12 hereof
are herein called the "Fiscal Agent.") The Fiscal Agent shall have the powers
and authority granted to and conferred upon it herein and in the Securities, and
such further powers and authority, acceptable to it, to act on behalf of the
Company and the Guarantor as the Company and the Guarantor may hereafter
respectively grant to or confer upon it.
(b) In addition, the Company and the Guarantor hereby appoint
Chemical Bank at present located at 450 W. 33rd Street, New York, New York 10001
and having its main office in London at Chemical Bank House, 125 London Wall,
London EC2Y 5AJ, England, as their paying agent in respect of the Securities and
the Guarantees upon the terms and subject to the conditions herein set forth.
(Chemical Bank and its successor or successors as such paying agent qualified
and appointed in accordance with Section 12 hereof are herein called the "Paying
Agent.") The Paying Agent shall have the powers and authority granted to and
conferred upon it herein and in the Securities, and such further powers and
authority, acceptable to it, to act on behalf of the Company and the Guarantor
as the Company and the Guarantor may hereafter respectively grant to or confer
upon it. As used herein, "paying agencies" shall mean paying agencies maintained
by the Company and the Guarantor as provided in Section 12(f) hereof.
(c) The Company and the Guarantor hereby appoint Chemical Bank, at
present located at 450 W. 33rd Street, New York, New York 10001 and having its
main office in London at Chemical Bank House, 125 London Wall, London EC2Y 5AJ,
England, as its conversion agent in respect of the Securities and the Exchange
Options upon the terms and subject to the conditions herein set forth. (Chemical
Bank and its successor or successors as such conversion agent qualified and
appointed in accordance with Section 12 hereof are herein called the "Conversion
Agent", and the Paying Agent, the Conversion Agent, the Transfer Agents (as
herein defined) and the Fiscal Agent are sometimes herein referred to severally
as an "Agent" and, collectively, as the "Agents"). The Conversion Agent shall
have the powers and authority granted to and conferred upon it herein and in the
Securities, and such further powers and authority, acceptable to it, to act on
behalf of the Company and the Guarantor as the Company and the Guarantor may
hereafter respectively grant to or confer upon it. As used herein, "conversion
agencies" shall mean conversion agencies maintained by the Company and the
Guarantor as provided in Section 12(f) hereof.
(d) The Company shall cause to be kept at the principal corporate
trust office of the Fiscal Agent a register (the registers maintained in such
office and in any other office or agency designated for such purpose (which
office shall be located outside of the United Kingdom) being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as the Company may prescribe, the Company shall provide
for the registration of Registered Securities and of transfers of Registered
Securities. The Fiscal Agent is hereby appointed "Security Registrar" for the
purpose of registering Registered Securities and transfers of Registered
Securities as herein provided.
3. Registration and Transfer.
(a) Upon surrender for registration of transfer of any Registered
Security at any office or agency designated for such purpose by the Company
pursuant to Section 12(g) hereof, the Company shall execute, and the Fiscal
Agent shall authenticate and register and make available for delivery, in the
name of the designated transferee or transferees, one or more new Registered
Securities of any authorized denominations and of a like aggregate principal
amount, having endorsed thereon a Guarantee and an Exchange Option (if
applicable) duly executed by the Guarantor; provided however, prior to the date
which is three years after the date of original issuance of such Registered
Security, the Fiscal Agent shall not register the transfer of any Registered
Security unless:
(i) The Fiscal Agent shall have been advised in writing by the
Company that the provisions of Rule 144A under the Securities Act of 1933 are
available for resales of such Security, and the registered holder presenting
such Registered Security for transfer, or its agent, shall have advised the
Fiscal Agent in writing that the person in whose name the Registered Security is
to be registered upon transfer (or, in the case of a transfer to a nominee, each
beneficial owner of such Registered Security) is a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933) and that such
transfer is in compliance with the exemption from registration under the
Securities Act of 1933 provided by said rule; or
(ii) The registered holder presenting such Registered Security for
transfer, or its agent, shall have advised the Fiscal Agent in writing that such
Security is being transferred in an Offshore Transaction (as defined in
Regulation S under the Securities Act of 1933 ) in compliance with the exemption
from registration under the Securities Act of 1933 provided by Regulation S and
the address of the person in whose name such Security is to be registered in the
Security Register upon transfer is an address outside the United States (as
defined in Regulation S); or
(iii) The registered holder presenting such Registered Security for
transfer, or its agent, together with a broker or dealer registered under
Section 15 of the United States Securities Exchange Act of 1934 shall each have
advised the Fiscal Agent in writing that (x) each person who will become a
beneficial owner of the Registered Security upon transfer is a sophisticated
institutional investor which is an "accredited investor" as such term is defined
in Regulation D under the Securities Act, (y) no general solicitation or
advertising was made or used in connection with the offer and sale of such
Registered Security to such person(s) and (z) such institutional investor has
been informed that the Securities have not been registered under the Securities
Act of 1933 and are subject to the restrictions on transfer set forth in the
Securities and this Agreement; or
(iv) The Fiscal Agent has received transfer documentation indicating,
and a written opinion of U.S. counsel acceptable in form and substance to the
Company confirming, that the transfer is being made pursuant to an exemption
from, or a transaction not otherwise subject to, the registration requirements
of the Securities Act of 1933.
For purposes of this Paragraph 3(a), any such advice to the Fiscal Agent
in writing may be in the form of a letter, notice or other written document or,
with respect to clauses (i), (ii) and (iii) above, by appropriate notation on
the transfer notice set forth on such Security.
(b) At the option of the holder of a Bearer Security, Bearer
Securities may be exchanged for Bearer Securities of other authorized
denominations and of a like aggregate principal amount or for Registered
Securities, of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Bearer Securities to be exchanged at any office or
agency designated for such purpose by the Company pursuant to Section 12(g),
with all unmatured coupons and all matured coupons in default thereto
appertaining. If such holder is unable to produce any such unmatured coupon or
coupons or matured coupon or coupons in default, such exchange may be effected
if the Bearer Securities are accompanied by payment in an amount equal to the
face amount of such missing coupon or coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Guarantor if there be
furnished to them such security or indemnity as they may require to save each of
them, the Fiscal Agent and any paying agency harmless. If thereafter the holder
of such Security shall surrender to any paying agency any such missing coupon in
respect of which such a payment shall have been made, such holder shall be
entitled to receive the amounts of such payment.
At the option of the holder of a Registered Security, Registered
Securities may be exchanged for Registered Securities of any other authorized
denominations and of a like aggregate principal amount, upon surrender of the
Registered Securities to be exchanged at any office or agency designated for
such purpose by the Company pursuant to Section 12(g). Registered Securities
shall not be exchangeable into Bearer Securities. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Fiscal Agent shall
authenticate and deliver, the Registered Securities which the holder making the
exchange is entitled to receive, having endorsed thereon a Guarantee and an
Exchange Option (if applicable) duly executed by the Guarantor.
(c) All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, and the
Guarantees and Exchange Options (if applicable) endorsed thereon shall be the
valid obligations of the Guarantor, evidencing the same obligations, and
entitled to the same benefits under this Agreement, as the Securities
surrendered upon such registration of transfer or exchange.
(d) Every Registered Security presented for registration of transfer
or surrendered for exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company, the Fiscal
Agent and the Transfer Agent to which such Security is presented or surrendered
and the Security Registrar, duly executed by the holder thereof or his attorney
duly authorized in writing. In the case of Registered Securities presented for
transfer, all such instruments shall comply with the provisions of Paragraph (a)
above. The registration of the transfer of a Registered Security by the Security
Registrar shall be deemed to be the written acknowledgment of such transfer on
behalf of the Company.
(e) No service charge shall be made for any exchange or registration
of transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities, other than exchanges
pursuant to Section 4 hereof or not involving any registration of transfer.
(f) Neither the Company nor the Fiscal Agent nor any of the offices
or agencies designated for the purposes specified in Section 12(f) nor any
Transfer Agent shall be required (i) to exchange Bearer Securities for
Registered Securities during the period between the close of business on the
Record Date (as defined in Section 5 hereof) and the opening of business on the
next succeeding interest payment date, (ii) to exchange any Bearer Security (or
portion thereof) for a Registered Security if the Company shall determine that,
as a result thereof, it may incur adverse consequences under the Federal income
tax laws and regulations (including proposed regulations) of the United States
in effect or proposed at the time of such exchange, or (iii) in the event of a
redemption in part, (A) to register the transfer of Registered Securities or to
exchange any Bearer Securities for Registered Securities during a period
beginning at the opening of business 15 days before any selection of Securities
to be redeemed and ending at the close of business on the day of the first
publication of the relevant notice of redemption, or (B) to register the
transfer of or exchange any Registered Security so selected for redemption in
whole or in part, except portions not being redeemed of Securities being
redeemed in part, or (C) to exchange any Bearer Security so selected for
redemption except that on the date fixed for redemption a Bearer Security may be
exchanged, on the terms and conditions set forth above, for a Registered
Security that is simultaneously surrendered, with written instruction for
payment on the date fixed for redemption, unless the redemption date is between
the close of business on any Record Date and the close of business on the next
succeeding interest payment date, in which case such exchange may only be made
prior to the Record Date immediately preceding the redemption date.
4. Global Security; Exchange.
(a) The Securities (other than the Restricted Securities) shall
initially be in the form of a temporary global security (the "Global Security")
in bearer form without interest coupons in the aggregate principal amount of
U.S. $37,950,000 (less the amount of any Restricted Securities simultaneously
issued) substantially in the form set forth in Exhibit B hereto. The Global
Security and the Restricted Securities shall be authenticated by the Fiscal
Agent upon the order of the Company on the same conditions, in substantially the
same manner and with the same effect as the Definitive Securities. The Global
Security and the Restricted Securities will be issued upon payment to the
Company or its order in United States dollars in same-day funds by check or wire
transfer to a United States dollar account designated by the Company at the
office of The First National Bank of Boston, Boston, Massachusetts, at 3:00
p.m., London time, on May 4, 1995, at such other time on the same or such other
date, not later than 5:00 p.m., London time, on the fifth business day in London
thereafter, as the Managers and the Company may agree. Such payment will be made
(1) upon authorization from the Managers, which authorization will be given if
the conditions to the Managers' obligations set forth in the Subscription
Agreement are either satisfied or waived, (2) against delivery of the amount, if
any, of Restricted Securities, as the Managers may request and as they shall
direct, and (3) against delivery of the Global Security for the balance of the
Securities to The Chase Manhattan Bank, N.A., London office, as depositary (the
"Common Depositary") for Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System (the "Euroclear Operator"), and
Centrale de Livraison de Valeurs Mobilieres S.A. ("CEDEL S.A."). The Global
Security shall be held on deposit with the Common Depositary for the accounts of
the Euroclear Operator and CEDEL S.A., for credit to the Managers' respective
Securities Clearance Accounts (or to such other accounts as the Managers may
have specified) with the Euroclear Operator or CEDEL S.A. "Exchange Date" means
the date following the expiration of the 40-day period commencing on May 4,
1995.
(b) Contemporaneously herewith, the Company shall execute and deliver
to the Fiscal Agent at its principal office in New York Definitive Securities
(which may be in typewritten form) in respect of the Restricted Securities
bearing the Guarantees of the Guarantor endorsed thereon and containing the
Exchange Options therein as set forth above. Without unnecessary delay but in
any event not less than 15 days prior to the Exchange Date, the Company will
execute and deliver to the Fiscal Agent at its principal office in London
Definitive Securities bearing the Guarantees of the Guarantor endorsed thereon
and containing the Exchange Options therein in the aggregate principal amount
outstanding in the Global Debenture. At such time, the Fiscal Agent shall
deliver to each holder of Restricted Securities printed Definitive Securities in
exchange for an equal aggregate principal amount of non-printed Restricted
Securities. On or after the Exchange Date, the Global Security may be
surrendered to the Fiscal Agent to be exchanged, as a whole, for Definitive
Bearer Securities without charge, and the Fiscal Agent shall authenticate and
deliver, in exchange for such Global Security, an equal aggregate principal
amount of Definitive Bearer Securities, but only upon presentation to the Fiscal
Agent at its office in London of a certificate of the Euroclear Operator or
CEDEL S.A. with respect to the Global Security, substantially in the form of
Exhibit C hereto, to the effect that it has received a certificate or
certificates in substantially the form set forth in Exhibit D hereto dated no
earlier than 15 days prior to the Exchange Date and signed by the persons
appearing in its records as the owners of the Global Security. Similarly, after
the Exchange Date, the Global Security may be exchanged for an equal aggregate
principal amount of Definitive Registered Securities upon presentation to the
Fiscal Agent at its office in London of a certificate substantially in the form
of Exhibit E hereto.
(c) Only Bearer Securities may be issued upon receipt by the
Euroclear Operator or CEDEL S.A. of a certificate or certificates in the form of
Exhibit D hereto. Bearer Securities will be delivered only outside the United
States, its territories and possessions, and only upon receipt of such
certificate or certificates. Only Registered Securities may be issued upon
receipt by the Euroclear Operator or CEDEL S.A. of a certificate or certificates
in the form of Exhibit E hereto.
(d) The delivery to the Fiscal Agent by the Euroclear Operator or
CEDEL S.A. of any certificate referred to above may be relied upon by the
Company and the Fiscal Agent as conclusive evidence that a corresponding
certificate or certificates has or have been delivered to the Euroclear Operator
or CEDEL S.A.
pursuant to the terms of this Agreement.
(e) Upon any such exchange of a portion of the Global Security for a
Definitive Security or Securities, the Global Security shall be endorsed by the
Fiscal Agent to reflect the reduction of its principal amount by an amount equal
to the aggregate principal amount of such Definitive Security or Securities.
Until so exchanged in full, the Global Security shall in all respects be
entitled to the same benefits under this Agreement as Definitive Securities
authenticated and delivered hereunder.
5. Payment.
(a) The Company will pay or cause to be paid to the Paying Agent the
amounts, at the times and for the purposes, set forth herein and in the text of
the Securities, and the Company hereby authorizes and directs the Paying Agent
to make payment of the principal, premium, if any, and interest (and Additional
Amounts as defined in Section 2 of the Definitive Securities) on the Securities
from such payments.
(b) At least 15 days prior to the date on which any payment of
Additional Amounts shall be required to be made pursuant to Section 2 of the
Definitive Securities, the Company will furnish the Paying Agent, each other
paying agency of the Company and the Fiscal Agent with a certificate of one of
its duly authorized officers instructing the Paying Agent and each other paying
agency of the Company as to the amounts required (i) to be deducted or withheld
for or on account of any taxes described in Section 2 of the Definitive
Securities from a payment to be made on that date and (ii) to be paid to each
holder of Securities or coupons as Additional Amounts pursuant to that
paragraph. If the foregoing amounts are not uniform for all holders, then the
Company's certificate shall specify by country of residence or other factor the
amounts required to be deducted or withheld and to be paid as Additional Amounts
for each holder or class of holders of the Securities or coupons. In the absence
of its receipt of any such certificate from the Company, the Paying Agent may
make payment without deduction or withholding. The Company and the Guarantor
hereby agree to indemnify the Paying Agent, each other paying agency of the
Company and the Fiscal Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part, arising out of or in connection with actions taken or omitted by any
of them in reliance on any certificate furnished pursuant to this Section.
(c) Interest on any Registered Security that is payable, and is
punctually paid or duly provided for, on any interest payment date shall be paid
to the person in whose name that Security is registered at the close of business
on the April 15 or October 15 immediately preceding such interest payment date
(each, a "Record Date") even if such Registered Security is canceled, upon
redemption, conversion or otherwise, after such Record Date. In case a Bearer
Security is surrendered for exchange for a Registered Security after the close
of business on any Record Date and before the opening of business on the next
succeeding interest payment date, the Fiscal Agent shall not be required to
perform such transfer or exchange of such Security.
(d) Interest on any Registered Security that is payable upon
conversion in accordance with Section 7(a) hereof shall be paid to the person in
whose name that Security is registered immediately prior to the conversion,
provided that if a Registered Security is converted after the close of business
on a Record Date and before the opening of business on the next succeeding
interest payment date, accrued interest shall be paid on the next succeeding
interest payment date to the person in whose name that Security is registered at
the close of business on that Record Date.
(e) Any interest on any Registered Security that is payable, but is
not punctually paid or duly provided for, on any interest payment date shall
forthwith cease to be payable to the registered holder thereof on the relevant
regular record date by virtue of having been such holder, and such defaulted
interest may be paid by the Company to the registered holder of such Registered
Security on a subsequent record date established by the Company in any lawful
manner if, after notice given by the Company to the Fiscal Agent of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Fiscal Agent.
(f) Subject to the foregoing provisions of this Section 5, each
Security delivered under this Agreement upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry all the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
(g) In order to provide for the payment of the principal, premium, if
any, and interest on the Securities as the same shall become due and payable,
the Company shall pay to the Paying Agent at its office in London, in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts therein, and in same day
funds, the following amounts (and the Company shall give notice to the Fiscal
Agent at least one full business day prior to the date payment is due to the
Paying Agent as to the means of such payment), to be held and applied by the
Paying Agent as hereinafter set forth:
(i) The Company shall pay to the Paying Agent on the business day
immediately prior to each interest payment date an amount sufficient to
pay the interest due (and Additional Amounts, if any,) on all the
Securities outstanding on such interest payment date, and the Paying Agent
shall apply the amounts so paid to it to the payment of such interest (and
Additional Amounts, if any) on such interest payment date.
(ii) Upon presentment for conversion of any Securities pursuant to
Section 7(a) hereof (except as described in the proviso to Section 5(d)),
the Paying Agent shall immediately that day notify the Company of the
amount of any accrued interest due and owing thereon. Within four business
days of such notification the Company shall pay to the Paying Agent an
amount sufficient to pay the accrued interest due on such Securities (and
Additional Amounts, if any, thereon), and the Paying Agent shall apply the
amounts so paid to it to the payment of such accrued interest (and
Additional Amounts, if any, thereon) in accordance with the terms of the
Securities.
(iii)If the Company shall elect, or shall be required, to redeem all
or any part of the Securities in accordance with Section 6 hereof, the
Company will pay to the Paying Agent on the business day immediately prior
to the date fixed for redemption thereof an amount sufficient (with any
amount then held by the Paying Agent and available for the purpose) to pay
the redemption price of the Securities called for redemption or entitled
to be redeemed, together with accrued interest thereon (and Additional
Amounts, if any, thereon) to the date fixed for redemption and not paid
pursuant to clause (g)(i) of this Section 5, and the Paying Agent shall
apply such amount to the payment of the redemption price and accrued
interest thereon (and Additional Amounts, if any, thereon) in accordance
with the terms of the Securities.
(iv) On the business day immediately prior to the maturity date of
the Securities, the Company shall pay to the Paying Agent an amount which,
together with any amounts then held by the Paying Agent, and available for
payment thereof, shall be equal to the entire amount of principal and
interest (and Additional Amounts, if any) to be due on such maturity date
on all the Securities then outstanding, and the Paying Agent shall apply
such amount to the payment of the principal of and interest on (and
Additional Amounts, if any, on) the Securities in accordance with the
terms of the Securities.
6. Redemption.
(a) If, under the circumstances described in Section 3 of the
Definitive Securities, the Company shall elect to redeem outstanding Securities,
the following provisions shall be applicable:
(i) The Company shall, at least 35 days in the case of a redemption
in whole or 75 days in the case of a redemption in part (or such shorter
period as shall be reasonably acceptable to the Fiscal Agent) before the
date designated for such redemption, give notice to the Agents of its
election to redeem the Securities on the redemption date specified in such
notice and state in such notice that the conditions precedent to such
redemption have occurred and describe them, and in case of redemptions
pursuant to Section 3(b) of the Definitive Securities shall provide to the
Fiscal Agent an opinion of counsel (who can be an employee of the Company
or the Guarantor) satisfactory to the Fiscal Agent stating that the legal
conditions precedent to the right of the Company to effect such redemption
have occurred, and shall request the Fiscal Agent to arrange for
publication and mailing of the notice specified in clause (a)(ii) below.
(ii) In case the Company shall give notice to the Agents of its
election to redeem the Securities, the Fiscal Agent shall cause to be
published on behalf of the Company a notice of redemption in accordance
with the provisions of Section 3 of the Definitive Securities and shall
mail by first-class mail a copy of notice to each holder of a Registered
Security at the address of such holder as it shall appear in the Security
Register. The Fiscal Agent shall send a copy of such notice of redemption
to the Company, the Guarantor, the Paying Agent (if different from the
Fiscal Agent) and each other paying agency of the Company.
(iii)Such notice shall be published on behalf and at the expense of
the Company in an Authorized Newspaper (as defined in Section 19 hereof)
in New York City, London and, so long as the Securities are listed on the
Luxembourg Stock Exchange, in Luxembourg, as set forth in Section 19 of
this Agreement and Section 3 of the Definitive Securities. In the case of
a redemption in whole, notice will be given once not more than 60 nor less
than 30 days prior to the date fixed for redemption. In the case of a
partial redemption, notice will be given twice, the first such notice to
be given not more than 75 nor less than 60 days prior to the date fixed
for redemption and the second such notice to be given not more than 60 and
not less than 30 days prior to the date fixed for redemption.
(b) Under the circumstances described in Section 3(d) of the
Definitive Securities concerning the redemption of outstanding Securities at the
option of the holders thereof, the following provisions shall be applicable:
(i) The Company shall give notice to the Agents of the occurrence of
a Redemption Event immediately upon the occurrence of such Redemption
Event. Such notice shall state:
(A) The nature of the Redemption Event; (B) The Holder
Redemption Date (as that term is
defined in Section 3(d) of the Definitive
Securities) in respect of such Redemption
Event; and
(C) The redemption price as set forth in Section 3(d) of the
Definitive Securities.
(ii) The Fiscal Agent shall cause to be published on behalf of the
Company a notice of entitlement to redeem in accordance with the
provisions of Section 3 of the Definitive Securities and shall mail by
first-class mail a copy of such notice to each holder of a Registered
Security at the address of such holder as it shall appear in the Security
Register. The Fiscal Agent shall send a copy of such notice of entitlement
to redeem to the Company, the Guarantor, the Paying Agent (if different
from the Fiscal Agent) and each other paying agency of the Company.
(iii)Such notice shall be published on behalf and at the expense of
the Company in an Authorized Newspaper (as defined in Section 19 hereof)
in New York City, London and so long as the Securities are listed on the
Luxembourg Stock Exchange, in Luxembourg, as set forth in Section 19 of
this Agreement and Section 3 of the Definitive Securities. Notice shall be
given not later than 10 days after the later of the Exchange Date or the
date of the occurrence of the Redemption Event.
(iv) Upon the deposit of any of the Definitive Securities with the
agency designated by the Company as the place for payment of the
Definitive Securities together with a duly signed and completed redemption
notice, all in accordance with the provisions of Section 3 of the
Definitive Securities, the holder of such Definitive Security shall be
entitled to receive a non-transferable receipt evidencing such deposit.
(v) The Fiscal Agent shall notify the Company on each of the five
business days prior to the Holder Redemption Date for Securities to be
redeemed under this Section 6(b) of the amount required to redeem such
Securities.
7. Conversion of Securities; Exchange Option.
(a) Conversion.
(i) Subject to and upon compliance with the provisions of this
Section 7(a), at the option of the holder thereof, (a) any Definitive
Security (other than a Restricted Security) or, in the case of any
Registered Security or Bearer Security of a denomination other than
$1,000, any portion of the principal amount thereof which is $1,000 or an
integral multiple of $1,000, may be converted on or after the date which
is the later of July 15, 1995 and the Exchange Date and prior to
redemption or maturity, and (ii) any Restricted Security, or any portion
of the principal amount thereof which is $1,000 or an integral multiple of
$1,000, may be converted on or after the date which is the latest of July
15, 1995, the Exchange Date or the date of the effectiveness of the
Registration Statement relating to the Common Stock issuable upon
conversion of the Restricted Securities (the "Registration Date") and
prior to redemption or maturity, in each case at the principal amount
thereof, or of such portion thereof, into fully paid and nonassessable
shares of Common Stock of the Company (the "Common Stock") as set forth in
the Definitive Securities. The right to convert Securities called for
redemption will terminate at the close of business on the fifteenth day
next preceding the date fixed for redemption (or if such date is not a
business day, on the next succeeding business day) and will be lost if not
exercised prior to that time. The price at which shares of Common Stock
shall be delivered upon conversion (herein called the "Conversion Price")
shall be initially $17.92 per share of Common Stock. The Conversion Price
shall be adjusted in certain instances as provided in paragraphs (c)(i),
(ii), (iii), (iv), (vi) and (vii) of Section 4 of the Definitive
Securities.
(ii) In order to exercise the conversion privilege, the holder of any
Security to be converted shall surrender such Security, together with all
unmatured coupons if any, and any matured coupons in default appertaining
thereto, if any, at the office of the Conversion Agent or any office or
agency of the Company maintained for that purpose pursuant to Section
12(f), accompanied by written notice, in substantially the form set forth
in the Definitive Security, to the Company, at such office or agency that
the holder elects to convert such Security or, if less than the entire
principal amount of a Registered Security or Bearer Security of a
denomination other than $1,000 is to be converted, the portion thereof to
be converted. Upon presentment for conversion of any Securities pursuant
to this Section, the Conversion Agent shall immediately that day notify
the Company of such presentment. No payment or adjustment shall be made
upon any conversion on account of any dividends on the Common Stock issued
upon conversion. Accrued interest from the immediately preceding interest
payment date until the conversion date (and Additional Amounts, if any,
thereon) will be paid to the holder, through the Paying Agent, in the same
manner as payments of interest, within five business days (as defined in
the Securities) after the conversion date, provided that if a Registered
Security is converted after the close of business on a Record Date and
before the opening of business on the next succeeding interest payment
date, accrued interest shall be paid on the next succeeding interest
payment date to the person in whose name that security is registered at
the close of business on that Record Date.
(iii)Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities
for conversion in accordance with the foregoing provisions, and at such
time the rights of the holders of such Securities as holders shall cease,
and the person or persons entitled to receive the Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such Common Stock at such time. As promptly as practicable on
or after the conversion date, the Company shall cause to be issued or
delivered at such office or agency a certificate or certificates for the
number of full shares of Common Stock issuable or deliverable upon
conversion, together with payment, in lieu of any fraction of a share, as
provided below. The Paying Agent shall, within five business days after
the conversion date, make a payment for the accrued interest thereon (and
Additional Amounts, if any, thereon), except as otherwise provided in the
proviso to the last sentence of Section 7(a)(ii).
(iv) In the case of any Registered Security or Bearer Security of a
denomination other than $1,000 that is converted in part only, upon such
conversion the Company shall execute and the Fiscal Agent shall
authenticate and deliver to the holder thereof, at the expense of the
Company, a new Security or Securities of any authorized kind or
denomination as requested by such holder, in aggregate principal amount
equal to the unconverted portion of the principal amount of such Security,
having endorsed thereon a Guarantee and an Exchange Option duly executed
by the Guarantor.
(v) No fractional shares of Common Stock shall be issued or delivered
upon conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same holder, the number of
full shares which shall be issuable or deliverable upon conversion thereof
shall be computed on the basis of the aggregate principal amount of the
Securities (or, in the case of Registered Securities or Bearer Securities
of a denomination other than $1,000, specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable or deliverable upon conversion of any Security or
Securities (or, in the case of Registered Securities or Bearer Securities
of a denomination other than $1,000, specified portions thereof), the
Company shall pay a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the Closing Price per share (as
defined in the Definitive Securities) of Common Stock at the close of
business on the day preceding the day of conversion.
(vi) Whenever the Conversion Price is adjusted as provided in the
Definitive Securities:
(A) the Company shall compute the adjusted Conversion Price in
accordance with the terms of the Definitive Securities and shall prepare
a certificate signed by the President, any Vice President or the
Treasurer of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed with the Conversion
Agent and at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 12(f); and
(B) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall forthwith be
required, and, as soon as practicable after it is required, the Company
shall promptly cause a notice setting forth the adjusted Conversion
Price to be given to the holders of the Securities as provided in
Section 19.
(vii)In case:
(A) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of
its retained earnings (excluding dividends payable in stock for which
adjustment is made pursuant to the terms of the Definitive Securities);
or
(B) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(C) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company is
a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(D) of the involuntary dissolution, liquidation or winding up of
the Company; or
(E) the Company proposes to take any other action which would
require an adjustment of the Conversion Price pursuant to the Definitive
Securities;
then the Company shall cause to be filed with the Conversion Agent and at
each office or agency maintained for the purpose of conversion of
Securities a notice setting forth the adjusted Conversion Price and shall
cause notice to be given as provided in Section 19 except that notice need
be given once at least 20 days (or 10 days in any case specified in clause
(A) or (B) above) prior to the applicable record date hereinafter
specified, stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, rights or warrants or, if a record
is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights or warrants
is to be determined, or (y) the date on which a reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for the securities, cash or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up. The failure to
give notice required by this Section or any defect therein shall not
affect the legality or validity of any dividend, distribution, rights,
warrants, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up, or the vote on any such action.
(viii) The Company shall, from and after the date on which the
Securities are convertible into Common Stock, have reserved and available,
free from preemptive rights, out of its authorized but unissued Common
Stock, for the purpose of effecting the conversion of Securities, the full
number of shares of Common Stock then issuable upon the conversion of all
Securities.
(ix) The Company shall in good faith file, promptly following the
issuance hereof, a registration statement with the U. S. Securities and
Exchange Commission covering the resale of shares of Common Stock issuable
upon conversion of the Restricted Securities. The Company shall in good
faith use its best efforts to cause such registration statement to be
declared effective as promptly as practicable thereafter and shall in good
faith use its best efforts (i) to cause all registrations with, and to
obtain any approvals by, any governmental authority under any Federal or
state law of the United States that may be required before the shares of
Common Stock may be lawfully issued or transferred, (ii) to maintain the
effectiveness of such registrations for such period of time until Rule
144(k) under the U.S. Securities Act of 1933 is available for the resale
of the shares of Common Stock issuable upon conversion of the Restricted
Securities (iii) to list the shares of Common Stock required to be issued
or delivered upon conversion of Securities prior to such issue or delivery
on each national securities exchange on which the outstanding Common Stock
is listed at the time of such delivery.
(x) The Company covenants that all shares of Common Stock which may
be issued or delivered upon conversion of Securities will upon issue be
fully paid and nonassessable and, except as provided in Section 13, the
Company will pay all stamp, excise or similar taxes or duties, liens and
charges with respect to the issue thereof.
(xi) All converted Securities shall be held by the Company, and may,
at any time, be delivered to the Fiscal Agent for cancellation, which
shall hold or dispose of the same. Converted Securities shall not be
transferred. The Company will promptly give, or cause to be given, written
notice to the Fiscal Agent of the serial numbers of all Securities which
have been converted.
(xii)In case of any consolidation with, or merger of the Company
into, any other corporation, or in case of any merger of another
corporation into the Company (other than a merger which does not result in
any reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company), or in case of any sale or transfer
of all or substantially all of the assets of the Company, the corporation
formed by such consolidation or resulting from such merger (which shall
not include the sale or transfer of any portion of the assets of the
Company to any corporation which, immediately following such transfer is
at least 51%-owned by the Company, provided that such sale or transfer
does not result in the reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), or
which acquires such assets, as the case may be, shall execute and deliver
to the Fiscal Agent an amendment to the Fiscal Agency Agreement providing
that the holder of each Definitive Security shall have the right during
the period such Security shall be convertible as specified in the
Definitive Securities to convert such Security only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of
shares of Common Stock of the Company into which such Security might have
been converted immediately prior to such consolidation, merger, sale or
transfer assuming, if such consolidation, merger, sale or transfer is
prior to the period such Security shall be convertible, that the
Securities were convertible at such time at the initial Conversion Price
as adjusted pursuant to the terms of the Definitive Securities. Such
amendment shall provide for adjustments which, for events subsequent to
the effective date of such amendment, shall be as nearly equivalent as may
be practicable to the adjustments provided for in the Definitive
Securities. The above provisions of this Section shall similarly apply to
successive consolidations, mergers, sales or transfers.
(xiii) Subject to Section 11(j), neither the Fiscal Agent nor the
Conversion Agent or agency appointed by the Company shall at any time be
under any duty or responsibility to any holder of Securities to determine
whether any facts exist which may require any adjustment of the Conversion
Price, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or in the
Definitive Securities provided to be employed, in making the same. Neither
the Fiscal Agent nor the Conversion Agent or agency appointed by the
Company shall be accountable with respect to the validity or value (or the
kind or amount) of any shares of Common Stock or of any securities or
property which may at any time be issued or delivered upon the conversion
of any Security; and neither the Fiscal Agent nor the Conversion Agent or
agency appointed by the Company makes any representation with respect
thereto. Neither the Fiscal Agent nor the Conversion Agent or agency
appointed by the Company shall be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property or to make any cash payment
upon the delivery of any Security for the purpose of conversion or to
comply with any of the covenants contained in this Section 7(a).
(xiv)Any Common Stock issued upon conversion of a Security
("Restricted Common Stock") at any time prior to the date which is three
years after the Closing Date when a registration statement in respect of
such Common Stock is not effective under the Securities Act shall be
subject to the restrictions on transfer set forth in paragraph 3(a) hereof
to the same extent as the Securities which were so converted. All shares
of Restricted Common Stock shall bear the legend and transfer requirements
set forth on the form of Registered Security set forth as Exhibit A
hereto.
(b) Exchange Option.
(i) Subject to and upon compliance with the provisions of this
Section 7(b), at the option of the holder thereof, any Definitive Security
or, in the case of any Registered Security or Bearer Security of a
denomination other than $1,000, any portion of the principal amount
thereof which is $1,000 or an integral multiple of $1,000 may be exchanged
on or after the date which is the later of the Exchange Date or the date
of the effectiveness of a registration statement relating to the Guarantor
Common Stock (as hereinafter defined), at the principal amount thereof, or
of such portion thereof, for fully paid and nonassessable shares of Common
Stock of the Guarantor ("Guarantor Common Stock") as set forth in the
Exchange Options endorsed upon the Definitive Securities (the "Exchange
Options"). The Exchange Options may be exercised from and after the date
set forth herein, by the holder of any outstanding Definitive Security in
the event of a Change in Control (as defined in the Exchange Options
endorsed upon the Definitive Securities) that has not been approved by the
Continuing Directors (as defined in the Exchange Options endorsed upon the
Definitive Securities). The price at which shares of Guarantor Common
Stock shall be delivered upon such exchange shall be determined in
accordance with the terms of the Exchange Options endorsed upon the
Definitive Securities. Any reference herein to the Exchange Options shall
be deemed to mean such Exchange Options as they may be amended by the
Guarantor from time to time as provided in the Exchange Options. In all
events, the Exchange Options are subject to termination as provided
therein. The Guarantor shall cause to be filed with the Conversion Agent
and at each office or agency maintained for the purpose of exchange of
Securities a notice setting forth the terms and effective date of any such
amendment or the date of such termination and shall cause notice to the
effect of such amendment or termination, including the terms and the
effective date thereof to be given as provided in Section 19 except that
notice need only be given once not more than 20 days after the date of
such amendment or termination by the Guarantor. The failure to give notice
required by this Section or any defect therein shall not affect the
legality or validity of any amendment or termination.
