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GUARANTEE AGREEMENT
This Guarantee Agreement, dated _________________, 1997 (the "Agreement"),
is entered into by and between ThermoLase Corporation, a Delaware corporation
(the "Corporation" or "ThermoLase"), and Thermo Electron Corporation, a Delaware
corporation ("Thermo Electron"). Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Offer to Exchange of the Corporation
dated , 1997 (the "Offer to Exchange").
WHEREAS, pursuant to the Offer to Exchange, the Corporation has offered to
exchange one unit (each, a "Unit"), consisting of one share of Common Stock, par
value $0.01 per share, of the Corporation (the "Common Stock") and one
redemption right (a "Redemption Right") for each share of Common Stock (each, an
"Exchange Share"), plus an additional payment of $3.00, payable either in cash
or in additional shares of Common Stock. No more than 2,000,000 Exchange Shares
will be accepted for exchange. Each Redemption Right will entitle the holder
thereof to sell the related share of Common Stock to the Company for $20.25
during the first 20 business days after the fourth anniversary of the Expiration
Date (as defined in the Offer to Exchange).
WHEREAS, the issuance and sale of the Units will be materially enhanced by
the existence of a subordinated guarantee by Thermo Electron of the
Corporation's obligations under the Redemption Rights;
NOW, THEREFORE, FOR VALUE RECEIVED, the parties hereby agree as follows:
1. Thermo Electron hereby agrees to guarantee, as provided in the
Guarantee dated the date hereof and attached hereto as EXHIBIT A, on a
subordinated basis, the due and punctual payment of any amounts due from the
Corporation to holders of Units pursuant to the Corporation's obligation to
redeem shares of its outstanding Common Stock during the Redemption Period, in
case of the failure of the Corporation to make any such payment punctually when
and as the same shall become due and payable. For purposes of this Agreement,
the guarantee of the Redemption Rights referred to in the preceding sentence
shall be referred to as the "Guarantee."
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2. The text of the Guarantee shall be endorsed on the back of each Unit
Certificate and shall be executed and attested by duly authorized officers of
Thermo Electron under its corporate seal. Such signatures may be manual or
facsimile.
3. Upon the failure or prospective failure of the Corporation to meet its
redemption obligations during the Redemption Period, the Corporation shall
deliver to Thermo Electron, at the earliest practicable time, a statement of the
failure or the prospective failure of the Corporation to meet its obligations
and the correct amount to be paid in respect of such redemption. Failure of the
Corporation to deliver such statement shall not relieve Thermo Electron of its
obligations under this Agreement or the Guarantee.
4. The Corporation hereby covenants to cause notice of the commencement
of the Redemption Period to be published in the Wall Street Journal, and to be
mailed to the holders of record of the Redemption Rights, not less than 30 nor
more than 45 days prior to the commencement of the Redemption Period. The
Corporation hereby further covenants that in the event of the occurrence prior
to the expiration of the Redemption Rights of a merger or consolidation of the
Corporation with or into another entity (other than a merger in which the
Corporation is the surviving entity) or the sale of all or substantially all of
the assets of the Corporation, or in the event of the reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the holders of Units shall have the rights
set forth in the Offer to Exchange under the heading "Description of Securities
-- The Units."
5. This Agreement may be amended only by written amendment signed by the
parties, and no such amendment that dilutes or impairs the rights of the holders
of the Units shall be effective against such holders without the consent of the
holders of a majority of the then outstanding Units other than Thermo Electron
and its subsidiaries.
6. This Agreement is effective as of the date hereof and shall terminate
on the date that the redemption obligations of the Corporation have been
satisfied in full.
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7. This Agreement has been entered into for the benefit of the holders of
the Units from time to time and such holders are third party beneficiaries
hereof.
Executed as a sealed instrument.
THERMOLASE CORPORATION THERMO ELECTRON CORPORATION
By: _______________________________ By: _________________________________
Title: _____________________________ Title: ______________________________
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EXHIBIT A
1. FOR VALUE RECEIVED, Thermo Electron Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Guarantor"), hereby unconditionally guarantees to the holder of the Rights
represented by the Certificate upon which this Guarantee is endorsed (the
"Holder") the due and punctual payment of any amounts due from ThermoLase
Corporation ("ThermoLase") to the Holder pursuant to ThermoLase's obligation to
redeem shares of its outstanding Common Stock during the Redemption Period, as
that term is defined on the face of this Certificate, in case of the failure of
ThermoLase to make any such payment punctually when and as the same shall become
due and payable.
