<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 1996
REGISTRATION NO. 333-8697
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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THERMO BIOANALYSIS CORPORATION
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C> <C>
DELAWARE 3826 85-0429899
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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504 AIRPORT ROAD, SANTA FE, NEW MEXICO 87504-2108
(505) 471-3232
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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SANDRA L. LAMBERT, SECRETARY
THERMO BIOANALYSIS CORPORATION
C/O THERMO ELECTRON CORPORATION
81 WYMAN STREET
POST OFFICE BOX 9046
WALTHAM, MASSACHUSETTS 02254-9046
(617) 622-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C> <C>
SETH H. HOOGASIAN, ESQ. HAL J. LEIBOWITZ, ESQ. EDWIN L. MILLER, JR., ESQ.
GENERAL COUNSEL HALE AND DORR TESTA, HURWITZ & THIBEAULT, LLP
THERMO BIOANALYSIS CORPORATION 60 STATE STREET 125 HIGH STREET
C/O THERMO ELECTRON BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02110
CORPORATION (617) 526-6000 (617) 248-7000
81 WYMAN STREET
POST OFFICE BOX 9046
WALTHAM, MASSACHUSETTS
02254-9046
(617) 622-1000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement has become effective.
------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
For purposes of the electronic filing of this Registration Statement,
amounts expressed in British pounds sterling are referred to as "gbp#".
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION -- DATED AUGUST 29, 1996
PROSPECTUS
1,000,000 SHARES
THERMO BIOANALYSIS CORPORATION
COMMON STOCK
All of the shares of Common Stock offered hereby are being sold by Thermo
BioAnalysis Corporation (the "Company"), a majority-owned subsidiary of Thermo
Instrument Systems Inc. ("Thermo Instrument"), which is a majority-owned
subsidiary of Thermo Electron Corporation ("Thermo Electron"). Following this
offering, Thermo Instrument will own approximately 71.4% of the outstanding
shares of Common Stock of the Company (assuming no exercise of the Underwriters'
over-allotment option).
Prior to this offering, there has been no public market for the Common
Stock of the Company. It is currently estimated that the initial public offering
price will be between $13.00 and $16.00 per share. See "Underwriting" for
information relating to the factors to be considered in determining the initial
public offering price. The Company has applied to have the Common Stock approved
for listing on the American Stock Exchange.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
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<CAPTION>
UNDERWRITING
DISCOUNTS PROCEEDS TO
PRICE TO PUBLIC AND COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share......................... $ $ $
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Total(3).......................... $ $ $
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<FN>
(1) The Company, Thermo Instrument and Thermo Electron have agreed to indemnify
the Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $1,000,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 150,000 shares of Common Stock solely to cover
over-allotments, if any. If this option is fully exercised, the total price
to the public would be $ , the total underwriting discounts and
commissions would be $ and the total proceeds to the Company before
estimated expenses would be $ . See "Underwriting."
</TABLE>
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The shares of Common Stock offered by this Prospectus are offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of the shares
will be made in New York, New York on or about , 1996.
NATWEST SECURITIES LIMITED
LEHMAN BROTHERS
SMITH BARNEY INC.
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 4
[PICTURES]
At the upper left of the page is a graphic image depicting a number of
Microtiter plate trays manufactured by the Company's DYNEX subsidiary.
To the right of this graphic is the following caption:
The Company's DYNEX subsidiary is a market leader in Microtiter plate
technology, which significantly improves the speed and efficiency of
immunoassay testing. The Company also manufactures a complete line of
Microtiter detection systems as well as fully automated testing systems.
--------------------------------------
Below and to the right of this graphic image and caption are two graphic images
depicting computer hardware and instrumentation housing the laboratory
information management systems and chromatography data systems produced by
the Company's LabSystems division.
Next to these graphics is the following caption:
The Company's LabSystems information management systems division designs and
develops computerized laboratory information management systems ("LIMS") and
chromatography data systems. The Company is recognized as one of the world's
leading LIMS suppliers.
--------------------------------------
THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR
MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE AMERICAN STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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FOR UNITED KINGDOM PURCHASERS: THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO THE PUBLIC (AS DEFINED IN THE COMPANIES ACT 1985) AND NO PROSPECTUS HAS BEEN
OR WILL BE REGISTERED OR ISSUED IN THE UNITED KINGDOM IN RESPECT OF THE COMMON
STOCK. CONSEQUENTLY, THE COMMON STOCK MUST NOT BE OFFERED FOR SALE OR SOLD IN
THE UNITED KINGDOM EXCEPT TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN
ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT)
FOR THE PURPOSES OF THEIR BUSINESSES OR TO PERSONS WHO IT IS REASONABLE TO
EXPECT WILL ACQUIRE, HOLD, MANAGE OR DISPOSE OF INVESTMENTS (AS PRINCIPAL OR
AGENT) FOR THE PURPOSES OF THEIR BUSINESS OR ARE OTHERWISE OFFERED TO PERSONS IN
THE CONTEXT OF THEIR TRADES, PROFESSIONS OR OCCUPATIONS.
THIS PROSPECTUS MAY ONLY BE ISSUED OR PASSED ON TO ANY PERSON IN THE UNITED
KINGDOM IF THAT PERSON IS OF A KIND DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL
SERVICES ACT 1986 (INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER 1995 OR WITHIN
ARTICLE 8(1) OF THE FINANCIAL SERVICES ACT 1986 (INVESTMENT ADVERTISEMENTS)
(EXEMPTIONS) (NO. 2) ORDER 1995.
------------------------
IAsys, LASERMAT, Microtiter, MRX, Multichrom and SpectraPHORESIS are
registered trademarks, and DIAS, DIAS Ultra, DYNAMO, Fluorolite, Microlite, MLX,
MRX-HD, SampleManager and VISION 2000 are trademarks, of Thermo BioAnalysis
Corporation or its subsidiaries. All other trademarks or tradenames referred to
in this Prospectus are the property of their respective owners.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in this Prospectus. Except as otherwise indicated, all information contained in
this Prospectus assumes no exercise of the Underwriters' over-allotment option.
Investors should carefully consider the information set forth under the heading
"Risk Factors."
THE COMPANY
Thermo BioAnalysis designs, manufactures and markets instruments and
information management systems for use in biochemical research and production,
as well as in clinical diagnostics. The Company focuses on three principal
product areas:
- Instrumentation. The Company markets a broad range of instruments and
consumables based on proprietary immunoassay, optical biosensor, mass
spectrometry and capillary electrophoresis technologies.
- Information Management Systems. The Company offers laboratory
information management systems and chromatography data systems for use in
laboratories and clinical testing facilities. The Company's information
management systems are designed to facilitate the monitoring and analysis
of samples throughout the laboratory or clinical lifecycle.
- Health Physics. The Company markets radiation detection instrumentation
and complete radiation monitoring systems for use in and around nuclear
power plants and other facilities where radioactive materials are used.
During the past decade, life sciences researchers have made significant
advances in identifying the basic mechanisms of biological activity at the
molecular level. These advances have created the need for increasingly
sophisticated instrumentation that allows companies to capitalize on the
improved understanding of molecular biology by developing novel drug therapies
and diagnostic products for human and animal health. In addition to the
significantly more complex biological problems under investigation, these
advances have also dramatically increased the quantity of information that needs
to be analyzed and processed. As a result, the ability to enhance productivity
and reduce product development time and cost in life sciences research has
become an increasingly important challenge and a potential competitive advantage
for pharmaceutical and biotechnology companies. These factors underly the rapid
growth in demand for life sciences instrumentation and related products as well
as the introduction of advanced bioanalytical systems such as those developed
and marketed by the Company.
The Company's strategy is to develop and market a broad portfolio of
instruments and information management systems for biochemistry applications
that address the needs of the laboratory and clinical diagnostic markets. The
Company seeks to implement this strategy through a combination of innovative
research and development and strategic acquisitions designed to expand its
technologies and product offerings. For example, the Company's recently-acquired
Affinity Sensors division has developed a line of optical biosensors that enable
near real-time analysis of molecular interactions. In addition, in February 1996
the Company acquired DYNEX Technologies ("DYNEX"), formerly Dynatech
Laboratories, a division of Dynatech Corporation, a leading supplier of
automated systems, detection systems and consumables for the immunoassay market.
The Company markets and sells its products worldwide through a number of
channels, including a direct sales force, independent sales representatives,
distributors and original equipment manufacturers.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by the Company..................... 1,000,000 shares
Common Stock to be Outstanding after this Offering(1)... 9,101,500 shares
Proposed AMEX Symbol.................................... TBA
Use of Proceeds......................................... General corporate purposes,
including acquisitions
</TABLE>
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(1) Does not include 925,000 shares of Common Stock reserved for issuance under
the Company's stock-based compensation plans and 3,030,303 shares of Common
Stock reserved for issuance upon the conversion of $50.0 million principal
amount of the Company's 4.875% Subordinated Convertible Note, due to Thermo
Instrument (the "Convertible Note"). As of June 29, 1996, options to
purchase 570,000 shares of Common Stock had been granted and were
outstanding under these plans. See "Capitalization," "Dilution," "Management
-- Compensation of Directors" and "-- Compensation of Executive Officers,"
"Relationship with Thermo Electron and Thermo Instrument," and Notes 2 and 9
of Notes to the Company's Consolidated Financial Statements.