(ii) In order to exercise an Exchange Option, the holder of any
Security to be so exchanged shall surrender such Security, together with
(if applicable) all unmatured coupons and any matured coupons in default
appertaining thereto and the sum of $1.00 for each full share of Guarantor
Common Stock to be issued upon such exchange in New York Clearing House
Funds or such other funds acceptable to the Guarantor, at the office of
the Conversion Agent or any office or agency of the Guarantor maintained
for that purpose pursuant to Section 12(f), accompanied by written notice
in substantially the form set forth in the Exchange Options endorsed upon
the Definitive Securities to the Guarantor, at such office or agency that
the holder elects to exchange such Security or, if less than the entire
principal amount of a Registered Security or Bearer Security of a
denomination other than $1,000 is to be exchanged, the portion thereof to
be exchanged. Subject to, in the case of Registered Securities surrendered
for exchange during the period from the close of business on any Record
Date next preceding any interest payment date to the opening of business
on such interest payment date, the right of the holder of record of a
Registered Security at such record date to receive an installment of
interest, no payment or adjustment shall be made upon any exchange on
account of any interest accrued on the Securities surrendered for exchange
or on account of any dividends on the Guarantor Common Stock issued upon
exchange.
(iii)Securities shall be deemed to have been exchanged immediately
prior to the close of business on the day of surrender of such Securities
for exchange in accordance with the foregoing provisions, and at such time
the rights of the holders of such Securities as holders shall cease, and
the person or persons entitled to receive the Guarantor Common Stock
issuable upon such exchange shall be treated for all purposes as the
record holder or holders of such Guarantor Common Stock at such time. As
promptly as practicable on or after the exchange date, the Guarantor shall
cause to be issued or delivered at such office or agency a certificate or
certificates for the number of full shares of Guarantor Common Stock
issuable or deliverable upon such exchange, together with payment, in lieu
of any fraction of a share, as provided below.
(iv) In the case of any Registered Security or Bearer Security of a
denomination other than $1,000 which is exchanged in part only, upon such
exchange, the Guarantor shall certify to the Company such partial
exchange, and the Company shall execute and the Fiscal Agent shall
authenticate and deliver to the holder thereof, at the expense of the
Company, a new Security or Securities of any authorized kind or
denomination as requested by such holder, in aggregate principal amount
equal to the unconverted portion of the principal amount of such Security,
having endorsed thereon a Guarantee and an Exchange Option duly executed
by the Guarantor.
(v) No fractional shares of Guarantor Common Stock shall be issued or
delivered upon exchange of Securities pursuant to the Exchange Options. If
more than one Security shall be surrendered for exchange at one time by
the same holder, the number of full shares which shall be issuable or
deliverable upon exchange thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or, in the case of
Registered Securities or Bearer Securities of a denomination other than
$1,000 specified portions thereof) so surrendered. Instead of any
fractional share of Guarantor Common Stock which would otherwise be
issuable or deliverable upon exchange of any Security or Securities (or,
in the case of Registered Securities or Bearer Securities of a
denomination other than $1,000, specified portions thereof), the Guarantor
shall pay a cash adjustment in respect of such fraction in an amount equal
to the same fraction of the Exchange Price (as defined in the Exchange
Options) of Guarantor Common Stock.
(vi) The Guarantor shall, from and after the date on which the
Exchange Options first may apply, at all times have reserved and
available, free from preemptive rights, out of its authorized but unissued
Common Stock, for the purpose of effecting the exchange of the Securities,
the full number of shares of Guarantor Common Stock then issuable upon the
exchange of all Securities.
(vii)The Guarantor shall use its best efforts to take all steps
necessary (i) to cause all registrations with, and to obtain any approvals
by, any governmental authority under any Federal or state law of the
United States that may be required before the shares of Guarantor Common
Stock may be lawfully issued or transferred and (ii) to list the shares of
Guarantor Common Stock required to be issued or delivered upon conversion
of Securities prior to such issue or delivery on each national securities
exchange on which the outstanding Guarantor Common Stock is listed at the
time of such delivery.
(viii) The Guarantor covenants that all shares of Guarantor Common
Stock which may be issued or delivered upon exchange of Securities will
upon issue be fully paid and nonassessable and, except as provided in
Section 13, the Guarantor will pay all stamp, excise or similar taxes or
duties, liens and charges with respect to the issue thereof.
(ix) All exchanged Securities shall be held by the Guarantor, and
may, at any time, be delivered to the Fiscal Agent for cancellation, which
shall hold or dispose of the same. Exchanged Securities shall not be
transferred and will cease to represent obligations of the Company upon
the presentation thereof for such exchange. The Guarantor will promptly
give, or cause to be given, written notice to the Company and the Fiscal
Agent of the serial numbers of all Securities which have been exchanged.
(x) Neither the Fiscal Agent nor the Conversion Agent or agency
appointed by the Guarantor shall be accountable with respect to the
validity or value (or the kind or amount) of any shares of Guarantor
Common Stock which may at any time be issued or delivered upon the
exchange of any Security; and neither the Fiscal Agent nor the Conversion
Agent or agency appointed by the Guarantor makes any representation with
respect thereto. Neither the Fiscal Agent nor the Conversion Agent or
agency appointed by the Guarantor shall be responsible for any failure of
the Guarantor to issue, transfer or deliver any shares of Common Stock or
stock certificates or other securities or property or to make any cash
payment upon the delivery of any Security for the purpose of exchange or
to comply with any of the covenants contained in this Section 7(b).
(xi) Issuance of any Guarantor Common Stock to be issued pursuant to
an Exchange Option ("Restricted Guarantor Common Stock") shall be deferred
until such time as a registration statement in respect of such Guarantor
Common Stock is effective under the Securities Act.
8. Surrendered Securities.
All Securities, together with any coupons appertaining thereto,
surrendered for payment, redemption, retirement, transfer or exchange and all
coupons paid through the application of interest installments shall be delivered
to the Fiscal Agent. In any such case the Fiscal Agent shall cancel all
Securities and coupons not previously canceled and destroy all such Securities
so delivered and shall furnish to the Company and the Guarantor a certificate
with respect to such destruction. Such certificate shall state, in the case of
destruction of the Global Security, that all certificates of the Euroclear
Operator or CEDEL S.A. as to beneficial ownership required by Section 4 hereof
have been duly presented by the Euroclear Operator or CEDEL S.A.
9. Mutilated, Destroyed, Stolen or Lost Securities.
The Fiscal Agent is hereby authorized, in accordance with the
provisions of the Securities and this Section, from time to time to authenticate
and deliver Securities in exchange for or in lieu of Securities that become
mutilated, destroyed, stolen or lost, upon receipt of indemnity and such other
documents or proof as may be required in form and substance satisfactory to the
Fiscal Agent, the Company and the Guarantor. Every Security authenticated and
delivered in exchange for or in lieu of any such Security shall have endorsed
thereon a Guarantee and an Exchange Option (if applicable) and shall be
considered obligations of the Company and the Guarantor and shall carry all
rights to interest accrued and unpaid and to accrue which were carried by such
Security, and notwithstanding anything to the contrary herein contained, any new
Bearer Security shall have attached thereto such coupons that neither gain nor
loss in interest shall result from such exchange or substitution.
10. Signatures.
(a) Securities shall be executed on behalf of the Company by its
President, its Secretary, any Vice President or its Treasurer, any of whose
signatures may be manual or in facsimile, and any coupons appertaining thereto
shall be executed on behalf of the Company by the facsimile signature of its
President, its Secretary, any Vice President or its Treasurer. Any signature in
facsimile may be imprinted or otherwise reproduced on the Securities. The
Company may adopt and use the signature or facsimile signature of any person who
shall be a President, Secretary, Vice President or Treasurer at the time of the
execution of the Securities, notwithstanding the fact that at the time the
Securities shall be authenticated and delivered, or disposed of, such person
shall have ceased to have held such office by virtue of which such person so
executed such security.
(b) The Guarantees and the Exchange Options shall be executed on
behalf of the Guarantor by its President, any Vice President, or its Treasurer,
manually or in facsimile, and a facsimile of its corporate seal shall be
impressed, imprinted or engraved thereon and shall be attested by its Secretary
or one of its Assistant Secretaries, whose signature may be manual or in
facsimile, prior to the authentication of the Securities on which they are
endorsed. Any signature in facsimile may be imprinted or otherwise reproduced on
the Guarantees and the Exchange Options. The Guarantor may adopt and use the
signature or facsimile signature of any person who shall be any such officer of
the Guarantor at the time of the execution of the Guarantee and the Exchange
Option (if applicable), notwithstanding the fact that at the time the Securities
shall be authenticated and delivered, or disposed of, such person shall have
ceased to be such officer of the Guarantor.
11. Agreements Concerning Agents.
Each of the Agents accepts its obligations herein and in the
Securities, upon the terms and conditions hereof and thereof, including the
following, to all of which the Company and Guarantor agree and to all of which
the rights hereunder of the holders from time to time of the Securities and
coupons shall be subject:
(a) Each of the Agents shall be entitled to reasonable compensation
for all services rendered by such Agent, as separately agreed by the Company and
the Agent, and the Company and the Guarantor jointly and severally agree
promptly to pay such compensation and to reimburse each of the Agents for the
reasonable out-of-pocket expenses (including, but not limited to, counsel fees)
incurred by such Agent in connection with the services rendered by it hereunder.
The Company and the Guarantor, jointly and severally, also agree to indemnify
each of the Agents and each other paying agency and conversion agency of the
Company for, and to hold it harmless against, any loss, liability or expense
(including the costs and expenses of defending against any claim of liability)
incurred without negligence or bad faith on the part of such Agent or other
paying agency and conversion agency, arising out of or in connection with its
acting as an Agent or other paying agency and conversion agency of the Company
hereunder. The obligations of the Company and the Guarantor under this clause
(a) shall survive payment of the Securities or the resignation or removal of any
Agent or paying agency and conversion agency.
(b) In acting under this Agreement and in connection with the
Securities, each of the Agents and each other paying agency and conversion
agency of the Company is acting solely as agent of the Company, and does not
assume any obligation, or relationship of agency or trust, for or with any of
the owners or holders of the Securities or coupons, except that all funds held
by the Paying Agent or any other paying agency of the Company for payment of
principal, premium, if any, or interest on (or Additional Amounts, if any, on)
the Securities shall be held in trust but need not be segregated from other
funds except as required by law and as set forth herein and in the Securities,
and shall be applied as set forth herein and in the Securities; provided,
however, that monies paid by the Company or the Guarantor to the Paying Agent or
any other paying agency of the Company for the payment of principal of or
interest on (or Additional Amounts, if any, on) Securities remaining unclaimed
at the end of two years after such principal or interest (or Additional Amounts,
if any) shall have become due and payable shall be repaid to the Company or the
Guarantor, as the case may be, as provided and in the manner set forth in the
Securities, whereupon the aforesaid trust shall terminate and all liability of
the Paying Agent or such other paying agency of the Company with respect thereto
shall cease.
(c) Each of the Agents and each other paying agency and conversion
agency of the Company may consult with one or more counsel satisfactory to it
(including counsel to the Company or the Guarantor), and the written opinion of
such counsel shall be full and complete authorization and protection in respect
of any action taken, omitted or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
(d) Each of the Agents and each other paying agency and conversion
agency of the Company shall be protected and shall incur no liability for or in
respect of any action taken, omitted or suffered by it in reliance upon any
Security, Guarantee, Exchange Option, coupon, notice, direction, consent,
certificate, affidavit, statement or other paper or document believed in good
faith by such Agent or such other paying agency and conversion agency of the
Company to be genuine and to have been signed by the proper parties.
(e) Each of the Agents and each other paying agency and conversion
agency of the Company, its officers, directors and employees may become the
owner of, or acquire any interest in, any Securities or coupons, with the same
rights that it or they would have if it were not an Agent or such other paying
agency of the Company hereunder, and may engage or be interested in any
financial or other transaction with the Company, the Guarantor and their
affiliates and may act on, or as depositary, trustee or agent for, any committee
or body of holders of Securities or other obligations of the Company or the
Guarantor, as freely as if it were not an Agent or a paying agency or conversion
agency of the Company hereunder.
(f) Neither the Paying Agent nor any other paying agency of the
Company shall be under any liability for interest on any monies at any time
received by it pursuant to any of the provisions of this Agreement or of the
Securities.
(g) The recitals contained herein and in the Securities (except in
the Fiscal Agent's certificates of authentication), shall be taken as the
statements of the Company or the Guarantor, as the case may be, and the Agents
assume no responsibility for the correctness of the same. None of the Agents
makes any representation as to the validity or sufficiency of this Agreement or
the Securities or the coupons or the Guarantees or the Exchange Options, except
for such Agent's due authorization to execute this Agreement. Neither the Agents
nor any other paying agency of the Company shall be accountable for the use or
application by the Company of the proceeds of any Securities authenticated and
delivered by the Fiscal Agent in conformity with the provisions of this
Agreement.
(h) The Agents and each other paying agency and conversion agency of
the Company shall be obligated to perform such duties and only such duties as
are herein and in the Securities specifically set forth and no implied duties or
obligations shall be read into this Agreement or the Securities against the
Agents or any other paying agency of the Company. The Agents shall not be under
any obligation to take any action hereunder which may tend to involve them in
any expense or liability, the payment of which within a reasonable time is not,
in their reasonable opinion, assured to them.
(i) Unless herein or in the Securities otherwise specifically
provided, any order, certificate, notice, request, direction, or other
communication, from the Company or the Guarantor made by or given by either of
them under any provision of this Agreement shall be sufficient if signed by the
President, the Secretary, any Vice President or the Treasurer of the Company or
the Guarantor, as the case may be.
(j) Anything in this Agreement to the contrary notwithstanding, none
of the Agents shall incur any liability hereunder, except as a result of
negligence or bad faith attributable to it or its officers or employees, and
shall incur no liability for the negligence or bad faith of its agents appointed
by it with due care; provided that the Agent shall notify the Company and the
Guarantor of the appointment of any such agents.
(k) The Agents shall not be liable for any loss caused by events
beyond the reasonable control of the Agents including any malfunction,
interruption of or error in the transmission of information caused by any
machines or system or interception of communication facilities, abnormal
operating conditions or acts of God. The Agents shall have no liability
whatsoever for any consequential, special, indirect or speculative loss or
damages suffered by the Company in connection with the transactions contemplated
by and the relationship established by this Agreement even if the Agents have
been advised as to the possibility of the same. These provisions will override
all other provisions of this Agreement.
12. Offices, Resignation, Successors, Etc. of Agents;
Paying, Conversion and Transfer Agencies.
(a) The Company agrees that, until none of the Securities and coupons
is outstanding or until monies for the payment of all principal, premium, if
any, and interest on (and Additional Amounts payable pursuant to Section 2 of
the Definitive Securities, if any, on) all outstanding Securities shall have
been made available at the office of the Paying Agent and shall have been
returned to the Company as provided in the Securities, there shall at all times
be a Fiscal Agent in the Borough of Manhattan, New York City, which shall be a
bank or trust company organized and doing business under the laws of the United
States of America or of any State of the United States of America, in good
standing and authorized under such laws to exercise corporate trust powers, a
Paying Agent, a Conversion Agent and a Transfer Agent having offices in a city
in Western Europe and in New York City, which shall be a bank or trust company
organized, in good standing and doing business under the laws of the United
States of America or of any State of the United States of America, and a paying
agency, a conversion agency and a transfer agency in at least one city in
Western Europe, which shall be Luxembourg so long as the Securities are listed
on the Luxembourg Stock Exchange.
(b) Each of the Agents may at any time resign as such Agent by giving
written notice to the Company and to the Guarantor of such intention on its
part, specifying the date in which its desired resignation shall become
effective; provided, however, that such date shall never be less than ninety
days after receipt of such notice by the Company and the Guarantor unless the
Company and the Guarantor agree to accept less notice. Each of the Agents
hereunder may be removed at any time by the filing with it of any instrument in
writing signed on behalf of the Company and the Guarantor and specifying such
removal and the date when it is intended to become effective. Such resignation
or removal shall take effect upon the date of the appointment by the Company and
the Guarantor, as hereinafter provided, of a successor Fiscal Agent, Conversion
Agent or Paying Agent, as the case may be, and the acceptance of such
appointment by such successor Agent. Upon its resignation or removal, each of
the Agents shall be entitled to the payment by the Company and the Guarantor of
its compensation for the services rendered hereunder and to the reimbursement of
all reasonable out-of-pocket expenses incurred in connection with the services
rendered hereunder by such Agent and shall promptly notify the Company of such
action.
(c) In case at any time any of the Agents shall resign, or shall be
removed, or shall be incapable of acting, or shall file a voluntary petition as
a debtor under Chapter 7 or 11 of Title 11 of the United States Code or have an
order for relief entered against it as a debtor under Chapter 7 or 11 of Title
11 of the United States Code or make an assignment for the benefit of its
creditors or consent to the appointment of a receiver of all or any substantial
part of its property, or shall admit in writing its inability to pay or meet its
debts as they mature, or if an order of any court shall be entered approving any
petition filed by or against the Fiscal Agent under any legislation similar to
the provisions of Title 11 of the United States Code or against any of the
Agents under the provisions of any legislation similar to the provisions of
Title 11 of the United States Code, or if a receiver of it or of all or any
substantial part of its property shall be appointed, or if any public officer
shall take charge or control of it or of its property or affairs, for the
purpose of rehabilitation, conservation or liquidation, a successor Agent,
qualified as aforesaid, shall be appointed by the Company and the Guarantor by
an instrument in writing. Upon the appointment as aforesaid of a successor Agent
and acceptance by it of such appointment, the Agent so superseded shall cease to
be such Agent hereunder. If no successor Agent shall have been so appointed by
the Company and the Guarantor and shall have accepted appointment as hereinafter
provided, any holder of a Security, on behalf of itself and all others similarly
situated, or any Agent may petition any court of competent jurisdiction for the
appointment of a successor Agent and shall promptly notify the Company and the
Guarantor of such action.
(d) Any successor Fiscal Agent, Conversion Agent, Transfer Agent or
Paying Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company and the Guarantor an instrument accepting such
appointment hereunder, and thereupon such successor Agent, without any further
act, deed or conveyance, shall become vested with all the authority, rights,
powers, trusts, immunities, duties and obligations of such predecessor with like
effect as if originally named as such Agent hereunder, and such predecessor,
upon payment of its charges and disbursements then unpaid, shall thereupon
become obligated to transfer, deliver and pay over, and such successor Agent
shall be entitled to receive, all monies, securities or other property on
deposit with or held by such predecessor, as such Agent hereunder.
(e) Any corporation or bank into which any of the Agents hereunder
may be merged or converted, or any corporation or bank with which such Agent may
be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which such Agent shall be a party, or any
corporation or bank to which such Agent shall sell or otherwise transfer all or
substantially all the assets and business of such Agent, or any corporation to
which the Fiscal Agent shall sell or otherwise transfer all or substantially all
of its corporate trust business, provided that it shall be qualified as
aforesaid, shall be the successor to such Agent under this Agreement without the
execution or filing of any document or any further act on the part of any of the
parties hereto.
(f) So long as there shall be a Fiscal Agent and Paying Agent
hereunder, the Company shall maintain agencies (i) where Registered Securities
(but not Bearer Securities or coupons ) may be presented for surrender for
payment (and for the payment of Additional Amounts on the Registered Securities,
if any) and where Securities may be surrendered for conversion in the Borough of
Manhattan, New York City, and (ii) where Bearer Securities and coupons may be
surrendered for payment (and for the payment of Additional Amounts (pursuant to
Section 2 of the Definitive Securities) on Bearer Securities, if any) and where
Bearer Securities may be surrendered for conversion in at least one city in
Western Europe, which shall be Luxembourg so long as the Securities are listed
on the Luxembourg Stock Exchange. The Company now intends to maintain additional
agencies (subject to applicable laws and regulations) where Bearer Securities
may be surrendered for payment (and for the payment of Additional Amounts
(pursuant to Section 2 of the Definitive Securities) on Bearer Securities, if
any), where Registered Securities may be surrendered for payment and where
Securities may be surrendered for conversion in London, England and Luxembourg,
and during such period to keep the Agents advised of the names and locations of
such agencies. The Guarantor shall maintain additional agencies where Securities
may be surrendered for exchange pursuant to the Exchange Options (if applicable)
at such locations and with such agencies as are maintained from time to time by
the Company for the surrender of securities for conversion. Unless the Company
shall otherwise notify each of the Agents in writing, the sole such paying
agencies and conversion agencies shall be the agencies specified in the
Securities. The Company authorizes the Paying Agent to pay to or to the order of
the aforesaid agencies, upon demand by such agencies, funds for the payment of
the principal, premium, if any, and interest on (and Additional Amounts pursuant
to Section 2 of the Definitive Securities, if any, on) the Securities. Except as
otherwise arranged by the Company, the Fiscal Agent shall arrange for the
payment of the compensation of such paying agencies for their services as such,
and the Company and the Guarantor shall pay to the Fiscal Agent from time to
time sufficient funds to make such payments.
(g) So long as there shall be a Fiscal Agent, Paying Agent and
Conversion Agent hereunder, the Company shall maintain a Security Registrar and
additional transfer agencies (the "Transfer Agents") (i) where Registered
Securities may be surrendered for exchange for Registered Securities in New York
City and (ii) in at least one city in Western Europe, which shall be Luxembourg
so long as the Securities are listed on the Luxembourg Stock Exchange, where
Bearer Securities may be delivered in exchange for Bearer Securities or for
Registered Securities. Consistent with applicable laws and regulations,
including the provisions of the federal income tax laws of the United States,
such agencies may be the same agencies as or different agencies from those
maintained by the Company pursuant to Section 12(f).
The Company hereby appoints Banque Internationale a Luxembourg, 69,
route d'Esch, L-1470 LuxembourgVille, Luxembourg, as Transfer Agent for such
exchanges. The transfer, exchange and registration of transfer or exchange of
Registered Securities shall be made by the Fiscal Agent in New York City.
13. Taxes.
The Company will pay all stamp taxes and other similar duties, if
any, that may be imposed by the United States of America or the United Kingdom,
or any state or political subdivision thereof or taxing authority therein, with
respect to the execution or delivery of this Agreement, or the issuance of the
Global Security or the Guarantees, or the exchange from time to time of the
Global Security for Definitive Securities, or with respect to the issue or
delivery of shares of Common Stock on conversion of Securities; provided,
however, that the Company shall not be required to pay any tax or duty which may
be payable in respect of any transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the holder of the Security
or Securities to be converted, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Company the
amount of any such tax or duty or has established to the satisfaction of the
Company that such tax or duty has been paid; and further provided, that the
Company shall not be required to pay any tax or duty that may be payable in
respect of any accrued interest paid in connection with the conversion of the
Securities.
The Guarantor will pay all stamp taxes and other similar duties, if any,
that may be imposed by the United States of America or the United Kingdom, or
any state or political subdivision thereof or taxing authority therein, with
respect to the issue or delivery of shares of Guarantor Common Stock on
exchanges of Securities pursuant to Exchange Options; provided, however, that
the Guarantor shall not be required to pay any tax or duty which may be payable
in respect of any transfer involved in the issue or delivery of shares of
Guarantor Common Stock in a name other than that of the holder of the Security
or Securities to be exchanged, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Guarantor the
amount of any such tax or duty or has established to the satisfaction of the
Guarantor that such tax or duty has been paid.
14. Meetings and Votes of Holders.
(a) A meeting of holders of Securities may be called at any time and
from time to time pursuant to this Section for any of the following purposes:
(i) to give any notice to the Company, to the Guarantor or to the Fiscal Agent,
or to give any directions to the Fiscal Agent, or to consent to the waiving of
any default hereunder or under the Definitive Securities and its consequences,
or to take any other action authorized to be taken by holders of Securities
pursuant to Section 9 of the Definitive Securities; or (ii) to take any other
action authorized to be taken by or on behalf of the holders of any specified
aggregate principal amount of the Securities under any other provision of this
Agreement, the Definitive Securities or under applicable law.
(b) Meetings of holders of Securities may be held at such place or
places in New York City or London as the Fiscal Agent or, in case of its failure
to act, the Company, the Guarantor or the holders calling the meeting shall from
time to time determine.
(c) The Fiscal Agent may at any time call a meeting of holders of
Securities to be held at such time and at such place in any of the locations
designated in Section 14(b) hereof as the Fiscal Agent shall determine. Notice
of every meeting of holders shall be made as specified in Section 19 hereof,
except that such notice shall set forth the time and the place of such meeting,
in general terms the action proposed to be taken at such meeting and a general
description of regulations applicable to such meeting and shall be published at
least three times in the publications specified in such Section 19, the first
publication to be not less than 21 nor more than 180 days prior to the date
fixed for the meeting.
(d) In case at any time the Company, the Guarantor or the holders of
at least 25% in aggregate principal amount of the Securities shall have
requested the Fiscal Agent to call a meeting of the holders, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Fiscal Agent shall not have given the first notice of such
meeting within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Company,
the Guarantor or the holders of Securities in the amount above specified may
determine the time and the place in either of the locations designated in
Section 14(b) hereof for such meeting and may call such meeting to take any
action authorized in Section 14(a) hereof by giving notice thereof as provided
in Section 14(c) hereof.
(e) To be entitled to vote at any meeting of holders of Securities, a
person shall be (i) a holder of one or more Securities, or (ii) a person
appointed by an instrument in writing as proxy for a holder or holders of
Securities by such holder or holders, which proxy need not be a holder of
Securities. The only persons who shall be entitled to be present or to speak at
any meeting of holders shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Fiscal Agent and its counsel and
any representatives of the Company and its counsel and any representatives of
the Guarantor and its counsel.
(f) The persons entitled to vote a majority in principal amount of
the outstanding Securities shall constitute a quorum for the transaction of all
business specified in Section 14(a) hereof. No business shall be transacted in
the absence of a quorum unless a quorum is represented when the meeting is
called to order. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at the request of
the holders of Securities (as provided in Section 14(d) hereof), be dissolved.
In any other case the meeting shall be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment of
such adjourned meeting. Notice of the reconvening of any adjourned meeting shall
be given as provided in Section 14(c) hereof except that such notice need be
published only once but must be given not less than five days prior to the date
on which the meeting is scheduled to be reconvened. Subject to the foregoing, at
the reconvening of any meeting adjourned for a lack of a quorum the persons
entitled to vote 25% in principal amount of the Securities shall constitute a
quorum for the taking of any action set forth in the notice of the original
meeting. Notice of the reconvening of an adjourned meeting shall state expressly
the percentage of the aggregate principal amount of the Securities that shall
constitute a quorum. At a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid, any resolution and all matters (except
as limited by Section 9 of the Definitive Securities) shall be effectively
passed and decided if passed or decided by the persons entitled to vote a
majority in principal amount of the Securities represented and voting at such
meeting, provided that such amount shall be not less than 25% in principal
amount of the Securities outstanding. Any holder of a Security who has executed
an instrument in writing appointing a person as his proxy shall be deemed to be
present for the purposes of determining a quorum and be deemed to have voted;
provided, however, that such holder shall be considered as present or voting
only with respect to the matters covered by such instrument in writing. Any
resolution passed or decision taken at any meeting of the holders of Securities
duly held in accordance with this Section 14 shall be binding on all the holders
of Securities whether or not present or represented at the meeting.
(g) Notwithstanding any other provision of this Agreement, the Fiscal
Agent may make such reasonable regulations as it may deem advisable for any
meeting of holders of Securities in regard to proof of the holding of Securities
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Bearer Securities
shall be proved by the production of the Bearer Securities or by a certificate
executed, as depositary, by, and the appointment of any proxy shall be proved by
having the signature of the person executing the proxy witnessed or guaranteed
by, in each case, any trust company, bank or banker satisfactory to the Fiscal
Agent. Such regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified herein or other proof. The holding of Registered Securities shall be
proved by the registry books maintained in accordance with Section 2(d) hereof
or by a certificate or certificates of the Fiscal Agent in its capacity as the
Company's agent for the maintenance of such books.
(h) The Fiscal Agent shall, by an instrument in writing, appoint a
temporary chairperson of the meeting, unless the meeting shall have been called
by the Company, the Guarantor or by the holders of Securities as provided in
Section 14(d) hereof, in which case the Company, the Guarantor or the holders
calling the meeting, as the case may be, shall in like manner appoint a
temporary chairperson. A permanent chairperson and a permanent secretary of the
meeting shall be elected by vote of the holders of a majority in principal
amount of the Securities represented at the meeting and entitled to vote.
(i) At any meeting each holder or proxy shall be entitled to one vote
for each U.S. $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Securities challenged as not outstanding and ruled by the
chairperson of the meeting to be not outstanding. The chairperson of the meeting
shall have no right to vote, except as a holder or proxy.
(j) Any meeting of holders of Securities duly called pursuant to
Section 14(c) or 14(d) hereof at which a quorum is present may be adjourned from
time to time by vote of the holders (or proxies for the holders) of a majority
in principal amount of the Securities represented at the meeting and entitled to
vote; and the meeting may be held as so adjourned without further notice.
(k) The vote upon any resolution submitted to any meeting of holders
of Securities shall be by written ballots on which shall be subscribed the
signatures of the holders of Securities or of their representatives by proxy and
the serial number or numbers of the Securities held or represented by them. The
permanent chairperson of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of holders of Securities shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was published as provided in Section 14(c) or 14(d) hereof and, if
applicable, Section 14(f) hereof. Each copy shall be signed and verified by the
affidavits of the permanent chairperson and secretary of the meeting, and one
such copy shall be delivered to the Company, another to the Guarantor and
another to the Fiscal Agent to be preserved by the Fiscal Agent, the copy
delivered to the Fiscal Agent to have attached thereto the ballots voted at the
meeting. Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
15. Merger, Consolidation or Sale of Assets.
(a) If at any time there shall be a merger, consolidation, sale or
conveyance of assets or assumption of obligations to which any of the covenants
contained in Section 6 of the Definitive Securities or Section 3 of the
Guarantees, is applicable, then in any such event the successor or assuming
corporation referred to therein will promptly deliver to the Fiscal Agent:
(i) A certificate signed by an executive officer of such
successor or assuming corporation stating that as of the time immediately after
the effective date of any such transaction the covenants of the Company or the
Guarantor, as the case may be, contained in the Definitive Securities or the
Guarantees, as applicable, have been complied with and the successor or assuming
corporation is not in default under the provisions of this Agreement or the
Securities or the Guarantees, as applicable; and
(ii) A written opinion of legal counsel (who may be an employee
of or counsel to the successor or assuming corporation) stating that in such
counsel's opinion such covenants have been complied with and that any instrument
or instruments executed in the performance of such covenants comply with the
requirements thereof.
In case of any such merger, consolidation, sale, conveyance or
assumption, such successor or assuming corporation shall succeed to and be
substituted for the Company or the Guarantor, as the case may be, with the same
effect, subject to (in the case of a merger to which the Company is a party)
Section 6(b) of the Definitive Securities, as if it had been named herein and in
the Definitive Securities or the Guarantees, as applicable, as the Company or
the Guarantor, as the case may be; the Company or the Guarantor, as the case may
be, shall thereupon be relieved of any further obligation or liability hereunder
or upon the Securities or the Guarantees, as applicable, and the Company or the
Guarantor, as the case may be, as the predecessor corporation may thereupon or
at any time thereafter be dissolved, wound up or liquidated. If applicable, such
successor or assuming corporation thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company any or all of the
Securities issuable hereunder which theretofore shall not have been executed on
behalf of the Company and delivered to the Fiscal Agent; and, upon the order of
such successor or assuming corporation, instead of the Company, and subject to
all the terms, conditions and limitations in this Agreement prescribed, the
Fiscal Agent shall authenticate and shall deliver any Securities which
previously shall have been signed and delivered by the officers of the Company
to the Fiscal Agent for authentication, and any Securities which such successor
or assuming corporation thereafter shall cause to be signed and delivered to the
Fiscal Agent for that purpose. If applicable, such successor or assuming
corporation may cause to be endorsed either in its own name or in the name of
the Guarantor, Guarantees on any or all of the Securities issuable hereunder
which theretofore shall not have been so endorsed and delivered to the Fiscal
Agent. All the Securities so issued shall in all respects have the same legal
rank and benefit under this Agreement as the Securities theretofore or
thereafter issued in accordance with the terms of this Agreement as though all
of such Securities had been issued at the date of the execution hereof.
In case of any merger, consolidation, sale, conveyance or assumption,
such changes in phraseology and form (but not in substance) may be made in the
Securities or the Guarantees, as the case may be, thereafter to be issued as may
be appropriate.
(b) The Fiscal Agent may rely on the documents delivered pursuant to
this Agreement by any successor or assuming corporation pursuant to this Section
15 as conclusive evidence that any such merger, consolidation, sale, conveyance
or assumption complies with the provisions of this Section and the Securities.
16. Governing Law
This Agreement, the Securities, the Exchange Options and the
Guarantees shall be governed by and construed in accordance with the law of the
Commonwealth of Massachusetts, United States of America.
17. Amendments.
This Agreement may be amended by the parties hereto, and certain
provisions hereof may be waived, in the manner provided in Section 9 of the
Definitive Securities. This Agreement may also be amended by the parties hereto,
without the consent of the holder of any Security, for the purposes set forth in
Section 9 of the Definitive Securities and for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or in any manner that the parties may mutually deem necessary
or desirable, and that shall not adversely affect the interests of the holders
of the Securities.
18. Agent for Service of Process.
As long as any of the Securities or coupons appertaining thereto
remain outstanding, the Company and the Guarantor will at all times have an
authorized agent in the City of New York, upon whom process may be served in any
legal action or proceeding arising out of or relating to this Agreement or any
Security or coupons appertaining thereto or any Guarantee or Exchange Option.
Service of process upon such agent and written notice of such service mailed or
delivered to the Company or the Guarantor, as the case may be, shall to the
extent permitted by law be deemed in every respect effective service of process
upon the Company or the Guarantor, as the case may be, in any such legal action
or proceeding. The Company and the Guarantor each hereby appoints the Fiscal
Agent as its agent for such purpose, and covenants and agrees that service of
process in any legal action or proceeding may be made upon it at the office of
such agent at 450 W. 33rd Street, New York, New York 10001, U.S.A., Attention:
Corporate Trust Department (or such other address in the City of New York, as
may be the principal corporate trust office of such agent in New York), unless
and until the Company or the Guarantor, as the case may be, shall designate
another agent for such purpose by written notice to the Fiscal Agent. If the
Fiscal Agent receives any such service of process, it shall promptly notify the
Company and the Guarantor of such service.
19. Notices.
All notices hereunder shall be deemed to have been given when
deposited in the mail as first class mail, registered or certified, return
receipt requested, postage prepaid, addressed to any party hereto as follows:
The Company.......... 1964 South Orange Blossom
Trail
Apopka, Florida 37203
U.S.A.
Attn: Chief Executive
Officer, with a copy
to the Guarantor and the
General Counsel of the
Guarantor
The Guarantor........ 81 Wyman Street
P. O. Box 9046
Waltham, MA 02254-9046
U.S.A.
Attn: Secretary,
with a copy to General Counsel
The Fiscal Agent..... 450 W. 33rd Street
15th floor
New York, NY 10001
U.S.A.
Attn: Corporate Trust
Department
Chemical Bank House
125 London Wall
London EC2Y 5AJ
England
Attn: Corporate Agency
The Paying Agent..... 450 West 33rd Street
15th floor
New York, NY 10001
U.S.A.