2. The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
ThermoLase's redemption obligations and shall be applicable without regard to
the provisions of Section 160 of the Delaware General Corporation Law (with
respect to the impairment of the capital of ThermoLase) or other legal
prohibition or impediment and irrespective of the absence of any action to
enforce the same, any waiver or consent by the Holder, the recovery of any
judgment against ThermoLase or any action to enforce the same or any other
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a guarantor. The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of ThermoLase, any right to require a proceeding first against
ThermoLase, protest or notice with respect to redemption of ThermoLase's Common
Stock as provided in this Certificate relating to redemption of ThermoLase's
Common Stock and of this Guarantee.
3. (a) Prior to satisfaction in full of the aforesaid redemption
obligations and this Guarantee, the Guarantor will not merge or consolidate
with, or sell or convey all or substantially all of its assets to, any other
corporation or entity, unless (i) either (A) the Guarantor shall be the
surviving corporation in the case of a merger or (B) the surviving, resulting or
transferee corporation or entity shall expressly assume the due and punctual
performance of all of the covenants and obligations of the Guarantor under this
Guarantee and (ii) the Guarantor or such successor corporation, as the case may
be, shall not, immediately after such merger, consolidation, sale or conveyance,
be in default in the performance of any covenants or obligations of the
Guarantor under this Guarantee.
(b) Upon any merger, consolidation, sale, conveyance or assumption as
provided in Section 3(a), the successor or assuming corporation shall succeed to
and be substituted for, and may exercise every right and power of and be subject
to
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all the obligations of, the Guarantor under this Guarantee 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 liability as
obligor under this Guarantee.
4. (a) The Guarantor, for itself, its successors and assigns, covenants
and agrees, and each Holder by his acceptance of the Units likewise covenants
and agrees, that all obligations of the Guarantor relating to payment of any
amounts due for the redemption of ThermoLase's Common Stock pursuant to the
terms set forth in this Certificate are hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, in right of payment to the prior
payment in full of all Senior Indebtedness of the Guarantor.
"Senior Indebtedness" shall mean the principal of, premium, if any, and
interest and other amounts due on or with respect to the following, whether
outstanding at the date hereof or thereafter incurred or created:
(i) indebtedness of the Guarantor for money borrowed by the
Guarantor (including, without limitation, purchase money obligations), whether
or not evidenced by debentures, bonds, notes or other corporate debt securities
or similar instruments issued by the Guarantor (including the principal of,
premium, if any, and interest on the Guarantor's 5% Senior Convertible
Debentures due 2001); provided, however, that Senior Indebtedness shall not
include (i) the Guarantor's obligations with respect to its outstanding 4 1/4%
Convertible Subordinated Debentures due 2003, which rank pari passu with the
obligations represented by this Guarantee in right of payment, (ii) the
Guarantor's subordinated guarantees of the principal, premium, if any, and
interest on the Non-Interest Bearing Convertible Subordinated Debentures due
2003 issued by Thermedics Inc., the Non-Interest Bearing Convertible
Subordinated Debentures due 2001 issued by Thermo Ecotek Corporation, the 6 1/2%
Convertible Subordinated Debentures due 1997 and the 4 5/8% Convertible
Subordinated Debentures due 2003 issued by Thermo TerraTech Inc., the
Non-Interest Bearing Convertible Subordinated Debentures due 1997 issued by
Thermo Cardiosystems Inc., the 3 3/4% Convertible Subordinated Debentures due
2000 issued by Thermo Voltek Corp., the 4 7/8% Convertible Subordinated
Debentures due 2000 issued by Thermo Remediation Inc., the 5% Convertible
Subordinated Debentures due 2000 issued by ThermoQuest Corporation or the 5%
Convertible Subordinated Debentures due 2000 issued by Thermo Optek Corporation,
which rank pari passu with the obligations represented by this Guarantee in
right of payment, or (iii) the Guarantor's subordinated guarantees of the
obligations to redeem the common stock of ThermoLyte Corporation and Thermo
Fibergen, Inc., which rank pari passu with the obligations represented by this
Guarantee in right of payment;
(ii) obligations to reimburse any bank or other person in
respect of amounts paid under letters of credit;
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(iii) leases of real property, equipment or other assets, which
leases are capitalized in the Guarantor's financial statements in accordance
with generally accepted accounting principles;
(iv) commitment, standby and other fees due and payable to
financial institutions with respect to credit facilities available to the
Guarantor;
(v) obligations of the Guarantor under interest rate or