3
<PAGE> 6
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED (3)
----------------------
SIX MONTHS ENDED SIX MONTHS
(1) FISCAL ENDED
FISCAL YEAR ------------------- YEAR ------------
--------------------------------------------- JULY 1, JUNE 29, ------- JUNE 29,
1991 (1) 1992 (1) 1993 1994 1995 1995 1996 (2) 1995 1996
-------- -------- ------- ------- ------- -------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................... $24,737 $20,120 $24,479 $25,127 $22,534 $11,686 $29,782 $80,803 $ 36,970
Gross Profit...................... 12,674 9,139 11,469 10,951 9,498 4,860 13,676 42,785 17,043
Research and Development
Expenses........................ 2,308 2,448 2,242 2,042 1,325 612 2,921 8,882 4,036
Write-off of Acquired
Technology...................... -- -- -- -- -- -- 3,500 -- --
Operating Income (Loss)........... 6,256 2,624 4,313 3,855 3,369 1,939 (1,762) 3,660 (972)
Net Income (Loss)................. 3,511 1,175 2,538 2,400 2,514 1,307 (2,683) 822 (1,574)
Earnings (Loss) per
Share (4)....................... .53 .18 .38 .36 .32 .18 (.33) .11 (.19)
Weighted Average
Shares (4)...................... 6,617 6,617 6,617 6,617 7,811 7,403 8,219 7,811 8,219
</TABLE>
<TABLE>
<CAPTION>
JUNE 29, 1996
----------------------------
AS
PRO FORMA (5) ADJUSTED (6)
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<S> <C> <C>
BALANCE SHEET DATA:
Working Capital....................................................................... $34,125 $ 46,683
Total Assets.......................................................................... 96,063 108,621
Subordinated Convertible Note, Due to Parent Company.................................. 50,000 50,000
Shareholders' Investment.............................................................. 26,466 39,024
</TABLE>
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(1) Derived from unaudited financial statements.
(2) Includes the results of DYNEX since its acquisition by the Company on
February 7, 1996 and the results of the Affinity Sensors and LabSystems
divisions of Fisons plc ("Fisons") since their acquisition by Thermo
Instrument on March 29, 1996.
(3) The pro forma combined statement of operations data was derived from the pro
forma combined condensed statement of operations included elsewhere in this
Prospectus. The pro forma combined statement of operations data sets forth
the results of operations for fiscal year 1995 and the six months ended June
29, 1996, as if the acquisitions of DYNEX and Affinity Sensors and
LabSystems, the issuance of the $50.0 million principal amount 4.875%
Subordinated Convertible Note ("the Convertible Note") to Thermo Instrument
and the repayment of the $30.0 million principal amount note payable to
Thermo Electron had occurred on January 1, 1995. The pro forma results are
not necessarily indicative of future operations or the actual results that
would have occurred had the acquisitions of DYNEX and Affinity Sensors and
LabSystems, the issuance of the Convertible Note to Thermo Instrument and
the repayment of the $30.0 million principal amount note payable to Thermo
Electron occurred on January 1, 1995.
(4) Pursuant to Securities and Exchange Commission requirements, earnings (loss)
per share have been presented for all periods. Weighted average shares for
all periods include the 6,500,000 shares issued to Thermo Instrument in
connection with the initial capitalization of the Company in February 1995
and the effect of the assumed exercise of stock options issued within one
year prior to the Company's proposed initial public offering.
(5) The pro forma balance sheet data as of June 29, 1996 is derived from the pro
forma condensed balance sheet included elsewhere in this Prospectus, which
was prepared as if the payment of $9.0 million by the Company to Thermo
Instrument in July 1996, made in consideration for the transfer of Affinity
Sensors and LabSystems, the issuance of the $50.0 million principal amount
Convertible Note to Thermo Instrument and the repayment of the $30.0 million
principal amount note payable to Thermo Electron had occurred on June 29,
1996.
(6) Adjusted to reflect the sale by the Company of 1,000,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $14.50
per share, after deducting estimated underwriting discounts and commissions
and offering expenses payable by the Company.
4
<PAGE> 7
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Accordingly, the following factors should be considered
carefully in evaluating the Company and its business before purchasing any of
such shares.
Intense Competition. The Company encounters and expects to continue to
encounter intense competition in the sale of its products. The Company believes
that the principal competitive factors affecting the markets for its products
include product features, product performance, price and service. The Company's
competitors include a number of large multinational corporations. These
companies and certain of the Company's other competitors have substantially
greater financial, marketing and other resources than 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 products than the Company. Competition could
increase if new companies enter the market or if existing competitors expand
their product lines or intensify efforts within existing product lines. There
can be no assurance that the Company's current products, products under
development or ability to develop new technologies will be sufficient to enable
it to compete effectively. See "Business -- Competition."
Rapid and Significant Technological Change and New Products. The markets
for the Company's products are characterized by rapid and significant
technological change, evolving industry standards and frequent new product
introductions and enhancements. Many of the Company's products and products
under development are technologically innovative, and require significant
planning, design, development and testing, at the technological, product and
manufacturing process levels. These activities require significant capital
commitments and investment by the Company. In addition, products that are
competitive in the Company's markets are characterized by rapid and significant
technological change due to industry standards that may change on short notice
and by the introduction of new products and technologies that render existing
products and technologies uncompetitive or obsolete. There can be no assurance
that any of the products currently being developed by the Company, or those to
be developed in the future, will be technologically feasible or accepted by the
marketplace, that any such development will be completed in any particular time
frame, or that the Company's products or proprietary technologies will not
become uncompetitive or obsolete. See "Business -- Research and Development" and
"-- Competition."
Uncertainty of Market Acceptance of New Products. Certain of the Company's
products represent alternatives to traditional instruments and methods and as a
result may be slow to achieve, or may not achieve, market acceptance, as
customers may seek further validation of the efficiency and efficacy of the
Company's technology. This is particularly true where the purchase of the
product requires a significant capital commitment. The Company's optical
biosensor, MALDI-TOF and capillary electrophoresis products are based on
relatively new technologies. The Company believes that, to a significant extent,
its growth prospects depend on its ability to gain acceptance by a broader group
of customers of the efficiency and efficacy of the Company's innovative
technologies. There can be no assurance that the Company will be successful in
obtaining such broad acceptance. See "Business -- Products" and "-- Research and
Development."
Dependence on Capital Spending Policies and Government Funding. The
Company's customers include pharmaceutical, biotechnology and chemical companies
and clinical diagnostic laboratories and companies. The capital spending
policies of these companies can have a significant effect on the demand for the
Company's products. Such policies are based on a wide variety of factors,
including the resources available to make such purchases, the spending
priorities among various types of research equipment and the policies regarding
capital expenditures during recessionary periods. Any decrease in capital
spending by life sciences companies could have a material adverse effect on the
Company's business and results of operations. Recently, biotechnology companies
have raised significant amounts of capital through public share offerings, and
most of these companies are engaged in active research and development programs
that include capital spending. However, the availability of capital through the
public markets can be cyclical and there can be no assurance that the raising of
capital by these companies will continue, nor can there be any assurance that
additional capital, if available, will result in increased sales of the
Company's products. See "Business -- Customers, Marketing and Distribution."
5
<PAGE> 8
Approximately 39% of the Company's sales during the six-month period ended
June 29, 1996 were to universities, government research laboratories, private
foundations and other institutions where funding is dependent on grants from
government agencies such as the National Institutes of Health (the "NIH") and
the equivalent of the NIH in the foreign countries where the Company markets its
products. If government funding necessary to purchase the Company's products
were to become unavailable to researchers for any extended period of time or if
overall research funding were to decrease, the Company's business and results of
operations could be adversely affected. In addition, in fiscal 1995
approximately 33% of sales by the Company's Eberline health physics subsidiary
were made to various branches of the United States government, primarily the
United States Department of Energy (the "DOE"). The Company believes that recent
uncertainties in the federal budget process have led to a decrease in demand for
the Company's health physics products from the Departments of Defense and
Energy. Revenues attributable to sales to the Departments of Defense and Energy
declined from approximately $3.0 million for the six-month period ended July 1,
1995 to approximately $1.3 million for the six-month period ended June 29, 1996.
Any further decline in purchases by the United States government, including
without limitation declines as the result of budgeting limitations, could have
an adverse effect on the Company's business and results of operations.
Dependence on Patents and Proprietary Rights. The Company places
considerable importance on obtaining patent and trade secret protection for
significant new technologies, products and processes because of the length of
time and expense associated with bringing new products through the development
process and to the marketplace. The Company's success depends in part on its
ability to develop patentable products and obtain and enforce patent protection
for its products both in the United States and in other countries. The Company
has filed and intends to file applications as appropriate for patents covering
its products. No assurance can be given that patents will issue from any pending
or future patent applications owned by or licensed to the Company or that the
claims allowed under any issued patents will be sufficiently broad to protect
the Company's technology. In addition, no assurance can be given that any issued
patents owned by or licensed to the Company will not be challenged, invalidated
or circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company. The Company could incur substantial costs in
defending itself in suits brought against it or in suits in which the Company
may assert its patent rights against others. If the outcome of any such
litigation is unfavorable to the Company, the Company's business and results of
operations could be materially adversely affected.
The commercial success of the Company will also depend in part on its
neither infringing patents issued to competitors or others nor breaching the
technology licenses upon which components of the Company's products are based.
The Company is aware of patents and patent applications belonging to competitors
and other third parties, and it is uncertain whether these patents and patent
applications will require the Company to alter its products or processes, pay
licensing fees or cease making and selling infringing products and pay damages
for past infringement. In particular, the Company is aware of a U.S. patent held
by a third party which has been asserted by such party against the design of the
cuvette used in the Company's optical biosensor system. The Company is also
aware of U.S. patents held by another third party which have been asserted by
such third party against the features of certain of the Company's MALDI-TOF mass
spectrometers. The Company had no revenues from products which allegedly
utilized features associated with these patents in fiscal 1995 because the
Company acquired its optical biosensor system in the first quarter of 1996 and
because the MALDI-TOF mass spectrometers which are the subject of certain of
these patents are currently under development. The Company believes that
revenues from products which allegedly utilized features associated with these
patents represented approximately 3% of the Company's total revenues during the
six-month period ended June 29, 1996. Although the Company believes that the
validity of these patents may be subject to challenge, if the patent holder were
successful in enforcing any such patent, the Company would be subject to damages
for past infringement and enjoined in the United States from manufacturing and
selling products utilizing the features associated with the patent, which could
have a material adverse effect on the Company's business and results of
operations.
The Company relies on trade secrets and proprietary know-how which it seeks
to protect, in part, by confidentiality agreements with its collaborators,
employees and consultants. There can be no assurance that these agreements will
not be breached, that the Company would have adequate remedies for any breach or
that the Company's trade secrets will not otherwise become known or be
independently developed by competitors. See "Business -- Patents and Proprietary
Technology."