Attn: Corporate Trust
Department
Chemical Bank House
125 London Wall
London EC2Y 5AJ
England
Attn: Corporate Agency
or at any other address of which any of the foregoing shall have
notified the others in writing.
Notices to holders of the Securities shall be given by publication in
an Authorized Newspaper. For purposes of this Agreement, the term "Authorized
Newspaper" means a newspaper customarily published on each business day in
morning editions, whether or not it shall be published in Saturday, Sunday or
holiday editions, such as The Wall Street Journal (Eastern edition) in New York
City, the Financial Times in London and the Luxemburger Wort in Luxembourg. If
by reason of the temporary or permanent suspension of publication of any
newspaper or by reason of any other cause it shall be impossible to make
publication of such notice in an Authorized Newspaper as herein provided, then
such publication or other notice in lieu thereof as shall be made by the Fiscal
Agent shall constitute sufficient publication of such notice, if such
publication or other notice shall, so far as may be possible approximate the
terms and conditions of the publication in lieu of which it is given. Notices
will be mailed to registered holders of Registered Securities at their
registered address as the same shall appear on the books of the Fiscal Agent on
the day fifteen days prior to such mailing. The Fiscal Agent shall promptly
furnish to the Company and to each other paying agency of the Company a copy of
each notice so published or mailed.
20. Counterparts.
This Agreement may be executed in separate counterparts, and by each
party separately in a separate counterpart, each such counterpart, when so
executed and delivered, to be an original. Such counterparts shall together
constitute but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Fiscal Agency
Agreement as of the date first above written.
THERMO REMEDIATION INC.
By: /s/ Jonathan W. Painter
Title: Treasurer
THERMO ELECTRON CORPORATION
By: /s/ Jonathan W. Painter
Title: Treasurer
CHEMICAL BANK, as Agent
By: /s/ M. Price
Title: Attorney-in-Fact
<PAGE>
EXHIBIT A
<PAGE>
FORM OF FACE OF REGISTERED DEBENTURE]
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT TO QUALIFIED
INSTITUTIONAL BUYERS (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
ACCORDANCE WITH RULE 144A (IF AVAILABLE) OR OTHERWISE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
Each purchaser, by its purchase of this Security, represents, acknowledges
and agrees that: (1) it is purchasing "restricted" securities which have not
been registered under the Securities Act; (2) if it should decide to dispose of
any of such Securities, it will not offer, sell, transfer, pledge, hypothecate
or otherwise dispose of any of such Securities except (A) pursuant to Rule 144A
under the Securities Act (if available), (B) pursuant to Regulation S under the
Securities Act, (C) to a sophisticated institutional investor approved as an
"accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) by a broker or dealer registered under Section 15 of
the Securities Exchange Act of 1934, (D) pursuant to any other exemption from,
or otherwise in a transaction not subject to, the registration requirements of
the Securities Act as confirmed in an opinion of U.S. counsel or (E) pursuant to
an effective registration statement under the Securities Act, in each case in
accordance with any applicable state laws of the United States governing the
offer or sale of securities.
[If held by DTC: Unless this certificate is presented by an authorized
representative of The Depository Trust Company to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate is registered
in the name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.]
<PAGE>
THERMO REMEDIATION INC.
(Incorporated in the State of Delaware)
4-7/8% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2000
GUARANTEED BY
THERMO ELECTRON CORPORATION
(Incorporated in the State of Delaware)
No. R-________ U.S.$________
Thermo Remediation Inc., a corporation duly incorporated and existing
under the laws of the State h of Delaware (the "Company"), for value received,
hereby promises to pay to ________________, or registered assigns, the principal
sum of ________ Thousand United States Dollars on May 1, 2000 and to pay
interest thereon, from May 4, 1995 or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semiannually in arrears on
May 1 and November 1, in each year (each, an "Interest Payment Date"),
commencing November 1, 1995 at the rate of 4-7/8% per annum, until the principal
hereof is paid or made available for payment. Interest hereon shall be
calculated on the basis of a 360-day year comprised of twelve 30-day months. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Fiscal Agency Agreement, be paid to the
person in whose name this Security is registered at the close of business on the
Record Date for such interest, which shall be April 15 or October 15 (whether or
not a Business Day) next preceding such Interest Payment Date. Except as
otherwise provided in the Fiscal Agency Agreement, any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
holder on such Record Date and may be paid at any time in any lawful manner, all
as more fully provided in the Fiscal Agency Agreement. Payment of interest on
this Security shall be made by United States dollar check drawn on a bank in the
City of New York and mailed to the person entitled thereto at his address as it
shall appear in the Security Register, or (if arrangements satisfactory to the
Company and the Fiscal Agent are made) by wire transfer to a United States
dollar account maintained by the payee with a bank in the City of New York;
provided, however, that it such mailing is not possible and no such application
shall have been made, payment of interest shall be made at the Corporate Trust
Office of the Fiscal Agent, or such other office or agency of the Company as may
be designated for such purpose in the City of New York, in United States
currency.
Reference is hereby made to the further provisions of this Security set
forth under Terms and Conditions of the Securities on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed in its corporate name by the manual or facsimile signature of a duly
authorized officer.
Dated: May 4, 1995
THERMO REMEDIATION INC.
By:
[Title]
<PAGE>
[FORM OF FACE OF BEARER DEBENTURE]
THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS EXCEPT TO QUALIFIED
INSTITUTIONAL BUYERS (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
ACCORDANCE WITH RULE 144A (IF AVAILABLE) OR OTHERWISE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
THERMO REMEDIATION INC.
(Incorporated in the State of Delaware)
4-7/8% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2000
GUARANTEED BY
THERMO ELECTRON CORPORATION
(Incorporated in the State of Delaware)
No. B-_____ U.S.$_________
Thermo Remediation Inc., a corporation duly incorporated and existing
under the laws of the State of Delaware (the "Company"), for value received,
hereby promises to pay to bearer upon presentation and surrender of this
Security the principal sum of _______ Thousand United States Dollars on May 1,
2000 and to pay interest thereon, from the date hereof, semiannually in arrears
on May 1 and November 1 in each year (each, an "Interest Payment Date"),
commencing November 1, 1995, at the rate of 4-7/8% per annum, until the
principal hereof is paid or made available for payment. Interest hereon shall be
calculated on the basis of a 360-day year comprised of twelve 30-day months.
Such payments (including premium, if any) shall be made in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, subject to any laws or regulations
applicable thereto and to the right of the Company (limited as provided in the
Fiscal Agency Agreement) to terminate the appointment of any such paying agency,
at the main offices of Chemical Bank, Chemical Bank House, 125 London Wall,
London EC2Y 5AJ, England or Banque Internationale a Luxembourg, 69, route
d'Esch, L-1470 LuxembourgVille, Luxembourg or at such other offices or agencies
outside the United States of America, its territories and possessions as the
Company may designate, by United States dollar check drawn on a bank in the City
of New York, or (if arrangements satisfactory to the Company and the Fiscal
Agent are made) by wire transfer to a United States dollar account maintained by
the holder at a bank outside the United States, its territories and its
possessions. Interest on this Security shall be paid only at an office or agency
located outside the United States, its territories and possessions and, in the
case of interest due on or before maturity, only upon presentation and surrender
at such an office or agency of the interest coupons hereto attached as they
severally mature. No payment on this Security or any coupon will be made at the
corporate trust office of the Fiscal Agent or any other paying agency maintained
by the Company in the United States or its possessions. nor will any payment be
made by transfer to an account in, or by mail to an address in, the United
States or its possessions, except as may be permitted by United States tax laws
and regulations in effect at the time of such payment without detriment to the
Company. Notwithstanding the foregoing, payment of this Security may be made at
the office of the Fiscal Agent in the City of New York if full payment at all
paying agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions.
Reference is hereby made to the further provisions of this Security set
forth under Terms and Conditions of the Securities on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed in its corporate name by the manual or facsimile signatures of a duly
authorized officer and coupons bearing the facsimile signature of a duly
authorized officer to be annexed hereto.
Dated: May 4, 1995
THERMO REMEDIATION INC.
By:
[Title]
<PAGE>
[FORM OF FACE OF COUPON ON BEARER DEBENTURES]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
THERMO REMEDIATION INC.
4-7/8% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2000
U.S. $
Due
Unless the Security to which this coupon appertains shall have been called
for previous redemption and payment thereof duly provided for or converted or
exchanged, on the date set forth hereon, THERMO REMEDIATION INC. (herein called
the "Company") will pay to bearer, upon surrender hereof, the amount shown
hereon (together with any Additional Amounts in respect thereof which the
Company may be required to pay according to the terms of said Security) at the
paying agencies set out on the reverse hereof or at such other places outside
the United States of America, its territories and possessions as the Company may
determine from time to time, by United States dollar check drawn on a bank in
the City of New York, or (if arrangements satisfactory to the Company and the
Fiscal Agent referred to in the Security to which this Coupon appertains are
made) wire transfer to a United States dollar account maintained by the payee at
a bank outside the United States of America, its territories and possessions,
being one-half year's interest then payable on said Security.
THERMO REMEDIATION INC.
By:
[Title]
<PAGE>
[Reverse of Coupon]
Chemical Bank Banque Internationale a
Luxembourg
Chemical Bank House 69, route d'Esch
125 London Wall L-1470 LuxembourgVille
London EC2Y 5AJ Luxembourg
England
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned Fiscal
Agency Agreement.
CHEMICAL BANK, as Fiscal Agent
By
Authorized Officer
<PAGE>
[Form of Reverse]
Terms and Conditions of the Securities
1. General.
(a) This Security is one of a duly authorized issue of Securities of
the Company designated as its 4-7/8% Convertible Subordinated Debentures due
2000 (herein called the "Securities"). The Company, for the benefit of the
holders from time to time of the Securities, has entered into a Fiscal Agency
Agreement dated as of May 4, 1995 (the "Fiscal Agency Agreement"), among the
Company, Thermo Electron Corporation, a corporation duly organized and existing
under the laws of the State of Delaware, as Guarantor (the "Guarantor"), and
Chemical Bank, as Fiscal Agent, Paying Agent, Registrar and Conversion Agent
(the "Fiscal Agent"), to which Fiscal Agency Agreement reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Guarantor, the Fiscal Agent, and the
holders of Securities and any coupons appertaining thereto and of the terms upon
which the Securities are, and are to be, authenticated and delivered. The
holders of the Securities will be entitled to the benefits of, be bound by, and
be deemed to have notice of, all of the provisions of the Fiscal Agency
Agreement. A copy of the Fiscal Agency Agreement is on file and may be inspected
at the offices of paying agencies appointed by the Company.
(b) The Securities are issuable as bearer Securities (the "Bearer
Securities"), with interest coupons attached, in the denominations of U.S.
$1,000 and U.S. $10,000 (or as otherwise permitted by the Company, the Guarantor
and the Fiscal Agent), and as registered Securities (the "Registered
Securities"), without coupons, in denominations of U.S. $1,000 and integral
multiples thereof. The Registered Securities, and transfers thereof, shall be
registered as provided in Section 8 hereof and in the Fiscal Agency Agreement.
The holder of any Bearer Security or any coupon and the registered holder of a
Registered Security shall (to the fullest extent permitted by applicable law) be
treated at all times, by all persons and for all purposes as the absolute owner
of such Security or coupon, as the case may be, regardless of any notice of
ownership, theft or loss or of any writing thereon.
(c) The Securities are unsecured obligations of the Company
subordinated as set forth in Section 7 hereof. There are no restrictions herein
on other indebtedness or securities which may be incurred or issued by the
Company.
2. Additional Amounts.
The Company will pay, as additional amounts ("Additional Amounts"),
to the holder of this Security or of any coupon appertaining hereto who is a
United States Alien (as defined below) such amounts as may be necessary in order
that every net payment of the principal of, premium, if any, and interest on
this Security, after withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States or any political subdivision or taxing authority
thereof or therein, will not be less than the interest provided herein or any
coupon appertaining hereto to be then due and payable; provided, however, that
the foregoing obligation to pay Additional Amounts shall not apply to:
(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such holder (or between a fiduciary, settlor, beneficiary,
member, stockholder, or a person holding a power over, such holder, if such
holder is an estate, trust, partnership or corporation) and the United States,
including, without limitation, such holder (or such fiduciary, settlor,
beneficiary, member, stockholder or person holding a power) being or having been
a citizen or resident or treated as a resident thereof or being or having been
engaged in a trade or business therein or being or having been present therein
or having or having had a permanent establishment therein, or (ii) such holder's
present or former status as a personal holding company, foreign personal holding
company, passive foreign investment company, foreign private foundation or other
foreign tax-exempt entity or controlled foreign corporation for United States
tax purposes or a corporation which accumulates earnings to avoid United States
Federal income tax or (iii) such holder's status as a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of business;
(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the holder of this Security or
any coupon appertaining hereto for payment on a date more than 10 days after the
date on which such payment became due and payable or on the date on which
payment thereof is duly provided, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with certification, information,
documentation or other reporting requirements concerning the nationality,
residence, identity or present or former connection with the United States of
the holder or beneficial owner of this Security or any related coupon if such
compliance is required by statute, regulation or ruling of the United States or
any political subdivision or taxing authority thereof as a precondition to
relief or exemption from such tax assessment or other governmental charge;
(e) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal of,
premium, if any, or interest on this Security; or
(f) any tax, assessment or other governmental charge imposed on
interest received by a person holding, actually or constructively, 10 percent or
more of the total combined voting power of all classes of stock of the Company
entitled to vote; or
(g) any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of, premium, if any,
or interest on this Security or any interest coupon appertaining thereto if such
payment can be made without such withholding by any other paying agent;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, premium, if any, or interest on this Security to a person other
than the sole beneficial owner of such payment, or that is a partnership or a
fiduciary, to the extent such beneficial owner, member of such partnership or
beneficiary or settlor with respect to such fiduciary would not have been
entitled to the Additional Amounts had such beneficial owner, member beneficiary
or settlor been the holder of this Security or any coupon appertaining hereto.
The term "United States Alien" means any person who, for United States
Federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership to the extent one or more of the members of which is, for
United States Federal income tax purposes, a foreign corporation, a non-resident
alien individual or an estate or trust, the income of which is not subject to
United States federal income taxation regardless of its source, and the term
"United States" means the United States of America, its territories and
possessions.
Except as specifically provided herein and in the Fiscal Agency Agreement,
the Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.
3. Redemption.
(a) The Securities are subject to redemption (1) on or after May 1,
1998 as a whole or in part, at the election of the Company, at a redemption
price equal to 100% of the principal amount, together with accrued interest to
the date fixed for redemption; and (2) under the circumstances described in the
next succeeding paragraph at a redemption price equal to 100% of the principal
amount, together in the case of any such redemption with accrued interest to the
date fixed for redemption, but certain interest installments on Registered
Securities will be payable to the holders of such Securities of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Fiscal Agency Agreement; and provided, however, that in
the event that the Company shall have elected to redeem all or any part of the
Securities under clause (1) hereof after the date on which a Change in Control
(as defined in the Exchange Option endorsed upon this Security) of the Guarantor
shall have been determined to occur by the Continuing Directors (as defined in
such Exchange Option) pursuant to the Exchange Option, which Change in Control
shall not have been approved by the Continuing Directors of the Guarantor, the
date on which such redemption may occur shall be not sooner than the first
business day immediately following the termination of the Exercise Period (as
defined in the Exchange Option). If fewer than all of the then outstanding
Securities are to be redeemed, the Securities to be redeemed will be selected by
the Fiscal Agent not more than 75 days prior to the date fixed for redemption,
by such method as the Fiscal Agent shall deem fair and appropriate.
(b) If, at any time, the Company shall determine that as a result of
any change in or amendment to the laws (or any regulations or rulings
promulgated thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or any amendment to or
change in an official application or interpretation of such laws, regulations or
rulings, which change or amendment becomes effective on or after May 4, 1995,
the Company will become obligated to pay to the holder of any Security or coupon
Additional Amounts and such obligation cannot be avoided by the Company taking
reasonable measures available to it, then the Company may, at its election
exercised at any time when such conditions continue to exist, redeem such
Securities as a whole at a redemption price equal to 100% of the principal
amount, together with accrued interest, if any, to the date fixed for
redemption; provided that no such notice of redemption shall be given earlier
than 90 days prior to the earliest date on which the Company would be obliged to
pay such Additional Amounts were a payment in respect of this Security then due;
and provided, further, that at the time such notice is given, such obligation to
pay such Additional Amounts remains in effect.
Prior to any redemption of the Securities pursuant to the preceding
paragraph, the Company shall provide the Fiscal Agent with one or more
certificates (signed by the President or any Vice President and the Treasurer or
the Secretary) of the Company to the effect that the Company is entitled to
redeem the Securities pursuant to such paragraph and that the conditions
precedent to the right of the Company to redeem the Securities pursuant to such
paragraph have occurred and a written opinion of counsel (who may be an employee
of the Company or the Guarantor) stating that all legal conditions precedent to
the right of the Company to redeem the Securities pursuant to such paragraph
have occurred.
(c) The Company shall, except as set forth in the succeeding
paragraph, redeem the Bearer Securities as a whole but not in part, at 100% of
their principal amount, together with interest accrued to the date fixed for
redemption, after determining, based on a written opinion of counsel, that any
certification, identification or information reporting requirement of United
States law or regulation with regard to the nationality, residence or identity
of a beneficial owner of a Bearer Security who is a United States Alien (as
defined in Section 2 hereof) would be applicable to a payment of principal of,
premium, if any, or interest on a Bearer Security or coupon appertaining thereto
made outside the United States by the Company or a paying agent (other than a
requirement (a) which would not be applicable to a payment made (i) directly to
the beneficial owner or (ii) to a custodian, nominee or other agent of the
beneficial owner, or (b) which could be satisfied by the holder, custodian,
nominee or other agent certifying that the beneficial owner is a United States
Alien, provided, however, in each case referred to in clauses (a)(ii) and (b)
payment by such custodian, nominee or agent to the beneficial owner is not
otherwise subject to any requirement referred to in this sentence). The Company
shall make such determination and will notify the Fiscal Agent thereof as soon
as practicable, stating in the notice the effective date of such certification,
identification, or information reporting requirement and the dates within which
the redemption shall occur, and the Fiscal Agent shall give prompt notice
thereof in accordance with the Fiscal Agency Agreement. The Company shall
determine the redemption date by notice to the Fiscal Agent at least 75 days
before the redemption date, unless shorter notice is acceptable to the Fiscal
Agent. Such redemption of the Bearer Securities must take place on such date,
not later than one year after the publication of the initial notice of the
Company's determination of the existence of such certification, identification
or information reporting requirement. The Company shall not so redeem the Bearer
Securities, however, if the Company shall, based on a subsequent event,
determine, based on a written opinion of counsel, not less than 30 days prior to
the date fixed for redemption, that no payment would be subject to any
requirement described above, in which case the Company shall notify the Fiscal
Agent, which shall give prompt notice of that determination in accordance with
the Fiscal Agency Agreement and any earlier redemption notice shall thereupon be
revoked and of no further effect.
Notwithstanding the next preceding paragraph, if and so long as the
certification, identification or information reporting requirement referred to
in the next preceding paragraph would be fully satisfied by payment of United
States withholding, backup withholding or similar taxes, the Company may elect,
prior to the giving of the notice of redemption and in lieu of redemption of the
Bearer Securities, to have the provisions of this paragraph apply in lieu of the
provisions of the next preceding paragraph. In that event, the Company will pay
such Additional Amounts (without regard to Section 2 hereof) as are necessary in
order that, following the effective date of such requirements, every net payment
made outside the United States by the Company or a related paying agent of the
principal of, premium, if any, and interest on a Bearer Security or a coupon
appertaining thereto to a holder who is a United States Alien (without
requirement of any certification, identification or information reporting
requirement as to the nationality, residence or identity of such holder), after
deduction for United States withholding, backup withholding or similar taxes
(other than withholding, backup withholding or similar taxes (i) which would not
be applicable in the circumstances referred to in the second parenthetical
clause of the first sentence of the preceding paragraph or (ii) are imposed as a
result of presentation of such Bearer Security or coupon for payment more than
10 days after the date on which such payment becomes due and payable or on which
payment thereof is duly provided for, whichever is later), will not be less than
the amount provided in the Bearer Security or coupon to be due and payable. If
the Company elects to pay such Additional Amounts and as long as it is obligated
to pay such Additional Amounts, the Company may subsequently redeem the Bearer
Securities, at any time, in whole but not in part, upon not more than 60 days
nor less than 30 days notice, at 100% of their principal amount, plus accrued
interest to the date fixed for redemption and Additional Amounts, if any.
(d) Each Security is subject to redemption in whole or in part (which
shall be in a principal amount hereof which is U.S. $1,000 or an integral
multiple thereof) at the option of the holder thereof on any Holder Redemption
Date (as defined below) at a redemption price equal to 100% of the principal
amount thereof, together with accrued interest, if a Redemption Event shall
occur or have occurred. For purposes hereof a "Redemption Event" shall have
occurred if the Company's Common Stock (or other equity securities into which
Securities are then convertible) is neither listed for trading on a United
States national securities exchange nor approved for trading on an established
automated over-the-counter trading market in the United States. The "Holder
Redemption Date" with respect to any Redemption Event shall be the ninetieth day
after the later of the Exchange Date or the Redemption Event.
Notwithstanding the fact that a Security or a portion thereof is called
for redemption by the Company, each holder of a Security desiring to exercise
the option for redemption set forth in this Section 3(d) shall, as a condition
to such redemption, on or before the close of business on the fifth day prior to
the Holder Redemption Date, surrender the Security to be redeemed in whole or in
part together with the redemption notice hereon duly executed at the place or
places specified in the notice required by Section 3(e) and otherwise comply
with the provisions of Section 3(f). A holder of a Security who has tendered a
redemption notice (i) will be entitled to revoke its election by delivering a
written notice of such revocation together with the holder's non-transferable
receipt for such Security to the office or agency of the Company designated as
the place for the payment of the Securities to be so redeemed on or before the
Holder Redemption Date and (ii) will retain the right to convert its Securities
into shares of Common Stock of the Company or exchange its Securities for shares
of Common Stock of the Guarantor pursuant to the Exchange Option on or before
the Holder Redemption Date.
(e) Notice of redemption will be given by publication in Authorized
Newspapers (as defined in the Fiscal Agency Agreement) in the City of New York
and in London, and, so long as the Securities are listed on the Luxembourg Stock
Exchange, in Luxembourg, and by mail to holders of Registered Securities, in
each case in the English language, all as provided in the Fiscal Agency
Agreement. In the case of a redemption in whole at the option of the Company,
notice will be given once not more than 60 nor less than 30 days prior to the
date fixed for redemption. In the case of a partial redemption at the option of
the Company, notice will be given twice, the first such notice to be given not
more than 75 nor less than 60 days prior to the date fixed for redemption and
the second such notice to be given not more than 60 nor less than 30 days prior
to the date fixed for redemption. In the case of a redemption by the Company at
the option of a holder of a Security pursuant to Section 3(d) hereof, notice
will be given by the Fiscal Agent setting forth the information described below
not later than 10 days after the later of the Exchange Date or the occurrence of
a Redemption Event. Neither the failure to give notice nor any defect in any
notice given to any particular holder of a Security shall affect the sufficiency
of any notice with respect to other Securities.
Notices relating to the redemption of Securities whether at the option of
the Company or the holder thereof shall specify: the date fixed for redemption
or the Holder Redemption Date, as the case may be; the redemption price; the
place or places of payment; and that payment will be made upon presentation and
surrender of the Securities to be redeemed, together, in the case of a Bearer
Security, with all appurtenant coupons, if any, maturing subsequent to the date
fixed for redemption; that interest accrued to the date fixed for redemption;
(unless the redemption date is an interest payment date) will be paid as
specified in said notice; and that on and after said date interest thereon will
cease to accrue. In the case of a redemption by the Company at the option of the
holder of a Security pursuant to Section 3(d), the notices given by the Fiscal
Agent informing a holder of such holder's entitlement to redeem shall also
specify that a holder electing redemption will be entitled to revoke its
election by delivering a written notice of such revocation, together with the
holder's non-transferable receipt for such Security, to the agency designated by
the Company as the place for the payment of the Securities to be so redeemed not
later than the fifth day prior to the Holder Redemption Date. In the case of a
redemption in part at the option of the Company, notices shall specify the
aggregate principal amount of Securities to be redeemed and the aggregate
principal amount of Securities outstanding after such partial redemption. The
first notice shall specify the last date on which exchanges or transfers of
Securities may be made, and the second notice shall specify the serial numbers
of the Securities and the portions thereof called for redemption. In the case of
a redemption in whole or in part by the Company, notices shall specify the date
the conversion privilege expires in accordance with Section 4(a) hereof. Such
notices shall also state that the conditions precedent, if any, to such
redemption have occurred.
(f) If (i) notice of redemption has been given in the manner set
forth in Section 3(e) hereof with respect to Securities to be redeemed at the
option of the Company, or (ii) notice of redemption has been given by the holder
of a Security to be redeemed pursuant to Section 3(d) hereof, the Securities so
to be redeemed shall become due and payable on the applicable redemption date
specified in such notice and upon presentation and surrender of the Securities
at the place or places specified in the notice given by the Company with respect
to such redemption, together in the case of Bearer Securities with all
appurtenant coupons, if any, maturing subsequent to the redemption date, the
Securities shall be paid and redeemed by the Company, at the places and in the
manner and currency herein specified and at the redemption price together with
accrued interest, if any, to the redemption date; provided, however, that
interest due in respect of coupons maturing on or prior to the redemption date
shall be payable only upon the presentation and surrender of such coupons (at an
office or agency located outside of the United States of America). If any Bearer
Security surrendered for redemption shall not be accompanied by all appurtenant
coupons maturing after the redemption date, such Security may be paid after
deducting from the amount otherwise payable an amount equal to the face amount
of all such missing coupons, or the surrender of such missing coupon or coupons
may be waived by the Company and the Fiscal Agent if they are furnished with
such security or indemnity as they may require to save each of them and each
other paying agency of the Company harmless. From and after the redemption date,
if monies for the redemption of Securities shall have been available at the
principal corporate trust office of the Fiscal Agent for redemption on the
redemption date, the Securities shall cease to bear interest, the coupons for
interest appertaining to Bearer Securities maturing subsequent to the redemption
date shall be void, and the only right of the holders of such Securities shall
be to receive payment of the redemption price together with accrued interest
(unless the redemption date is an interest payment date) to the redemption date
as aforesaid. If monies for the redemption of the Securities are not made
available for payment until after the redemption date, the Securities shall not
cease to bear interest until such monies have been so made available.
4. Conversion.
(a) Subject to and upon compliance with the provisions of the Fiscal
Agency Agreement, a holder of Securities (other than Restricted Securities) is
entitled, at his option, at any time on or after the later of (i) July 15, 1995,
or (ii) the Exchange Date (as defined in the Fiscal Agency Agreement) and a
holder of Restricted Securities is entitled at his option at any time after the
latest of (i) July 15, 1995, (ii) the Exchange Date or (iii) the Registration
Date (as defined in the Fiscal Agency Agreement), and in each case on or before
the close of business on May 1, 2000, or in case a Security or a portion thereof
is called for redemption by the Company, or the holder thereof elects to have
such Security or a portion thereof redeemed by the Company pursuant to Section
3(d) hereof, then in respect of such Security or such portion thereof until and
including, but (unless the Company and the Guarantor default in making the
payment due upon redemption) not after, the close of business on the date that
is 15 days (or if such day is a non-business day as described in Section 11
hereof in New York City, then the next business day) preceding the date fixed
for redemption, to convert such Security (or any portion of the principal amount
hereof which is U.S. $1,000 or an integral multiple thereof), at the principal
amount thereof, or of such portion, into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/1000 of a share) of Common
Stock of the Company ("Common Stock") at a Conversion Price equal to U.S. $17.92
aggregate principal amount of Securities for each share of Common Stock (the
"Conversion Price") (or at the current adjusted Conversion Price if an
adjustment has been made as provided herein) by surrender of the Security, or in
the case of a Security submitted for redemption pursuant to Section 3(d) hereof
satisfactory evidence of such submission, together with (i) if a Bearer
Security, all unmatured coupons and any matured coupons in default appertaining
thereto, and if a Registered Security (if so required by the Company or the
Fiscal Agent), instruments of transfer in form satisfactory to the Company and
the Fiscal Agent, duly executed by the registered holder or by his duly
authorized attorney and (ii) the conversion notice hereon duly executed (a) at
the Corporate Trust Office of the Fiscal Agent, or at such other office or
agency of the Company as may be designated by it for such purpose in the City of
New York, or (b) subject to any laws or regulations applicable thereto and
subject to the right of the Company to terminate the appointment of any such
conversion agency, at the offices of Chemical Bank, Chemical Bank House, 125
London Wall, London EC2Y 5AJ, England, and Banque Internationale a Luxembourg,
69, route d'Esch, L-1470 LuxembourgVille, Luxembourg, or at such other offices
or agencies as the Company may designate.
(b) In the case of a conversion after the close of business on a
Record Date next preceding any interest payment date and on or before the
opening of business on such interest payment date, the holder of record of a
Registered Security at such Record Date is to receive an installment of interest
on the interest payment date. No payment or adjustment is to be made on
conversion for dividends on the Common Stock delivered on conversion. Except as
set forth in the first sentence of this subsection (b), accrued interest from
the immediately preceding interest payment date until the date of conversion
(together with Additional Amounts, if any, thereon) will be paid to the holder
within five business days after presentment for conversion. No fractions of
shares or scrip representing fractions of shares will be issued or delivered on
conversion, but instead of any fractional interest the Company shall pay a cash
adjustment as provided in the Fiscal Agency Agreement. Such conversion shall be
so effected by the Company, except payment of accrued interest (together with
Additional Amounts, if any, thereon) which will be paid by the Paying Agent.
(c) (i) In case at any time the Company shall pay or make a dividend or
other distribution on any class of capital stock of the Company in Common
Stock, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced so that the
same shall equal the price determined by multiplying such Conversion Price
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares
and the total number of shares constituting such dividend or other
distribution, such adjustment to become effective immediately after the
opening of business on the day following the date fixed for such
determination.
(ii) In case at any time the Company shall (A) subdivide its
outstanding Common Stock, (B) combine its outstanding Common Stock into a
smaller number of shares, or (C) issue by reclassification of its Common
Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation)
any shares, the Conversion Price in effect at the effective date of such
subdivision, combination or reclassification shall be proportionately
adjusted so that the holder of any Security surrendered for conversion after
such time shall be entitled to receive the aggregate number and kind of
shares which, if such Security had been converted immediately prior to such
time, the holder would have owned upon such conversion and been entitled to
receive upon such subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(iii)In case at any time the Company shall fix a record date for the
issuance of rights or warrants to all holders of its Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a price per
share less than the current market price per share (determined as provided
in paragraph (v) of this subsection (c)) of the Common Stock on such record
date, the Conversion Price in effect at the opening of business on the day
following such record date, shall be reduced so that the same shall equal
the price determined by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on such record date plus the number of
shares of Common Stock which the aggregate of the offering price of the
total number of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on such record date plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become effective
immediately after the opening of business on the day following such record
date. Such reduction shall be made successively whenever such a record date
is fixed; and in the event that such rights or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such record date had not been fixed.
(iv) In case at any time the Company shall fix a record date for the
making of a distribution, by dividend or otherwise, to all holders of its
Common Stock, of evidences of its indebtedness or assets (including
securities, but excluding any dividend or distribution referred to in
paragraph (i) of this subsection (c), any rights or warrants referred to in
paragraph (iii) of this subsection (c), and any dividend or distribution
paid in cash out of the retained earnings of the Company), then in each such
case the Conversion Price in effect after such record date shall be
determined by multiplying the Conversion Price in effect immediately prior
to such record date by a fraction, of which the numerator shall be the total
number of outstanding shares of Common Stock multiplied by the current
market price per share of Common Stock (as defined in paragraph (v) of this
subsection (c)) on such record date, less the fair market value (as
determined by the Board of Directors of the Company, whose determination
shall be conclusive and described in a statement filed with the Fiscal
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed, and of which the denominator shall be the total number of
outstanding shares of Common Stock multiplied by such current market price
per share of Common Stock. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Conversion Price shall again be adjusted to
be the Conversion Price which would then be in effect if such record date
had not been fixed.
(v) For the purpose of any computation under paragraphs (iii) and
(iv) of this subsection (c), the current market price per share of Common
Stock on any date shall be deemed to be the average of the Closing Prices
for the 15 consecutive days upon which the principal trading market for the
Common Stock is open selected by the Company commencing not less than 20 nor
more than 30 days before the day in question. The Closing Price for any day
shall be the last reported sales prices regular way or, in case no such
reported sale takes place on such day, the average of the reported closing
bid and asked prices regular way, in either case on the American Stock
Exchange or, if the Common Stock is not listed or admitted to trading on
such Exchange, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the closing sale price
quoted on the NASDAQ National Market System, or if not so quoted, as
determined by the Company.
(vi) The Company may make such adjustments in the Conversion Price,
in addition to those required by paragraphs (i), (ii) and (iii) of this
section, as it considers to be advisable in order that any event treated for
United States Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients.
(vii)No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least
twenty-five cents ($0.25) in such Conversion Price; provided, however, that
any adjustment which by reason of this paragraph (vii) is not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this subsection (c) shall be made to the
nearest cent or to the nearest 1/1000 of a share, as the case may be.
(d) Whenever the Conversion Price is adjusted and in the event of
certain other corporate actions, as herein provided, the Company shall give
notice, all as provided in the Fiscal Agency Agreement.
(e) The Company shall in good faith file, promptly following the
issuance hereof, a registration statement with the U.S. Securities and Exchange
Commission covering the resale of shares of Common Stock issuable upon
conversion of the Restricted Securities. The Company shall in good faith use its
best efforts to cause such registration statement to be declared effective as
promptly as practicable thereafter and shall in good faith use its best efforts
(i) to cause all registrations with, and to obtain any approvals by, any
governmental authority under any Federal or state law of the United States that
may be required before the shares of Common Stock may be lawfully issued or
transferred and delivered, (ii) to maintain the effectiveness of such
registrations for such period of time until Rule 144(k) under the Securities Act
of 1933 is available for the resale of the shares of Common Stock issuable upon
conversion of the Restricted Securities and (iii) to list the shares of Common
Stock required to be issued or delivered upon conversion of the Securities prior
to such issue or delivery on each national securities exchange on which the
outstanding Common Stock is listed at the time of such delivery.
(f) The Company shall, from and after the date on which the
Securities are convertible into Common Stock, have reserved and available, free
from preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Securities. The Company
covenants that all shares of Common Stock which may be issued or delivered upon
conversion of Securities will upon issue be fully paid and nonassessable.