currency swaps, floors, caps or other similar arrangements intended to hedge
interest rates or currency exposure;
(vi) indebtedness secured by any mortgage, pledge, lien or
other encumbrance on property which is owned or held by the Guarantor subject to
such mortgage, pledge, lien or encumbrance, whether or not the indebtedness
secured thereby shall have been assumed by the Guarantor;
(vii) obligations of the Guarantor constituting guarantees of
indebtedness of or joint obligations with another or others which would be
included in the preceding clauses (i), (ii), (iii), (iv), (v) or (vi) (including
the Guarantor's guarantee of the principal of, premium, if any, and interest on
the 3 3/4% Senior Convertible Debentures due 2000 of Thermo Instrument Systems
Inc. and the 4 1/2% Senior Convertible Debentures due 2003 of Thermo Instrument
Systems Inc.); and
(viii) modifications, renewals, extensions or refundings of any
of the indebtedness, leases, fees or obligations referred to in the preceding
clauses (i), (ii), (iii), (iv), (v), (vi) or (vii) or debentures, notes or other
evidences of indebtedness issued in exchange therefor; provided, however, that
Senior Indebtedness shall not include any particular indebtedness, lease, fee or
obligation, modification, renewal, extension or refunding or exchanged
securities if, under the express provisions of the instrument creating or
evidencing the same, or pursuant to which the same is outstanding, such
indebtedness, lease, fee or obligation or such modification, renewal, extension
or refunding thereof or exchanged securities are stated to be not superior in
right of payment to the Guarantees.
(b) (i) In the event of any insolvency or bankruptcy proceedings,
or any receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Guarantor or to its creditors as such, or
to its property, or in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Guarantor, 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 all Senior Indebtedness of the
Guarantor shall first be entitled to receive payment in full of the principal of
and premium, if any and interest, including interest thereon accruing after the
commencement of any such proceeding, on all Senior Indebtedness of the Guarantor
before the holders of any of the Units, shall be entitled
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to receive any payment on account of the obligations of the Guarantor pursuant
to Section 1, and to that end the holders of Senior Indebtedness of the
Guarantor shall be entitled to receive for application in payment thereof any
payment or distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in any such proceedings in
respect to obligations of the Guarantor relating to the Redemption Rights 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 Redemption Rights, to the payment of all Senior Indebtedness of
the Guarantor, provided that the rights of the holders of Senior Indebtedness of
the Guarantor are not altered by such reorganization or readjustment. For the
purposes of this Section, no consolidation, merger, conveyance or transfer made
pursuant to the provisions of Section 3 shall be deemed to be a liquidation,
reorganization, dissolution or other winding up of the Guarantor.
(ii) If under the circumstances set forth in paragraph (b)(i)
of this Section, and notwithstanding the provisions thereof, any payment or
distribution of assets of the Guarantor of any kind, whether in cash, property,
or securities (other than securities of the Guarantor as reorganized or
readjusted or securities of the Guarantor or any other corporation provided for
by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the extent provided in this Section with respect to
the obligations of the Guarantor relating to the Redemption Rights, to the
payment of all Senior Indebtedness of the Guarantor provided that the rights of
the holders of Senior Indebtedness of the Guarantor are not altered by such
reorganization or readjustment) shall be received by the holders of the Units in
respect of the obligations of the Guarantor before the principal of (and
premium, if any) and interest on all Senior Indebtedness of the Guarantor is
paid in full, such payment or distribution shall be paid over to the holders of
Senior Indebtedness of the Guarantor, ratably, for application to the payment of
the principal of (and premium, if any) and interest on all Senior Indebtedness
of the Guarantor remaining unpaid until all the principal of (and premium, if
any) and interest on all Senior Indebtedness of the Guarantor shall have been
paid in full, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness of the Guarantor.
(iii) Upon any distribution of assets of the Guarantor referred
to in this Section, the holders of the Units shall be entitled to rely upon any
final order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
and the holders of the Units shall be entitled to rely upon a certificate of the
liquidating trustee or agent or other person making any distribution to the
holders of the Units for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebtedness of the
Guarantor and other indebtedness of the Guarantor, the
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amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Section.