6
<PAGE> 9
Government Regulations; No Assurance of Regulatory Approval. The
production and marketing of certain of the Company's products and its ongoing
research and development activities are subject to regulation by government
authorities in the United States and in other countries. To the extent that an
analytical instrument will be used in human clinical or diagnostic applications,
the manufacturer of that instrument must submit to the U.S. Food and Drug
Administration (the "FDA"), prior to commercial distribution of the instrument,
either a premarket notification ("510(k)") or a premarket approval ("PMA")
application. The Company has, to date, been required to obtain 510(k) clearance
with respect to certain clinical applications of its Microtiter technology
products. There can be no assurance that 510(k) clearance for any future product
or modification of an existing product will be granted by the FDA within a
reasonable time frame, if at all, that in the future the FDA will not require
manufacturers of certain medical devices to engage in a more thorough and time
consuming approval process than the 510(k) process, or that the FDA or certain
corresponding state or international government agencies will permit marketing
of the Company's products in their respective jurisdictions.
As a result of the clinical applications of certain of the Company's
Microtiter technology products, the Company is registered with the FDA as a
medical device manufacturer. As such, the Company may be inspected on a routine
basis by the FDA for compliance with the FDA's Good Manufacturing Practices and
other applicable regulations. These regulations require that the Company
manufacture its products and maintain related documentation in a prescribed
manner with respect to manufacturing, testing and quality control activities.
Further, the Company is required to comply with various FDA requirements for
reporting of product malfunctions and other matters.
The regulatory standards for manufacturing are currently being applied
stringently by the FDA and state regulatory agencies. Noncompliance with FDA or
applicable state agency regulations or discovery of previously unknown problems
with a product, manufacturer or facility may result in restrictions on such
product or manufacturer, including fines, recalls, injunctions or seizures of
products, refusal of the government to approve or clear product approval
applications or to allow the Company to enter into government supply contracts,
or even withdrawal of the product from the market or criminal prosecution, any
of which could have a material adverse effect on the Company's business and
results of operations.
International regulatory bodies often establish varying regulations
governing product standards, packaging requirements, labeling requirements,
import restrictions, tariff regulations, duties and tax requirements. In order
to continue to sell its products in Europe, the Company is required to maintain
an ISO 9000 series registration, an internationally-recognized set of quality
standards, and each of its products is required to obtain a CE mark, evidence of
compliance with European Union electronic safety requirements. While the Company
has an active program to comply with CE mark requirements and an ISO 9000
compliance program, there can be no assurance that the Company will be
successful in maintaining its compliance with applicable certification
requirements. Any violation of, and the cost of compliance with, these
regulations or requirements could have a material adverse effect on the
Company's business and results of operations.
See "Business -- Government Regulations."
Uncertainty of Patient Reimbursement. The Company estimates that revenues
from products used in diagnostic testing represented approximately 9% of the
Company's total revenues in the six-month period ended June 29, 1996. The
Federal government regulates reimbursement of fees for certain diagnostic
examinations and capital equipment acquisition costs connected with services to
Medicare beneficiaries. Recent legislation has limited Medicare reimbursement
for diagnostic examinations. For example, deficit reduction measures have
resulted in reimbursement rate reductions in the past and may result in further
rate reductions in the future. These policies may have the effect of limiting
the availability or reimbursement for procedures, and as a result may inhibit or
reduce demand by healthcare providers for products in the markets in which the
Company competes. While the Company cannot predict what effect the policies of
government entities and other third party payors will have on future sales of
the Company's products, there can be no assurance that such policies would not
have an adverse impact on the operations of the Company.
Potential Product Liability. The Company's business exposes it to
potential product liability claims which are inherent in the manufacturing,
marketing and sale of biomedical instruments and diagnostic
7
<PAGE> 10
products, and as such the Company may face substantial liability to patients for
damages resulting from the faulty design or manufacture of its products. The
Company currently maintains product liability insurance, but there can be no
assurance that this insurance will provide sufficient coverage in the event of a
claim, that the Company will be able to maintain such coverage on acceptable
terms, if at all, or that a product liability claim would not materially
adversely affect the business or financial condition of the Company.
Risks Associated with Acquisition Strategy. The Company's strategy
includes the acquisition of businesses and technologies that complement or
augment the Company's existing product lines. For example, in February 1996 the
Company acquired DYNEX Technologies, formerly Dynatech Laboratories, from
Dynatech Corporation, and in July 1996 acquired the Affinity Sensors and
LabSystems divisions of Fisons plc from Thermo Instrument. Promising
acquisitions are difficult to identify and complete for a number of reasons,
including competition among prospective buyers and the need for regulatory
approvals, including antitrust approvals. 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. See
"Use of Proceeds," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business -- Background."
Risks Associated With International Operations. International sales
accounted for 33% of the Company's revenues in fiscal 1995. The Company expects
that this percentage will increase in fiscal 1996 as a result of its
acquisitions of DYNEX, Affinity Sensors and LabSystems. The Company intends to
continue to expand its presence in international markets. International revenues
are subject to a number of risks, including the following: agreements may be
difficult to enforce and receivables difficult to collect through a foreign
country's legal system; foreign customers may have longer payment cycles;
foreign countries may impose additional withholding taxes or otherwise tax the
Company's foreign income, impose tariffs or adopt other restrictions on foreign
trade; fluctuations in exchange rates may affect product demand and adversely
affect the profitability in U.S. dollars of products and services provided by
the Company in foreign markets where payment of the Company's products and
services is made in the local currency; U.S. export licenses may be difficult to
obtain; and the protection of intellectual property in foreign countries may be
more difficult to enforce. There can be no assurance that any of these factors
will not have a material adverse impact on the Company's business and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Customers, Marketing and Distribution."
Potential Fluctuations in Quarterly Performance. The Company's quarterly
operating results may vary significantly depending on a number of factors,
including the size, timing and shipment of individual orders, seasonality of
revenue, foreign currency exchange rates, the mix of products sold and general
economic conditions. Because the Company's operating expenses are based on
anticipated revenue levels and a high percentage of the Company's expenses are
fixed for the short term, a small variation in the timing of recognition of
revenue can cause significant variations in operating results from quarter to
quarter. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Control by Thermo Instrument. The Company's stockholders do not have the
right to cumulate votes for the election of directors. Thermo Instrument, which
will own approximately 71.4% of the outstanding Common Stock of the Company
after this offering (approximately 78.6% assuming conversion of the Convertible
Note), in each case assuming no exercise of the Underwriters' over-allotment
option, has the power to elect the entire Board of Directors of the Company and
to approve or disapprove any corporate action submitted to a vote of the
Company's stockholders. The Convertible Note is generally convertible upon
demand into up to 3,030,303 shares of Common Stock at the election of Thermo
Instrument at any time prior to July 23, 2001. See "Relationship with Thermo
Electron and Thermo Instrument" and "Security Ownership of Certain Beneficial
Owners and Management."
Potential Conflicts of Interest. The Company may be subject to potential
conflicts of interest from time to time as a result of its relationship with
Thermo Electron and Thermo Instrument. For example, conflicts may arise in the
determination of the annual services fee payable by the Company pursuant to the
Corporate Services Agreement between the Company and Thermo Electron and in
determining whether to invest funds
8
<PAGE> 11
with or borrow funds from Thermo Electron pursuant to other contractual
arrangements. Certain officers of the Company are also officers of Thermo
Instrument, Thermo Electron and/or other subsidiaries of Thermo Electron, and
are full-time employees of Thermo Instrument or Thermo Electron. Such officers
will devote only a portion of their working time to the affairs of the Company.
For financial reporting purposes, the Company's financial results are included
in the consolidated financial statements of Thermo Instrument and Thermo
Electron. The members of the Board of Directors of the Company who are also
affiliated with Thermo Electron or Thermo Instrument will consider not only the
short-term and the long-term impact of operating decisions on the Company, but
also the impact of such decisions on the consolidated financial results of
Thermo Instrument and Thermo Electron. In some instances the impact of such
decisions could be disadvantageous to the Company while advantageous to Thermo
Instrument or Thermo Electron, or vice versa. The Company is a party to various
agreements with Thermo Electron and Thermo Instrument that may limit the
Company's operating flexibility. See "Relationship with Thermo Electron and
Thermo Instrument."
Significant Additional Shares Eligible for Sale After this Offering. At
the conclusion of the 120-day period following the closing of this offering, the
Company will file a registration statement pursuant to the Securities Act of
1933, as amended (the "Securities Act"), covering the resale of 1,601,500 shares
of Common Stock held by existing investors other than Thermo Instrument. The
6,500,000 shares of Common Stock owned by Thermo Instrument will become eligible
for resale under Rule 144 promulgated under the Securities Act commencing in
February 1997. In addition, as long as Thermo Instrument is able to elect a
majority of the Company's Board of Directors, it will have the ability to cause
the Company at any time to register for resale all or a portion of the Common
Stock owned by Thermo Instrument. Thermo Instrument and the Company have agreed
not to sell any shares of Common Stock for a 180-day period after the date of
this Prospectus, other than (i) shares of Common Stock to be sold to the
Underwriters in this offering, (ii) the grant of options to purchase shares of
Common Stock pursuant to existing stock-based compensation plans, (iii) shares
of Common Stock which may be sold to Thermo Instrument, and (iv) the issuance of
shares of Common Stock as consideration for the acquisition of one or more
businesses (provided that such Common Stock may not be resold prior to the
expiration of the 180-day period referenced above).
Additional shares of Common Stock issuable upon exercise of options granted
under the Company's stock-based compensation plans will become available for
future sale in the public market at prescribed times. Sales of a significant
number of shares of Common Stock in the public market following this offering
could adversely affect the market price of the Common Stock and affect the
Company's ability to raise capital. See "Relationship with Thermo Electron and
Thermo Instrument," "Shares Eligible for Future Sale" and "Underwriting."
Immediate and Substantial Dilution. Purchasers of the Common Stock offered
hereby will incur an immediate and substantial dilution in the net tangible book
value per share of the Common Stock from the initial public offering price of
$14.23 per share. Additional dilution is likely to occur upon the exercise of
outstanding stock options. See "Dilution."