(g) In case of any consolidation with, or merger of the Company into,
any other corporation, or in case of any merger of another corporation into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company), or in case of any sale or transfer of all or substantially all of
the assets of the Company (which shall not include the sale or transfer of any
portion of the assets of the Company to any corporation which, immediately
following such transfer is at least 51%-owned by the Company, provided that such
sale or transfer does not result in the reclassification, conversion, exchange
or cancellation of outstanding shares of Common Stock of the Company), the
corporation formed by such consolidation or resulting from such merger or which
acquires such assets, as the case may be, shall execute and deliver to the
Fiscal Agent an amendment to the Fiscal Agency Agreement providing that the
holder of each Security shall have the right during the period such Security
shall be convertible as specified in section (a) hereof to convert such Security
only into the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the number of
shares of Common Stock of the Company into which such Security might have been
converted immediately prior to such consolidation, merger, sale or transfer
assuming, if such consolidation, merger, sale or transfer is prior to the period
such Security shall be convertible as specified in subsection (a) hereof, that
the Securities were convertible at such time at the initial Conversion Price as
adjusted from May 4, 1995 to such time pursuant to paragraphs (i), (ii), (iii),
(iv) and (vi) of subsection (c) hereof. Such amendment shall provide for
adjustments which, for events subsequent to the effective date of such
amendment, shall be as nearly equivalent as may be practicable to the
adjustments provided for herein. The above provisions of this subsection shall
similarly apply to successive consolidations, mergers, sales or transfers.
5. Events of Default.
In the event that any of the following ("Events of Default") shall occur
and be continuing:
(a) the Company shall fail to pay when due the principal of, or
premium, if any, on any of the Securities whether at maturity or upon redemption
or otherwise; or
(b) the Company shall fail to pay any installment of interest (or
Additional Amounts as described in Section 2 hereof) on any of the Securities
for a period of 10 days after the date when due; or
(c) the Company shall fail duly to perform or observe any other term,
covenant or agreement contained in any of the Securities or in the Fiscal Agency
Agreement or the Guarantor shall fail duly to perform or observe any term,
covenant or agreement contained in a Guarantee endorsed on any of the Securities
or in the Fiscal Agency Agreement, for a period of 60 days after the date on
which written notice of such failure, requiring the Company or the Guarantor, as
the case may be, to remedy the same, shall first have been given to the Company,
the Guarantor and the Fiscal Agent by the holders of at least 25% in aggregate
principal amount of the Securities at the time outstanding; provided, however,
that in the event the Company or the Guarantor shall within the aforesaid period
of 60 days commence legal action in a court of competent jurisdiction seeking a
determination that the Company had not failed to duly perform or observe the
term or terms, covenant or covenants or agreement or agreements specified in the
aforesaid notice, or the Guarantor had not failed to duly perform or observe the
term or terms, covenant or covenants or agreement or agreements specified in the
aforesaid notice, such failure shall not be an Event of Default unless the same
continues for a period of 10 days after the date of any final determination to
the effect that the Company or the Guarantor had failed to duly perform or
observe one or more of such terms, covenants or agreements; or
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Guarantor or the Company in an involuntary
case or proceeding under any applicable bankruptcy, insolvency, reorganization
or other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Guarantor or the Company or for any substantial part of the property of
either of them, or ordering the winding-up or liquidation of the affairs of
either of them and such decree or order shall remain unstayed and in effect for
a period of 20 consecutive days; or
(e) the Guarantor or the Company shall commence a voluntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or similar official) of the Guarantor or the
Company, as the case may be, or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall admit
in writing its inability to pay its debts as they become due or shall take any
corporate action in furtherance of any of the foregoing; or
(f) an event of default, as defined in any indenture or instrument
evidencing or under which the Company shall have outstanding at least
$10,000,000 (or its equivalent in another currency) in aggregate principal
amount of indebtedness for borrowed money, shall happen and be continuing and
such default shall involve the failure to pay the principal of such indebtedness
(or any part thereof), when due and payable after the expiration of any
applicable grace period with respect thereto, or such indebtedness shall have
been accelerated so that the same shall be or become due and payable prior to
the date on which the same would otherwise have become due and payable, and
failure to pay shall not have been cured by the Company within 20 days after
such failure or such acceleration shall not be rescinded or annulled within 20
days after notice thereof shall have first been given to the Company; provided
that if such event of default under such indenture or instrument shall be
remedied or cured by the Company or waived by the holders of such indebtedness,
then the Event of Default hereunder by reason thereof shall be deemed likewise
to have been thereupon remedied, cured or waived without further action upon the
part of any of the holders of Securities;
then the holder of this Security may, at such holder's option, declare the
principal of this Security and the interest accrued hereon (and Additional
Amounts under Section 2 hereof, if any, thereon) to be due and payable
immediately by written notice to the Company, the Guarantor and the Fiscal
Agent, and if any such Event of Default shall continue at the time of receipt of
such written notice, the principal of this Security and the interest accrued
hereon (and Additional Amounts, if any, hereon) shall become immediately due and
payable, subject to the proviso of subsection (c) of this Paragraph 5. Upon
payment of such amount of principal, premium, if any, and interest (and
Additional Amounts pursuant to Section 2 hereof, if any), all of the Company's
obligations in respect of payment of principal of and interest on (and
Additional Amounts, if any, on) this Security shall terminate. Interest on
overdue principal, premium, if any, and interest (and Additional Amounts, if
any) shall accrue from the date on which such principal, premium, if any, and
interest (and Additional Amounts, if any) was due and payable to the date such
principal and interest (and Additional Amounts, if any) is paid or duly provided
for, at the rate borne by the Securities (to the extent payment of such interest
shall be legally enforceable).
6. Merger, Consolidation, Sale, Conveyance or Assumption.
(a) The Company will not merge or consolidate with, or sell or convey
all or substantially all of its assets to, any other corporation, unless (i)
either (A) the Company shall be the surviving corporation in the case of a
merger, (B) the assets sold or conveyed shall be owned by a corporation which,
immediately following such sale or conveyance, is at least 51%-owned by the
Company, provided that such sale or conveyance does not result in the
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company, or (C) (I) the surviving, resulting or transferee
corporation shall expressly assume the due and punctual payment (including
Additional Amounts pursuant to Section 2 hereof, if any) of all the Securities,
according to their tenor, and the due and punctual performance of all of the
covenants and obligations of the Company under the Securities, the coupons and
the Fiscal Agency Agreement, by supplemental agreement reasonably satisfactory
to the Fiscal Agent, (II) immediately after such merger, consolidation, sale or
conveyance, the Securities will not be subject to United States Federal estate
tax as a result thereof, if held by a person who at the time of death is not a
citizen or resident of the United States unless such successor corporation shall
have agreed, by supplemental agreement, to indemnify the persons liable therefor
for the amount of United States Federal estate tax attributable and paid in
respect of any Securities includable in the gross estate of a person who at the
time of death is not a citizen or resident of the United States or unless the
Securities would be subject to United States Federal estate tax immediately
prior to such merger, consolidation, sale or conveyance if held by a person who
at the time of death is not a citizen or resident of the United States, and
(III) the Fiscal Agent shall have received the documentation required in the
context by the Fiscal Agency Agreement, (ii) the surviving, resulting or
transferee corporation, if not organized and validly existing under the laws of
the United States, shall expressly agree to make payments under the Securities
free of any deduction or withholding for or on account of taxes, levies, imposts
and charges whatsoever imposed by or for the account of the jurisdiction where
such successor corporation is generally subject to taxation (or any political
subdivision or taxing authority thereof or therein) in a manner equivalent to
that set forth herein, subject to the exceptions contained in such forms of the
Securities, and (iii) the Company or such successor corporation, as the case may
be, shall not, immediately after such merger, consolidation, sale or conveyance,
be in default in the performance of any covenants or obligations of the Company
under the Securities or the Fiscal Agency Agreement. In calculating the amount
of tax attributable to any Securities for purposes of sub-clause (II) above in
accordance with the provisions of the Internal Revenue Code of 1986, as amended,
the gross estate of the decedent shall be deemed to include only Securities
issued under the Fiscal Agency Agreement.
(b) Upon any merger, consolidation, sale, conveyance or assumption as
provided in Section 6(a), the successor or assuming corporation shall succeed to
and be substituted for, and may exercise every right and power of and be subject
to all the obligations of, the Company under the Securities and Fiscal Agency
Agreement, with the same effect as if such successor or assuming corporation had
been named as the Company therein and herein and the Company shall be released
from its obligations as obligor under the Securities and Fiscal Agency
Agreement; provided that any successor or assuming corporation shall have the
right to redeem the Securities pursuant to Section 3(b) hereof only as a result
of circumstances which occur subsequent to such merger, consolidation, sale,
conveyance or assumption and as a result of which the Company would have had
such right if the Company had remained the obligor on the Securities.
7. Agreement of Subordination of Securities.
(a) The Company, for itself, its successors and assigns, covenants
and agrees, and each holder of Securities by his acceptance thereof, likewise
covenants and agrees that the payment of the principal, premium, if any, and
interest (and Additional Amounts pursuant to Section 2 hereof) on each and all
of the Securities is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of all Superior Indebtedness of the Company.
"Superior Indebtedness of the Company" shall mean the principal of,
premium, if any, and interest on the following whether outstanding at the date
hereof or hereafter incurred or created:
(i) any indebtedness of the Company (other than the Securities,
any indebtedness of the Company to the Guarantor and indebtedness
ranking pari passu with the Securities) for money borrowed by the
Company (including purchase money obligations and obligations to
reimburse any bank or other person in respect of amounts paid under
letters of credit), whether or not evidenced by debentures, bonds, notes
or other corporate debt securities or similar instruments issued by the
Company; provided, however, that Superior Indebtedness shall not include
the Company's 3.875% Subordinated Convertible Note due 2000, the
obligations represented by which shall rank pari passu with the
obligations represented hereby in right of payment;
(ii) leases for real property, equipment or other assets used in
the Company's business, which leases are capitalized in the Company's
financial statements in accordance with generally accepted accounting
principles;
(iii)commitment, standby and other fees due and
payable to financial institutions with respect to credit
facilities available to the Company;
(iv) obligations under interest rate and currency swaps, floors,
caps or other similar arrangements intended to fix or hedge interest
rate obligations or currency exposure;
(v) indebtedness secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by the Company
subject to such mortgage, pledge, lien or other encumbrance, whether or
not the indebtedness secured thereby shall have been assumed by the
Company;
(vi) obligations of the Company 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) and (v) if
an obligation of the Company; or
(vii)renewals, extensions or refunding of any of the
indebtedness, leases, fees or obligations referred to in the preceding
clauses (i), (ii), (iii), (iv), (v) or (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 to payment to the Securities, and (B) the Securities.
(b) (i) In the event of any insolvency or bankruptcy proceedings, or
any receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Company or to its creditors, in their
capacity as such creditors, or to its property, or in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of the
Company, whether or not involving insolvency or bankruptcy, or in the event of
any assignment for the benefit of creditors of the Company or any marshaling of
assets of the Company, then the holders of Superior Indebtedness of the Company
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 Company
before the holders of any of the Securities shall be entitled to receive any
payment on account of the principal, premium, if any or interest (or Additional
Amounts pursuant to Section 2 hereof) on the Securities, and to that end the
holders of Superior Indebtedness of the Company shall be entitled to receive for
application in payment thereof any payment or distribution of any kind or
character, whether in cash, property or securities, which may be payable or
deliverable in any such proceedings in respect of the Securities, other than
securities of the Company as reorganized or readjusted or securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Section 7 with respect to the Securities, to the payment of all
Superior Indebtedness of the Company, provided that the rights of the holders of
Superior Indebtedness of the Company are not altered by such reorganization or
readjustment. For the purposes of this Section 7, no consolidation, merger,
conveyance or transfer made pursuant to the provisions of Section 6 shall be
deemed to be a liquidation, reorganization, dissolution or other winding up of
the Company.
(ii) If under the circumstances set forth in paragraph (i) of
this subsection, and notwithstanding the provisions thereof, any payment or
distribution of assets of the Company of any kind, whether in cash, property or
securities (other than securities of the Company as reorganized or readjusted or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinated, at least to
the extent provided in this Section 7 with respect to the Securities, to the
payment of all Superior Indebtedness of the Company, provided that the rights of
the holders of Superior Indebtedness of the Company are not altered by such
reorganization or readjustment), shall be received by the holders of the
Securities before the principal of (and premium, if any) and interest on all
Superior Indebtedness of the Company is paid in full, such payment or
distribution shall be paid over to the holders of Superior Indebtedness of the
Company ratably, for application to the payment of the principal of (and
premium, if any) and interest on all Superior Indebtedness of the Company
remaining unpaid until all the principal of (and premium, if any) and interest
on Superior Indebtedness of the Company shall have been paid in full, after
giving effect to any concurrent payment or distribution to the holders of such
Superior Indebtedness of the Company.
(iii)Upon any distribution of assets of the Company referred to
in this Section, the holders of Securities shall be entitled to rely upon any
final order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
and the holders of Securities shall be entitled to rely upon a certificate of
the liquidating trustee or agent or other person making any distribution to the
holders of Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Superior Indebtedness of
the Company and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section.
(c) (i) Upon the maturity of any Superior Indebtedness of the Company
by lapse of time, acceleration or otherwise, all principal thereof (and premium,
if any) and interest due thereon, including interest thereon accruing after the
commencement of any proceeding of the type referred to in paragraph (i) of
Section 7(b) above, shall first be paid in full, or such payment duly provided
for in cash, before any payment, directly or indirectly, is made on account of
the principal, premium, if any, or interest (or Additional Amounts pursuant to
Section 2 hereof) on the Securities.
(ii) Upon the happening of an event of default with respect to
any Superior Indebtedness of the Company, 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 Company, directly or indirectly, on account of the principal, premium, if
any, or interest (or Additional Amounts pursuant to Section 2 hereof) on the
Securities.
(d) In case cash, securities, or other property otherwise payable or
deliverable to the holders of the Securities shall have been applied, pursuant
to Sections 7(b) or (c), to the payment of Superior Indebtedness of the Company,
then, upon the payment in full of the principal of (and premium, if any) and
interest on all Superior Indebtedness of the Company, the holders of the
Securities shall be subrogated to any rights of any holders of Superior
Indebtedness of the Company to receive any further payment or distributions
applicable to Superior Indebtedness of the Company until the principal, premium,
if any, and interest (and Additional Amounts pursuant to Section 2 hereof) on
the Securities shall have been paid in full, and such payments or distributions
received by the holders of the Securities, by reason of such subrogation, of
cash, securities or other property which otherwise would be paid or distributed
to the holders of Superior Indebtedness of the Company shall, as between the
Company and its creditors other than the holders of Superior Indebtedness of the
Company, on the one hand, and the holders of the Securities, on the other hand,
be deemed to be a payment by the Company on account of Superior Indebtedness of
the Company and not on account of the Securities.
(e) No present or future holder of any Superior Indebtedness of the
Company shall be prejudiced in any way in the right to enforce the subordination
of the Securities by any act or failure to act on the part of the Company. The
provisions of this Section are solely for the purpose of defining the relative
rights of the holders of Superior Indebtedness of the Company, on the one hand,
and the holders of the Securities, on the other hand, against the Company and
its assets, and nothing contained in this Section shall impair, as between the
Company and the holder of any Security, the obligation of the Company, which is
unconditional and absolute, to pay to the holder thereof the principal thereof,
premium, if any, and interest (and Additional Amounts pursuant to Section 2
hereof) thereon as and when the same shall become due and payable in accordance
with the terms thereof, or prevent the holder of any Security, upon default
hereunder or under such Security, from exercising all rights, powers and
remedies otherwise provided herein or therein or by applicable law, all subject
to the rights of the holders of Superior Indebtedness of the Company under this
Section to receive cash, property or securities otherwise payable or deliverable
to the holders of the Securities and coupons.
(f) Nothing contained in this Section or in any of the Securities
shall prevent at any time, except under the conditions described in Sections
7(b) and (c) hereof or during the pendency of any dissolution, winding up,
liquidation or reorganization proceedings therein referred to, the Company from
making payments at any time of principal, premium, if any, or interest (or
Additional Amounts pursuant to Section 2 hereof) on the Securities. Nothing
contained in this Section shall prevent conversions of Securities.
8. Replacement, Transfer and Exchange of Securities.
(a) In case any Security shall at any time become mutilated,
destroyed, stolen or lost and such Security or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required) shall be delivered to the
Fiscal Agent, a new Security of like tenor and date with appropriate interest
coupons, if any, and having the Guarantee endorsed thereon will be issued by the
Company in exchange for the Security so mutilated, or in lieu of the Security so
destroyed, stolen or lost, but, in the case of a destroyed, stolen or lost
Security only upon receipt of evidence satisfactory to the Fiscal Agent, the
Company and the Guarantor that such Security was destroyed, stolen or lost, and
if required by the Fiscal Agent, the Company or the Guarantor, upon receipt also
of indemnity satisfactory to the Fiscal Agent, the Company and the Guarantor.
All expenses and reasonable charges associated with procuring such indemnity and
with the preparation, authentication and delivery of a new Security shall be
borne by the owner of the Security so mutilated, destroyed, stolen or lost.
(b) As provided in the Fiscal Agency Agreement and subject to certain
limitations therein set forth, Bearer Securities (with all unmatured and matured
defaulted coupons appertaining thereto) are exchangeable at, subject to
applicable laws and regulations, the offices of the paying agencies in London
and Luxembourg or as designated by the Company for such purpose pursuant to the
Fiscal Agency Agreement, for an equal aggregate principal amount of Registered
Securities without coupons and/or Bearer Securities of authorized denominations,
and Registered Securities are exchangeable at the Corporate Trust Office of the
Fiscal Agent in the City of New York or, subject to applicable laws and
regulations, the offices of the paying agencies in London and Luxembourg or as
designated by the Company for such purpose pursuant to the Fiscal Agency
Agreement, for an equal aggregate principal amount of Registered Securities of
authorized denominations as requested by the holder surrendering the same.
Registered Securities will not be exchangeable into Bearer Securities. The
Company shall not be required (a) to exchange Bearer Securities for Registered
Securities during the period between the close of business on each April 15 and
October 15 and the opening of business on the next succeeding interest payment
date, or (b) in the event of a redemption in part, (i) to register the transfer
of Registered Securities or to exchange Bearer Securities for Registered
Securities for a period of 15 days immediately preceding the date notice is
given identifying the serial numbers of the Securities called for such
redemption; (ii) to register the transfer of or exchange any such Registered
Securities, or portion thereof, called for redemption; or (iii) to exchange any
such Bearer Securities called for redemption; provided, however, that a Bearer
Security called for redemption may be exchanged for a Registered Security which
is simultaneously surrendered, with written instruction for payment on the date
fixed for redemption, unless the date fixed for redemption is during the period
between the close of business on each April 15 and October 15 and the close of
business on the next succeeding interest payment date, in which case such
exchange may only be made prior to the close of business on April 15 or October
15 immediately preceding the date fixed for redemption. The Company shall not be
required to exchange Securities if, as a result thereof, the Company or the
Guarantor would incur adverse consequences under United States Federal income
tax laws in effect at the time of such exchange. In the event of redemption or
conversion of a Registered Security in part only, a new Security or Securities
for the unredeemed or unconverted portion hereof will be issued in the name of
the holder thereof.
(c) The costs and expenses of effecting any exchange or registration
of transfer pursuant to the foregoing provisions, except for the expenses of
delivery by other than regular mail (if any) and except, if the Company shall so
require, the payment of a sum sufficient to cover any tax or other governmental
charge or insurance charges that may be imposed in relation thereto, will be
borne by the Company.
(d) The Company has initially appointed as registrar and transfer
agent the Fiscal Agent acting through its principal corporate trust office in
New York. The Company has also initially appointed Banque Internationale a
Luxembourg as a transfer agent. The Company may at any time terminate the
appointment of the registrar and transfer agent and appoint additional or other
registrars and transfer agents or to approve any change in an office through
which the registrar and transfer agent acts; provided that, until all of the
Securities have been delivered to the Fiscal Agent for cancellation, or monies
sufficient to pay the Securities have been made available for payment and either
paid or returned to the Company as provided in the Securities, the Company will
maintain a registrar and a transfer agent in the City of New York in the United
States.
(e) For purposes of the provisions of this Security and the Fiscal
Agency Agreement, any Security authenticated and delivered pursuant to the
Fiscal Agency Agreement shall, as of any date of determination, be deemed to be
"outstanding", except for:
(i) Securities previously canceled by the Fiscal
Agent or delivered to the Fiscal Agent for cancellation;
(ii) Securities which have been called for redemption by the
Company in accordance with Section 3 hereof or which have become due and payable
at maturity or otherwise and with respect to which monies sufficient to pay the
principal thereof and interest thereon (including Additional Amounts, if any)
shall have been made available to the Fiscal Agent;
(iii)Securities which have been exchanged for
shares of Common Stock of the Guarantor pursuant to the Exchange
Option; or
(iv) Securities in lieu of or in substitution for which other
Securities have been authenticated and delivered pursuant to the Fiscal Agency
Agreement;
provided, however, that in determining whether the holders of the requisite
principal amount of outstanding Securities are present at a meeting of holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or the Guarantor or any subsidiary thereof shall be disregarded
and deemed not to be outstanding.
9. Modifications and Amendments.
(a) Without the consent of any holders of Securities, modifications
of or amendments to the Fiscal Agency Agreement or the Terms and Conditions of
the Securities may be made for any of the following purposes:
(i) to evidence the succession of another corporation to the
Company or the Guarantor and the assumption by any such successor of the
covenants of the Company or the Guarantor, as the case may be, in the Fiscal
Agency Agreement, the Securities or the Guarantees;
(ii) to add to the covenants of the Company or of the Guarantor
for the benefit of the holders of Securities or coupons, or to surrender any
right or power herein conferred upon the Company or the Guarantor;
(iii)to permit payment of principal, premium, if any, and
interest on Bearer Securities in the United States, provided that such payment
is permitted by United States tax laws and regulations then in effect;
(iv) to make provision with respect to the conversion rights of
holders of Securities pursuant to Section 4(g) hereof;
(v) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Security or the Fiscal Agency Agreement, provided such action pursuant to
this clause (v) shall not materially adversely affect the interests of the
holders of Securities or coupons; or
(vi) to permit the issuance of additional Securities pursuant to
the Fiscal Agency Agreement.
(b) Modifications and amendments to the Fiscal Agency Agreement or to
these Terms and Conditions may be made, and future compliance with or past
default by the Company under any of the provisions thereof may be waived, with
the consent of the holders of at least a majority in aggregate principal amount
of the Securities at the time outstanding, or of such lesser percentage as may
act at a meeting of holders of Securities held in accordance with the provisions
set forth herein; provided, that no such modification, amendment or waiver may,
without the consent of the holder of each such Security affected thereby:
(i) waive a default in the payment of the
principal of, premium, if any, or interest on any Security;
(ii) change the stated maturity of the principal, premium, if
any, or any installment of interest on, any Security, or reduce the principal
amount thereof or rate of interest thereon or any premium payable on the
redemption thereof, or change the obligation of the Company to pay Additional
Amounts pursuant to Section 2 hereof (except as permitted by subsection (a) of
this Section 9 or by the Fiscal Agency Agreement), or change the coin or
currency in which any Security or any premium or interest thereon is payable, or
adversely affect the right to redeem (pursuant to Section 3(d) hereof) or
convert any Securities as provided in Sections 3 and 4, respectively, or modify
the provisions of the Guarantees in a manner adverse to the holders;
(iii)reduce the requirements of Section 10 hereof for quorum or
voting, or reduce the percentage in principal amount of the outstanding
Securities the consent of whose holders is required for any amendment or
modification of the Fiscal Agency Agreement or the Terms and Conditions of the
Securities or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the Fiscal Agency Agreement or the
Securities or certain defaults hereunder and thereunder and their consequences)
provided for in these Terms and Conditions;
(iv) change the obligation of the Company and the Guarantor to
maintain an office or agency in the City of New York and outside the United
States; or
(v) modify any of the provisions of this section except to
increase any such percentage or to provide that certain other provisions of the
Fiscal Agency Agreement or the Securities cannot be modified or waived without
the consent of the holder of each outstanding Security affected thereby.
It shall not be necessary for any act of holders of Securities under this
Section to approve the particular form of any proposed amendment, modification
or waiver, but it shall be sufficient if such act shall approve the substance
thereof. Any modifications, amendments or waivers to the Fiscal Agency Agreement
or to these Terms and Conditions will be conclusive and binding on all holders
of the Securities and related coupons, whether or not they have given such
consent or were present at such meeting, whether or not notation of such
modifications, amendments or waivers is made upon the Securities or coupons, and
on all future holders of Securities and coupons. Any instrument given by or on
behalf of any holder of a Security in connection with any consent to any such
modification, amendment or waiver will be irrevocable once given and will be
conclusive and binding on all subsequent holders of such Security.
10. Meetings and Votes of Holders.
(a) A meeting of holders of Securities may be called at any time and
from time to time pursuant to this Section for any of the following purposes:
(i) to give any notice to the Company, to the Guarantor or to the Fiscal Agent,
or to give any directions to the Fiscal Agent, or to consent to the waiving of
any default hereunder and its consequences, or to take any other action
authorized to be taken by holders of Securities pursuant to these Terms and
Conditions; or (ii) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of the
Securities under any other provision of the Fiscal Agency Agreement, under
applicable law or under these Terms and Conditions.
(b) Meetings of holders of Securities may be held at such place or
places in New York City or London as the Fiscal Agent or, in case of its failure
to act, the Company, the Guarantor or the holders calling the meeting shall from
time to time determine.
The Fiscal Agent may at any time call a meeting of holders of the
Securities to be held at such time and at such place in any of such designated
locations as the Fiscal Agent shall determine. Notice of every meeting of
holders shall be made as specified in the Fiscal Agency Agreement.
In case at any time the Company, the Guarantor or the holders of at least
25% in aggregate principal amount of the Securities shall have requested the
Fiscal Agent to call a meeting of the holders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Fiscal Agent shall not have given the first notice of such meeting within 21
days after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Company, the Guarantor or the
holders of Securities in the amount above specified may determine the time and
the place in such designated locations for such meeting and may call such
meeting to take any action authorized herein by giving notice thereof as
provided in the Fiscal Agency Agreement.
(c) To be entitled to vote at any meeting of holders of Securities, a
person shall be (i) a holder of one or more Securities, or (ii) a person
appointed by an instrument in writing as proxy for a holder or holders of
Securities by such holder or holders, which proxy need not be a holder of
Securities. The only persons who shall be entitled to be present or to speak at
any meeting of holders shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Fiscal Agent and its counsel and
any representatives of the Company and its counsel and any representatives of
the Guarantor and its counsel. The persons entitled to vote a majority in
principal amount of the Securities shall constitute a quorum for the transaction
of all business specified in such subsection (a) hereof. No business shall be
transacted in the absence of a quorum unless a quorum is represented when the
meeting is called to order. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of the holders of Securities, be dissolved. In any other case the
meeting shall be adjourned for a period of not less than 10 days as determined
by the chairman of the meeting prior to the adjournment of such adjourned
meeting. Notice of the reconvening of any adjourned meeting shall be given as
provided in the Fiscal Agency Agreement. Subject to the foregoing, at the
reconvening of any meeting adjourned for a lack of a quorum the persons entitled
to vote 25% in principal amount of the Securities shall constitute a quorum for
the taking of any action set forth in the notice of the original meeting. Notice
of the reconvening of an adjourned meeting shall state expressly the percentage
of the aggregate principal amount of the Securities that shall constitute a
quorum. At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except as
limited by Section 9 of these Terms and Conditions) shall be effectively passed
and decided if passed or decided by the persons entitled to vote a majority in
principal amount of the Securities represented and voting at such meeting,
provided that such amount shall be not less than 25% in principal amount of the
Securities outstanding. Any holder of a Security who has executed an instrument
in writing appointing a person as his proxy shall be deemed to be present for
the purposes of determining a quorum and be deemed to have voted; provided,
however, that such holder shall be considered as present or voting only with
respect to the matters covered by such instrument in writing. Any resolution
passed or decision taken at any meeting of the holders of Securities duly held
in accordance with this Section 10 shall be binding on all the holders of
Securities whether or not present or represented at the meeting.
(d) The Fiscal Agent may make such reasonable regulations as it may
deem advisable for any meeting of holders of Securities in regard to proof of
the holding of Securities and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Bearer Securities shall be proved by the production of the Bearer Securities
or by a certificate executed, as depositary, by, and the appointment of any
proxy shall be proved by having the signature of the person executing the proxy
witnessed or guaranteed by, in each case, any trust company, bank or banker
satisfactory to the Fiscal Agent. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be presumed valid and
genuine without the proof specified herein or other proof. The holding of
Registered Securities shall be proved by the registry books maintained in
accordance with the Fiscal Agency Agreement or by a certificate or certificates
of the Fiscal Agent in its capacity as the Company's agent for the maintenance
of such books.
(e) The Fiscal Agent shall, by an instrument in writing, appoint a
temporary chairperson of the meeting, unless the meeting shall have been called
by the Company, the Guarantor or by the holders of Securities as provided herein
and in the Fiscal Agency Agreement, in which case the Company, the Guarantor or
the holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairperson. A permanent chairperson and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Securities represented at the meeting and entitled to
vote. At any meeting each holder or proxy shall be entitled to one vote for each
U.S. $1,000 principal amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Securities challenged as not outstanding and ruled by the chairperson of the
meeting to be not outstanding. The chairperson of the meeting shall have no
right to vote, except as a holder or proxy. Any meeting of holders of Securities
duly called at which a quorum is present may be adjourned from time to time by
vote of the holders (or proxies for the holders) of a majority in principal
amount of the Securities represented at the meeting and entitled to vote; and
the meeting may be held as so adjourned without further notice.
(f) The vote upon any resolution submitted to any meeting of holders
of Securities shall be written ballots on which shall be subscribed the
signatures of the holders of Securities or of their representatives by proxy and
the serial number or numbers of the Securities held or represented by them. The
permanent chairperson of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of holders of Securities shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was published as provided in the Fiscal Agency Agreement. Each copy shall
be signed and verified by the affidavits of the permanent chairperson and
secretary of the meeting, and one of such copy shall be delivered to the
Company, another to the Guarantor and another to the Fiscal Agent to be
preserved by the Fiscal Agent, the copy delivered to the Fiscal Agent to have
attached thereto the ballots voted at the meeting. Any record so signed and
verified shall be conclusive evidence of the matters therein stated.
11. Non-business Days.
In any case where the date of maturity of the principal of, premium, if
any, or interest on (or Additional Amounts, if any, on) the Securities or the
date fixed for redemption of any Security shall be at any place of payment a
Saturday, Sunday, a legal holiday or a day on which banking institutions are
authorized or obligated by law to close, then payment of principal or interest
on (or Additional Amounts, if any) need not be made on such date at such place
but may be made on the next succeeding day at such place of payment which is not
a Saturday, Sunday, a legal holiday or a day on which banking institutions are
authorized or obligated by law to close, with the same force and effect as if
made on the date of maturity or the date fixed for redemption, and no interest
shall accrue for the period after such date.
12. Fiscal and Paying Agent.
(a) In acting under the Fiscal Agency Agreement and in connection
with the Securities, the Fiscal Agent is acting solely as agent of the Company
and the Guarantor and does not assume any obligation towards or relationship of
agency or trust for or with the owner or holder of this Security or any interest
coupon appertaining hereto, except that any funds held by the Fiscal Agent for
payment on this Security shall be held in trust by it and applied as set forth
herein, but need not be segregated from other funds held by it, except as
required by law. For a description of the duties and the immunities and rights
of the Fiscal Agent under the Fiscal Agency Agreement, reference is made to the
Fiscal Agency Agreement, and the obligations of the Fiscal Agent to the holder
hereof are subject to such immunities and rights.
(b) Any monies paid by the Company to any paying agency for payment
of principal of or interest on any Security (including Additional Amounts, if
any, in respect thereof) and remaining unclaimed for two years after such
payment has been made shall be repaid to the Company and to the extent permitted
by law the holder of any Security shall thereafter look only to the Company or
the Guarantor for any payment thereof as a general unsecured obligation thereof
and all liability of the Fiscal Agent with respect thereto shall cease.
(c) No reference herein to the Fiscal Agency Agreement and no
provision of this Security or of the Fiscal Agency Agreement shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, premium, if any, and interest (and Additional Amounts, as
described above) on this Security at the times, places and rate, and in the coin
or currency, herein prescribed or to convert or redeem (at the request of a
holder) this Security as provided herein or in the Fiscal Agency Agreement.
Title to Bearer Securities shall pass by delivery. As provided in the
Fiscal Agency Agreement and subject to certain limitations therein set forth,
the transfer of Registered Securities is registrable on the Security Register
upon surrender of a Registered Security for registration of transfer at the
office or agency of the Company in the City of New York, or, subject to
applicable laws and regulations, at the offices of the paying agency in
Luxembourg, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed by,
the holder thereof or his attorney duly authorized in writing, and thereupon one
or more new Registered Securities, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
13. Notices.
All notices to the holders of Securities will be published in an
Authorized Newspaper (as defined in the Fiscal Agency Agreement) in New York
City and in London, and, as long as the Securities are listed on the Luxembourg
Stock Exchange, in Luxembourg. It is expected that publication in New York City
will be made in The Wall Street Journal (Eastern edition), in London in the
Financial Times and in Luxembourg in the Luxemburger Wort. Notices shall be
deemed to have been given on the date of publication as aforesaid or, if
published on different dates, on the date of the first such publication. Notices
will be mailed to registered holders of Registered Securities at their
registered addresses as the same shall appear on the books of the Fiscal Agent.
14. Governing Law.
(a) The Fiscal Agency Agreement, the Securities and any coupons
appertaining thereto the Guarantees and Exchange Options endorsed thereon shall
be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
(b) The Company and the Guarantor have appointed Chemical Bank, 450
West 33rd Street, New York, New York 10001 (Attention: Corporate Trust
Department), as its agent upon whom process may be served in any such suit,
action or proceeding, with a copy to the Company at 1964 South Orange Blossom
Trail, Apopka, Florida 32703 and to the Guarantor at 81 Wyman Street, P.O. Box
9046, Waltham, Massachusetts 02254-9046 (Attention: Secretary) with a copy to
the General Counsel.
15. Authentication.
This Security and any coupons appertaining thereto shall not become valid
or obligatory for any purpose until the certificate of authentication hereon
shall have been duly signed by the Fiscal Agent acting under the Fiscal Agency
Agreement.
16. Warranty of the Issuer.
Subject to Section 15 hereof, the Company hereby certifies and warrants
that all acts, conditions and things required to be done and performed and to
have happened precedent to the creation and issuance of this Security and any
coupons appertaining thereto, and to constitute the same legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
have been done and performed and have happened in due and strict compliance with
all applicable laws.
17. Accounting Terms. All accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with generally accepted
accounting principles as applied in the United States.
18. Descriptive Headings.
The descriptive headings appearing in these Terms and Conditions are for
convenience of reference only and shall not alter, limit or define the
provisions hereof.
<PAGE>
GUARANTEE OF THERMO ELECTRON CORPORATION
1. FOR VALUE RECEIVED, Thermo Electron Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Guarantor"), hereby unconditionally guarantees to the holder of the
Security upon which this Guarantee is endorsed and to each holder of any coupon
appertaining thereto the due and punctual payment of the principal of, premium,
if any, and interest ( and any Additional Amounts payable in accordance with
Section 2 of such Security) on such Security when and as the same shall become
due and payable, whether at the stated maturity or by declaration of
acceleration, call for redemption, redemption at the option of the holder
thereof or otherwise, according to the terms of such Security and of the Fiscal
Agency Agreement referred to in the Security upon which this Guarantee is
endorsed. In case of the failure of the Company referred to in the Security upon
which this Guarantee is endorsed punctually to make any such payment of
principal, premium, if any, or interest (or such Additional Amounts, if any),
the Guarantor hereby agrees to cause any such payment to be made punctually when
and as the same shall become due and payable, whether at the stated maturity or
by declaration of acceleration, call for redemption, redemption at the option of
the holder thereof or otherwise, and as if such payment were made by the
Company.