(c) (i) Upon the maturity of any Senior Indebtedness of the
Guarantor by lapse of time, acceleration or otherwise, all principal thereof
(and premium, if any) and interest due thereon, including interest thereon
accruing after the commencement of any proceeding of the type referred to in
paragraph (i) of Section (b) above, shall first be paid in full, or such payment
duly provided for in cash, before any payment, directly or indirectly, is made
on account of the obligations of the Guarantor relating to the Redemption
Rights.
(ii) Upon the happening of an event of default with respect to
any Senior Indebtedness of the Guarantor, as defined therein or in the
instrument under which it is outstanding, permitting the holders to accelerate
the maturity thereof, then, unless and until such event of default shall have
been cured or waived or shall have ceased to exist, no payment shall be made by
the Guarantor, directly or indirectly, on account of the obligations of the
Guarantor relating to the Redemption Rights.
(d) In case cash, securities or other property otherwise payable or
deliverable to the holders of the Units on account of the Guarantee shall have
been applied, pursuant to Section (b) or (c), to the payment of Senior
Indebtedness of the Guarantor, then, upon the payment in full of the principal
of (and premium, if any) and interest on all Senior Indebtedness of the
Guarantor, the holders of the Units shall be subrogated to any rights of any
holders of Senior Indebtedness of the Guarantor, to receive any further payments
or distributions applicable to Senior Indebtedness of the Guarantor until the
obligation of the Guarantor in respect of this Guarantee shall have been
discharged in full, and such payments or distributions received by the holders
of the Units by reason of such subrogation, of cash, securities or other
property that otherwise would be paid or distributed to the holders of Senior
Indebtedness of the Guarantor, shall, as between the Guarantor and its creditors
other than the holders of Senior Indebtedness of the Guarantor, on the one hand,
and the holders of the Units on account of this Guarantee, on the other hand, be
deemed to be a payment by the Guarantor on account of Senior Indebtedness of the
Guarantor and not on account of the Redemption Rights.
(e) No present or future holder of any Senior Indebtedness of the
Guarantor shall be prejudiced in any way in the right to enforce the
subordination of this Guarantee by any act or failure to act on the part of the
Guarantor. The provisions of this Section 4 are solely for the purpose of
defining the relative rights of the holders of Senior Indebtedness of the
Guarantor, on the one hand, and the holders of the Units on account of this
Guarantee, on the other hand, against the Guarantor and its assets, and nothing
contained in this Section 4 shall impair, as between the Guarantor and the
holder of any Units, the obligation of the Guarantor, which is
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unconditional and absolute, to perform in accordance with the terms of this
Guarantee or prevent the holder of any Units, upon default hereunder or under
the terms of the Units, from exercising all rights, powers and remedies
otherwise provided herein or therein or by applicable law, all subject to the
rights of the holders of Senior Indebtedness of the Guarantor under this Section
4 to receive cash, property or securities otherwise payable or deliverable to
the holders of the Units on account of this Guarantee.
(f) Nothing contained in this Section 4 shall prevent at any time,
except under the conditions described in Section 4(b) and (c) hereof or during
the pendency of any dissolution, winding up, liquidation or reorganization
proceedings therein referred to, the Guarantor from performing its obligations
under this Guarantee.
5. The Guarantor shall be subrogated to all rights of the holders of the
Units against ThermoLase in respect of any amounts paid by the Guarantor
pursuant to the provisions of this Guarantee to the end that the Guarantor shall
be entitled to receive the shares of ThermoLase Common Stock as to which it
makes payments in respect of ThermoLase's redemption obligations hereunder.
6. This Guarantee shall be governed by and construed in accordance with
the laws of Commonwealth of Massachusetts.
7. The Guarantor hereby certifies and warrants that all acts, conditions
and things required to be done and performed and to have happened precedent to
the creation and issuance of this Guarantee and to constitute the same a valid
obligation of the Guarantor have been done and performed and have happened in
due compliance with all applicable laws.
8. By his acceptance hereof, each Holder acknowledges and agrees that
this Guarantee supersedes any and all prior guarantees by Guarantor to such
Holder with respect to any redemption obligations of ThermoLase as to its Common
Stock.
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0. The Holder shall at all times be a beneficiary under, and shall be
entitled to enforce, that certain Guarantee Agreement dated as of ___________,
1997 by and between the Guarantor and ThermoLase. A copy of such Guarantee
Agreement will be provided to the Holder, without charge, upon written request
to the Guarantor.
WITNESS the facsimile seal of the Guarantor and the facsimile signatures of
its duly authorized officers.
Dated: ________________, 1997
_______________________ _________________________
Secretary [Seal] President and Chief
Executive Officer
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