No Prior Public Market; Potential Volatility of Stock Price. Prior to this
offering, there has been no public market for the Common Stock, and there can be
no assurance that an active trading market will develop or be sustained after
this offering or that the market price of the Common Stock will not decline
below the initial public offering price. The initial public offering price will
be determined by negotiations among the Company and the Representatives of the
Underwriters. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. Factors such as
fluctuations in the Company's operating results, announcements of technological
innovations or new contracts or products by the Company or its competitors,
government regulation and approvals, developments in patent or other proprietary
rights and market conditions for stocks of companies similar to the Company
could have a significant impact on the market price of the Common Stock.
Lack of Dividends. The Company anticipates that for the foreseeable future
the Company's earnings, if any, will be retained for use in the business and
that no cash dividends will be paid on the Common Stock. Declaration of
dividends on the Common Stock will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements and general business conditions. See "Dividend Policy."
9
<PAGE> 12
Unallocated Net Proceeds. The Company has not as yet identified specific
uses of the net proceeds to be received by it from this offering, and, pending
such uses, the Company expects that it will invest such net proceeds primarily
in investment grade interest bearing or dividend bearing instruments, either
directly by the Company or pursuant to a repurchase agreement with Thermo
Electron. The Company will have discretion over the use and investment of such
proceeds. See "Use of Proceeds" and "Relationship with Thermo Electron and
Thermo Instrument -- Miscellaneous."
10
<PAGE> 13
THE COMPANY
The Company was incorporated in Delaware in February 1995 as a wholly-owned
subsidiary of Thermo Instrument. At that time, Thermo Instrument contributed all
of the assets relating to its capillary electrophoresis product line, its
MALDI-TOF division and its Eberline health physics division to the Company in
exchange for 6,500,000 shares of Common Stock and the assumption by the Company
of substantially all of the liabilities relating to such businesses. On February
7, 1996, the Company acquired all of the assets, subject to certain liabilities,
of DYNEX Technologies, formerly Dynatech Laboratories, from Dynatech
Corporation. In March 1996, Thermo Instrument acquired a substantial portion of
the businesses comprising the Scientific Instruments Division of Fisons plc
("Fisons"), a wholly-owned subsidiary of Rhone-Poulenc Rorer Inc. On July 22,
1996, the Company acquired the Affinity Sensors and LabSystems divisions of
Fisons from Thermo Instrument.
Unless the context otherwise requires, references in this Prospectus to the
Company or Thermo BioAnalysis refer to Thermo BioAnalysis Corporation and its
subsidiaries and the predecessor businesses that constitute the Company. As of
August 28, 1996, Thermo Instrument beneficially owned 80.2% of the Company's
outstanding Common Stock, excluding the shares of Common Stock issuable upon
conversion of the $50.0 million principal amount of the Company's 4.875%
Subordinated Convertible Note, due to Thermo Instrument, which was issued in
July 1996 (the "Convertible Note"). The Company's principal executive offices
are located at 504 Airport Road, Santa Fe, New Mexico 87504-2108, and its
telephone number is (505) 471-3232.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be approximately $12,558,000 (approximately
$14,591,000 if the Underwriters' over-allotment option is exercised in full),
assuming an initial public offering price of $14.50 per share and after
deducting estimated underwriting discounts and commissions and offering
expenses. The principal purposes of this offering are to increase the Company's
equity capital, to create a public market for the Common Stock and to facilitate
future access by the Company to public equity markets.
The Company expects to use the net proceeds from this offering for working
capital and other general corporate purposes, including the possible acquisition
of one or more businesses whose products are complementary with those offered by
the Company. However, the Company has no specific agreements or commitments with
respect to any acquisition that would be material to the Company.
Pending these uses, the Company expects to invest the net proceeds from
this offering primarily in investment grade interest bearing or dividend bearing
instruments, either directly by the Company or pursuant to a repurchase
agreement with Thermo Electron. See "Risk Factors -- Unallocated Net Proceeds"
and "Relationship with Thermo Electron and Thermo Instrument -- Miscellaneous."
DIVIDEND POLICY
The Company anticipates that for the foreseeable future the Company's
earnings, if any, will be retained for use in the business and that no cash
dividends will be paid on the Common Stock.
11
<PAGE> 14
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
29, 1996, on a pro forma basis as if the issuance of the $50.0 million principal
amount Convertible Note to Thermo Instrument and the repayment of the $30.0
million principal amount note payable to Thermo Electron had occurred on June
29, 1996, and as adjusted to give effect to the sale of Common Stock offered
hereby at an assumed initial public offering price of $14.50 per share and after
deducting estimated underwriting fees and commissions and offering expenses
payable by the Company.
<TABLE>
<CAPTION>
JUNE 29, 1996
-----------------------
PRO FORMA AS ADJUSTED
--------- -----------
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
Subordinated Convertible Note, Due to Parent Company.................... $50,000 $50,000
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 25,000,000 shares authorized; 8,101,500
shares issued and outstanding and 9,101,500 shares as adjusted
(1)................................................................ 81 91
Capital in excess of par value........................................ 26,917 39,465
Accumulated deficit................................................... (540) (540)
Cumulative translation adjustment..................................... 8 8
-------- --------
Total Shareholders' Investment................................ 26,466 39,024
-------- --------
Total Capitalization (Subordinated Convertible Note, Due
to Parent Company and Shareholders' Investment)......... $76,466 $89,024
======== ========
</TABLE>
- ---------------
(1) Does not include 925,000 shares of Common Stock reserved for issuance under
the Company's stock-based compensation plans and 3,030,303 shares of Common
Stock reserved for issuance upon conversion of the Convertible Note. Options
to purchase 570,000 shares of Common Stock had been granted and were
outstanding under the Company's stock-based compensation plans as of June
29, 1996. See "Dilution," "Management -- Compensation of Directors" and
"-- Compensation of Executive Officers" and Notes 2 and 9 of Notes to the
Company's Consolidated Financial Statements.
12
<PAGE> 15
DILUTION
As of June 29, 1996, the Company had a negative net tangible book value of
$10,071,000 or $1.24 per share. Negative net tangible book value per share is
determined by dividing negative net tangible book value (total tangible assets
less total liabilities) of the Company by the number of shares of Common Stock
outstanding. After giving effect to the sale of 1,000,000 shares of Common Stock
offered hereby at an assumed initial public offering price of $14.50 per share
and the receipt of the estimated net proceeds therefrom, the pro forma net
tangible book value of the Common Stock as of June 29, 1996 would have been
$2,487,000 or $.27 per share. This represents an immediate increase in net
tangible book value of $1.51 per share to existing shareholders and an immediate
dilution in net tangible book value of $14.23 per share to new investors
purchasing Common Stock in this offering. See "Risk Factors -- Immediate and
Substantial Dilution." The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed price to public............................................. $14.50
Negative net tangible book value per share as of June 29, 1996,
before this offering.......................................... $(1.24)
Increase in net tangible book value per share attributable to
this offering................................................. 1.51
------
-
Net tangible book value per share as of June 29, 1996, after this
offering (1)(2).................................................... .27
------
-
Dilution per share to new investors (1)(2).......................... $14.23
======
</TABLE>
- ---------------
(1) If the Underwriters' over-allotment option were exercised in full, the net
tangible book value per share after this offering would be $.49, resulting
in an immediate dilution of $14.01 per share to investors purchasing shares
in this offering. See "Underwriting."
(2) If all options outstanding at June 29, 1996 to purchase an aggregate of
570,000 shares of Common Stock at a weighted average price of $10.51 per
share were exercised in full, and the $50.0 million principal amount
Convertible Note issued in July 1996 was converted by Thermo Instrument into
3,030,303 shares of the Company's Common Stock in addition to the
Underwriters' exercise of the over-allotment option, the net tangible book
value per share after this offering would be $4.71, resulting in an
immediate dilution of $9.79 per share to investors purchasing shares in this
offering.
The following table sets forth as of June 29, 1996, the number of shares of
Common Stock purchased from the Company, the total consideration paid to the
Company and the average price paid per share by existing shareholders and by the
investors purchasing shares of Common Stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Thermo Instrument (1)............. 6,500,000 71.4% $12,080,000 28.4% $1.86
Other existing investors (2)...... 1,601,500 17.6 16,015,000 37.6 10.00
New investors..................... 1,000,000 11.0 14,500,000 34.0 14.50
--------- ----- ----------- ----- -----
Total........................ 9,101,500 100.0% $42,595,000 100.0%
========= ===== =========== =====
</TABLE>
- ---------------
(1) Represents the book value of net assets transferred by Thermo Instrument to
the Company in exchange for 6,500,000 shares of the Company's Common Stock.
(2) Represents the price paid for shares of Common Stock purchased for cash.
13
<PAGE> 16
SELECTED FINANCIAL INFORMATION
The selected financial information below as of and for the fiscal years
ended January 1, 1994, December 31, 1994 and December 30, 1995 has been derived
from the Company's Consolidated Financial Statements, which have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report included elsewhere in this Prospectus. This information should be read in
conjunction with the Company's Consolidated Financial Statements and related
notes included elsewhere in this Prospectus. The selected financial information
for the fiscal years ended December 28, 1991 and January 2, 1993 and for the six
month periods ended July 1, 1995 and June 29, 1996 has not been audited but, in
the opinion of the Company, includes all adjustments (consisting only of normal,
recurring adjustments) necessary to present fairly such information in
accordance with generally accepted accounting principles applied on a consistent
basis. The results of operations for the six months ended June 29, 1996 are not
necessarily indicative of results for the entire year.