2. The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
such Security or the Fiscal Agency Agreement, the absence of any action to
enforce the same, any waiver or consent by the holder of such Security or any
such coupon or by the Fiscal Agent with respect to any provisions thereof or of
the Fiscal Agency Agreement, the recovery of any judgment against the Company or
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. The
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest or notice with
respect to such Security or coupon or the indebtedness evidenced thereby and all
demands whatsoever, and covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in such Security and
any such coupon and in this Guarantee.
3. (a) The Guarantor will not merge or consolidate with, or sell or convey
all or substantially all of its assets to, any other corporation, unless (i)
either (A) the Guarantor shall be the surviving corporation in the case of a
merger, (B) the assets sold or conveyed shall be owned by a corporation which,
immediately following such sale or conveyance, is at least 51%-owned by the
Guarantor, provided that such sale or conveyance does not result in the
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Guarantor, or (C) (I) the surviving, resulting or transferee
corporation shall expressly assume the due and punctual performance of all of
the covenants and obligations of the Guarantor under the Guarantees and Fiscal
Agency Agreement, by supplemental agreement reasonably satisfactory to the
Fiscal Agent, and (II) the Fiscal Agent shall have received the documentation
required in the context by the Fiscal Agency Agreement and (ii) the Guarantor or
such successor corporation, as the case may be, shall not, immediately after
such merger, consolidation, sale or conveyance, be in default in the performance
of any covenants or obligations of the Guarantor under the Guarantees or the
Fiscal Agency Agreement.
(b) Upon any merger, consolidation, sale, conveyance or assumption as
provided in Section 3(a), the successor or assuming corporation shall succeed to
and be substituted for, and may exercise every right and power of and be subject
to all the obligations of, the Guarantor under the Guarantees and Fiscal Agency
Agreement, with the same effect as if such successor or assuming corporation had
been named as the Guarantor therein and herein and the Guarantor shall be
released from its obligations as obligor under the Guarantees and Fiscal Agency
Agreement.
4. (a) The Guarantor, for itself, its successors and assigns, covenants
and agrees, and each holder of Securities by his acceptance thereof, likewise
covenants and agrees, that all obligations of the Guarantor relating to payment
of the principal of, premium, if any, and interest (and Additional Amounts
pursuant to Section 2 of the Securities) on each and all of the Securities is
hereby expressly subordinated, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full of all Superior
Indebtedness of the Guarantor.
"Superior Indebtedness of the Guarantor" shall mean the principal of,
premium, if any, and interest on the following, whether outstanding at the date
hereof or hereafter created or incurred:
(i) indebtedness of the Guarantor for money borrowed by the
Guarantor (including purchase money obligations and obligations to reimburse any
bank or other person in respect of amounts paid under letter of credit) whether
or not evidenced by debentures, bonds, notes or other corporate debt securities
or similar instruments issued by the Guarantor (including the Guarantor's
obligations with respect to its 5% Senior Convertible Debentures due 2001 and
its 4-5/8% Senior Convertible Debentures due 1997); provided, however, that
Superior Indebtedness shall not include (a) the Guarantor's 4-7/8% Convertible
Subordinated Debentures due 1997, the obligations represented by which shall
rank pari passu with the obligations represented hereby in right of payment, (b)
the Guarantor's subordinated guarantee of the principal, premium, if any, and
interest on the 6-5/8% Convertible Subordinated Debentures due 2001 of Thermo
Instrument Systems Inc., on the 6-1/2% Convertible Subordinated Debentures due
1997 of Thermo Process Systems Inc., on the Non-Interest Bearing Convertible
Subordinated Debentures due 1997 and the 5-1/2% Convertible Subordinated Note
due 2002 of Thermo Cardiosystems Inc., on the 6-1/2% Convertible Subordinated
Debentures due 1998 of Thermedics Inc., and on the 3-3/4% Convertible
Subordinated Debentures due 2000 of Thermo Voltek Corp., the obligations
represented by which shall rank pari passu with the obligations represented
hereby in right of payment and (c) the Guarantor's subordinated guarantee of the
obligations to redeem the common stock of ThermoLyte Corporation, the
obligations represented by which shall rank pari passu with the obligations
represented hereby in right of payment;
(ii) 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, standby and other fees due and
payable to financial institutions with respect to credit
facilities available to the Guarantor;
(iv) obligations under interest rate and currency swaps, floors,
caps or other similar arrangements intended to fix or hedge interest rate
obligations or currency exposure;
(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 (including the Guarantor's guarantee of the
principal, premium, if any, and interest on the 3-3/4% Senior Convertible
Debentures due 2000 of Thermo Instrument Systems Inc.); or
(vii)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, and (B) the Guarantees.
(b) (i) In the event of any insolvency or bankruptcy proceedings, or
any receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Guarantor or it its creditors, in their
capacity as such creditors, or to its property, or in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of the
Guarantor, whether or not involving insolvency or bankruptcy, or in the event of
any assignment for the benefit of creditors of the Guarantor or any 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 Securities and coupons shall be
entitled to receive any payment on account of the obligations of the Guarantor
relating to the principal of, premium, if any, or interest (and Additional
Amounts pursuant to Section 2 of the Securities) on the Securities and coupons,
and to that end the holders of 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 of the
obligations of the Guarantor relating to the Securities and coupons, other than
securities of the Guarantor as reorganized or readjusted or securities of the
Guarantor or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Section 4 with respect to the obligations of the Guarantor
relating to the Securities and coupons, to the payment of all 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 4, no consolidation, merger,
conveyance or transfer made pursuant to the provisions of Section 3 shall be
deemed to be a liquidation, reorganization, dissolution or other winding up of
the Guarantor.
(ii) If under the circumstances set forth in paragraph (i) of
this subsection, and notwithstanding the provisions thereof, any payment or
distribution of assets of the Guarantor of any kind, whether in cash, property,
or securities (other than securities of the Guarantor as reorganized or
readjusted or securities of the Guarantor or any other corporation provided for
by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the extent provided in this Section 4 with respect to
the obligations of the Guarantor relating to the Securities and coupons, to the
payment of all 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), shall be received by the holders of the
Securities 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 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 Securities shall be entitled to rely upon any
final order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
and the holders of Securities shall be entitled to rely upon a certificate of
the liquidating trustee or agent or other person making any distribution to the
holders of Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of 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 4(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 principal
of, premium, if any, or interest (or Additional Amounts pursuant to Section 2 of
the Securities) on the Securities or coupons.
(ii) Upon the happening of an event of default with respect to
any 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 principal of, premium, if any, or interest (or
Additional Amounts pursuant to Section 2 of the Securities) on the Securities
and coupons.
(d) In case cash, securities or other property otherwise payable or
deliverable to the holders of the Securities on account of the Guarantees shall
have been applied, pursuant to Section 4(b) or (c), to the payment of 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 Securities and coupons 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 obligations of the Guarantor in respect of the Guarantees
shall have been discharged in full, and such payments or distributions received
by the holders of the Securities and coupons, by reason of such subrogation, of
cash, securities or other property which otherwise would be paid or distributed
to the holders of 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 Securities and coupons on
account of the Guarantees, 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 Securities and coupons.
(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 the Guarantees by any act or failure to act on the part of the
Guarantor. The provisions of this Section 4 are solely for the purpose of
defining the relative rights of the holders of Superior Indebtedness of the
Guarantor, on the one hand, and the holders of the Securities and coupons on
account of the Guarantees, on the other hand, against the Guarantor and its
assets, and nothing contained in this Section 4 shall impair, as between the
Guarantor and the holder of any Security or coupon, the obligation of the
Guarantor, which is unconditional and absolute, to perform in accordance with
the terms of its Guarantees, or prevent the holder of any Security or coupon,
upon default hereunder or under such Security or coupon, from exercising all
rights, powers and remedies otherwise provided herein or therein or by
applicable law, all subject to the rights of the holders of Superior
Indebtedness of the Guarantor under this Section 4 to receive cash, property or
securities otherwise payable or deliverable to the holders of the Securities and
coupons on account of the Guarantees.
(f) Nothing contained in this Section 4 or in any Guarantees shall
prevent at any time, except under the conditions described in Sections 4(b) and
(c) hereof or during the pendency of any dissolution, winding up, liquidation or
reorganization proceedings therein referred to, the Guarantor from performing
its obligations under the Guarantees.
5. The Guarantor shall be subrogated to all rights of the holders of the
Securities and of any coupons against the Company in respect of any amounts paid
by the Guarantor pursuant to the provisions of this Guarantee; provided,
however, that the Guarantor shall not be entitled to enforce or to receive any
payments arising out of, or based upon, such right of subrogation until the
principal of, premium, if any, and interest on (and Additional Amounts pursuant
to Section 2 of the Securities, if any, on) all of the Securities shall have
been paid in full.
6. This Guarantee shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
7. All terms used in this Guarantee which are defined in the Fiscal Agency
Agreement shall have the meanings assigned to them in the Fiscal Agency
Agreement.
8. Subject to the next following paragraph, the Guarantor hereby certifies
and warrants that all acts, conditions and things required to be done and
performed and to have happened precedent to the creation and issuance of this
Guarantee and to constitute the same a legal, valid and binding obligation of
the Guarantor have been done and performed and have happened in due and strict
compliance with all applicable laws.
9. This Guarantee shall not become valid or obligatory for any purpose
until the certificate of authentication on the Security upon which this
Guarantee is endorsed shall have been duly signed by the Fiscal Agent acting
under the Fiscal Agency Agreement.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed.
Dated as of May 4, 1995
THERMO ELECTRON CORPORATION
By:
[Title]
<PAGE>
EXCHANGE OPTION
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 grants to the holder of the Security upon which this
Exchange Option is endorsed, the right, subject to the within terms and
conditions, to exchange this Security for shares of the Guarantor's Common
Stock, $1.00 par value ("Guarantor Common Stock"), upon payment of the sums and
compliance with the terms set forth herein and in the Fiscal Agency Agreement
(the "Fiscal Agency Agreement") dated as of May 4, 1995 by and among Thermo
Remediation Inc. (the "Company"), the Guarantor and Chemical Bank, as fiscal
agent (the "Fiscal Agent").
1. Definitions. As used in the Exchange Option, the
following terms shall be defined as follows:
(a) A "Change in Control" shall occur at such time or
times when
(i) any individual or entity (A) who has acquired any Guarantor
Common Stock pursuant to a Tender Offer becomes the beneficial owner, directly
or indirectly, of more than 50% of the then outstanding Guarantor Common Stock;
or (B) who is a beneficial owner, directly or indirectly, of more than 50% of
the then outstanding Guarantor Common Stock becomes the beneficial owner,
directly or indirectly, of any additional shares of Guarantor Common Stock
pursuant to a Tender Offer;
(ii) individuals who constitute the Continuing Directors shall
cease to constitute for any reason at least a majority of the Board of Directors
of the Guarantor; or
(iii)the Continuing Directors shall determine that any other
event constitutes an effective change in control of the Guarantor.
(b) "Closing Price" shall mean for any day, the last reported sales
price regular way or, in case no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way, in either case on the
New York Stock Exchange, or, if the Guarantor Common Stock is not then listed or
admitted to trading on such Exchange, on the principal national securities
exchange on which the Guarantor Common Stock is then listed or admitted to
trading or, if not listed or traded on any national securities exchange, the
closing sale price quoted on the NASDAQ National Market System, or if not so
quoted, as determined by the Guarantor.
(c) "Continuing Directors" shall mean (i) those directors of the
Guarantor serving as such on May 4, 1995 ("Current Directors"), and (ii) any
future directors who have been nominated or elected to serve as directors of the
Guarantor by a majority of the Continuing Directors then in office;
(d) "Exchange Price" shall mean 50% of the average of the Closing
Prices for the thirty consecutive days upon which the principal trading market
for the Guarantor Common Stock is open immediately preceding the Notification
Date.
(e) "Exercise Period" shall mean the period of time, commencing on
the date the Guarantor shall have given notice of the commencement of the
Exercise Period (in accordance with Section 2(d) hereof) and expiring on the
first to occur of (i) May 1, 2000 and (ii) 180 days after the date the notice
referred to above shall be deemed to have been given. Notice shall be deemed
first to have been given on the first publication in an Authorized Newspaper (as
defined in the Fiscal Agency Agreement) or the first such other publication as
may be authorized under the Fiscal Agency Agreement.
(f) "Notification Date" shall mean the first to occur of (i) the
receipt by the Board of Directors of the Guarantor of a proposal for a Change in
Control; (ii) the publication of a proposal for a Change in Control; and (iii)
the occurrence of an event that requires filing by the individual or entity
whose act or acts lead to a Change in Control with the United States Securities
and Exchange Commission pursuant to 15 U.S.C. ss.78m(d)(1) relating to such
individual's or entity's stock ownership in or intention to seek control of the
Guarantor. The Continuing Directors then on the Board of Directors of the
Guarantor shall, in good faith, determine the Notification Date in accordance
with this Section (f), which determination shall be conclusive in the absence of
actual fraud.
(g) "Tender Offer" shall mean an offer to acquire shares for cash,
securities or any other consideration or an acquisition pursuant to a request or
invitation for tenders.
2. Option.
(a) After the occurrence of a Change in Control of the Guarantor,
which Change in Control has not been approved by a majority of Continuing
Directors then in office at the next meeting of the Board of Directors called
for such purpose, which meeting shall occur no later than ten days after the
date of such Change in Control (which date shall be as determined in good faith
by such Continuing Directors), and subject to and upon compliance with the
provisions of the Fiscal Agency Agreement, a holder of Securities is entitled,
at his option, at any time during an Exercise Period on or after the date that
is 30 days after the Exchange Date (as defined in the Fiscal Agency Agreement),
to exchange an outstanding Security (or any portion of the principal amount
hereof which is U.S. $1,000 or an integral multiple thereof), at 100% of the
principal amount thereof, or of such portion, for fully paid and nonassessable
shares (calculated as to each conversion to the nearest 1/1000 of a share) of
Common Stock of the Guarantor ("Common Stock") at the Exchange Price. The
Exchange Option shall be exercised by surrender of the Security together with
(i) the sum of $1.00 for each full share of Guarantor Common Stock to be issued
upon such exchange, in funds acceptable to the Guarantor, (ii) if a Bearer
Security, all unmatured coupons and any matured coupons in default appertaining
thereto and if a Registered Security (if so required by the Guarantor or the
Fiscal Agent), instruments of transfer in form satisfactory to the Guarantor and
the Fiscal Agent, duly executed by the registered holder or by his duly
authorized attorney, and (iii) the exchange notice hereon duly executed and
delivered (a) at the Corporate Trust Office of the Fiscal Agent, or at such
other office or agency of the Guarantor as may be designated by it for such
purpose in the City of New York, or (b) subject to any laws or regulations
applicable thereto and subject to the right of the Guarantor to terminate the
appointment of any such conversion agency, at the offices of Chemical Bank,
Chemical Bank House, 125 London Wall, London EC2Y 5AJ, England, Banque
Internationale a Luxembourg, 69, route d'Esch, L-1470 LuxembourgVille,
Luxembourg, or at such other offices or agencies as the Company may designate.
(b) Subject to, in the case of Registered Securities surrendered for
exchange after the close of business on a Record Date next preceding any
interest payment date and on or before the opening of business on such interest
payment date, to the right of the holder of record of a Registered Security at
such Record Date to receive an installment of interest, no payment or adjustment
is to be made on exchange for interest accrued thereon or for dividends on the
Guarantor Common Stock delivered on exchange. No fractions of shares or scrip
representing fractions of shares will be issued or delivered on exchange, but
instead of any fractional interest the Guarantor shall pay a cash adjustment as
provided in the Fiscal Agency Agreement. Such exchange shall be so effected by
the Guarantor.
(c) The Guarantor shall use its best efforts to take all steps
necessary (i) to cause all registrations with and to obtain any approvals by,
any governmental authority under any Federal or state law of the United States
that may be required before the shares of Guarantor Common Stock may be lawfully
issued or transferred and delivered and (ii) to list the shares of Guarantor
Common Stock required to be issued or delivered upon conversion of Securities
prior to such issue or delivery on each national securities exchange on which
the outstanding Guarantor Common Stock is listed at the time of such delivery.
(d) The Guarantor shall, from and after the date on which the
Securities first may be exchangeable into Guarantor Common Stock, have reserved
and available, free from preemptive rights, out of its authorized but unissued
Guarantor Common Stock, for the purpose of effecting the exchange of Securities,
the full number of shares of Guarantor Common Stock then issuable upon the
exchange of all Securities. The Guarantor covenants that all shares of Guarantor
Common Stock which may be issued or delivered upon exchange of Securities will
upon issue be fully paid and nonassessable.
(e) Notice shall be given by the Guarantor setting forth the
occurrence of a Change in Control, the date on which the Exercise Period shall
have commenced and shall expire, the Exchange Price and the manner in which the
Exchange Option may be exercised, not later than ten days after the meeting of
the Board of Directors referred to in subsection (a) above. Notice shall be
given in accordance with the terms of the Fiscal Agency Agreement.
3. Amendment; Termination.
(a) Without the consent of or compensation to any holders of
Securities, the Exchange Options may be terminated prior to a Change in Control
for any reason and modifications of or amendments to the Exchange Options may be
made for any purpose by a majority of the Continuing Directors then in office.
Notice of the termination of the Exchange Options or of any modification
or amendment shall be given in the manner set forth in the Terms and Conditions
of the Securities and the Fiscal Agency Agreement, specifying the nature of the
action taken.
4. Effect of Certain Redemptions on Exchange Option.
In the event that prior to the date, as determined by the Board of
Directors in accordance with Section 2 hereof, on which a Change of Control has
occurred, the Securities or any portion thereof shall have been called for
redemption by the Company, the Exchange Options (in the case of a redemption of
all Securities) or the Exchange Options with respect to those Securities which
are called for redemption (in the case of a redemption in part) shall forthwith
terminate and be of no further force and effect upon the giving of notice of
redemption in accordance with the Terms and Conditions of the Securities (in the
case of a redemption of all Securities) or upon the giving of such notice in
accordance with the Terms and Conditions of the Securities as shall specify the
serial numbers and portion thereof of those Securities called for redemption (in
the case of a redemption in part)..
5. Cancellation of Securities.
Upon surrender of any Security or portion thereof upon exercise of an
Exchange Option, such Security or portion thereof shall forthwith cease to
represent any obligation of the Company to the holder thereof (including the
Guarantor), and shall be submitted for cancellation in accordance with the terms
of the Fiscal Agency Agreement.
6. Governing Law.
This Exchange Option shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
7. Definitions.
All terms used in this Exchange Option which are defined in the Fiscal
Agency Agreement shall have the meanings assigned to them in the Fiscal Agency
Agreement.
8. Conditions Satisfied.
Subject to the next following paragraph, the Guarantor hereby certifies
and warrants that all acts, conditions and things required to be done and
performed and to have happened precedent to the creation and issuance of this
Exchange Option and to constitute the same a legal, valid and binding obligation
of the Guarantor enforceable in accordance with its terms have been done and
performed and have happened in due and strict compliance with all applicable
laws.
9. Authentication of Security.
This Exchange Option shall not become valid or obligatory for any purpose
until the certificate of authentication on the Security upon which this Exchange
Option is endorsed shall have been duly signed by the Fiscal Agent acting under
the Fiscal Agency Agreement.
IN WITNESS WHEREOF, the Guarantor has caused this Exchange Option to be
duly executed.
Dated as of May 4, 1995
[Corporate Seal] THERMO ELECTRON
CORPORATION
Attest:___________________________ By:
[Title] [Title]
<PAGE>
TRANSFER NOTICE
Only if a Registered Security or Common Stock issued upon conversion of
any Security (if no registration statement covering such Common Stock is
effective) or Guarantor Common Stock issued in exchange therefor (if no
registration statement covering such Guarantor Common Stock is effective):
FOR VALUE RECEIVED, the undersigned Holder hereby sell(s),
assign(s) and transfer(s) unto ________________________
- ----------------------------------------------------------------
whose taxpayer identification number is _________ and whose
address including postal/zip code is ___________________________
- ----------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ____________________________________ attorney-in-fact to transfer
said Security on the books of the Fiscal Agent with full power of substitution
in the premises.
In connection with the transfer of this Security, the undersigned Holder
certifies that:
[Check one]
[ ] (a) This Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act of 1933) in compliance with the exemption from
registration under the Securities Act of 1933 provided by Rule
144A.
[ ] (b) This Security is being transferred in an Offshore
Transaction (as defined in Regulation S under the Securities Act
of 1933) in compliance with the exemption from registration
under the Securities Act of 1933 provided by Regulation S.
[ ] (c) This Security is being transferred to a sophisticated
institutional investor which is an "accredited investor" (within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933) in a transaction not involving any
general solicitation or advertising.
Dated: Name:
By:
Title:
NOTICE: The signature of the Holder to this
assignment must correspond with the name as
written upon the face of the within
instrument in every particular, without
enlargement or any change whatsoever.
SIGNATURE GUARANTEED
TO BE COMPLETED BY A BROKER OR DEALER IF (c) ABOVE IS CHECKED:
The undersigned represents and warrants that (i) it is a broker or dealer
registered under Section 15 of the Securities Exchange Act of 1934, (ii) each
person which will become a beneficial owner of this Security upon transfer is a
sophisticated institutional investor which is an "accredited investor" (within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933); (iii) no general solicitation or advertising was made or used by it in
connection with the offer and sale of this Security to such person(s); and (iv)
each such person has been notified that this Security has not been registered
under the Securities Act of 1933 and is subject to the restrictions on transfer
of the Security set forth herein and in the Fiscal Agency Agreement.
Dated: ____________________
By:
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE FISCAL AGENT SHALL NOT BE
OBLIGATED TO REGISTER THE TRANSFER OF THIS SECURITY UNLESS AND UNTIL THE
CONDITIONS TO ANY SUCH TRANSFER OF REGISTRATION SET FORTH HEREIN, ON THE FACE
HEREOF AND IN THE FISCAL AGENCY AGREEMENT SHALL HAVE BEEN SATISFIED.
<PAGE>
EXCHANGE NOTICE
If Bearer Security of denomination U.S. $1,000:
The undersigned holder of this Security hereby irrevocably exercises the
option to exchange this Security for shares of Common Stock of Thermo Electron
Corporation in accordance with the terms of the Exchange Option endorsed upon
this Security and directs that such shares be registered in the name of and
delivered, together with a check in payment for any fractional share and accrued
interest from the immediately preceding interest payment date, to the
undersigned unless a different name has been indicated below. If shares are to
be registered in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Dated: _______ __, ____
Signature
[MUST BE GUARANTEED]
If shares are to be registered in the name of and delivered to a person other
than the holder, please print such person's name and address:
- ----------------------------------
- ----------------------------------
- ----------------------------------
HOLDER
Please print name and address of holder:
<PAGE>
EXCHANGE NOTICE
If Registered Security or Bearer Security of denomination U.S.
$10,000:
The undersigned holder of this Security hereby irrevocably exercises the
option to exchange this Security, or portion hereof (which is U.S. $1,000 or an
integral multiple thereof) below designated, for shares of Common Stock of
Thermo Electron Corporation in accordance with the terms of the Exchange Option
endorsed upon this Security and accrued interest from the immediately preceding
interest payment date (except interest payable to the holder of record on an
interest record date), and directs that such shares, together with a check in
payment for any fractional share and any Securities representing any unconverted
principal amount hereof, be delivered to and be registered (if a Registered
Security), in the name of the undersigned unless a different name has been
indicated below. If shares or Securities are to be registered in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto.
Dated: ________ __, ____
Signature
[MUST BE GUARANTEED]
If shares or Securities are to If only a portion of the be registered in the
name of a Securities is to be exchanged person other than the holder, please
indicate: please print such person's name and address:
1. Principal Amount to be
exchanged: U.S. $________
2. Kind, amount and denomination of Securities
representing unconverted principal amount to be
issued:
Bearer-U.S.$____________
Denominations: U.S.$____
(U.S. $1,000 or $10,000)
Registered-U.S.$________
Denominations: U.S.$____
(U.S. $1,000 or an
integral multiple
thereof)
Registered Securities are not exchangeable for
Bearer Securities.
<PAGE>
CONVERSION NOTICE
If Bearer Security of denomination U.S. $1,000:
The undersigned holder of this Security hereby (i) irrevocably exercises
the option to convert this Security into shares of Common Stock of Thermo
Remediation Inc. (the "Company") in accordance with the terms of this Security,
(ii) directs that such shares be registered in the name of and delivered,
together with a check in payment for any fractional share and accrued interest
from the immediately preceding interest payment date, to the undersigned unless
a different name has been indicated below and (iii) represents and warrants that
this Security does not constitute a "restricted security" ( as defined in the
Securities Act of 1933) and that the undersigned is not an "affiliate" (as
defined in the Securities Act of 1933) of the Company. If shares are to be
registered in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
Dated: _______ __, ____
Signature
[MUST BE GUARANTEED]
If shares are to be registered in the name of and delivered to a person other
than the holder, please print such person's name and address:
- ----------------------------------
- ----------------------------------
- ----------------------------------
HOLDER
Please print name and address of holder:
CONVERSION NOTICE
If Registered Security or Bearer Security of denomination U.S.
$10,000:
The undersigned holder of this Security hereby (i) irrevocably exercises
the option to convert this Security, or portion hereof (which is U.S. $1,000 or
an integral multiple thereof) below designated, into shares of Common Stock of
Thermo Remediation Inc. (the "Company") in accordance with the terms of this
Security, (ii) directs that such shares, together with a check in payment for
any fractional share and accrued interest payable to the holder of record on an
interest record date and any Securities representing any unconverted principal
amount hereof, be delivered to and be registered (if a Registered Security) in
the name of the undersigned unless a different name has been indicated below and
(ii) if this Security is a Bearer Security, represents and warrants that this
Security does not constitute a "restricted security" (as defined in the
Securities Act of 1933) and that the undersigned is not an "affiliate" (as
defined in the Securities Act of 1933) of the Company. If shares or Securities
are to be registered in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Dated: _________ __, ____
------------------------------
Signature
[MUST BE GUARANTEED]
If shares or Securities are to If only a portion of the
be registered in the name of a Securities is to be converted,
Person other than the holder, please indicate:
please print such person's
name and address:
1. Principal Amount to be
converted: U.S.$________
2. Kind, amount and denomination of Securities
Representing unconverted Principal amount to be
issued:
Bearer-U.S.$____________
Denominations: U.S.$____
(U.S. $1,000 or $10,000)
Registered-U.S.$________
Denominations: U.S.$____
(U.S. $1,000 or an
integral multiple
thereof)
Registered Securities are not exchangeable for
Bearer Securities.
<PAGE>
REDEMPTION NOTICE
UNDER SECTION 3(d)
If Bearer Security of denomination U.S. $1,000:
The undersigned holder of this Security hereby requests and instructs the
Company to redeem this Security in accordance with the terms of Section 3(d) of
this Security and directs that a check in payment of the redemption amount be
delivered to the undersigned unless a different name has been indicated below.
The undersigned understands that this request can be revoked by delivering
written notice to the Paying Agent on or before the Holder Redemption Date,
together with the undersigned's non-transferable receipt for such Security.
Dated: _______ __, ____
------------------------------
Signature
[MUST BE GUARANTEED]
If a check in payment of the redemption amount is to be delivered to a person
other than the holder, please print such person's name and address:
- ----------------------------------
- ----------------------------------
- ----------------------------------
HOLDER
Please print name and address of holder:
-----------------------------
-----------------------------
-----------------------------
<PAGE>
REDEMPTION NOTICE
UNDER SECTION 3(d)
If Registered Security or Bearer Security of denomination U.S.
$10,000:
The undersigned holder of this Security hereby requests and instructs the
Company to redeem this Security or portion hereof (which is U.S. $1,000 or an
integral multiple thereof) in accordance with the terms of Section 3(d) of this
Security, and directs that a check in payment of the redemption amount be
delivered to, and any Securities representing any unredeemed principal amount
hereof be delivered to and be registered in the name of, the undersigned unless
a different name has been indicated below. If Securities are to be registered in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. The undersigned understands that
this request can be revoked by delivering written notice to the Paying Agent on
or before the Holder Redemption Date, together with the undersigned's
non-transferable receipt for such Security.
Dated: _________ __, ____
------------------------------
Signature
[MUST BE GUARANTEED]
If Securities are to If only a portion of the be registered in the name of,
Securities is to be redeemed, or a check in payment of the please indicate:
redemption amount is to be delivered to, a Person other than the holder, please
print such person's name and address:
1. Principal Amount to be
redeemed: U.S.$________
2. Kind, amount and denomination of Securities
representing unredeemed principal amount to be
issued:
Bearer-U.S.$____________
Denominations: U.S.$____
(U.S. $1,000 or $10,000)
Registered-U.S.$________
Denominations: U.S.$____
(U.S. $1,000 or an
integral multiple
thereof)
Registered Securities are not exchangeable for
Bearer Securities.
<PAGE>
EXHIBIT B
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THIS SECURITY NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD DIRECTLY OR INDIRECTLY IN THE UNITED
STATES OF AMERICA, ITS TERRITORIES OR POSSESSIONS ("UNITED STATES") OR TO
CITIZENS, NATIONALS OR RESIDENTS THEREOF OR TO ANY CORPORATION, PARTNERSHIP OR
OTHER PERSON OR ENTITY DEEMED A U.S. PERSON UNDER REGULATION S UNDER THE
SECURITIES ACT ("UNITED STATES PERSONS"), OTHER THAN ANY PORTION OF THIS
SECURITY SOLD, SUBJECT TO CERTAIN RESTRICTIONS, PURSUANT TO RULE 144A OR ANOTHER
APPLICABLE EXEMPTION UNDER THE SECURITIES ACT.
ANY UNITED STATES PERSON WHO HOLDS THIS SECURITY WILL BE SUBJECT TO LIMITATIONS
UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN
SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE.
THERMO REMEDIATION INC.
(Incorporated in the State of Delaware)
4-7/8% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
GUARANTEED ON A SUBORDINATED BASIS BY
THERMO ELECTRON CORPORATION
(Incorporated in the State of Delaware)
TEMPORARY GLOBAL DEBENTURE
THERMO REMEDIATION INC., a corporation duly incorporated and existing
under the laws of the State of Delaware (the "Company"), for value received,
hereby promises to pay to bearer upon presentation and surrender of this Global
Security the principal sum of ____________ United States Dollars on May 1, 2000
and to pay interest thereon, from the date hereof, semiannually in arrears on
May 1 and November 1 in each year, commencing November 1, 1995, at the rate of
4-7/8% per annum, until the principal hereof is paid or made available for
payment, provided, however, that interest on this Global Security shall be
payable only after the issuance of the definitive Securities for which this
Global Security is exchangeable and, in the case of definitive Securities in
bearer form, only upon presentation and surrender of the interest coupons
thereto attached as they severally mature.
This Global Security is one of a duly authorized issue of Securities of
the Company designated as specified in the title hereof (the "Securities"). This
Global Security and the definitive Securities for which it is exchangeable, as
described below, are entitled to the benefits of a Fiscal Agency Agreement of
even date herewith (the "Fiscal Agency Agreement") among the Company, Thermo
Electron Corporation, a corporation duly organized and existing under the laws
of the State of Delaware, as guarantor, and Chemical Bank, as fiscal agent,
paying agent and conversion agent (the "Fiscal Agent"). It is a temporary
security and is exchangeable in whole without charge upon request of the holder
hereof for definitive Securities in bearer form, with interest coupons attached,
(a) not earlier than the day following the expiration of the 40-day period that
begins on the date hereof and (b) as promptly as practicable following
presentation of certification, in the form set forth as Exhibits C and D of the
Fiscal Agency Agreement for such purpose, that the beneficial owner or owners of
this Global Security (or, if such exchange is only for a part of this Global
Security, of such part) are not United States Persons. Upon any exchange of a
part of this Global Security for definitive Securities, the portion of the
principal amount hereof so exchanged shall be endorsed by the Fiscal Agent on
the Schedule of Exchanges hereto, and the principal amount hereof shall be
reduced for all purposes by the amount so exchanged.
Until exchanged in full for definitive Securities, this Global Security
shall in all respects be entitled to the same benefits under, and subject to the
same terms and conditions of, the Fiscal Agency Agreement as definitive
Securities authenticated and delivered thereunder, except that neither the
holder hereof nor the beneficial owners of this Global Security shall be
entitled to receive payment of interest hereon, except as provided above, or to
convert this Global Security into Common Stock of the Company or any other
security, cash or other property.
This Global Security shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
All terms used in this Global Security which are defined in the Fiscal
Agency Agreement shall have the meanings assigned to them in the Fiscal Agency
Agreement.
<PAGE>
Unless the certificate of authentication hereon has been executed by an
authorized officer of the Fiscal Agent, this Global Security shall not be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Global Security to be duly
executed in its corporate name by its duly authorized officer.
Dated as of May 4, 1995
THERMO REMEDIATION INC.
By:___________________________
[Title]
CERTIFICATE OF AUTHENTICATION
This is the Global Security described in the within-mentioned Fiscal
Agency Agreement.
CHEMICAL BANK, as Fiscal Agent
By:
Authorized Officer
<PAGE>
SCHEDULE OF EXCHANGES
Remaining
principal
Principal amount
amount exchanged following Notation made
Date for definitive such on behalf of
made Securities exchange the
Fiscal Agent
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GUARANTEE OF THERMO ELECTRON CORPORATION
1. FOR VALUE RECEIVED, Thermo Electron Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Guarantor"), hereby unconditionally guarantees to the holder of the
Security upon which this Guarantee is endorsed and to each holder of any coupon
appertaining thereto the due and punctual payment of the principal of, premium,
if any, and interest ( and any Additional Amounts payable in accordance with
Section 2 of such Security) on such Security when and as the same shall become
due and payable, whether at the stated maturity or by declaration of
acceleration, call for redemption, redemption at the option of the holder
thereof or otherwise, according to the terms of such Security and of the Fiscal
Agency Agreement referred to in the Security upon which this Guarantee is
endorsed. In case of the failure of the Company referred to in the Security upon
which this Guarantee is endorsed punctually to make any such payment of
principal, premium, if any, or interest (or such Additional Amounts, if any),
the Guarantor hereby agrees to cause any such payment to be made punctually when
and as the same shall become due and payable, whether at the stated maturity or
by declaration of acceleration, call for redemption, redemption at the option of
the holder thereof or otherwise, and as if such payment were made by the
Company.
2. The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
such Security or the Fiscal Agency Agreement, the absence of any action to
enforce the same, any waiver or consent by the holder of such Security or any
such coupon or by the Fiscal Agent with respect to any provisions thereof or of
the Fiscal Agency Agreement, the recovery of any judgment against the Company or
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. The
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest or notice with
respect to such Security or coupon or the indebtedness evidenced thereby and all
demands whatsoever, and covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in such Security and
any such coupon and in this Guarantee.