<TABLE>
<CAPTION>
PRO FORMA
COMBINED (2)
----------------------
FISCAL SIX MONTHS
SIX MONTHS ENDED YEAR ENDED
FISCAL YEAR -------------------- ------- ------------
----------------------------------------------- JULY 1, JUNE 29, JUNE 29,
1991 1992 1993 1994 1995 1995 1996 (1) 1995 1996
------- ------- ------- ------- ------- -------- --------- ------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $24,737 $20,120 $24,479 $25,127 $22,534 $11,686 $ 29,782 $80,803 $ 36,970
------- ------- ------- ------- ------- ------- -------- ------- --------
Costs and Operating Expenses:
Cost of revenues............ 12,063 10,981 13,010 14,176 13,036 6,826 16,106 38,018 19,927
Selling, general and
administrative expenses... 4,110 4,067 4,914 5,054 4,804 2,309 9,017 30,243 13,979
Research and development
expenses.................. 2,308 2,448 2,242 2,042 1,325 612 2,921 8,882 4,036
Write-off of acquired
technology................ -- -- -- -- -- -- 3,500 -- --
------- ------- ------- ------- ------- ------- -------- ------- --------
18,481 17,496 20,166 21,272 19,165 9,747 31,544 77,143 37,942
------- ------- ------- ------- ------- ------- -------- ------- --------
Operating Income (Loss)....... 6,256 2,624 4,313 3,855 3,369 1,939 (1,762) 3,660 (972)
Interest Income (Expense),
Net......................... -- -- -- -- 819 238 (375) (1,690) (725)
------- ------- ------- ------- ------- ------- ------- ------ --------
Income (Loss) Before Income
Taxes....................... 6,256 2,624 4,313 3,855 4,188 2,177 (2,137) 1,970 (1,697)
Income Tax Provision
(Benefit)................... 2,745 1,449 1,775 1,455 1,674 870 546 1,148 (123)
------- ------- ------- ------- ------- ------- -------- ------- --------
Net Income (Loss)............. $ 3,511 $ 1,175 $ 2,538 $ 2,400 $ 2,514 $ 1,307 $ (2,683) $ 822 $ (1,574)
======= ======= ======= ======= ======= ======= ======== ======= ========
Earnings (Loss) per Share
(3)......................... $ .53 $ .18 $ .38 $ .36 $ .32 $ .18 $ (.33) $ .11 $ (.19)
======= ======= ======= ======= ======= ======= ======== ======= ========
Weighted Average Shares (3)... 6,617 6,617 6,617 6,617 7,811 7,403 8,219 7,811 8,219
======= ======= ======= ======= ======= ======= ======== ======= ========
BALANCE SHEET DATA (AT END OF
PERIOD):
Working Capital............... $ 5,663 $ 5,808 $ 6,333 $ 8,282 $27,105 $16,845 $(15,875) $ 34,125
Total Assets.................. 13,830 11,767 13,596 14,349 32,907 22,199 85,063 96,063
Subordinated Convertible Note,
Due to Parent Company....... -- -- -- -- -- -- -- 50,000
Shareholders' Investment...... 7,892 7,838 8,332 10,162 29,146 18,783 26,466 26,466
</TABLE>
- ---------------
(1) Includes the results of DYNEX since its acquisition by the Company on
February 7, 1996 and the results of the Affinity Sensors and LabSystems
divisions of Fisons since their acquisition by Thermo Instrument on March
29, 1996.
(2) The pro forma combined statement of operations data was derived from the pro
forma combined condensed statement of operations included elsewhere in this
Prospectus. The pro forma combined statement of operations data sets forth
the results of operations for fiscal year 1995 and the six months ended June
29, 1996, as if the acquisitions of DYNEX and Affinity Sensors and
LabSystems, the issuance of the $50.0 million principal amount Convertible
Note to Thermo Instrument and the repayment of the $30.0 million principal
amount note payable to Thermo Electron had occurred on January 1, 1995. The
pro forma balance sheet information is derived from the pro forma condensed
balance sheet included elsewhere in this Prospectus, which was prepared as
if the payment of $9.0 million by the Company to Thermo Instrument, made in
consideration for the transfer of Affinity Sensors and LabSystems, the
issuance of the $50.0 million principal amount Convertible Note to Thermo
Instrument and the repayment of the $30.0 million principal amount note
payable to Thermo Electron had occurred on June 29, 1996.
(3) Pursuant to Securities and Exchange Commission requirements, earnings (loss)
per share have been presented for all periods. Weighted average shares for
all periods include the 6,500,000 shares issued to Thermo Instrument in
connection with the initial capitalization of the Company and the effect of
the assumed exercise of stock options issued within one year prior to the
Company's proposed initial public offering.
14
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company operates in three principal areas: life sciences
instrumentation, information management systems and health physics
instrumentation. The Company's instrumentation group includes its DYNEX
Technologies and Affinity Sensors subsidiaries and its capillary electrophoresis
("CE") and MALDI-TOF mass spectrometer divisions, through which the Company
designs, manufactures and markets a broad range of instruments and consumables
based on proprietary immunoassay, optical biosensor, mass spectrometry and CE
technologies. The Company's LabSystems subsidiary designs, implements and
supports laboratory information management systems ("LIMS") and chromatography
data systems. The Company's Eberline health physics subsidiary supplies
radiation detection and counting instrumentation and sophisticated radiation
monitoring systems to the nuclear industry worldwide.
The Company's strategy is to develop and market a portfolio of instruments
and information management systems for biochemistry and other applications
through research and development of innovative products and through the
acquisition of complementary businesses and technologies. In February 1996, the
Company acquired DYNEX, which supplies automated systems, detection systems and
consumables for the immunoassay market, for $43.1 million. DYNEX incurred an
operating loss of $1.0 million on revenues of $28.5 million for the period from
April 1, 1995 through February 7, 1996. DYNEX's operating loss includes
corporate service fees charged by its former parent company of $0.7 million. In
addition, DYNEX changed suppliers of plastic resins used in the manufacture of
certain of its products. This change resulted in reduced revenue during the
transition period.
In July 1996, the Company acquired the Affinity Sensors and LabSystems
divisions of Fisons from Thermo Instrument for $9.0 million, subject to a
post-closing adjustment. Affinity Sensors supplies optical biosensors used in
life sciences research by the pharmaceutical and biotechnology industries,
universities and medical research institutes. Affinity Sensors was established
to develop and commercialize products based on a new technology, optical
biosensors, and commenced commercial sales in 1993. Affinity Sensors incurred a
pre-tax loss of $2.5 million on revenues of $2.4 million in 1995. LabSystems
markets laboratory information management systems and chromatography data
systems used in research and development, quality assurance and control, and
processing plants. LabSystems had pre-tax income of $3.1 million on revenues of
$20.0 million in 1995. Because, as of June 29, 1996, the Company, Affinity
Sensors and LabSystems were deemed for accounting purposes to be under control
of their common owner, Thermo Instrument, which had acquired a substantial
portion of the businesses comprising the Scientific Instruments Division of
Fisons on March 29, 1996, the accompanying financial information as of and for
the six months ended June 29, 1996 includes the results of operations of
Affinity Sensors and LabSystems from March 29, 1996, the date these businesses
were acquired by Thermo Instrument. During the six months ended June 29, 1996,
the Company wrote-off $3.5 million of acquired technology in connection with
these acquisitions. Because the Company had not paid Thermo Instrument for these
businesses as of June 29, 1996, the accompanying June 29, 1996 financial
statements include an amount payable to Thermo Instrument of $9.0 million,
subject to a post-closing adjustment.
RESULTS OF OPERATIONS
Six Months Ended June 29, 1996 Compared With Six Months Ended July 1, 1995
Revenues increased 155% to $29.8 million in the six months ended June 29,
1996 from $11.7 million in the six months ended July 1, 1995. This increase was
primarily due to the inclusion of $14.7 million in revenues from DYNEX, which
was acquired in February 1996, and the inclusion of $6.0 million in revenues
from LabSystems and Affinity Sensors, which were acquired as of March 29, 1996
for accounting purposes, offset in part by lower revenues at the Company's
Eberline health physics subsidiary caused primarily by reduced spending at DOE
facilities as a result of the federal budgetary impasse. In addition, sales of
the Company's MALDI-TOF product line declined due to increased competition.
The gross profit margin increased to 46% in the six months ended June 29,
1996 from 42% in the six months ended July 1, 1995, primarily due to the
inclusion of higher margin revenues at DYNEX, LabSystems
15
<PAGE> 18
and Affinity Sensors, offset in part by a decrease in margins at the Company's
MALDI-TOF division, due to a change in distribution channels from
commission-based sales agents to distributors, which resulted in reduced
revenues.
Selling, general and administrative expenses as a percentage of revenues
increased to 30% in the six months ended June 29, 1996 from 20% in the six
months ended July 1, 1995, primarily due to higher costs as a percentage of
revenues at DYNEX and LabSystems. In mid-1996 the Company implemented cost
reduction plans at DYNEX and LabSystems, which are expected to reduce selling,
general and administrative expenses as a percentage of revenues at each
business. Research and development expenses increased to $2.9 million from $0.6
million primarily due to the inclusion of expenses at DYNEX, LabSystems and
Affinity Sensors.
During the six months ended June 29, 1996, Thermo Instrument wrote-off $3.5
million in acquired technology in connection with the acquisition of Affinity
Sensors and LabSystems. Because, as of June 29, 1996, the Company, Affinity
Sensors and LabSystems were deemed for accounting purposes to be under the
common control of Thermo Instrument, this write-off is included in the Company's
results of operations.
Interest expense in the six months ended June 29, 1996 represents interest
associated with the $30.0 million principal amount promissory note issued to
Thermo Electron in February 1996 in connection with the DYNEX acquisition. This
note was repaid in July 1996 with the proceeds of the $50.0 million principal
amount Convertible Note issued to Thermo Instrument. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The effective tax rate was 40% in both periods, excluding the effect of the
March 1996 write-off of acquired technology associated with the acquisition of
U.K.-based Affinity Sensors and LabSystems, for which no tax benefit has been
recorded. This rate exceeds the statutory federal income tax rate primarily due
to the impact of state income taxes.
In 1995, the Company had sales to customers outside of the United States
which represented 33% of total revenues. With the acquisitions of DYNEX,
Affinity Sensors and LabSystems, the Company expects that an increasing
percentage of its manufacturing operations and a majority of its revenues will
be to customers outside the United States. Inherent in international operations
are risks such as greater difficulties in collecting accounts receivable due to
longer payment cycles and possible difficulties enforcing agreements and legal
claims in foreign jurisdictions. Tax rates in certain foreign countries exceed
that of the United States and foreign earnings may be subject to withholding
requirements or the imposition of tariffs, exchange controls or other
restrictions. In addition, currency exchange fluctuations affecting the
relationship between the U.S. dollar and foreign currencies may adversely affect
the Company's results of operations and cash flows. See "Risk Factors -- Risks
Associated With International Operations."
1995 Compared With 1994
Revenues decreased 10% to $22.5 million in 1995 from $25.1 million in 1994,
primarily due to lower health physics sales which resulted from lower capital
spending by commercial nuclear power producers and government laboratories, U.S.
government budget constraints and regulatory uncertainty concerning clean-up
projects.
The gross profit margin declined to 42% in 1995 from 44% in 1994. This
reduction was primarily due to lower sales of high-margin personnel
contamination monitors and environmental monitors produced by the Company's
Eberline health physics subsidiary.
Selling, general and administrative expenses as a percentage of revenues
increased to 21% in 1995 from 20% in 1994 due to the decrease in revenues noted
above. Research and development expenses decreased to $1.3 million in 1995 from
$2.0 million in 1994 primarily due to the elimination of German research and
development activities at the Company's MALDI-TOF division and a reduction in
spending at the Company's Eberline health physics subsidiary in 1994 and in
1995.
Interest income in 1995 represents interest on the net proceeds of the
Company's private placements of Common Stock in March 1995 and April 1995.
The effective tax rate was 40% in 1995 and 38% in 1994. These rates exceed
the statutory federal rate primarily due to the impact of state income taxes.
The increase in the effective rate resulted from the inability
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in 1995 to provide a tax benefit on foreign losses and a reduced tax benefit
associated with the Company's foreign sales corporation.
1994 Compared With 1993
Revenues increased 3% to $25.1 million in 1994 from $24.5 million in 1993,
due to an increase in revenues of the Company's MALDI-TOF product line caused by
increased market acceptance of those products, offset in part by lower health
physics revenues caused by reduced spending by the DOE and commercial nuclear
power producers.
The gross profit margin declined to 44% in 1994 from 47% in 1993 due to
lower sales of one of the Company's high-margin health physics instruments.
Selling, general and administrative expenses as a percentage of revenues
was 20% in both periods. Research and development expenses decreased to $2.0
million in 1994 from $2.2 million in 1993 primarily due to a reduction in
spending at the Company's Eberline health physics subsidiary in 1994.
The effective tax rate was 38% in 1994 and 41% in 1993. These rates exceed
the statutory federal rate primarily due to the impact of state income taxes.
The decrease in the effective rate resulted from the inability in 1993 to
provide a tax benefit on foreign losses.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated working capital was negative $15.9 million as of June 29,
1996, compared with $27.1 million as of December 30, 1995. The decrease in
working capital was primarily due to the issuance of a $30.0 million promissory
note to Thermo Electron to partially fund the acquisition of DYNEX and the
inclusion of an amount payable to Thermo Instrument of $9.0 million related to
the acquisition of Affinity Sensors and LabSystems. Included in working capital
are cash and cash equivalents of $12.2 million as of June 29, 1996, compared
with $17.7 million as of December 30, 1995. During the first six months of 1996,
$8.2 million of cash was provided by operating activities. Accounts payable and
other current liabilities increased by approximately $3.8 million primarily as a
result of higher accounts payable and accrued expense balances at DYNEX, which
had been reduced from normal levels in anticipation of its acquisition by the
Company. Inventory decreased by approximately $0.7 million primarily as a result
of lower balances at DYNEX due to managing production levels to carry lower
finished goods inventories. During the first six months of 1996, the Company
expended $0.4 million for the purchases of property, plant and equipment. The
Company expects to expend approximately $0.7 million for additional purchases of
property, plant and equipment during the remainder of 1996.
In February 1996, the Company purchased DYNEX for approximately $43.1
million. To fund the acquisition of DYNEX, the Company used cash and borrowed
$30.0 million from Thermo Electron pursuant to a promissory note due February
1997, and bearing interest at the 90 day Commercial Paper Composite Rate, as
quoted by Merrill Lynch, plus 25 basis points, set quarterly. The interest rate
for this note was 5.69% as of June 29, 1996.
In July 1996, the Company purchased Affinity Sensors and LabSystems from
Thermo Instrument for approximately $9.0 million, subject to a post-closing
adjustment. In connection with the acquisition of Affinity Sensors and
LabSystems, in July 1996 the Company issued to Thermo Instrument a $50.0 million
principal amount 4.875% subordinated convertible note, due 2001, convertible
into shares of the Company's Common Stock at $16.50 per share. The Company used
the proceeds of the subordinated convertible note to retire the $30.0 million
promissory note issued to Thermo Electron in connection with the acquisition of
DYNEX.
Though the Company expects to have positive cash flow from its existing
operations, the Company anticipates it will require significant amounts of cash
to pursue the acquisition of complementary businesses. The Company expects that
it will finance these acquisitions through a combination of internal funds,
including the net proceeds from the sale of the shares of Common Stock offered
hereby, additional debt or equity financing from capital markets, or short-term
borrowings from Thermo Instrument or Thermo Electron, although there is no
agreement with Thermo Instrument or Thermo Electron under which such parties are
obligated to lend funds to the Company. The Company believes that its existing
resources are sufficient to meet the capital requirements of its existing
businesses for at least the next 24 months.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS OF DYNEX TECHNOLOGIES
OVERVIEW
DYNEX Technologies operated as a division of Dynatech Corporation through
February 7, 1996. The Company acquired substantially all of the assets of DYNEX,
subject to certain liabilities, on February 7, 1996. DYNEX designs, manufactures
and markets products used in the immunoassay segment of the bioinstrumentation
market.
In describing the results of operations below, the period from April 1,
1995 through February 7, 1996 is referenced as fiscal 1996, and the years ended
March 31, 1995 and 1994 are referenced as fiscal 1995 and fiscal 1994,
respectively.
RESULTS OF OPERATIONS
Fiscal 1996 Compared With Fiscal 1995
Revenues decreased 24% to $28.5 million in fiscal 1996 from $37.3 million
in fiscal 1995. Revenues decreased $5.8 million in fiscal 1996 due to the
abbreviated fiscal year. In addition, DYNEX had sales of certain products to
customers in Russia of $0.2 million in fiscal 1996 compared with $3.0 million in
fiscal 1995.
The gross profit margin decreased to 45% in fiscal 1996 from 46% in fiscal
1995, primarily due to an increase in lower margin sales to original equipment
manufacturers ("OEM's"), offset in part by a reduction in lower margin sales in
fiscal 1996 of certain products manufactured by third parties for customers in
Russia.
Selling, general and administrative expenses as a percentage of revenues
increased to 40% in fiscal 1996 from 34% in fiscal 1995 primarily due to the
decrease in revenues discussed above. Research and development expenses
decreased to $2.3 million in fiscal 1996 from $2.5 million in fiscal 1995
primarily due to the abbreviated fiscal year.
Interest expense increased in fiscal 1996 primarily due to an increase in
the interest allocation from Dynatech Corporation as a result of increased
borrowings.
The effective tax rates in fiscal 1996 and fiscal 1995 differ from the
statutory federal income tax rate primarily due to the inability to provide a
tax benefit on losses incurred at certain subsidiaries and, to a lesser extent,
higher tax rates at certain foreign subsidiaries.
Fiscal 1995 Compared With Fiscal 1994
Revenues increased 24% to $37.3 million in fiscal 1995 from $30.1 million
in fiscal 1994. Revenues increased primarily due to increased demand, which
resulted in part from the introduction of certain new instrumentation products.
In addition, sales of certain products to customers in Russia accounted for an
increase in revenues of $2.3 million.
The gross profit margin decreased to 46% in fiscal 1995 from 49% in fiscal
1994, primarily due to the inclusion of lower margin revenues on the sale of
certain products manufactured by third parties for customers in Russia, and an
increase in lower margin sales to OEM's.
Selling, general and administrative expenses as a percentage of revenues
decreased to 34% in fiscal 1995 from 41% in fiscal 1994 primarily due to the
increase in revenues discussed above. Research and development expenses were
$2.5 million in both periods.
Interest expense decreased in fiscal 1995 primarily due to a decrease in
the interest allocation from Dynatech Corporation.
The effective tax rates in fiscal 1995 and fiscal 1994 differ from the
statutory federal income tax rate primarily due to the inability to provide a
tax benefit on losses incurred at certain subsidiaries and, to a lesser extent,
higher tax rates at certain foreign subsidiaries.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
OF AFFINITY SENSORS AND LABSYSTEMS
OVERVIEW
Affinity Sensors and LabSystems operated as divisions of Fisons plc through
March 29, 1996 at which time Thermo Instrument acquired a substantial portion of
the Scientific Instruments Division of Fisons plc (of which Affinity Sensors and
LabSystems form a part). In July 1996, the Company acquired Affinity Sensors and
LabSystems from Thermo Instrument.
Affinity Sensors was established to develop and commercialize products
based on a new technology, optical biosensors, and commenced commercial sales in
1993. LabSystems designs, implements and supports laboratory information
management systems and chromatography data systems.
RESULTS OF OPERATIONS
First Quarter 1996 Compared with First Quarter 1995
Turnover increased 7% to 2.9 million British pounds sterling in the first
quarter of 1996 from 2.7 million British pounds sterling in the first quarter of
1995. This increase was primarily due to an increase of 0.6 million British
pounds sterling in turnover at LabSystems due to increased demand for its
product in South America and Asia, partially offset by a decrease in turnover of
0.4 million British pounds sterling at Affinity Sensors due to the timing of
certain shipments.
The gross profit margin declined to 53% in the first quarter of 1996, from
63% in the first quarter of 1995, primarily due to a provision for obsolescence
recorded in the first quarter of 1996 for approximately 0.3 million British
pounds sterling.
Distribution costs represented 30% of turnover in the first quarter of 1996
compared with 24% of turnover in the first quarter of 1995. The increase was
primarily due to an increase in the reserve for bad debts of approximately 0.2
million British pounds sterling. Administrative expenses remained constant at
63% of turnover in both periods.
1995 Compared With 1994
Turnover decreased 4% to 14.4 million British pounds sterling in 1995 from
15.0 million British pounds sterling in 1994. This decrease was primarily due to
a decrease of 1.0 million British pounds sterling in turnover at LabSystems due
to a decrease in demand for its chromatography data systems, offset in part by
an increase in turnover of 0.4 million British pounds sterling at Affinity
Sensors due to increased demand.
The gross profit margin increased to 75% in 1995 from 72% in 1994,
primarily due to a change in sales mix at Affinity Sensors.