3. (a) The Guarantor will not merge or consolidate with, or sell or convey
all or substantially all of its assets to, any other corporation, unless (i)
either (A) the Guarantor shall be the surviving corporation in the case of a
merger, (B) the assets sold or conveyed shall be owned by a corporation which,
immediately following such sale or conveyance, is at least 51%-owned by the
Guarantor, provided that such sale or conveyance does not result in the
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Guarantor, or (C) (I) the surviving, resulting or transferee
corporation shall expressly assume the due and punctual performance of all of
the covenants and obligations of the Guarantor under the Guarantees and Fiscal
Agency Agreement, by supplemental agreement reasonably satisfactory to the
Fiscal Agent, and (II) the Fiscal Agent shall have received the documentation
required in the context by the Fiscal Agency Agreement and (ii) the Guarantor or
such successor corporation, as the case may be, shall not, immediately after
such merger, consolidation, sale or conveyance, be in default in the performance
of any covenants or obligations of the Guarantor under the Guarantees or the
Fiscal Agency Agreement.
(b) Upon any merger, consolidation, sale, conveyance or assumption as
provided in Section 3(a), the successor or assuming corporation shall succeed to
and be substituted for, and may exercise every right and power of and be subject
to all the obligations of, the Guarantor under the Guarantees and Fiscal Agency
Agreement, with the same effect as if such successor or assuming corporation had
been named as the Guarantor therein and herein and the Guarantor shall be
released from its obligations as obligor under the Guarantees and Fiscal Agency
Agreement.
4. (a) The Guarantor, for itself, its successors and assigns, covenants
and agrees, and each holder of Securities by his acceptance thereof, likewise
covenants and agrees, that all obligations of the Guarantor relating to payment
of the principal of, premium, if any, and interest (and Additional Amounts
(pursuant to Section 2 of the Securities) on each and all of the Securities is
hereby expressly subordinated, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full of all Superior
Indebtedness of the Guarantor.
"Superior Indebtedness of the Guarantor" shall mean the principal of,
premium, if any, and interest on the following, whether outstanding at the date
hereof or hereafter created or incurred:
(i) indebtedness of the Guarantor for money borrowed by the
Guarantor (including purchase money obligations and obligations to reimburse any
bank or other person in respect of amounts paid under letter of credit) whether
or not evidenced by debentures, bonds, notes or other corporate debt securities
or similar instruments issued by the Guarantor (including the Guarantor's
obligations with respect to its 5% Senior Convertible Debentures due 2001 and
its 4-5/8% Senior Convertible Debentures due 1997); provided, however, that
Superior Indebtedness shall not include (a) the Guarantor's 4-7/8% Convertible
Subordinated Debentures due 1997, the obligations represented by which shall
rank pari passu with the obligations represented hereby in right of payment, (b)
the Guarantor's subordinated guarantee of the principal, premium, if any, and
interest on the 6-5/8% Convertible Subordinated Debentures due 2001 of Thermo
Instrument Systems Inc., on the 6-1/2% Convertible Subordinated Debentures due
1997 of Thermo Process Systems Inc., on the Non-Interest Bearing Convertible
Subordinated Debentures due 1997 and the 5-1/2% Convertible Subordinated Note
due 2002 of Thermo Cardiosystems Inc., on the 6-1/2% Convertible Subordinated
Debentures due 1998 of Thermedics Inc., and on the 3-3/4% Convertible
Subordinated Debentures due 2000 of Thermo Voltek Corp., the obligations
represented by which shall rank pari passu with the obligations represented
hereby in right of payment and (c) the Guarantor's subordinated guarantee of the
obligations to redeem the common stock of ThermoLyte Corporation, the
obligations represented by which shall rank pari passu with the obligations
represented hereby in right of payment;
(ii) 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, standby and other fees due and
payable to financial institutions with respect to credit
facilities available to the Guarantor;
(iv) obligations under interest rate and currency swaps, floors,
caps or other similar arrangements intended to fix or hedge interest rate
obligations or currency exposure;
(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 (including the Guarantor's guarantee of the
principal, premium, if any, and interest on the 3-3/4% Senior Convertible
Debentures due 2000 of Thermo Instrument Systems Inc.); or
(vii)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, and (B) the Guarantees.
(b) (i) In the event of any insolvency or bankruptcy proceedings, or
any receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Guarantor or it its creditors, in their
capacity as such creditors, or to its property, or in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of the
Guarantor, whether or not involving insolvency or bankruptcy, or in the event of
any assignment for the benefit of creditors of the Guarantor or any 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 Securities and coupons shall be
entitled to receive any payment on account of the obligations of the Guarantor
relating to the principal of, premium, if any, or interest ( and Additional
Amounts ( pursuant to Section 2 of the Securities) on the Securities and
coupons, and to that end the holders of 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 of the
obligations of the Guarantor relating to the Securities and coupons, other than
securities of the Guarantor as reorganized or readjusted or securities of the
Guarantor or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Section 4 with respect to the obligations of the Guarantor
relating to the Securities and coupons, to the payment of all 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 4, no consolidation, merger,
conveyance or transfer made pursuant to the provisions of Section 3 shall be
deemed to be a liquidation, reorganization, dissolution or other winding up of
the Guarantor.
(ii) If under the circumstances set forth in paragraph (i) of
this subsection, and notwithstanding the provisions thereof, any payment or
distribution of assets of the Guarantor of any kind, whether in cash, property,
or securities (other than securities of the Guarantor as reorganized or
readjusted or securities of the Guarantor or any other corporation provided for
by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the extent provided in this Section 4 with respect to
the obligations of the Guarantor relating to the Securities and coupons, to the
payment of all 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), shall be received by the holders of the
Securities 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 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 Securities shall be entitled to rely upon any
final order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
and the holders of Securities shall be entitled to rely upon a certificate of
the liquidating trustee or agent or other person making any distribution to the
holders of Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of 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 4(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 principal
of, premium, if any, or interest (or Additional Amounts (pursuant to Section 2
of the Securities) on the Securities or coupons.
(ii) Upon the happening of an event of default with respect to
any 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 principal of, premium, if any, or interest (or
Additional Amounts (pursuant to Section 2 of the Securities) on the Securities
and coupons.
(d) In case cash, securities or other property otherwise payable or
deliverable to the holders of the Securities on account of the Guarantees shall
have been applied, pursuant to Section 4(b) or (c), to the payment of 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 Securities and coupons 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 obligations of the Guarantor in respect of the Guarantees
shall have been discharged in full, and such payments or distributions received
by the holders of the Securities and coupons, by reason of such subrogation, of
cash, securities or other property which otherwise would be paid or distributed
to the holders of 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 Securities and coupons on
account of the Guarantees, 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 Securities and coupons.
(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 the Guarantees by any act or failure to act on the part of the
Guarantor. The provisions of this Section 4 are solely for the purpose of
defining the relative rights of the holders of Superior Indebtedness of the
Guarantor, on the one hand, and the holders of the Securities and coupons on
account of the Guarantees, on the other hand, against the Guarantor and its
assets, and nothing contained in this Section 4 shall impair, as between the
Guarantor and the holder of any Security or coupon, the obligation of the
Guarantor, which is unconditional and absolute, to perform in accordance with
the terms of its Guarantees, or prevent the holder of any Security or coupon,
upon default hereunder or under such Security or coupon, from exercising all
rights, powers and remedies otherwise provided herein or therein or by
applicable law, all subject to the rights of the holders of Superior
Indebtedness of the Guarantor under this Section 4 to receive cash, property or
securities otherwise payable or deliverable to the holders of the Securities and
coupons on account of the Guarantees.
(f) Nothing contained in this Section 4 or in any Guarantees shall
prevent at any time, except under the conditions described in Sections 4(b) and
(c) hereof or during the pendency of any dissolution, winding up, liquidation or
reorganization proceedings therein referred to, the Guarantor from performing
its obligations under the Guarantees.
5. The Guarantor shall be subrogated to all rights of the holders of the
Securities and of any coupons against the Company in respect of any amounts paid
by the Guarantor pursuant to the provisions of this Guarantee; provided,
however, that the Guarantor shall not be entitled to enforce or to receive any
payments arising out of, or based upon, such right of subrogation until the
principal of, premium, if any, and interest on (and Additional Amounts pursuant
to Section 2 of the Securities, if any, on) all of the Securities shall have
been paid in full.
6. This Guarantee shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
7. All terms used in this Guarantee which are defined in the Fiscal Agency
Agreement shall have the meanings assigned to them in the Fiscal Agency
Agreement.
8. Subject to the next following paragraph, the Guarantor hereby certifies
and warrants that all acts, conditions and things required to be done and
performed and to have happened precedent to the creation and issuance of this
Guarantee and to constitute the same a legal, valid and binding obligation of
the Guarantor have been done and performed and have happened in due and strict
compliance with all applicable laws.
9. This Guarantee shall not become valid or obligatory for any purpose
until the certificate of authentication on the Security upon which this
Guarantee is endorsed shall have been duly signed by the Fiscal Agent acting
under the Fiscal Agency Agreement.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed.
Dated as of May 4, 1995
THERMO ELECTRON CORPORATION
By:
` [Title]
<PAGE>
EXHIBIT C
<PAGE>
Form of Certificate to be Given by the Euroclear Operator and
CEDEL S.A.
CERTIFICATION
Thermo Remediation Inc.
U.S. $37,950,000
4-7/8% Convertible Subordinated Debentures
due May 1, 2000
(the "Securities")
This is to certify that, based on certificates we have received in
writing, by tested telex or by electronic transmission from our member
organizations appearing in our records as persons being entitled to a portion of
the principal amount set forth below, substantially in the form set out in the
Fiscal Agency Agreement relating to the above-captioned Securities, as of the
date hereof, U.S. $______ principal amount of the above-captioned Securities (i)
are owned by a person that is not a citizen or resident of the United States, a
domestic partnership, a domestic corporation or any estate or trust the income
of which is subject to United States federal income taxation regardless of its
source (a "United States Person"), (ii) are owned by a United States Person that
is (a) the foreign branch of a United States financial institution (as defined
in United States Treasury Regulations Section 1.165-12(c)(1)(v)) (a "financial
institution") purchasing for its own account or for resale, or (b) a United
States Person who acquired the Securities through the foreign branch of a United
States financial institution and who holds the Securities through such financial
institution on the date hereof (and in the case of either clause (a) or (b), the
financial institution has agreed for your benefit to comply with the
requirements of Section 163(j)(3)(A), (B) or (C) of the United States Internal
Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are
owned by a financial institution for purposes of resale during the restricted
period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)). Financial institutions described in clause (iii) of the
preceding sentence (whether or not also described in clause (i) or (ii)) have
certified that they have not acquired the Securities for purposes of resale
directly or indirectly to a United States Person or to a person within the
United States or its possessions.
In addition, based on such certificates, none of such principal amount
constitutes an unsold allotment or subscription of a distributor (as defined in
United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)).
As used in this Certificate, "United States" means the
United States of America (including the States and the District
of Columbia); and its "possessions" include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
We further certify that, as of the date hereof, (i) we are not making
available herewith for exchange any portion of the Temporary Global Security
excepted in such certifications and (ii) we have not received any notification
from any of our member organizations to the effect that the statements made by
such member organizations with respect to any portion of the part submitted
herewith for exchange are no longer true and cannot be relied upon as of the
date hereof.
We understand that this certificate is required in connection with certain
tax laws of the United States. In connection therewith, if administrative or
legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceedings.
Dated: ___________, 1995*
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK (Brussels Office),
as Operator of the Euroclear
System]**
[CEDEL S.A.]**
By:
- ----------------
* To be dated no earlier than the date which is 40 days after
the closing of the sale of the Debentures.
** Delete as appropriate.
<PAGE>
EXHIBIT D
<PAGE>
Form of Certificate of Beneficial Ownership
for Bearer Securities to be Provided to the
Euroclear Operator or to CEDEL S.A.
CERTIFICATION
Thermo Remediation Inc.
U.S. $37,950,000
4-7/8% Convertible Subordinated Debentures
due May 1, 2000
(the "Securities")
This is to certify that as of the date hereof and except as provided in
the fourth paragraph hereof, the above-captioned Securities held by you for our
account:
(a)(i) are owned by a person that is not a citizen or a resident, a
domestic partnership, a domestic corporation or any estate or trust the
income of which is subject to United States federal income taxation
regardless of its source (a "United States Person"), or
(ii) are owned by a United States Person that is (A) the foreign
branch of a United States financial institution (as defined in United States
Treasury Regulations Section 1.165-12(c)(1)(v)) (a "financial institution")
purchasing for its own account or for resale, or (B) a United States Person
who acquired the Securities through the foreign branch of a United States
financial institution and who holds the Securities through such financial
institution on the date hereof (and in the case of either clause (A) or (B),
the financial institution hereby agrees for the benefit of the Company to
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
United States Internal Revenue Code of 1986, as amended, and the regulations
thereunder), or
(iii)are owned by a financial institution for purposes of resale
during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5 (c)(2)(i)(D)(7)).
In addition, financial institutions described in clause (iii) of the
preceding sentence (whether or not also described in clause (i) or (ii))
certify that they have not acquired the Securities for purposes of resale
directly or indirectly to a United States Person or to a person within the
United States or its possessions.
(b) Do not constitute part of an unsold allotment or subscription of a
distributor (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)).
As used in this Certificate, "United States" means the
United States of America (including the States and the District
of Columbia), and its "possessions" include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
We undertake to advise you by telex if the above statement as to
beneficial ownership is not correct on any date of exchange by us of a portion
of the Temporary Global Bearer Security for definitive Securities as to all of
the above-captioned Securities then appearing in your books as being held for
our account.
This certificate excepts and does not relate to U.S. $____ principal
amount of the above-captioned Securities appearing on your books as being held
for our account as to which we are not yet able to certify and as to which we
understand that exchange and delivery of definitive Securities cannot be made
until we are able so to certify.
We understand that this certificate is required in connection with certain
tax regulations in the United States. If administrative or legal proceedings are
commenced or threatened in connection with which this certificate is or would be
relevant, we irrevocably authorized you to produce this certificate or a copy
hereof to any interested party in such proceedings.
Date: ___________, 1995*
[NAME]
By:
Signature
As, or as agent for, the
beneficial
owner(s) of the
Securities to which this certificate
relates.
* Not earlier than 15 days prior to the date which is 40 days after the closing
date of the sale of the Securities.
<PAGE>
EXHIBIT E
<PAGE>
Form of Certificate of Beneficial
Ownership for Registered
Securities to be Provided to
the Euroclear Operator or
to CEDEL S.A.
Please issue $___________ of the U.S. $ 37,950,000 4-7/8% Convertible
Subordinated Debentures due May 1, 2000 (the "Securities") of Thermo Remediation
Inc. held by you for our account in registered form. We hereby certify to you
that we are not a U.S. person as defined in Regulation S under the United States
Securities Act of 1933, as amended. The exact name of the beneficial holder that
the Securities are to be registered in is as follows:
This certificate does not constitute such certification on Form W-8 or its
equivalent as may be necessary to avoid imposition of withholding and/or back-up
withholding under U.S. federal tax law with respect to any payments of interest
on the Securities.
We irrevocably authorize you to produce this certificate or a copy hereof
to any interested party in any administrative or legal proceedings with respect
to the matters covered by this certificate.
[NAME]
Date: ___________, 1995*
By:___________________________
Signature
[to be completed by the
account
holder as, or as agent
for, the
beneficial owner(s) of
the Securities
to which this
certificate relates.]
* To be dated not earlier than the Closing Date.
Exhibit 10.13
AMENDED AND RESTATED MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 12th day of February, 1998 by and
among Thermo Electron Corporation (the "Parent") and those of its subsidiaries
that join in this Agreement by executing the signature page hereto (the
"Majority Owned Subsidiaries").
WITNESSETH:
WHEREAS, the majority owned subsidiaries and their wholly-owned
subsidiaries wish to enter into various financial transactions, such as
convertible or nonconvertible debt, loans, and equity offerings, and other
contractual arrangements with third parties (the "Underlying Obligations") and
may provide credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent acknowledge that
the Majority Owned Subsidiaries and their wholly-owned subsidiaries may be
unable to enter into many kinds of Underlying Obligations without a guarantee of
their performance thereunder from the Parent (a "Parent Guarantee") or without
obtaining Credit Support Obligations from other Majority Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their wholly-owned
subsidiaries may borrow funds from the Parent, and the Parent may loan funds or
provide credit to the Majority Owned Subsidiaries and their wholly-owned
subsidiaries, on a short-term and unsecured basis;
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier
Majority Owned Subsidiaries ") may themselves be majority owned
subsidiaries of other Majority Owned Subsidiaries ("First Tier
Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second Tier Majority
Owned Subsidiary's Underlying Obligations may be demanded and given without the
respective First Tier Majority Owned Subsidiary also issuing a guarantee of such
Underlying
Obligation;
WHEREAS, the Parent may itself make a loan or provide other credit to a
Second Tier Majority Owned Subsidiary or its wholly-owned subsidiaries under
circumstances where the applicable First Tier Majority Owned Subsidiary does not
provide such credit; and
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees and providing credit, and the Majority Owned Subsidiaries are willing
to consider continuing to provide Credit Support Obligations and to borrow
funds, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority
Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such
Underlying Obligation shall indemnify and save harmless the
Parent from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the
Parent as a result of the Parent Guarantee. If the
Underlying Obligation is issued by a Second Tier Majority
Owned Subsidiary or a wholly-owned subsidiary thereof, and
such Second Tier Majority Owned Subsidiary is unable to
fully indemnify the Parent (because of the poor financial
condition of such Second Tier Majority Owned Subsidiary, or
for any other reason), then the First Tier Majority Owned
Subsidiary that owns the majority of the stock of such
Second Tier Majority Owned Subsidiary shall indemnify and
save harmless the Parent from any remaining liability, cost,
expense or damage (including reasonable attorneys' fees)
suffered by the Parent as a result of the Parent Guarantee.
If a Majority Owned Subsidiary or a wholly-owned subsidiary
thereof provides a Credit Support Obligation for any
subsidiary of the Parent, other than a subsidiary of such
Majority Owned Subsidiary, and the beneficiary(ies) of the
Credit Support Obligation enforce the Credit Support
Obligation, or the Majority Owned Subsidiary or its
wholly-owned subsidiary performs under the Credit Support
Obligation for any other reason, then the Parent shall
indemnify and save harmless the Majority Owned Subsidiary or
its wholly-owned subsidiary, as applicable, from any
liability, cost, expense or damage (including reasonable
attorneys' fees) suffered by the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable, as a result
of the Credit Support Obligation. Without limiting the
foregoing, Credit Support Obligations include the deposit of
funds by a Majority Owned Subsidiary or a wholly-owned
subsidiary thereof in a credit arrangement with a banking
facility whereby such funds are available to the banking
facility as collateral for overdraft obligations of other
Majority Owned Subsidiaries or their subsidiaries also
participating in the credit arrangement with such banking
facility.
2. For purposes of this Agreement, the term "guarantee" shall
include not only a formal guarantee of an obligation, but
also any other arrangement where the Parent is liable for
the obligations of a Majority Owned Subsidiary or its
wholly-owned subsidiaries. Such other arrangements include
(a) representations, warranties and/or covenants or other
obligations joined in by the Parent, whether on a joint or
joint and several basis, for the benefit of the Majority
Owned Subsidiary or its wholly-owned subsidiaries and (b)
responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary or its
wholly-owned subsidiaries, including controlling person
liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary
of a Parent Guarantee is seeking to enforce such Parent
Guarantee, the Parent shall notify the Majority Owned
Subsidiary(s) obligated, either directly or indirectly
through a wholly-owned subsidiary, under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have
the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim
of such beneficiary, the Parent will not perform under the
relevant Parent Guarantee unless and until, in the Parent's
reasonable judgment, the Parent is obligated under the terms
of such Parent Guarantee to perform. Subject to the
foregoing, any dispute between a Majority Owned Subsidiary
or wholly-owned subsidiary thereof, as applicable, and a
beneficiary of a Parent Guarantee shall not affect such
Majority Owned Subsidiary's obligation to promptly indemnify
the Parent hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit
Support Obligation is seeking to enforce such Credit Support
Obligation, the Majority Owned Subsidiary shall notify the
Parent. The Parent shall have the right, at its own
expense, to contest the claim of such beneficiary. If the
Parent or the subsidiary of the Parent on whose behalf the
Credit Support Obligation is given is contesting the claim
of such beneficiary, the Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, will not
perform under the relevant Credit Support Obligation unless
and until, in the Majority Owned Subsidiary's reasonable
judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the
terms of such Credit Support Obligation to perform. Subject
to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support
Obligation was given, on the one hand, and a beneficiary of
a Credit Support Obligation, on the other, shall not affect
the Parent's obligation to promptly indemnify the Majority
Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
4. Upon the request of a Majority Owned Subsidiary, the Parent
may make loans and advances to the Majority Owned Subsidiary
or its wholly-owned subsidiaries on a short-term, revolving
credit basis, from time to time in such amounts as mutually
determined by the Parent and the Majority Owned Subsidiary.
The aggregate principal amount of such loans and advances
shall be reflected on the books and records of the Majority
Owned Subsidiary (or wholly-owned subsidiary, as applicable)
and the Parent. All such loans and advances shall be on an
unsecured basis unless specifically provided otherwise in
loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall pay interest on the aggregate unpaid principal amount
of such loans from time to time outstanding at a rate
("Interest Rate") equal to the rate of the Commercial Paper
Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five
business days of such Majority Owned Subsidiary's latest
fiscal quarter then ended, plus twenty-five (25) basis
points. The Interest Rate shall be adjusted on the first
business day of each fiscal quarter of such Majority Owned
Subsidiary pursuant to the Interest Rate formula contained
in the preceding sentence and shall be in effect for the
entirety of such fiscal quarter. Interest shall be computed
on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on
demand. The principal and accrued interest may be paid by
the Majority Owned Subsidiaries or their wholly-owned
subsidiaries, as applicable, at any time or from time to
time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then
to principal. Principal and interest shall be payable in
lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at
such other place as the Parent may designate from time to
time in writing to the Majority Owned Subsidiary. The
unpaid principal amount of any such borrowings, and accrued
interest thereon, shall become immediately due and payable,
without demand, upon the failure of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, the filing by or against the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any
jurisdiction), or the making by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable. In case any
payments of principal and interest shall not be paid when
due, the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, further promises to pay all cost
of collection, including reasonable attorneys' fees.
5. If the Parent makes a loan or provides other credit ("Credit
Extension") to a Second Tier Majority Owned Subsidiary, the
First Tier Majority Owned Subsidiary that owns the majority
of the stock of such Second Tier Majority Owned Subsidiary
hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent thereunder. Such
guaranty shall be enforced only after the Parent, in its
reasonable judgment, determines that the Second Tier
Majority Owned Subsidiary is unable to fully perform its
obligations under the Credit Extension. If the Parent
provides Credit Extension to a wholly-owned subsidiary of a
Second Tier Majority Owned Subsidiary, the Second Tier
Majority Owned Subsidiary hereby guarantees it wholly-owned
subsidiary's obligations to the Parent thereunder and the
First Tier Majority Owned Subsidiary that owns the majority
of the stock of such Second Tier Majority Owned Subsidiary
hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent hereunder. Such
guaranty by the First Tier Majority Owned Subsidiary shall
be enforced only after the Parent, in its reasonable
judgment, determines that the Second Tier Majority Owned
Subsidiary is unable to fully perform its guaranty
obligation hereunder.
6. All payments required to be made by a Majority Owned Subsidiary or its
wholly-owned subsidiaries, as applicable, shall be made within two days
after receipt of notice from the Parent. All payments required to be made
by the Parent shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
7. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts applicable to contracts made and
performed therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By: /s/ Melissa F. Riordan
Melissa F. Riordan
Title: Treasurer
THERMO REMEDIATION INC.
By: /s/ Jeffrey N. Powell
Jeffrey N. Powell
Title: President
Exhibit 10.14
AMENDED AND RESTATED MASTER GUARANTEE REIMBURSEMENT
AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 26th day of February, 1998, by
and among Thermo TerraTech Inc. (the "Parent") and those of its subsidiaries
that join in this Agreement by executing the signature page hereto (the
"Majority Owned Subsidiaries").
WITNESSETH:
WHEREAS, the majority owned subsidiaries and their wholly-owned
subsidiaries wish to enter into various financial transactions, such as
convertible or nonconvertible debt, loans, and equity offerings, and other
contractual arrangements with third parties (the "Underlying Obligations") and
may provide credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent acknowledge that
the Majority Owned Subsidiaries and their wholly-owned subsidiaries may be
unable to enter into many kinds of Underlying Obligations without a guarantee of
their performance thereunder from the Parent (a "Parent Guarantee") or without
obtaining Credit Support Obligations from other Majority Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their wholly-owned
subsidiaries may borrow funds from the Parent, and the Parent may loan funds or
provide credit to the Majority Owned Subsidiaries and their wholly-owned
subsidiaries, on a short-term and unsecured basis; and
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees and providing credit, and the Majority Owned Subsidiaries are willing
to consider continuing to provide Credit Support Obligations and to borrow
funds, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority
Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such
Underlying Obligation shall indemnify and save harmless the
Parent from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the
Parent as a result of the Parent Guarantee. If a Majority
Owned Subsidiary or a wholly-owned subsidiary thereof
provides a Credit Support Obligation for any subsidiary of
the Parent, other than a subsidiary of such Majority Owned
Subsidiary, and the beneficiary(ies) of the Credit Support
Obligation enforce the Credit Support Obligation, or the
Majority Owned Subsidiary or its wholly-owned subsidiary
performs under the Credit Support Obligation for any other
reason, then the Parent shall indemnify and save harmless
the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, from any liability, cost, expense
or damage (including reasonable attorneys' fees) suffered by
the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, as a result of the Credit Support
Obligation. Without limiting the foregoing, Credit Support
Obligations include the deposit of funds by a Majority Owned
Subsidiary or a wholly-owned subsidiary thereof in a credit
arrangement with a banking facility whereby such funds are
available to the banking facility as collateral for
overdraft obligations of other Majority Owned Subsidiaries
or their subsidiaries also participating in the credit
arrangement with such banking facility.
2. For purposes of this Agreement, the term "guarantee" shall
include not only a formal guarantee of an obligation, but
also any other arrangement where the Parent is liable for
the obligations of a Majority Owned Subsidiary or its
wholly-owned subsidiaries. Such other arrangements include
(a) representations, warranties and/or covenants or other
obligations joined in by the Parent, whether on a joint or
joint and several basis, for the benefit of the Majority
Owned Subsidiary or its wholly-owned subsidiaries and (b)
responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary or its
wholly-owned subsidiaries, including controlling person
liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary
of a Parent Guarantee is seeking to enforce such Parent
Guarantee, the Parent shall notify the Majority Owned
Subsidiary(s) obligated, either directly or indirectly
through a wholly-owned subsidiary, under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have
the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim
of such beneficiary, the Parent will not perform under the
relevant Parent Guarantee unless and until, in the Parent's
reasonable judgment, the Parent is obligated under the terms
of such Parent Guarantee to perform. Subject to the
foregoing, any dispute between a Majority Owned Subsidiary
or wholly-owned subsidiary thereof, as applicable, and a
beneficiary of a Parent Guarantee shall not affect such
Majority Owned Subsidiary's obligation to promptly indemnify
the Parent hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit
Support Obligation is seeking to enforce such Credit Support
Obligation, the Majority Owned Subsidiary shall notify the
Parent. The Parent shall have the right, at its own
expense, to contest the claim of such beneficiary. If the
Parent or the subsidiary of the Parent on whose behalf the
Credit Support Obligation is given is contesting the claim
of such beneficiary, the Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, will not
perform under the relevant Credit Support Obligation unless
and until, in the Majority Owned Subsidiary's reasonable
judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the
terms of such Credit Support Obligation to perform. Subject
to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support
Obligation was given, on the one hand, and a beneficiary of
a Credit Support Obligation, on the other, shall not affect
the Parent's obligation to promptly indemnify the Majority
Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
4. Upon the request of a Majority Owned Subsidiary, the Parent
may make loans and advances to the Majority Owned Subsidiary
or its wholly-owned subsidiaries on a short-term, revolving
credit basis, from time to time in such amounts as mutually
determined by the Parent and the Majority Owned Subsidiary.
The aggregate principal amount of such loans and advances
shall be reflected on the books and records of the Majority
Owned Subsidiary (or wholly-owned subsidiary, as applicable)
and the Parent. All such loans and advances shall be on an
unsecured basis unless specifically provided otherwise in
loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall pay interest on the aggregate unpaid principal amount
of such loans from time to time outstanding at a rate
("Interest Rate") equal to the rate of the Commercial Paper
Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five
business days of such Majority Owned Subsidiary's latest
fiscal quarter then ended, plus twenty-five (25) basis
points. The Interest Rate shall be adjusted on the first
business day of each fiscal quarter of such Majority Owned
Subsidiary pursuant to the Interest Rate formula contained
in the preceding sentence and shall be in effect for the
entirety of such fiscal quarter. Interest shall be computed
on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on
demand. The principal and accrued interest may be paid by
the Majority Owned Subsidiaries or their wholly-owned
subsidiaries, as applicable, at any time or from time to
time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then
to principal. Principal and interest shall be payable in
lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at
such other place as the Parent may designate from time to
time in writing to the Majority Owned Subsidiary. The
unpaid principal amount of any such borrowings, and accrued
interest thereon, shall become immediately due and payable,
without demand, upon the failure of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, the filing by or against the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any
jurisdiction), or the making by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable. In case any
payments of principal and interest shall not be paid when
due, the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, further promises to pay all cost
of collection, including reasonable attorneys' fees.
5. All payments required to be made by a Majority Owned Subsidiary or its
wholly-owned subsidiaries, as applicable, shall be made within two days
after receipt of notice from the Parent. All payments required to be made
by the Parent shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
6. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts applicable to contracts made and
performed therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO TERRATECH INC.
By: /s/ John P. Appleton
John P. Appleton
Title: President
THERMO REMEDIATION INC.
By: /s/ Jeffrey N. Powell
Jeffrey N. Powell
Title: President
Exhibit 10.17
THERMO REMEDIATION INC.
RESTATED STOCK HOLDING ASSISTANCE PLAN
SECTION 1. Purpose.
The purpose of this Plan is to benefit Thermo Remediation Inc. (the
"Company") and its stockholders by encouraging Key Employees to acquire and
maintain share ownership in the Company, by increasing such employees'
proprietary interest in promoting the growth and performance of the Company and
its subsidiaries and by providing for the implementation of the Stock Holding
Policy.
SECTION 2. Definitions.
The following terms, when used in the Plan, shall have the meanings set
forth below:
Committee: The Human Resources Committee of the Board of
Directors of the Company as appointed from time to time.
Common Stock: The common stock of the Company and any
successor thereto.
Company: Thermo Remediation Inc., a Delaware corporation.
Stock Holding Policy: The Stock Holding Policy of the
Company, as adopted by the Committee and as in effect from time
to time.
Key Employee: Any employee of the Company or any of its subsidiaries,
including any officer or member of the Board of Directors who is also an
employee, as designated by the Committee, and who, in the judgment of the
Committee, will be in a position to contribute significantly to the attainment
of the Company's strategic goals and long-term growth and prosperity.
Loans: Loans extended to Key Employees by the Company
pursuant to this Plan.
Plan: Thermo Remediation Inc. Stock Holding Assistance
Plan, as amended from time to time.
SECTION 3. Administration.
The Plan and the Stock Holding Policy shall be administered by the
Committee, which shall have authority to interpret the Plan and the Stock
Holding Policy and, subject to their provisions, to prescribe, amend and rescind
any rules and regulations and to make all other determinations necessary or
desirable for the administration thereof. The Committee's interpretations and
decisions with regard to the Plan and the Stock Holding Policy and such rules
and regulations as may be established thereunder shall be final and conclusive.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or the Stock Holding Policy, or in any Loan in the
manner and to the extent the Committee deems desirable to carry it into effect.
No member of the Committee shall be liable for any action or omission in
connection with the Plan or the Stock Holding Policy that is made in good faith.
SECTION 4. Loans and Loan Limits.
The Committee has determined that the provision of Loans from time to time
to Key Employees in such amounts as to cause such Key Employees to comply with
the Stock Holding Policy is, in the judgment of the Committee, reasonably
expected to benefit the Company and authorizes the Company to extend Loans from
time to time to Key Employees in such amounts as may be requested by such Key
Employees in order to comply with the Stock Holding Policy. Such Loans may be
used solely for the purpose of acquiring Common Stock (other than upon the
exercise of stock options or under employee stock purchase plans) in open market
transactions or from the Company.
Each Loan shall be full recourse and evidenced by a non-interest bearing
promissory note substantially in the form attached hereto as Exhibit A (the
"Note") and maturing in accordance with the provisions of Section 6 hereof, and
containing such other terms and conditions, which are not inconsistent with the
provisions of the Plan and the Stock Holding Policy, as the Committee shall
determine in its sole and absolute discretion.
SECTION 5. Federal Income Tax Treatment of Loans.
For federal income tax purposes, interest on Loans shall be imputed on any
interest free Loan extended under the Plan. A Key Employee shall be deemed to
have paid the imputed interest to the Company and the Company shall be deemed to
have paid said imputed interest back to the Key Employee as additional
compensation. The deemed interest payment shall be taxable to the Company as
income, and may be deductible to the Key Employee to the extent allowable under
the rules relating to investment interest. The deemed compensation payment to
the Key Employee shall be taxable to the employee and deductible to the Company,
but shall also be subject to employment taxes such as FICA and FUTA.
SECTION 6. Maturity of Loans.
Each Loan to a Key Employee hereunder shall be due and payable on demand
by the Company. If no such demand is made, then each Loan shall mature and the
principal thereof shall become due and payable on the fifth anniversary of the
date of the Loan, provided that the Committee may, in its sole and absolute
discretion, authorize such other maturity and repayment schedule as the
Committee may determine. Each Loan shall also become immediately due and payable
in full, without demand, upon the occurrence of any of the events set forth in
the Note; provided that the Committee may, in its sole and absolute discretion,
authorize an extension of the time for repayment of a Loan upon such terms and
conditions as the Committee may determine.
SECTION 7. Amendment and Termination of the Plan.
The Committee may from time to time alter or amend the Plan or the Stock
Holding Policy in any respect, or terminate the Plan or the Stock Holding Policy
at any time. No such amendment or termination, however, shall alter or otherwise
affect the terms and conditions of any Loan then outstanding to Key Employee
without such Key Employee's written consent, except as otherwise provided herein
or in the promissory note evidencing such Loan.
SECTION 8. Miscellaneous Provisions.
(a) No employee or other person shall have any claim or right to receive a
Loan under the Plan, and no employee shall have any right to be retained in the
employ of the Company due to his or her participation in the Plan.
(b) No Loan shall be made hereunder unless counsel for the Company shall
be satisfied that such Loan will be in compliance with applicable federal, state
and local laws.
(c) The expenses of the Plan shall be borne by the Company.
(d) The Plan shall be unfunded, and the Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the making of any Loan under the Plan.
(e) Except as otherwise provided in Section 7 hereof, by accepting any
Loan under the Plan, each Key Employee shall be conclusively deemed to have
indicated his acceptance and ratification of, and consent to, any action taken
under the Plan or the Stock Holding Policy by the Company, the Board of
Directors of the Company or the Committee.
(f) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Loans hereunder, as may be
required by any applicable statute, rule or regulation.
SECTION 9. Effective Date.
The Plan and the Stock Holding Policy shall become effective upon approval
and adoption by the Committee.
DOC # 1116
THN STOCK HOLDING ASSISTANCE PLAN
<PAGE>
EXHIBIT A TO STOCK HOLDING ASSISTANCE PLAN
THERMO REMEDIATION INC.