Distribution costs represented 18% of turnover in 1995 compared with 21% of
turnover in 1994. The decrease was primarily due to a restructuring of
LabSystems' United States sales office which resulted in the elimination of
approximately one third of the office's sales personnel. Administrative expenses
remained constant at 55% of turnover in both periods.
The tax provision in both periods exceeded the United Kingdom statutory
rate of 33% primarily due to losses incurred by sales offices in the United
States for which no tax benefit has been recorded.
1994 Compared With 1993
Turnover decreased 6% to 15.0 million British pounds sterling in 1994 from
16.0 million British pounds sterling in 1993. This decrease was primarily due to
a decrease of 1.7 million British pounds sterling in turnover at LabSystems due
to a decrease in demand for its chromatography data systems products, offset in
part by an increase in turnover of 0.7 million British pounds sterling at
Affinity Sensors due to increased demand.
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The gross profit margin decreased to 72% in 1994 from 74% in 1993 due to a
decrease in turnover of higher margin products at LabSystems.
Distribution costs represented 21% of turnover in 1994 compared with 18% of
turnover in 1993. This increase was primarily due to an increase of
approximately 0.4 million British pounds sterling in costs for Affinity Sensors'
United States sales office for a full year of operations in 1994 compared with
three months in 1993. Administrative expenses represented 55% of turnover in
1994 compared with 58% of turnover in 1993. This decrease was primarily due to a
write-off of 0.4 million British pounds sterling of intangibles in 1993.
The tax provision in both periods exceeds the United Kingdom statutory rate
of 33% primarily due to losses incurred by sales offices in the United States
for which no tax benefit has been recorded.
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BUSINESS
Thermo BioAnalysis designs, manufactures and markets instruments and
information management systems for use in biochemical research and production,
as well as in clinical diagnostics. The Company focuses on three principal
product areas:
- Instrumentation. The Company markets a broad range of instruments and
consumables based on proprietary immunoassay, optical biosensor, mass
spectrometry and capillary electrophoresis technologies.
- Information Management Systems. The Company offers laboratory information
management systems ("LIMS") and chromatography data systems for use in
laboratories and clinical testing facilities. The Company's information
management systems are designed to facilitate the monitoring and analysis
of samples throughout the laboratory or clinical lifecycle.
- Health Physics. The Company markets radiation detection instrumentation
and complete radiation monitoring systems for use in and around nuclear
power plants and other facilities where radioactive materials are used.
During the past decade, life sciences researchers have made significant
advances in identifying the basic mechanisms of biological activity at the
molecular level. These advances have created the need for increasingly
sophisticated instrumentation that allows companies to capitalize on the
improved understanding of molecular biology by developing novel drug therapies
and diagnostic products for human and animal health. In addition to the
significantly more complex biological problems under investigation, these
advances have also dramatically increased the quantity of information that needs
to be analyzed and processed. As a result, the ability to enhance productivity
and reduce product development time and cost in life sciences research has
become an increasingly important challenge and a potential competitive advantage
for pharmaceutical and biotechnology companies. These factors underly the rapid
growth in demand for life sciences instrumentation and related products as well
as the introduction of advanced bioanalytical systems such as those developed
and marketed by the Company.
The Company's strategy is to develop and market a broad portfolio of
instruments and information management systems for biochemistry applications
that address the needs of the laboratory and clinical diagnostic markets. The
Company seeks to implement this strategy through a combination of innovative
research and development and strategic acquisitions designed to expand its
technologies and product offerings. For example, the Company's recently-acquired
Affinity Sensors division has developed a line of optical biosensors that enable
real-time analysis of molecular interactions. In addition, in February 1996 the
Company acquired DYNEX Technologies ("DYNEX"), formerly Dynatech Laboratories, a
division of Dynatech Corporation, a leading supplier of automated systems,
detection systems, and consumables for the immunoassay market. The Company
markets and sells its products worldwide through a number of channels, including
a direct sales force, independent sales representatives, distributors and
original equipment manufacturers ("OEMs").
BACKGROUND
During the past decade, biochemical research evolved rapidly as a result of
new techniques and discoveries that enabled scientists to address biological
problems at the molecular level. In particular, dramatic strides have been made
in the understanding of the composition and function of the human genome, as
well as in such areas as antisense, ribozymes, signal transduction and gene
amplification diagnostics. These breakthroughs have in turn led to important
developments in the understanding, diagnosis and treatment of a wide variety of
diseases, including cancer, heart disease and diabetes.
Industry sources estimate that approximately 50,000 research groups are
engaged in biochemical and other forms of life sciences research activities
worldwide, including academic institutions, government laboratories and private
foundations, as well as biotechnology, pharmaceutical and chemical companies and
diagnostic laboratories. The increased emphasis on cost-effectiveness and
optimizing resources in the life sciences is forcing these organizations to
become more selective in the allocation of their research budgets.
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Consequently, these organizations have embraced new technologies which
accelerate and improve the cost effectiveness of the discovery and development
process.
At the same time as these organizations are seeking to address the effects
of cost reductions, the proliferation of new biological targets offers an
incentive for pharmaceutical companies to increase their drug discovery efforts.
Researchers at pharmaceutical and biotechnology companies, universities and
other institutions have identified numerous novel receptors, enzymes and other
proteins as drug targets and have generated information on their potential role
in human diseases. Advances in genomics research leading to the identification
of genes implicated in human diseases have also contributed to this
proliferation of new biological targets. The identification of these targets has
provided expanded opportunities for the discovery and development of new drugs
and diagnostic applications. Through combinatorial chemistry (the process of
assembling chemical molecules to rapidly produce many ordered sequences to such
molecules), scientists are creating large libraries of novel compounds which are
screened against biological targets for molecular activity. This process
requires pharmaceutical and other companies to seek methods to rapidly design,
synthesize and evaluate greater numbers of drug candidates. The Company believes
that bioanalytical instruments will provide the medium to enable pharmaceutical
companies to achieve this goal.
Traditional analytical instruments and early bioanalytical instruments and
methods were not designed to rapidly analyze subtle biological events and
process the large volume of complex data necessary to evaluate biological
functions of today's biochemical discoveries and to understand and quantify
biological mechanisms and interactions. For example, the analytical biochemistry
industry today relies primarily on technology developed ten to twenty years ago
for small-scale research use in biochemistry laboratories. The Company seeks to
address the gap it perceives in the bioanalytical instrumentation and systems
market by developing and acquiring a broad portfolio of products for
biochemistry applications that address the needs of the biochemical and clinical
diagnostics markets.
PRODUCTS
Instrumentation
The Company designs, manufactures and markets a broad range of instruments
and consumables based on proprietary immunoassay, optical biosensor, mass
spectrometry and capillary electrophoresis technologies. The Company's products
include automated systems, detection systems and consumables for the immunoassay
market offered under the "DYNEX" name; optical biosensors marketed under the
"Affinity Sensors" name; MALDI-TOF mass spectrometers; and capillary
electrophoresis systems, components and accessories.
Immunoassay. DYNEX designs, manufactures, sells and supports products for
immunoassay testing. Immunoassay is an analytical method used for the
qualitative and quantitative analysis of biological molecules. Immunoassays are
widely used in pharmaceutical and biopharmaceutical research, as well as for
clinical testing and diagnosis of patient samples. In vitro diagnostic
instruments for immunoassay testing are designed to measure the presence of
specific substances, or analytes, in blood or other body fluids. Immunoassay
testing is one of the most widely-used methods for diagnostic testing due to its
ability to detect very small quantities of analytes. Immunoassay technology is
used in a number of screening, diagnostic and monitoring tests, including tests
for pregnancy, hepatitis and HIV.
Immunoassay products are used in medical and pharmaceutical research,
clinical diagnostics, veterinary medicine, agricultural diagnostics, water
quality testing, and food and beverage testing. According to industry sources,
sales in the entire immunodiagnostic market were approximately $4.5 billion in
1995. The Company estimates the microplate instruments and consumables segment
of that market was approximately $290 million in 1995. The Company believes that
trends in the medical industry, such as the proliferation of disease, new
diagnostic discoveries and the demand for more cost-efficient automated testing
systems, will drive growth in this market over the next few years.
DYNEX is a market leader in microplate technology, which significantly
improves the speed and efficiency of immunoassay testing. This technology
enables laboratories to run analyses of up to 96 samples simultaneously using
small amounts of both the sample being tested and the chemicals used to test the
samples. Microplate systems offer clinical users the ability to automate and
increase the throughput of their
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testing processes. These systems also allow researchers to conduct tests on
small samples with increased sensitivity and consistency. DYNEX pioneered the
development of microplate technology, now an industry standard for immunoassay
testing in clinical applications and in pharmaceutical and biopharmaceutical
research, with its Microtiter product line, and holds all rights to the
Microtiter tradename.
A Microtiter system is comprised of several components, including a plastic
96-well plate, a detection device and a washer. In the Microtiter system, a
reagent, or testing chemical, is bound to the Microtiter plate. The tested
sample is placed in one of the wells; if the specific analyte being tested is
present, it will attach itself to the substance bound to the microplate. The
remainder of the sample is then washed out, leaving the analyte bound to the
well. A second reagent is then added to each well and if any analyte is present,
the second reagent adheres to it. Each well is then washed clean of unattached
reagents and analyzed with a luminescence, fluorescence or absorbance detector.
The detector measures the presence of the second reagent, either through its
luminescent or fluorescent qualities or by its color. The amount of analyte
present in the original sample can then be derived by determining the amount of
the second reagent in the well at the end of the test cycle.
The Company believes that it offers among the most sensitive, flexible and
automated Microtiter systems currently available. The primary advantage of the
DYNEX Microtiter immunoassay testing system is the breadth of the Company's line
of Microplate products and services. In addition, DYNEX's Microtiter products
are compatible with all detection technologies and many reagent test kits. A
number of immunoassay systems currently available are closed systems,
manufactured and supplied by certain reagent manufacturers. These closed systems
can only process tests made by that manufacturer, limiting flexibility and
requiring the user to purchase multiple systems in order to utilize a variety of
test kits. The Microtiter system is an open system which allows laboratories and
clinics to select the most appropriate and cost-effective assay from products
offered by several competing reagent manufacturers and to rapidly introduce new
diagnostic tests as they become available. The Company believes that this
advantage will become increasingly important as laboratories and clinics face
mounting cost pressure in the current healthcare environment.