Promissory Note
$---------
Dated:____________
For value received, ________________, an individual whose residence is
located at _______________________ (the "Employee"), hereby promises to pay to
Thermo Remediation Inc. (the "Company"), or assigns, ON DEMAND, but in any case
on or before [insert date which is the fifth anniversary of date of issuance]
(the "Maturity Date"), the principal sum of [loan amount in words] ($_______),
or such part thereof as then remains unpaid, without interest. Principal shall
be payable in lawful money of the United States of America, in immediately
available funds, at the principal office of the Company or at such other place
as the Company may designate from time to time in writing to the Employee.
Unless the Company has already made a demand for payment in full of this
Note, the Employee agrees to repay to the Company from the Employee's annual
cash incentive compensation (referred to as bonus), beginning with the first
such bonus payment to occur after the date of this Note and on each of the next
four bonus payment dates occurring prior to the Maturity Date, such amount as
may be designated by the Company. Any amount remaining unpaid under this Note,
if no demand has been made by the Company, shall be due and payable on the
Maturity Date.
This Note may be prepaid at any time or from time to time, in whole or in
part, without any premium or penalty. The Employee acknowledges and agrees that
the Company has advanced to the Employee the principal amount of this Note
pursuant to the Company's Stock Holding Assistance Plan, and that all terms and
conditions of such Plan are incorporated herein by reference.
The unpaid principal amount of this Note shall be and become immediately
due and payable without notice or demand, at the option of the Company, upon the
occurrence of any of the following events:
(a) the termination of the Employee's employment with the Company,
with or without cause, for any reason or for no reason;
(b) the death or disability of the Employee;
(c) the failure of the Employee to pay his or her debts as they
become due, the insolvency of the Employee, the filing by or against the
Employee of any petition under the United States Bankruptcy Code (or the
filing of any similar petition under the insolvency law of any
jurisdiction), or the making by the Employee of an assignment or trust
mortgage for the benefit of creditors or the appointment of a receiver,
custodian or similar agent with respect to, or the taking by any such
person of possession of, any property of the Employee; or
(d) the issuance of any writ of attachment, by trustee process or
otherwise, or any restraining order or injunction not removed, repealed or
dismissed within thirty (30) days of issuance, against or affecting the
person or property of the Employee or any liability or obligation of the
Employee to the Company.
In case any payment herein provided for shall not be paid when due, the
Employee further promises to pay all costs of collection, including all
reasonable attorneys' fees.
No delay or omission on the part of the Company in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Company, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Employee hereby waives presentment, demand, notice of prepayment, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The undersigned hereby assents
to any indulgence and any extension of time for payment of any indebtedness
evidenced hereby granted or permitted by the Company.
This Note has been made pursuant to the Company's Stock Holding Assistance
Plan and shall be governed by and construed in accordance with, such Plan and
the laws of the State of Delaware and shall have the effect of a sealed
instrument.
-------------------------------
Employee Name: _________________
- ------------------------
Witness
DOC # 1116
THN STOCK HOLDING ASSISTANCE PLAN
Exhibit 13
THERMO REMEDIATION INC.
Consolidated Financial Statements
Fiscal 1998
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Consolidated Statement of Operations
Year Ended
April 4, March 29, March 30,
(In thousands except per share amounts) 1998 1997 1996
- --------------------------------------------------------------------------
Revenues (Note 11) $128,409 $114,849 $ 66,957
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 114,011 96,901 49,114
Selling, general, and administrative
expenses (Note 8) 13,630 12,058 8,903
New business development expenses 1,148 1,040 1,084
Nonrecurring costs (Note 12) - 7,800 -
-------- -------- --------
128,789 117,799 59,101
-------- -------- --------
Operating Income (Loss) (380) (2,950) 7,856
Interest Income 970 1,896 2,539
Interest Expense (includes $259, $259,
and $295 to related party; Note 6) (2,209) (2,251) (1,999)
Gain on Sale of Unconsolidated Subsidiary
(Note 13) 3,012 - -
Other Income, Net (Note 2) 209 136 180
Equity in Earnings of Unconsolidated
Subsidiary (Note 13) 174 865 -
-------- -------- --------
Income (Loss) Before Provision for
Income Taxes 1,776 (2,304) 8,576
Provision for Income Taxes (Note 5) 1,536 377 3,132
-------- -------- --------
Net Income (Loss) $ 240 $ (2,681) $ 5,444
======== ======== ========
Earnings (Loss) per Share (Note 14):
Basic $ .02 $ (.21) $ .44
======== ======== ========
Diluted $ .02 $ (.21) $ .42
======== ======== ========
Weighted Average Shares (Note 14):
Basic 12,609 12,821 12,394
======== ======== ========
Diluted 12,758 12,821 12,984
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Consolidated Balance Sheet
April 4, March 29,
(In thousands) 1998 1997
- --------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents (includes $8,000
and $19,674 under repurchase agreement with
affiliated company) $ 8,912 $ 19,703
Available-for-sale investments, at quoted
market value (amortized cost of $2,008 and
$4,096; Note 2) 2,003 4,101
Accounts receivable, less allowances of $1,690
and $1,557 30,529 21,631
Unbilled contract costs and fees 8,154 5,685
Prepaid and refundable income taxes (Note 5) 2,256 3,348
Prepaid expenses 2,257 1,820
Due from parent company and Thermo Electron 667 321
-------- --------
54,778 56,609
-------- --------
Property, Plant, and Equipment, at Cost, Net 37,011 36,514
-------- --------
Other Assets (Note 13) 10,954 13,403
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Notes 3 and 12) 37,568 29,588
-------- --------
$140,311 $136,114
======== ========
3
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Consolidated Balance Sheet (continued)
April 4, March 29,
(In thousands except share amounts) 1998 1997
- --------------------------------------------------------------------------
Liabilities and Shareholders' Investment
Current Liabilities:
Accounts payable $ 10,936 $ 8,462
Accrued payroll and employee benefits 4,875 3,566
Deferred revenue 3,374 1,391
Billings in excess of revenues earned 1,277 879
Other accrued expenses 4,375 3,351
-------- --------
24,837 17,649
-------- --------
Deferred Income Taxes (Note 5) 407 3,035
-------- --------
Subordinated Convertible Obligations (includes
$5,650 of related-party debt; Note 6) 40,600 40,600
-------- --------
Commitments and Contingencies (Note 7)
Shareholders' Investment (Notes 3, 4, and 9):
Common stock, $.01 par value, 50,000,000
shares authorized; 14,019,918 and 13,388,073
shares issued 140 134
Capital in excess of par value 89,103 85,402
Accumulated deficit (5,592) (3,328)
Treasury stock at cost, 1,089,085 and 823,741
shares (9,181) (7,382)
Net unrealized gain (loss) on available-for-sale
investments (Note 2) (3) 4
-------- --------
74,467 74,830
-------- --------
$140,311 $136,114
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Consolidated Statement of Cash Flows
Year Ended
April 4, March 29, March 30,
(In thousands) 1998 1997 1996
- ----------------------------------------------------------------------------
Operating Activities:
Net income (loss) $ 240 $ (2,681) $ 5,444
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Nonrecurring costs (Note 12) - 7,800 -
Depreciation and amortization 7,278 6,815 6,061
Gain on sale of unconsolidated
subsidiary (Note 13) (3,012) - -
Equity in earnings of unconsolidated
subsidiary (Note 13) (174) (865) -
Deferred income tax expense (benefit) (1,243) 602 (858)
Gain on sale of investments (Note 2) - (136) (180)
Provision for losses on accounts
receivable 193 162 (184)
Other noncash items (263) - -
Changes in current accounts,
excluding the effects of
acquisitions:
Accounts receivable and unbilled
contract costs and fees (9,284) (6,008) 4,755
Other current assets 529 (3,055) 860
Accounts payable 998 3,558 505
Other current liabilities (1,030) (1,685) (5,454)
Due to (from) parent company and
Thermo Electron (346) 243 (3,570)
-------- -------- --------
Net Cash Provided By (Used in) Operating
Activities (6,114) 4,750 7,379
-------- -------- --------
Investing Activities:
Acquisitions, net of cash acquired
(Note 3) (5,163) (1,681) (17,713)
Proceeds from sale and maturities of
available-for-sale investments 2,088 20,908 37,795
Purchases of available-for-sale
investments - (15,753) (30,863)
Purchases of property, plant, and
equipment (6,318) (6,036) (9,489)
Proceeds from sale of unconsolidated
subsidiary (Note 13) 8,825 - -
Increase in other assets (1,119) (788) (1,090)
Proceeds from sale of property, plant,
and equipment 455 113 579
Other - - (130)
-------- -------- --------
Net Cash Used in Investing Activities $ (1,232) $ (3,237) $(20,911)
-------- -------- --------
5
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Consolidated Statement of Cash Flows (continued)
Year Ended
April 4, March 29, March 30,
(In thousands) 1998 1997 1996
- ----------------------------------------------------------------------------
Financing Activities:
Net proceeds from issuance of
subordinated convertible debentures
(Note 6) $ - $ - $ 36,889
Repurchases of Company common stock (3,055) (8,317) -
Net proceeds from issuance of Company
common stock (Note 9) 179 313 6,908
Repayment of obligations to Thermo
Electron - - (4,000)
Dividends paid (Note 9) (751) (847) (810)
Other 182 794 -
-------- -------- --------
Net Cash Provided by (Used in) Financing
Activities (3,445) (8,057) 38,987
-------- -------- --------
Increase (Decrease) in Cash and Cash
Equivalents (10,791) (6,544) 25,455
Cash and Cash Equivalents at Beginning
of Year 19,703 26,247 792
-------- -------- --------
Cash and Cash Equivalents at End of Year $ 8,912 $ 19,703 $ 26,247
======== ======== ========
Cash Paid For:
Interest $ 1,996 $ 2,031 $ 1,060
Income taxes $ 2,113 $ 1,490 $ 2,809
Noncash Activities:
Fair value of assets of acquired
companies $ 13,772 $ 6,961 $ 39,349
Cash paid for acquired companies (5,665) (1,705) (18,462)
Issuance of common stock, stock options,
and warrants for acquired companies (2,850) (2,006) (11,210)
-------- -------- --------
Liabilities assumed of acquired
companies $ 5,257 $ 3,250 $ 9,677
======== ======== ========
Dividends reinvested in Company common
stock (Note 9) $ 1,753 $ 1,710 $ 1,681
Issuance of common stock to parent
company for acquired companies $ - $ - $ 7,713
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Consolidated Statement of Shareholders' Investment
Year Ended
April 4, March 29, March 30,
(In thousands) 1998 1997 1996
- -------------------------------------------------------------------------
Common Stock, $.01 Par Value
Balance at beginning of year $ 134 $ 128 $ 118
Dividends declared and partially
reinvested in Company common
stock (Note 9) 2 2 1
Issuance of stock under employees' and
directors' stock plans - 1 2
Net proceeds from private placement
of common stock (Note 9) - - 5
Issuance of common stock for acquired
companies (Note 3) 4 3 2
------- ------- -------
Balance at end of year 140 134 128
------- ------- -------
Capital in Excess of Par Value
Balance at beginning of year 85,402 81,353 61,333
Dividends declared and partially
reinvested in Company common
stock (Note 9) 1,751 1,708 1,680
Activity under employees' and
directors' stock plans (359) (654) 312
Tax benefit related to employees'
and directors' stock plans 181 198 200
Net proceeds from private placement
of common stock (Note 9) - - 6,620
Issuance of common stock for acquired
companies (Note 3) 2,128 2,003 11,208
Capital contribution from parent
company - 794 -
------- ------- -------
Balance at end of year 89,103 85,402 81,353
------- ------- -------
Retained Earnings (Accumulated Deficit)
Balance at beginning of year (3,328) 1,910 (1,043)
Net income (loss) 240 (2,681) 5,444
Dividends declared and partially
reinvested in Company common
stock (Note 9) (2,504) (2,557) (2,491)
------- ------- -------
Balance at end of year $(5,592) $(3,328) $ 1,910
------- ------- -------
7
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Consolidated Statement of Shareholders' Investment (continued)
Year Ended
April 4, March 29, March 30,
(In thousands) 1998 1997 1996
- -------------------------------------------------------------------------
Treasury Stock
Balance at beginning of year $(7,382) $ (31) $ -
Activity under employees' and
directors' stock plans 538 966 (31)
Repurchases of Company common stock (3,055) (8,317) -
Issuance of common stock for acquired
companies (Note 3) 718 - -
------- ------- -------
Balance at end of year (9,181) (7,382) (31)
------- ------- -------
Net Unrealized Gain (Loss) on Available-
for-sale Investments
Balance at beginning of year 4 (8) (88)
Change in net unrealized gain (loss)
on available-for-sale investments
(Note 2) (7) 12 80
------- ------- -------
Balance at end of year (3) 4 (8)
------- ------- -------
Total Shareholders' Investment $74,467 $74,830 $83,352
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Thermo Remediation Inc. (the Company) is a national provider of
environmental-liability management services and related consulting
services, primarily in five areas: industrial remediation, nuclear
remediation, waste-fluids collection and recycling, soil remediation, and
environmental-management and information-technology systems.
Principles of Consolidation and Relationship with Thermo TerraTech Inc.
The Company was incorporated in November 1991 and commenced
operation in June 1992. As of April 4, 1998, Thermo TerraTech Inc. owned
8,874,551 shares of the Company's common stock, representing 69% of such stock
outstanding. Thermo TerraTech is an 82%-owned subsidiary of Thermo Electron
Corporation. As of April 4, 1998, Thermo Electron owned 193,900 shares of the
Company's common stock, representing 1.5% of such stock outstanding.
The accompanying financial statements include the accounts of the Company
and its subsidiaries. All material intercompany accounts and transactions have
been eliminated. The Company accounted for its investment in a business in which
it owned 50% through October 1997 using the equity method (Note 13).
Presentation
Certain amounts in prior years have been reclassified to conform to the
fiscal 1998 financial statement presentation.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest March 31.
References to fiscal 1998, 1997, and 1996 are for the fiscal years ended April
4, 1998, March 29, 1997, and March 30, 1996, respectively. Fiscal 1998 included
53 weeks; fiscal 1997 and 1996 each included 52 weeks.
Revenue Recognition
Revenues from certain environmental-liability management and consulting
services are recognized upon completion of services rendered. The Company's
industrial- and nuclear-remediation businesses also perform services pursuant to
long-term contracts. Revenues and profits on substantially all long-term
contracts are recognized using the percentage-of-completion method. Revenues
recorded under the percentage-of-completion method were $77,052,000,
$65,217,000, and $2,278,000 in fiscal 1998, 1997, and 1996, respectively. The
percentage of completion is determined by relating either the actual costs or
actual labor incurred to date to management's estimate of total costs or total
labor, respectively, to be incurred on each contract. If a loss is projected on
any contract in process, a provision is made currently for the entire loss. The
Company's contracts generally provide for billing of customers upon the
attainment of certain milestones specified in each contract. Revenues earned on
contracts-in-process in excess of billings are classified as unbilled contract
costs and fees in the accompanying balance sheet. There are no significant
amounts included in the accompanying balance sheet that are not expected to be
recovered from
9
<PAGE>
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
existing contracts at current contract values, or that are not expected to be
collected within one year. Revenues from soil-remediation services are
recognized as soil is processed, and the Company bills customers upon receipt of
the contaminated soil at its remediation centers. Amounts billed in excess of
revenues recognized are classified as billings in excess of revenues earned in
the accompanying balance sheet.
New Business Development Expenses
Costs classified as new business development expenses in the accompanying
statement of operations represent costs associated with the development of the
Company's environmental-services businesses.
Stock-based Compensation Plans
The Company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its stock-based compensation plans (Note 4). Accordingly, no
accounting recognition is given to stock options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to equity.
Income Taxes
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 its tax returns.
Earnings per Share
During the quarter ended January 3, 1998, the Company adopted SFAS No. 128,
"Earnings per Share" (Note 14). As a result, all previously reported earnings
per share have been restated; however, basic and diluted earnings per share
equals the Company's previously reported primary and fully diluted earnings per
share, respectively, for the periods presented. Basic earnings per share have
been computed by dividing net income by the weighted average number of shares
outstanding during the year. Except where the result would be antidilutive,
diluted earnings per share have been computed assuming the conversion of
convertible obligations and the elimination of the related interest expense, and
the exercise of stock options and warrants, as well as their related income tax
effects.
Cash and Cash Equivalents
At fiscal year-end 1998 and 1997, $8,000,000 and $19,674,000, respectively,
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
10
<PAGE>
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Electron collateralizes with investments principally consisting of corporate
notes, commercial paper, U.S. government-agency securities, money market funds,
and other marketable securities, in the amount of at least 103% of such
obligation. The Company's funds subject to the repurchase agreement are readily
convertible into cash by the Company. The repurchase agreement earns a rate
based on the 90-day Commercial Paper Composite Rate plus 25 basis points, set at
the beginning of each quarter. Cash equivalents are carried at cost, which
approximates fair market value.
Property, Plant, and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization primarily using the straight-line method over the
estimated useful lives of the property as follows: buildings and improvements, 7
to 30 years; machinery and equipment, 2 to 12 years; and leasehold improvements,
the shorter of the term of the lease or the life of the asset. Soil-remediation
units, which accounted for 36% and 41% of the Company's machinery and equipment,
net, at fiscal year-end 1998 and 1997, respectively, are depreciated based on an
hourly rate that is computed by estimating total hours of operation for each
unit. Property, plant, and equipment consists of the following:
(In thousands) 1998 1997
- ---------------------------------------------------------------------------
Land $ 4,554 $ 4,592
Buildings and Leasehold Improvements 20,108 17,833
Machinery and Equipment 32,378 32,533
------- -------
57,040 54,958
Less: Accumulated Depreciation and Amortization 20,029 18,444
------- -------
$37,011 $36,514
======= =======
Other Assets
Other assets in the accompanying balance sheet includes the costs of
acquired technology and other specifically identifiable intangible assets that
are being amortized using the straight-line method over their estimated useful
lives, which range from 5 to 12 years. These assets were $5,200,000 and
$6,137,000, net of accumulated amortization of $5,706,000 and $4,647,000, at
fiscal year-end 1998 and 1997, respectively.
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired
companies is amortized using the straight-line method over periods ranging from
20 to 40 years. Accumulated amortization was $2,836,000 and $1,899,000 at fiscal
year-end 1998 and 1997, respectively. The Company assesses the future useful
life of this asset whenever events or changes
11
<PAGE>
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
in circumstances indicate that the current useful life has diminished (Note 12).
The Company considers the future undiscounted cash flows of the acquired
companies in assessing the recoverability of this asset. If impairment has
occurred, any excess of carrying value over fair value is recorded as a loss.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Available-for-sale Investments
In accordance with SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," the Company's debt 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 as a component of shareholders' investment titled
"Net unrealized gain (loss) on available-for-sale investments."
Available-for-sale investments in the accompanying fiscal 1998 balance
sheet represents corporate bonds with contractual maturities of one year or
less. The difference between the market value and the cost basis of
available-for-sale investments was $5,000 of gross unrealized losses and $5,000
of gross unrealized gains at fiscal year-end 1998 and 1997, respectively.
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 operations. Gains on sales of investments resulted
from gross realized gains of $145,000 and $180,000 in fiscal 1997 and 1996,
respectively, and gross realized losses of $9,000 in fiscal 1997, related to the
sale of available-for-sale investments.
3. Acquisitions
In November 1997, the Company acquired Benchmark Environmental Corporation
for 85,106 shares of the Company's common stock, valued at $450,000, and
$2,900,000 in cash. The shares of the Company's common stock issued in
connection with the acquisition are subject to certain restrictions on transfer.
The restrictions lapse with respect to one-third of the shares on each of the
second, third, and fourth anniversaries of the closing. Benchmark provides
nuclear-remediation and waste-management services to government agencies and
private industry.
12
<PAGE>
3. Acquisitions (continued)
In August 1997, the Company, through its Remediation Technologies, Inc.
(RETEC) subsidiary, acquired substantially all of the assets, subject to certain
liabilities, of RPM Systems, Inc. for 374,507 shares of the Company's common
stock, valued at $2,400,000, and $600,000 in cash. Certain shares of the
Company's common stock issued in connection with the acquisition are subject to
restrictions on transfer. Thirty percent of such shares have no transfer
restrictions; while the restrictions lapse with respect to one half of the
remaining shares on each of the second and third anniversaries of the closing.
RPM provides consulting services in the areas of environmental management,
planning, and information technology.
In May 1997, the Company, also through RETEC, acquired substantially all of
the assets, subject to certain liabilities, of TriTechnics Corporation for
$1,600,000 in cash. TriTechnics provides comprehensive consulting and remedial
services at refinery and chemical-plant sites.
During fiscal 1997, the Company also acquired an additional business for
$565,000 in cash.
In September 1996, the Company acquired IEM Sealand Corporation for 311,040
shares of the Company's common stock, valued at $2,006,000, and $1,705,000 in
cash. The shares of the Company's common stock issued in connection with the
acquisition are subject to certain restrictions on transfer. The restrictions
lapse with respect to one-third of the shares on each of the third, fourth, and
fifth anniversaries of the closing. IEM Sealand performs cleanups of hazardous
waste sites for government and industry as a prime construction contractor and
completes predesigned remedial action contracts at sites containing hazardous,
toxic, and radioactive wastes.
In December 1995, the Company acquired RETEC, a provider of integrated
environmental services such as the remediation of industrial sites contaminated
with organic wastes and residues. The purchase price of $29,672,000 consisted of
$18,462,000 in cash, 227,250 shares of the Company's common stock, and 75,750
warrants to purchase shares of the Company's common stock at $14.85 per share,
valued in the aggregate at $3,716,000, and approximately $7,494,000 attributable
to the conversion of outstanding RETEC stock options of equivalent intrinsic
value at the date of the acquisition.
In June 1995, the Company acquired Eberline Analytical Corporation (which
conducts business under the name Thermo NUtech) from Thermo TerraTech in
exchange for 1,583,360 shares of the Company's common stock, with a fair market
value of $24,740,000 as of such date. Thermo NUtech provides services to remove
radioactive contaminants from sand, gravel, and soil, as well as health physics
services, radiochemistry laboratory services, radiation dosimetry services,
radiation instrument calibration and repair services, and radiation source
production. During the fiscal year ended April 1, 1995, Thermo NUtech's assets
were held in a joint venture (the Joint Venture) between Thermo TerraTech and
Thermo Instrument Systems Inc. Thermo TerraTech's financial statements
consolidated the assets and liabilities of the Joint Venture and its
13
<PAGE>
3. Acquisitions (continued)
results of operations, net of minority interest related to Thermo Instrument's
allocable share of operations. Effective April 2, 1995, Thermo TerraTech and
Thermo Instrument agreed to dissolve the Joint Venture and Thermo TerraTech
purchased the businesses formerly operated by the Joint Venture from Thermo
Instrument.
Because the Company and Thermo NUtech were deemed for accounting purposes
to be under control of their common majority owner, Thermo TerraTech, the
transaction has been accounted for at historical cost in a manner similar to a
pooling-of-interests, with the accounting followed by the Company conforming to
that of Thermo TerraTech. Accordingly, all historical financial information
presented, except for weighted average shares, was restated to reflect the
acquisition of Thermo NUtech.
The 1,583,360 shares of the Company's common stock issued in exchange for
Thermo NUtech are considered to be outstanding as of April 2, 1995, for purposes
of computing weighted average shares.
These acquisitions, except for Thermo NUtech, have been accounted for using
the purchase method of accounting and their results of operations have been
included in the accompanying financial statements from their respective dates of
acquisition. The aggregate cost of the acquisitions exceeded the estimated fair
value of the acquired net assets by $33,550,000, which is being amortized over
periods ranging from 20 to 40 years. Allocation of the purchase price for these
acquisitions was based on estimates of the fair value of the net assets acquired
and, for acquisitions completed in fiscal 1998, is subject to adjustment upon
finalization of the purchase price allocation. The Company has gathered no
information that indicates the final purchase price allocation will differ
materially from preliminary estimates.
Based on unaudited data, the following table presents selected financial
information for the Company and RETEC on a pro forma basis, assuming the
companies had been combined since the beginning of fiscal 1996. The effect on
the Company's financial statements of the acquisitions not included in the pro
forma data was not material to the Company's results of operations.
(In thousands except per share amounts) 1996
- -------------------------------------------------------------------------
Revenues $98,183
Net Income 5,855
Earnings per Share:
Basic .47
Diluted .45
The pro forma results are not necessarily indicative of future operations
or the actual results that would have occurred had the acquisition of RETEC been
made at the beginning of fiscal 1996.
14
<PAGE>
4. Employee Benefit Plans
Stock-based Compensation Plans
Stock Option Plans
The Company has an equity incentive plan for key employees, directors, and
others, adopted in October 1993. In February 1997, the Company also adopted an
employee equity incentive plan, similar to its equity incentive plan adopted in
1993, except that neither executive officers nor directors are eligible to
participate in the plan. Both plans permit the grant of a variety of stock and
stock-based awards as determined by the human resources committee of the
Company's Board of Directors (the Board Committee), including restricted stock,
stock options, stock bonus shares, or performance-based shares. To date, only
nonqualified stock options have been awarded under these plans. The option
recipients and the terms of options granted under these plans are determined by
the Board Committee. Generally, options granted to date are exercisable
immediately, but are subject to certain transfer restrictions and the right of
the Company to repurchase shares issued upon exercise of the options at the
exercise price, upon certain events. The restrictions and repurchase rights
generally lapse ratably over a five to ten year period, depending on the term of
the option, which may range from seven to twelve years. Nonqualified stock
options may be granted at any price determined by the Board Committee, although
incentive stock options must be granted at not less than the fair market value
of the stock on the date of grant. The Company also has a directors' stock
option plan, adopted in October 1993, which provides for the grant of stock
options to outside directors pursuant to a formula approved by the Company's
shareholders. Options awarded under this plan are exercisable six months after
the date of grant and expire three to seven years after the date of grant. In
addition to the Company's stock-based compensation plans, certain officers and
key employees may also be granted options under the stock-based compensation
plans of Thermo Electron or Thermo TerraTech.
In connection with the acquisition of RETEC in December 1995, the Company
assumed certain outstanding options granted under RETEC's nonqualified and
incentive stock option plans. Such options were converted into options to
purchase shares of the Company's common stock, in accordance with the original
terms of the options. Options issued in connection with the acquisition of RETEC
vest ratably over three years from their original date of grant, and expire ten
years from the date of grant.
15
<PAGE>
4. Employee Benefit Plans (continued)
A summary of the Company's stock option information is as follows:
1998 1997 1996
---------------- ---------------- ----------------
Weighted Weighted Weighted
Number Average Number Average Number Average
(Shares in of Exercise of Exercise of Exercise
thousands) Shares Price Shares Price Shares Price
- ---------------------------------------------------------------------------
Options
Outstanding,
Beginning
of Year 1,897 $ 7.92 1,559 $ 6.95 695 $ 7.62
Granted 438 6.52 556 8.65 144 5.74
Exercised (61) 2.58 (168) 1.47 (149) 1.59
Forfeited (223) 12.18 (50) 7.43 (28) 6.96
Assumed upon
acquisition
of RETEC - - - - 897 4.25
----- ----- -----
Options
Outstanding,
End of Year 2,051 $ 7.32 1,897 $ 7.92 1,559 $ 6.95
===== ====== ===== ====== ===== ======
Options
Exercisable 2,045 $ 7.31 1,826 $ 7.79 1,416 $ 6.58
===== ====== ===== ====== ===== ======
Options
Available
for Grant 196 415 449
===== ===== =====
A summary of the status of the Company's stock options at April 4, 1998, is
as follows:
Options Outstanding
Number Weighted Weighted
of Average Average
Shares Remaining Exercise
Range of Exercise Prices (In thousands) Contractual Life Price
- -------------------------------------------------------------------------
$ 2.52-$ 5.74 279 2.5 years $ 3.61
5.75- 8.96 1,302 4.3 years 6.81
8.97- 12.18 407 7.7 years 10.31
12.19- 15.40 63 4.2 years 15.04
-----
$ 2.52-$15.40 2,051 4.7 years $ 7.32
=====
The information disclosed above for options outstanding at April 4, 1998,
does not differ materially for options exercisable.
16
<PAGE>
4. Employee Benefit Plans (continued)
Employee Stock Purchase Program
Substantially all of the Company's full-time employees are eligible to
participate in an employee stock purchase program sponsored by the Company and
Thermo Electron. Under this program, shares of the Company's and Thermo
Electron's common stock can be purchased at the end of a 12-month period at 95%
of the fair market value at the beginning of the period, and the shares
purchased are subject to a six-month resale restriction. Shares are purchased
through payroll deductions of up to 10% of each participating employee's gross
wages. During fiscal 1998, 1997, and 1996, the Company issued 3,367 shares,
5,792 shares, and 9,040 shares, respectively, of its common stock under this
program. Employees of the Company's Thermo NUtech subsidiary participated in an
employee stock purchase program sponsored by Thermo TerraTech through November
1996.
Pro Forma Stock-based Compensation Expense
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-based Compensation," which sets forth a fair-value
based method of recognizing stock-based compensation expense. As permitted by
SFAS No. 123, the Company has elected to continue to apply APB No. 25 to account
for its stock-based compensation plans. Had compensation cost for awards under
the Company's stock-based compensation plans been determined based on the fair
value at the grant dates consistent with the method set forth under SFAS No.
123, the effect on the Company's net income (loss) and earnings (loss) per share
would have been as follows:
(In thousands except per share amounts) 1998 1997 1996
- --------------------------------------------------------------------------
Net Income (Loss):
As reported $ 240 $(2,681) $ 5,444
Pro forma (286) (2,946) 5,352
Basic Earnings (Loss) per Share:
As reported .02 (.21) .44
Pro forma (.02) (.23) .43
Diluted Earnings (Loss) per Share:
As reported .02 (.21) .42
Pro forma (.02) (.23) .42
Because the method prescribed by SFAS No. 123 has not been applied to
options granted prior to April 2, 1995, the resulting pro forma compensation
expense may not be representative of the amount to be expected in future years.
Compensation expense for options granted is reflected over the vesting period;
therefore, future pro forma compensation expense may be greater as additional
options are granted.
The weighted average fair value per share of options granted was $1.82,
$3.58, and $5.58 in fiscal 1998, 1997, and 1996, respectively. The fair value of
each option grant was estimated on the grant date using the
17
<PAGE>
4. Employee Benefit Plans (continued)
Black-Scholes option-pricing model with the following weighted-average
assumptions:
1998 1997 1996
- --------------------------------------------------------------------------
Volatility 27% 29% 29%
Risk-free Interest Rate 5.5% 6.3% 5.9%
Expected Life of Options 3.4 years 5.9 years 5.1 years
The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option-pricing models require the input of highly
subjective assumptions including expected stock price volatility. Because the
Company's employee stock options have characteristics significantly different
from those of traded options, and because CHANGES IN THE SUBJECTIVE INPUT
ASSUMPTIONS CAN MATERIALLY AFFECT THE FAIR VALUE estimate , IN MANAGEMENT'S
OPINION, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
401(k) Savings Plans
The majority of the Company's full-time employees are eligible to
participate in 401(k) savings plans sponsored by certain subsidiaries and Thermo
Electron. Contributions to the 401(k) savings plan are made by both the employee
and the Company. Company contributions are based upon the level of employee
contributions and for certain plans are based on subsidiary profits. The Company
contributed and charged to expense for these plans $2,016,000, $1,572,000, and
$919,000 in fiscal 1998, 1997, and 1996, respectively.
5. Income Taxes
The components of the provision for income taxes are as follows:
(In thousands) 1998 1997 1996
- -------------------------------------------------------------------------
Currently (Refundable) Payable:
Federal $ 1,947 $ (510) $ 3,400
State 832 285 590
------- ------- -------
2,779 (225) 3,990
------- ------- -------
Deferred (Prepaid), Net:
Federal (1,074) 491 (708)
State (169) 111 (150)
------- ------- -------
(1,243) 602 (858)
------- ------- -------
$ 1,536 $ 377 $ 3,132
======= ======= =======
18
<PAGE>
5. Income Taxes (continued)
The Company receives a tax deduction upon exercise of nonqualified stock
options by employees for the difference between the exercise price and the
market price of the Company's stock on the date of exercise. The provision for
income taxes that is currently payable does not reflect $181,000, $198,000, and
$200,000 of such benefits of the Company allocated to capital in excess of par
value in fiscal 1998, 1997, and 1996, respectively.
The provision for income taxes in the accompanying statement of operations
differs from the amounts calculated by applying the statutory federal income tax
rate of 34% to income (loss) before provision for income taxes due to the
following:
(In thousands) 1998 1997 1996
- --------------------------------------------------------------------------
Income Tax Provision (Benefit) at
Statutory Rate $ 604 $ (783) $2,916
Differences Resulting From:
State income taxes, net of federal tax 438 261 290
Amortization and write-off of cost in
excess of net assets of acquired
companies 267 979 140
Nondeductible expenses 27 27 21
Tax-exempt investment income - (33) (185)
Other 200 (74) (50)
------ ------ ------
$1,536 $ 377 $3,132
====== ====== ======
Prepaid and deferred income taxes in the accompanying balance sheet consist
of the following:
(In thousands) 1998 1997
- -----------------------------------------------------------------
Prepaid Income Taxes:
Reserves and accruals $1,057 $2,750
Accrued compensation 897 357
Net operating loss carryforwards 714 103
Allowance for doubtful accounts 9 315
Other 25 23
------ ------
2,702 3,548
Less: Valuation allowance 739 200
------ ------
$1,963 $3,348
====== ======
Deferred Income Taxes:
Depreciation $ 407 $3,035
====== ======
19
<PAGE>
5. Income Taxes (continued)
The valuation allowance relates to uncertainty surrounding the realization
of tax benefits attributable to federal and state operating losses and credit
carryforwards. The valuation allowance increased in fiscal 1998 as a result of
certain losses that arose during the year. Of the total 1998 valuation
allowance, $126,000 will be used to reduce cost in excess of net assets of
acquired companies when any portion of the related deferred tax asset is
recognized.
6. Subordinated Convertible Obligations
In May 1995, the Company issued and sold $37,950,000 principal amount of 4
7/8% subordinated convertible debentures due 2000, including $3,000,000
principal amount of such debentures sold to Thermo Electron. The debentures are
convertible into shares of the Company's common stock at a conversion price of
$17.92 per share and are guaranteed on a subordinated basis by Thermo Electron.
Thermo TerraTech has agreed to reimburse Thermo Electron in the event Thermo
Electron is required to make a payment under the guarantee.
In fiscal 1994, the Company issued to Thermo TerraTech $2,650,000 principal
amount of a 3 7/8% subordinated convertible note due 2000. The note is
convertible into shares of the Company's common stock at a conversion price of
$9.83 per share.
See Note 10 for fair value information pertaining to the Company's
subordinated convertible obligations.
7. Commitments and Contingencies
Operating Leases
The Company leases land, office facilities, and equipment under operating
leases expiring at various dates through fiscal 2006. The accompanying statement
of operations includes expenses from operating leases of $2,707,000, $1,943,000,
and $1,319,000 in fiscal 1998, 1997, and 1996, respectively. Future minimum
payments due under noncancellable operating leases at April 4, 1998, are
$2,329,000 in fiscal 1999; $1,546,000 in fiscal 2000; $935,000 in fiscal 2001;
$662,000 in fiscal 2002; $169,000 in fiscal 2003, and $277,000 in 2004 and
thereafter. Total future minimum lease payments are $5,918,000.
Contingencies
The Company is contingently liable with respect to lawsuits and other
matters that arose in the ordinary course of business. In the opinion of
management, these contingencies will not have a material effect upon the
financial position of the Company or its results of operations.
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,
20
<PAGE>
8. Related-party Transactions (continued)
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 0.8% of the Company's revenues in calendar 1998. In calendar
1997 and 1996 the Company paid an amount equal to 1.0% of the Company's
revenues. Prior to January 1, 1996, the Company paid an annual fee equal to
1.20% of the Company's revenues. For these services, the Company was charged
$1,220,000, $1,148,000, and $767,000 in fiscal 1998, 1997, and 1996,
respectively. The annual fee is reviewed and adjusted annually by mutual
agreement of the parties. Management believes that the service fee charged by
Thermo Electron is reasonable and that such fees are representative of the
expenses the Company would have incurred on a stand-alone basis. The corporate
services agreement is renewed annually but can be terminated upon 30 days' prior
notice by the Company or upon the Company's withdrawal from the Thermo Electron
Corporate Charter (the Thermo Electron Corporate Charter defines the
relationship among Thermo Electron and its majority-owned subsidiaries). For
additional items such as employee benefit plans, insurance coverage, and other
identifiable costs, Thermo Electron charges the Company based upon costs
attributable to the Company.
Subordinated Convertible Obligations
See Note 6 for obligations of the Company held by Thermo Electron and
Thermo TerraTech.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
9. Common Stock
During fiscal 1996, the Company issued 500,000 shares of its common stock
at $13.25 per share in a private placement for net proceeds of $6,625,000.
Dividends to common shareholders of the Company of $2,504,000 were
declared in fiscal 1998, of which $1,753,000, including $1,736,000 paid to
Thermo TerraTech, was reinvested in 257,338 shares of the Company's common stock
pursuant to the Company's Dividend Reinvestment Plan. Dividends to common
shareholders of the Company of $2,557,000 were declared in fiscal 1997, of which
$1,710,000, including $1,694,000 paid to Thermo TerraTech, was reinvested in
196,806 shares of the Company's common stock. Dividends to common shareholders
of the Company of $2,491,000 were declared in fiscal 1996, of which $1,681,000,
including $1,667,000 paid to Thermo TerraTech, was reinvested in 118,778 shares
of the Company's common stock.
At April 4, 1998, the Company had reserved 5,067,206 unissued shares of its
common stock for possible issuance under stock-based compensation plans,
outstanding warrants, and possible issuance upon conversion of the Company's
convertible obligations.
21
<PAGE>
10. Fair Value of Financial Instruments
The Company's financial instruments consist mainly of cash and cash
equivalents, available-for-sale investments, accounts receivable, due from
parent company and Thermo Electron, accounts payable, and subordinated
convertible obligations. The carrying amounts of these financial instruments,
with the exception of available-for-sale investments and subordinated
convertible obligations, approximates fair value due to their short-term nature.
Available-for-sale investments are carried at fair value in the
accompanying balance sheet. The fair values were determined based on quoted
market prices. See Note 2 for fair value information pertaining to these
financial instruments.
Based on quoted market prices and on borrowing rates available to the
Company, the fair value of the Company's subordinated convertible obligations
was $39,395,000 and $37,674,000 at fiscal year-end 1998 and 1997, respectively.
11. Significant Customers and Concentration of Credit Risk
A substantial portion of the Company's nuclear-remediation services has
been provided to the U.S. government. One subcontract for the U.S. government
accounted for approximately 5% and 10% of the Company's total revenues in fiscal
1997 and 1996, respectively. All other U.S. government agencies accounted for
10%, 25%, and 16% of the Company's total revenues in fiscal 1998, 1997, and
1996, respectively. Management does not believe that this concentration of
credit risk has or will have a significant negative impact on the Company.
12. Nonrecurring Costs
During fiscal 1997, the Company recorded $7,800,000 of nonrecurring costs
to write-down certain capital equipment and intangible assets, including cost in
excess of net assets of acquired companies, in response to a severe downturn in
the Company's soil-recycling business, which resulted in the closure of two
soil-remediation sites. In addition, the Company's analysis indicated that the
future undiscounted cash flows from certain other soil-remediation sites that
remained open would be insufficient to recover the Company's investment in those
business units, thus requiring a write-down of certain assets included in the
$7,800,000 charge. Of the total charge, $2,206,000 was nondeductible for tax
purposes.
13. Equity in Earnings of Unconsolidated Subsidiary
The Company's equity in earnings of unconsolidated subsidiary in the
accompanying statement of operations represented the Company's proportionate
share of income from a 50% investment in RETEC/TETRA L.C., acquired in December
1995 through the acquisition of RETEC.
22
<PAGE>
13. Equity in Earnings of Unconsolidated Subsidiary (continued)
Summary financial information for RETEC/TETRA as of December 31, 1996, is
as follows:
(In thousands) 1996
- -------------------------------------------------------------------------
Current Assets $ 3,072
Noncurrent Assets 12,644
-------
Total assets $15,716
=======
Current Liabilities $ 2,016
Noncurrent Liabilities 2,635
Members' Equity 11,065
-------
Total liabilities and members' equity $15,716
=======
Year Ended
Dec. 31,
(In thousands) 1996
- -------------------------------------------------------------------------
Revenues $12,066
Cost of Revenues 9,040
-------
Gross Profit $ 3,026
=======
Net Income $ 981
=======
In October 1997, the Company sold its 50% limited-liability interest
in RETEC/TETRA to TETRA Thermal, Inc., for $8,825,000 in cash. The Company
realized a pretax gain of $3,012,000 on the sale.
The carrying value of the unconsolidated subsidiary was $5,650,000 at
fiscal year-end 1997 and was included in other assets in the accompanying
balance sheet.
23
<PAGE>
14. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
(In thousands except per share amounts) 1998 1997 1996
- -------------------------------------------------------------------------
Basic
Net Income (Loss) $ 240 $(2,681) $ 5,444
------- ------- -------
Weighted Average Shares 12,609 12,821 12,394
------- ------- -------
Basic Earnings (Loss) per Share $ .02 $ (.21) $ .44
======= ======= =======
Diluted
Net Income (Loss) $ 240 $(2,681) $ 5,444
Effect of convertible obligations - - 62
------- ------- -------
Income (Loss) Available to Common
Shareholders, as Adjusted $ 240 $(2,681) $ 5,506
------- ------- -------
Weighted Average Shares 12,609 12,821 12,394
Effect of:
Convertible obligations - - 269
Stock options 149 - 321
------- ------- -------
Weighted Average Shares, as Adjusted 12,758 12,821 12,984
------- ------- -------
Diluted Earnings (Loss) per Share $ .02 $ (.21) $ .42
======= ======= =======
The computation of diluted earnings per share for fiscal 1998 and 1997
excludes the effect of assuming the exercise of certain outstanding stock
options and warrants because the effect would be antidilutive. As of April 4,
1998, there were 1,768,000 of such options and warrants outstanding, with
exercise prices ranging from $6.51 to $15.40 per share.
In addition, the computation of diluted earnings per share for fiscal
1998 and 1997 excludes the effect of assuming the conversion of convertible
obligations because the effect would be antidilutive. As of April 4, 1998, the
Company had $37,950,000 principal amount of 4 7/8% subordinated convertible
debentures, convertible at $17.92 per share, and $2,650,000 principal amount
of a 3 7/8% subordinated convertible note, convertible at $9.83 per share, that
were excluded from the calculation of diluted earnings per share.
24
<PAGE>
15. Unaudited Quarterly Information
(In thousands except per share amounts)
1998 First(a) Second(b) Third(c) Fourth
- ------------------------------------------------------------------------
Revenues $28,204 $33,639 $34,620 $31,946
Gross Profit 4,371 5,274 3,947 806
Net Income (Loss) 576 696 1,701 (2,733)
Earnings (Loss) per Share:
Basic .05 .06 .13 (.21)
Diluted .05 .06 .13 (.21)
1997 First Second Third(d) Fourth(e)
- -------------------------------------------------------------------------
Revenues $23,520 $27,913 $34,252 $29,164
Gross Profit 4,482 4,428 4,714 4,324
Net Income (Loss) 1,028 974 620 (5,303)
Earnings (Loss) per Share:
Basic .08 .08 .05 (.42)
Diluted .08 .07 .05 (.42)
(a) Reflects the May 1997 acquisition of TriTechnics.
(b) Reflects the August 1997 acquisition of RPM.
(c) Reflects the November 1997 acquisition of Benchmark and includes a pre-tax
gain of $3,012,000 from the sale of an investment in a joint venture.
(d) Reflects the September 1996 acquisition of IEM Sealand.
(e) Reflects
$7,800,000 of nonrecurring costs.
25
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Thermo Remediation Inc.:
We have audited the accompanying consolidated balance sheet of Thermo
Remediation Inc. (a Delaware corporation and 69%-owned subsidiary of Thermo
TerraTech Inc.) and subsidiaries as of April 4, 1998, and March 29, 1997, and
the related consolidated statements of operations, shareholders' investment, and
cash flows for each of the three years in the period ended April 4, 1998. 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 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
Remediation Inc. and subsidiaries as of April 4, 1998, and March 29, 1997, and
the results of their operations and their cash flows for each of the three years
in the period ended April 4, 1998, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
May 12, 1998
26
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks,"
"estimates," and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the results
of the Company to differ materially from those indicated by such forward-looking
statements, including those detailed immediately after this Management's
Discussion and Analysis of Financial Condition and Results of Operation under
the heading "Forward-looking Statements."
Overview
The Company is a national provider of environmental-liability management.
Through a nationwide network of offices, the Company offers these and related
consulting services in five areas: industrial remediation, nuclear remediation,
waste-fluids collection and recycling, soil remediation, and
environmental-management and information-technology systems.
The Company's industrial remediation businesses provide consultation,
engineering, and on-site services to help clients manage problems associated
with environmental compliance, waste management, and the remediation of
industrial sites contaminated with organic and inorganic wastes and residues. In
May 1997, the Company's RETEC subsidiary acquired TriTechnics Corporation, an
environmental engineering and consulting firm. The Company's IEM Sealand
subsidiary, acquired in September 1996, performs the cleanup of hazardous waste
sites for government and industry as a prime construction contractor and
completes predesigned remedial action contracts at sites containing hazardous,
toxic, and radioactive wastes.
In the nuclear-remediation area, the Company provides services to remove
radioactive contaminants from sand, gravel, and soil, as well as health physics
services, radiochemistry laboratory services, radiation dosimetry services,
radiation-instrument calibration and repair services, and radiation-source
production. In November 1997, the Company acquired Benchmark Environmental
Corporation, a provider of nuclear-remediation and waste-management services to
government and private sector clients.
The Company also collects, tests, processes, and recycles used motor oil
and other industrial fluids.
The Company designs and operates facilities for the remediation of
nonhazardous soil and mobile equipment for the on-site remediation of such
wastes. The Company's soil-remediation centers are environmentally secure
facilities for receiving, storing, and processing petroleum- contaminated soils.
27
<PAGE>
Overview (continued)
Through its RPM Systems, Inc. subsidiary, acquired in August 1997, the
Company develops and implements management and computer-based systems that aid
in the collection and application of environmental data, helping to establish or
improve a customer's environmental-compliance program while controlling the
related costs.
The Company's businesses are affected by several factors, particularly
extreme weather variations, government spending, enactment and enforcement of
environmental legislation, economic cycles, regulation and enforcement of
remediation activities, the availability of federal and state funding for
environmental cleanup, and local competition.
The Company has acquired a number of businesses in the last three years.
The Company does not presently intend to actively seek to make additional
acquisitions in the near future, and expects instead to concentrate its
resources on strengthening its core businesses. The Company may, however,
acquire one or more additional businesses if they are presented to the Company
on terms the Company believes to be attractive.
Results of Operations
Fiscal 1998 Compared With Fiscal 1997
Revenues in fiscal 1998 increased 12% to $128,409,000 from $114,849,000 in
fiscal 1997. Revenues increased due to the inclusion of $20,061,000 in revenues
from acquired businesses (Note 3) and, to a lesser extent, higher revenues from
construction, consulting, and engineering services at RETEC. This increase was
offset in part by an $11,104,000 decrease in revenues resulting from a decline
in the number of contracts in process at IEM Sealand. Revenues from
soil-remediation services decreased $3,461,000, resulting from the closure of
two sites, as well as heavy rains, which unfavorably affected operations at
certain West Coast sites, and, to a lesser extent, competitive pricing
pressures. Revenues from nuclear remediation and fluids-recycling services
increased $1,728,000 in fiscal 1998.
The gross profit margin decreased to 11% in fiscal 1998 from 16% in fiscal
1997, primarily due to losses on certain remedial-construction contracts at IEM
Sealand, resulting from poorly bid and executed projects, and increased
lower-margin revenues at RETEC. This decrease was offset in part by a greater
percentage of soil-remediation revenues earned at certain higher-margin
soil-remediation facilities.
Selling, general, and administrative expenses as a percentage of revenues
remained relatively unchanged at 10.6% and 10.5% in fiscal 1998 and 1997,
respectively.
During fiscal 1997, the Company recorded $7,800,000 of nonrecurring costs
to write-down certain capital equipment and intangible assets, including cost in
excess of net assets of acquired companies (Note 12). The write-down was in
response to a severe downturn in the Company's soil-recycling business, which
resulted in the closure of two soil-remediation sites. In addition, the
Company's analysis indicated
28
<PAGE>
Fiscal 1998 Compared With Fiscal 1997 (continued)
that the future undiscounted cash flows from certain other soil-remediation
sites that remained open would be insufficient to recover the Company's
investment in these business units, thus requiring a write-down of certain
assets, included in the $7,800,000 charge.
Interest income decreased to $970,000 in fiscal 1998 from $1,896,000 in
fiscal 1997 as a result of lower average invested balances due to the use of
$11,372,000 to repurchase Company common stock in fiscal 1998 and 1997 and the
Company's funding of an increase in accounts receivable.
Equity in earnings of unconsolidated subsidiary represents the Company's
proportionate share of income from a joint venture (Note 13). "Gain on sale of
unconsolidated subsidiary" results from the Company's sale of its interest in
this joint venture in October 1997.
The effective tax rate for fiscal 1998 exceeded the statutory federal
income tax rate, primarily due to the impact of state income taxes and
nondeductible amortization of cost in excess of net assets of acquired
companies. The Company recorded an income tax provision on a pretax loss in
fiscal 1997 primarily due to the amortization and write-off of nondeductible
costs in excess of net assets of acquired companies and, to a lesser extent, the
impact of state income taxes.
The Company is currently assessing the potential impact of the year 2000 on
the processing of date-sensitive information by the Company's computerized
information systems as well as products purchased by the Company. The Company
believes that its internal information systems are either year 2000 compliant or
will be so prior to the year 2000 without incurring material costs. There can be
no assurance, however, that the Company will not experience unexpected costs and
delays in achieving year 2000 compliance for its internal information systems,
which could result in a material adverse effect on the Company's future results
of operations.
The Company is presently assessing whether its key suppliers are adequately
addressing the year 2000 issue and the effect this might have on the Company.
The Company has not completed its analysis and is unable to conclude at this
time that the year 2000 problem as it relates to products purchased from key
suppliers is not reasonably likely to have a material adverse effect on the
Company's future results of operations.
Fiscal 1997 Compared With Fiscal 1996
Revenues in fiscal 1997 increased 72% to $114,849,000 from $66,957,000 in
fiscal 1996. Revenues increased due to the inclusion of $50,033,000 of revenues
from RETEC and IEM Sealand, acquired in December 1995 and September 1996,
respectively (Note 3). Revenues from soil-remediation services decreased 21% in
response to a severe downturn in this business, which resulted in a decline in
the volume of soil processed due to overcapacity in the industry and competitive
pricing pressures.
The gross profit margin decreased to 16% in fiscal 1997 from 27% in fiscal
1996, primarily due to lower margins on soil processed as a result of
competitive pricing pressures and, to a lesser extent, lower volumes of soil
processed at the Company's traditionally higher-margin soil-
29
<PAGE>
Fiscal 1997 Compared With Fiscal 1996 (continued)
remediation centers. The gross profit margin also decreased due to the inclusion
of lower-margin revenues from RETEC and IEM Sealand.
Selling, general, and administrative expenses as a percentage of revenues
decreased to 10% in fiscal 1997 from 13% in fiscal 1996, primarily due to lower
expenses as a percentage of revenues at acquired companies.
During fiscal 1997, the Company recorded $7,800,000 of nonrecurring costs
to write-down certain capital equipment and intangible assets, including cost in
excess of net assets of acquired companies, as described in the results of
operations for fiscal 1998 compared with fiscal 1997.
Interest income decreased to $1,896,000 in fiscal 1997 from $2,539,000 in
fiscal 1996 as a result of lower average invested balances following the
acquisition of RETEC in December 1995 (Note 3) and the use of $8,317,000 to
repurchase Company common stock in fiscal 1997. Interest expense increased to
$2,251,000 in fiscal 1997 from $1,999,000 in fiscal 1996, primarily due to the
issuance of the 4 7/8% subordinated convertible debentures in May 1995 (Note 6).
Equity in earnings of unconsolidated subsidiary represents the Company's
proportionate share of income from a joint venture (Note 13).
The Company recorded an income tax provision on a pretax loss in fiscal
1997 primarily due to the amortization and write-off of nondeductible cost in
excess of net assets of acquired companies and, to a lesser extent, the impact
of state income taxes. The effective tax rate in fiscal 1996 was higher than the
statutory federal income tax rate primarily due to the impact of state income
taxes and nondeductible amortization of cost in excess of net assets of acquired
companies, offset in part by tax-exempt investment income.
Liquidity and Capital Resources
Consolidated working capital, including cash, cash equivalents, and
short-term available-for-sale investments, was $29,941,000 at April 4, 1998,
compared with $38,960,000 at March 29, 1997. Cash, cash equivalents, and
available-for-sale investments were $10,915,000 at April 4, 1998, compared with
$23,804,000 at March 29, 1997. During fiscal 1998, the Company used $6,114,000
of cash for operating activities. The Company used cash to fund an increase in
accounts receivable of $9,284,000, primarily as a result of delays in the
pursuit of collections on accounts receivable at certain of the Company's
subsidiaries and, to a lesser extent, higher revenues at certain business units.
The Company expects to address this matter by increasing collection efforts over
the next several quarters.
The Company's investing activities used $1,232,000 of cash during fiscal
1998. The Company expended $5,163,000, net of cash acquired, for acquisitions
(Note 3) and $6,318,000 for purchases of property, plant, and equipment. The
Company plans to make capital expenditures of approximately $5,000,000 during
fiscal 1999. In October 1997, the Company sold its 50% limited-liability
interest in RETEC/TETRA L.C. for $8,825,000 in cash (Note 13).
30
<PAGE>
Liquidity and Capital Resources (continued)
In fiscal 1998, the Company's financing activities used $3,445,000 of cash.
The Company's Board of Directors has authorized the repurchase, through July
1998, of up to $15,000,000 of its own securities. Through April 4, 1998, the
Company had expended $11,372,000 under this authorization, of which $3,055,000
was expended during fiscal 1998. All such purchases are funded from working
capital. In fiscal 1998, the Company paid $751,000 in cash dividends. The amount
of cash dividends ultimately paid by the Company is dependent on the number of
shareholders participating in the Company's Dividend Reinvestment Plan.
The Company generally expects to have positive cash flow from its existing
operations. Although the Company does not presently intend to actively seek to
acquire additional businesses in the near future, it may acquire one or more
complementary businesses if they are presented to the Company on terms the
Company believes to be attractive. Such acquisitions may require significant
amounts of cash. The Company expects that it will finance any such acquisitions
through a combination of internal funds, additional debt or equity financing
from the capital markets, or short-term borrowings from Thermo TerraTech Inc. or
Thermo Electron Corporation, although it has no agreement with these companies
to ensure that funds will be available on acceptable terms, or at all.
31
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Forward-looking Statements
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company wishes to caution readers that the
following important factors, among others, in some cases have affected, and in
the future could affect, the Company's actual results and could cause its actual
results in fiscal 1999 and beyond to differ materially from those expressed in
any forward-looking statements made by, or on behalf of, the Company.
Dependence on Environmental Regulation. Federal, state, and local
environmental laws govern each of the markets in which the Company conducts
business, as well as many of the Company's operations. The markets for each of
the Company's services, including industrial remediation services, nuclear
remediation services, hazardous waste remedial construction services,
soil-remediation services, and waste-fluids recycling services, and the
standards governing most aspects of the construction and operation of the
Company's facilities were directly or indirectly created by, and are dependent
on, the existence and enforcement of those laws. There can be no assurance that
these laws and regulations will not change in the future, requiring new
technologies or stricter standards with which the Company must comply. In
addition, there can be no assurance that these laws and regulations will not be
made more lenient in the future, thereby reducing the size of the markets
addressed by the Company. Any such change in such federal, state, and local
environmental laws and regulations may have a material adverse effect on the
Company's business.
Responsibility for establishing and enforcing certain federal policies,
such as the federal underground storage tank policy, has been delegated to the
states, which are not only required to establish regulatory programs, but also
are permitted to mandate more stringent requirements than are otherwise required
by federal law. Recently, certain states have adopted a "risk-based" approach to
prioritizing site cleanups and setting cleanup standards, which attempt to
balance the costs of remediation against the potential harm to human health and
the environment from leaving sites unremediated. There can be no assurance that
additional states will not adopt similar policies, or that these policies will
not reduce the size of the potential market addressed by the Company.
Potential Environmental and Regulatory Liability. The Company's operations
are subject to comprehensive laws and regulations related to the protection of
the environment. Among other things, these laws and regulations impose
requirements to control air, soil, and water pollution, and regulate health,
safety, zoning, land use, and the handling and transportation of hazardous and
nonhazardous materials. Such laws and regulations also impose liability for
remediation and cleanup of environmental contamination, both on-site and
off-site, resulting from past and present operations. These requirements may
also be imposed as conditions of operating permits or licenses that are subject
to renewal, modification, or revocation. Existing laws and regulations, and new
laws and regulations, may require the Company to modify, supplement, replace, or
curtail its operating methods, facilities, or equipment at costs which may be
substantial, without any corresponding increase in revenue. The
32
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Forward-looking Statements
Company is also potentially subject to monetary fines, penalties,
remediation, cleanup, or stop orders, injunctions, or orders to cease or
suspend certain of its practices. The outcome of any proceedings and
associated costs and expenses could have a material adverse impact on the
Company's business. In addition, the Company's divisions are subject to
numerous laws and regulations related to the protection of human health
and safety. Such laws and regulations may impose liability on the Company
for exposure of its employees to radiation or other hazardous
contamination or failure to isolate and remove radioactive or other
hazardous contaminants from soil.
The Company endeavors to operate its business to minimize its
exposure to environmental and other regulatory liabilities. Although no
claims giving rise to such liabilities have been asserted by the Company's
customers or employees to date, there can be no assurance that such claims
cannot or will not be asserted against the Company.
Uncertainty of Funding. Remediation compliance requirements and attendant
costs are often beyond the financial capabilities of many individuals and small
companies. To address this problem, some states have established tax-supported
trust funds to assist in the financing of compliance and site remediation. As a
consequence, in many of the states in which the Company markets its
soil-remediation services, the majority, and in some cases virtually all, of the
soil remediated by the Company is paid for by large companies and/or state trust
funds. Any substantial decrease in this funding could have a material adverse
effect on the Company's business and financial performance. Many states have
realized that the number of sites requiring remediation and the costs of
compliance are substantially higher than were originally estimated. As a result,
several states have relaxed enforcement activities and others have reduced
compliance requirements in order to reduce the costs of cleanup. These factors
have already resulted in lower levels of cleanup activity in some states and
have had a material adverse effect on the Company's business. Continued
de-emphasis on enforcement activities and/or further reductions in compliance
requirements will have an even more severe adverse effect on the Company's
business.
The Company depends on funding from the federal and state governments, and
their agencies and instrumentalities, for compensation for its services. For
example, Thermo NUtech provides a large portion of its services directly or
indirectly to the U.S. Department of Energy (DOE). Declines in spending by the
DOE and other governmental agencies could have a material adverse effect on the
Company's business.
Competition. The markets for many of the Company's services are regional
and are characterized by intense competition from numerous local competitors.
Some of the Company's competitors have greater technical and financial resources
than those of the Company. As a result, they may be able to adapt more quickly
to new or emerging technologies and changes in customer requirements, or to
devote greater resources to the promotion and sale of their services than the
Company. Competition could increase if new companies enter the market or if
existing competitors expand their service lines. There can be no assurance that
the Company's current technology, technology under development, or ability to
develop new technologies will be sufficient to enable it to compete effectively
with its competitors.
33
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Forward-looking Statements
Seasonal Influences. A majority of the Company's businesses
experience seasonal fluctuations. A majority of the Company's
soil-remediation sites, as well as the company's fluids-recycling sites,
experience declines in severe weather conditions. Site remediation work
and certain environmental testing services, such as the services provided by
RETEC, IEM Sealand, and Thermo NUtech, may decline in winter months as
a result of severe weather conditions.
Possible Obsolescence Due to Technological Change. Technological
developments are expected to continue at a rapid pace in the environmental
services industry. The Company's technologies could be rendered obsolete
or uneconomical by technological advances by one or more companies that
address the Company's markets or by future entrants into the industry.
There can be no assurance that the Company would have the resources to, or
otherwise would be successful in, developing responses to technological
advances by others.
Risks Associated with Acquisition Strategy. The Company's strategy
has included the acquisition of businesses that complement or augment the
Company's existing services. The Company does not presently intend to
actively seek to make additional acquisitions in the near future, and expects
instead to concentrate its resources on strengthening its core
businesses. The Company may, however, acquire one or more additional
businesses if they are presented to the Company on terms the Company
believes to be attractive.
Promising acquisitions are difficult to identify and complete for a
number of reasons, including competition among prospective buyers and the
need for regulatory approvals. Any acquisitions completed by the Company
may be made at substantial premiums over the fair value of the net assets
of the acquired companies. There can be no assurance that the Company will
be able to complete future acquisitions or that the Company will be able
to successfully integrate any acquired businesses. In order to finance
such acquisitions, it may be necessary for the Company to raise additional
funds through public or private financings. Any equity or debt financing,
if available at all, may be on terms which are not favorable to the
Company and, in the case of equity financing, may result in dilution to
the Company's stockholders.
No Assurance of Development and Commercialization of Technology
Under Development. The Company is currently engaged in the development of
several technologies which may ultimately be commercialized to provide
services to customers. There are a number of technological challenges that
the Company must successfully address to complete any of its development
efforts. Technology development involves a high degree of risk, and
returns to investors are dependent upon successful development and
commercialization of such technology. There can be no assurance that any
of the technologies currently being developed by the Company, or those to
be developed in the future, will be technologically feasible or accepted
by the marketplace, or that any such development will be completed in any
particular timeframe.
34
<PAGE>
Potential Impact of Year 2000 on Processing of Date-sensitive Information.
The Company is currently assessing the potential impact of the year 2000 on the
processing of date-sensitive information by the Company's computerized
information systems as well as products purchased by the Company. The Company
believes that its internal information systems are either year 2000 compliant or
will be so prior to the year 2000 without incurring material costs. There can be
no assurance, however, that the Company will not experience unexpected costs and
delays in achieving year 2000 compliance for its internal information systems,
which could result in a material adverse effect on the Company's future results
of operations.
The Company is presently assessing whether its key suppliers are adequately
addressing the year 2000 issue and the effect this might have on the Company.
The Company has not completed its analysis and is unable to conclude at this
time that the year 2000 problem as it relates to products purchased from key
suppliers is not reasonably likely to have a material adverse effect on the
Company's future results of operations.
35
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Selected Financial Information
(In thousands except
per share amounts) 1998(a) 1997(b) 1996(c) 1995(d) 1994
- ----------------------------------------------------------------------
Statement of
Operations Data:
Revenues $128,409 $114,849 $ 66,957 $ 51,504 $ 43,488
Income (Loss)
Before Cumulative
Effect of Change
in Accounting
Principle 240 (2,681) 5,444 3,643 2,510
Net Income (Loss) 240 (2,681) 5,444 3,643 2,567
Earnings (Loss) per
Share:
Basic .02 (.21) .44 .36 .26
Diluted .02 (.21) .42 .35 .26
Balance Sheet Data:
Working Capital $ 29,941 $ 38,960 $ 46,343 $ 3,384 $ 12,676
Total Assets 140,311 136,114 135,802 79,156 68,939
Subordinated
Convertible
Obligations 40,600 40,600 40,600 2,650 2,650
Shareholders'
Investment 74,467 74,830 83,352 60,320 47,638
Other Data:
Cash Dividends
Declared $ 2,504 $ 2,557 $ 2,491 $ 2,012 $ 2,127
(a) Reflects the November 1997 acquisition of Benchmark, the August 1997
acquisition of RPM, and the May 1997 acquisition of TriTechnics and
includes a pre-tax gain of $3,012,000 from the sale of an investment in a
joint venture.
(b) Reflects the September 1996 acquisition of IEM Sealand and $7.8 million of
nonrecurring costs.
(c) Reflects the May 1995 issuance of $38 million principal amount of 4 7/8%
subordinated convertible debentures and a private placement of 500,000
shares of the Company's common stock for net proceeds of $6.6 million. Also
reflects the December 1995 acquisition of RETEC.
(d) Reflects the October 1994 acquisition of TPST Woodworth and the December
1994 acquisition of TPST Maryland.
36
<PAGE>
Thermo Remediation Inc. 1998 Financial Statements
Common Stock Market Information
The Company's common stock is traded on the American Stock Exchange under
the symbol THN. The following table sets forth the high and low sale prices of
the Company's common stock for fiscal 1998 and 1997, as reported in the
consolidated transaction reporting system.
Fiscal 1998 Fiscal 1997
------------------- --------------------
Quarter High Low High Low
- --------------------------------------------------------------------------
First $7 9/16 $6 1/2 $15 $11 7/8
Second 8 1/8 6 7/8 13 1/4 9 7/8
Third 7 11/16 5 1/2 11 1/2 7 7/8
Fourth 7 3/8 5 5/8 8 7/8 6 3/4
As of May 29, 1998, the Company had 181 holders of record of its common
stock. This does not include holdings in street or nominee names. The closing
market price on the American Stock Exchange for the Company's common stock on
May 29, 1998, was $5 1/2 per share.
Shareholder Services
Shareholders of Thermo Remediation Inc. who desire information about the
Company are invited to contact John N. Hatsopoulos, Chief Financial Officer,
Thermo Remediation Inc., 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts
02254-9046, (781) 622-1111. A mailing list is maintained to enable shareholders
whose stock is held in street name, and other interested individuals, to receive
quarterly reports, annual reports, and press releases as quickly as possible.
Distribution of printed quarterly reports is limited to the second quarter only.
All material will be available from Thermo Electron's Internet site
(http://www.thermo.com/subsid/thn1.html).
Stock Transfer Agent
BankBoston is the stock transfer agent and maintains shareholder activity
records. The agent will respond to questions on issuance of stock certificates,
change of ownership, lost stock certificates, and change of address. For these
and similar matters, please direct inquires to:
BankBoston
c/o Boston EquiServe Limited Partnership
P.O. Box 8040
Boston, Massachusetts 02266-8040
(617) 575-3120
Dividend Policy
The Company intends to pay cash dividends from time to time to the holders
of the Company's common stock out of funds legally available therefor. The
Company currently expects that such dividends will be paid semiannually. No
assurance can be given, however, as to whether the Company will continue to pay
dividends in the future. On July 24, 1997, and February 12, 1998, the Board of
Directors declared semiannual
37
<PAGE>
Dividend Policy (continued)
dividends of $.10 per share, which were paid on September 10, 1997, and March
23, 1998, to shareholders of record as of August 15, 1997, and March 2, 1998,
respectively.
Dividend Reinvestment Plan
The Thermo Remediation Inc. Dividend Reinvestment Plan permits shareholders
to have their dividends reinvested automatically in additional shares of the
Company's common stock without paying service charges or brokerage fees. For
more details about this service, please write to:
BankBoston
c/o Boston EquiServe Limited Partnership
Investor Relations Department
P.O. Box 8040
Boston, Massachusetts 02266-8040
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended April 4,
1998, as filed with the Securities and Exchange Commission, may be obtained
without charge by writing to John N. Hatsopoulos, Chief Financial Officer,
Thermo Remediation Inc., 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts
02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Tuesday,
September 15, 1998, at 2:00 p.m. at Thermo Electron Corporation,
81 Wyman Street, Waltham, Massachusetts.
Exhibit 21
THERMO REMEDIATION INC.
Subsidiaries of the Registrant
As of May 29, 1998, Thermo Remediation Inc. owned the following
companies:
STATE OR
JURISDISCTION OF PERCENT OF
NAME INCORPORATION OWNERSHIP
Benchmark Environmental Corporation New Mexico 100
Eberline Holdings Inc. Delaware 100
Eberline Analytical Corporation New Mexico 100
Thermo Hanford Inc. Delaware 100
TMA/NORCAL Inc. California 100
IEM Sealand Corporation Virginia 100
RPM Systems, Inc. Connecticut 100
Remediation Technologies, Inc. Delaware 100
GeoWest Golden Inc. Colorado 100
GeoWest TriTechnics of Ohio, LLC
RETEC Thermal, Inc. Delaware 100
Thermo Fluids Inc. Delaware 100
TPS Technologies Inc. Florida 100
TPST Soil Recyclers of Calif. Inc. California 100
California Hydrocarbon, Inc. Nevada 100
TPST Soil Recyclers of Maryland Inc. Maryland 100
Todds Lane Limited Partnership
(1% of which is owned directly
by TPS Technologies Inc.) Maryland 100*
TPST Soil Recyclers of New York Inc. New York 100
TPST Soil Recyclers of Oregon Inc. Oregon 100
TPST Soil Recyclers of S. Carolina Inc. Delaware 100
TPST Soil Recyclers of Virginia Inc. Delaware 100
TPST Soil Recyclers of Washington Inc. Washington 100
TRUtech L.L.C. Delaware 47.5*
* Joint Venture/Partnership
Exhibit 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated May 12, 1998, included in
or incorporated by reference into Thermo Remediation Inc.'s Annual Report
on Form 10-K for the fiscal year ended April 4, 1998, and into the
Company's previously filed Registration Statements as follows:
Registration Statement No. 33-92030 on Form S-3, Registration Statement
No. 33-92058 on Form S-8, Registration Statement No. 33-85368 on Form S-8,
Registration Statement No. 33-85370 on Form S-8, Registration Statement
No. 33-85374 on Form S-8, Registration Statement No. 33-85372 on Form S-8,
Registration Statement No. 333-00062 on Form S-3, Registration Statement
No. 33-80747 on Form S-8, Registration Statement No. 33-80515 on Form S-8,
Registration Statement No. 33-81226 on Form S-3, Registration Statement
No. 33-80458 on Form S-3, Registration Statement No. 33-77818 on Form S-3,
Registration Statement No. 333-35373 on Form S-3, and Registration
Statement No. 333-33341 on Form S-3.
A rthur A ndersen LLP
Boston, Massachusetts
June 26, 1998
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
REMEDIATION INC.'S ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED APRIL 4,1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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0
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