The Company's principal immunoassay products include:
- Microtiter detection systems, which read the results of diagnostic tests
through the detection of color, luminescence or fluorescence. The Company
markets the DYNEX ImmunoAssay System ("DIAS") reader, a modular,
fully-automated detector that serves as a stand-alone reader or as the
controlling unit of DYNEX's automated Microtiter plate processing system;
the MRX and MRX-HD colorimetric detectors; the MLX luminescence detector;
and the Flourolite line of fluorescence detectors. Suggested U.S. list
prices for Microtiter plate detectors and computerized detection systems
range from approximately $9,000 to approximately $30,000.
- Automated testing systems, which combine detection, washing, reagent
dispensing, incubation and data management functions. The Company's DIAS
system with time management software allows users to automatically
process and analyze Microtiter applications and to conduct several assays
or tests concurrently or at pre-scheduled intervals. This system can be
configured to hold up to 24 Microtiter plates, resulting in the automated
analysis of up to 2,304 samples. Suggested U.S. list prices for these
systems range from approximately $50,000 to approximately $90,000,
depending on system configuration.
- Consumables, consisting primarily of small plastic Microtiter plates with
96 wells, which are used to hold the sample and reagents during the
testing process. The Company's consumables are used by both reagent
manufacturers, who coat them with reagents and resell them to
laboratories, and by researchers, who are developing new applications
using experimental reagents for testing purposes. The Company's plastic
products are manufactured using high-performance resins with
characteristics that facilitate consistent test results.
Optical Biosensors. Optical biosensor systems are a new technology used to
quantify biomolecules and characterize their functional properties. Optical
biosensor systems monitor the interaction of two or more biological compounds by
measuring changes in the refractive index caused by molecular activity. Unlike
competing technologies, which statically measure only the presence and quantity
of a biomolecule, optical
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biosensors dynamically measure the speed and strength of the molecular
interaction. The result is an analytical instrument which provides previously
unavailable information regarding molecular activity in real time without the
need for chemical or radioactive labels, thereby reducing the time associated
with the testing process. The Company believes that optical biosensors may be
useful in developing more effective therapeutics, more selective diagnostics and
a greater understanding of the molecular basis of inter- and intracellular
communication. According to industry sources, worldwide sales of optical
biosensors in 1995 have grown to approximately $30 million since their
introduction in 1990.
The Company's Affinity Sensors division ("Affinity Sensors") designs,
develops and sells optical biosensors for life sciences research in the
pharmaceutical and biotechnology industries, universities and medical research
institutes. Affinity Sensors' biosensor-based assay system, known as IAsys, is
an optical biosensor system comprised of two components, an instrument system
and a disposable biosensor which can have tailored specificity and can be used
up to one hundred or more times before disposal. The Company offers both manual
and automated versions of its IAsys optical biosensor system for performing a
broad range of assays and affinity measurements. Suggested U.S. list prices for
the IAsys optical biosensor system range from approximately $85,000 to
approximately $200,000.
The Company believes that its IAsys optical biosensor systems offer
practical, cost and time saving advantages over conventional analytical
technologies. The IAsys system eliminates the multi-step process associated with
conventional testing techniques such as enzyme-linked immunosorbant assays
("ELISA"), radio-immunoassays ("RIA"), ultracentrifugation and fluorescence
polarization, thereby reducing the amount of time necessary to obtain test
results and enhancing research productivity. The IAsys system uses a cuvette
rather than a flow-through design, thereby allowing the monitoring of reactions
for an unlimited period and the recovery of substantially all of the sample used
in the testing process.
Affinity Sensors has incorporated patented technology into the IAsys system
that directly detects an extensive range of analytes, including
biopharmaceuticals, proteins, peptides, DNA and cells. The Company believes that
the IAsys system has a wide range of applications, including life sciences
research, clinical diagnostics, environmental, industrial and defense
applications. Researchers use the Company's optical biosensors to assist them in
understanding which molecules interact, how many interact, how strongly and how
quickly they interact, and how they bind relative to one another.
MALDI-TOF Mass Spectrometry. Mass spectrometry measures the molecular
weight of a sample's components, thereby enabling identification and measurement
of organic chemical compounds and/or inorganic elements contained in the sample.
Historically, mass spectrometry has been of little use to biochemists because
mass spectrometry measurements of large molecules, such as the biomolecules that
comprise peptides and proteins which have molecular weights in excess of 3,000
daltons, were not possible.
The development of ionization techniques such as those used in the
MALDI-TOF mass spectrometer have solved this problem. MALDI-TOF mass
spectrometers, first commercially available in 1990, measure the amount of time
required for an ionized molecule to reach a detector and convert that
measurement into a measurement of mass. Using these devices, biochemists can
measure molecules with molecular weights of up to 500,000 daltons.
According to industry sources, worldwide sales of MALDI-TOF mass
spectrometers in 1995 were estimated to be approximately $74 million and
estimated to increase at a rate of approximately 20% per year through 1999. The
Company believes that the growth of this market may accelerate as the advantages
of the relatively new MALDI-TOF technology are recognized by the biotechnology
community and as new applications for the technology are developed.
The Company currently offers two MALDI-TOF mass spectrometers: LASERMAT, an
automated standard-resolution benchtop instrument controlled by a personal
computer and designed to permit biochemists to conduct fast and accurate
measurements in their own laboratories; and VISION 2000, a high-resolution,
research-grade instrument designed for the analysis of complex biomolecules with
a mass range of up to 500,000 daltons. VISION 2000 incorporates an advanced
technology for obtaining detailed structural information, such as the amino acid
sequence of a peptide, by purely instrumental means. The Company is
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also completing the development of DYNAMO, an enhanced benchtop MALDI-TOF mass
spectrometer which has significantly enhanced resolution. Suggested U.S. list
prices for the Company's MALDI-TOF mass spectrometers range from approximately
$100,000 to approximately $250,000.
Capillary Electrophoresis. Capillary electrophoresis or "CE" is a
purification and separation technique commercially introduced in 1989. CE
systems separate molecules by measuring the speeds at which different compounds
move through an extremely narrow tube or capillary that is charged with an
electric field.
The largest market for CE systems are biopharmaceutical companies, whose
research activities require state-of-the-art CE systems and related supplies.
One of the principal applications for CE systems is the analysis and separation
of biomolecules such as proteins, peptides and nucleic acids, including DNA.
Applications of DNA separation by CE include the identification of specific
individuals through DNA "fingerprinting" and the diagnosis of diseases and
specific genetic disorders such as leukemia, hepatitis and sickle cell anemia.
CE is a rapidly growing purification and separation technique, and industry
sources estimate that the total size of the CE market in 1995, including
instrumentation, service and consumables, was approximately $51 million.
The Company's SpectraPHORESIS line of CE systems includes a low-cost,
manually-controlled CE system and a fully-automated CE system with multiple
wavelength detectors. The Company recently introduced its new generation CE
system, the SpectraPHORESIS Ultra. The Company believes that the SpectraPHORESIS
Ultra has more than twice the sample capacity of competing products, thereby
permitting users to decrease labor costs by allowing longer periods of
unattended operation. The Company's CE systems offer high sensitivity, as well
as advanced data handling, control and automation features. The Company also
offers a line of CE capillaries, buffers and other consumables. Suggested U.S.
list prices for the Company's CE products range from approximately $1,750 to
approximately $40,000.
Information Management Systems
Laboratories and clinical facilities are gathering increasing amounts of
data from a variety of sources utilizing an array of instrumental and
non-instrumental techniques. These data must then be organized, interpreted,
distributed and archived for a variety of business and regulatory reasons.
Companies can improve the efficiency of their analytical laboratories by
using a laboratory information management system ("LIMS") to perform sample
login, test scheduling, test execution, automated results entry, results
validation, reporting and data archiving. LIMS benefits include minimizing the
number of laboratory personnel needed to handle increases in sample volume,
facilitating the implementation of new analytical procedures and improving
compliance with regulatory guidelines. Productivity and accuracy can also be
enhanced by reducing manual data transcription and automating error-prone manual
tasks such as sample status tracking, calculations, report preparation, and
information retrieval. In addition, LIMS facilitates the maintenance of data and
procedure security, audit trails and validation checks that are key components
in complying with regulatory agency requirements. According to industry sources,
worldwide sales of LIMS products in 1995 were approximately $200 million.
LabSystems, the Company's information management systems subsidiary,
designs, develops and supports LIMS and chromatography data systems. LabSystems
is recognized as one of the world's leading LIMS suppliers. LabSystems also
maintains an implementation support group that provides software customization
and project management services for its customers. LabSystems' products are
distributed throughout a wide user base including research and development,
quality assurance/quality control and processing facilities. A substantial
majority of LabSystems' customers are Fortune 500 companies in the process
chemical, aerospace, pharmaceutical, environmental, oil and gas, petrochemical,
automotive, food and beverage, agricultural and medical products industries.
SampleManager, LabSystems' LIMS product, is a fully-integrated suite of
software modules that provides industry-specific functionality in the areas of
statistical analysis, instrument control, pharmaceutical stability studies,
pharmaceutical batch material control and data security and integrity. The
Company believes that its SampleManager is the only LIMS product that uses open
system architecture, allowing easy
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<PAGE> 28
integration with other software packages and platforms. The current version of
SampleManager is available on DEC, HP and IBM platforms, running Rdb and Oracle
databases. The Company believes that it was the first LIMS vendor worldwide to
achieve an accredited ISO 9001/TickIT certification. As of June 30, 1996,
SampleManager had been installed in over 550 sites worldwide.
LabSystems also offers SampleManager-IDI, a software module that enables
SampleManager to interface with SAP AG's R3 office data management system. The
Company's SampleManager-IDI software module has been certified by SAP AG and
integrates SampleManager with the user's other software data systems. The
Company believes that its SampleManager-IDI interface, which is used by
approximately 30% to 35% of LabSystems' customers, is an important selling point
for the SampleManager product.
XChrom and Multichrom, the Company's chromatography data systems or "CDS"
products, are open system analytical tools which assist users in analyzing
chromatographic data obtained via gas and liquid chromatography and capillary
electrophoresis. XChrom is available on a variety of platforms, runs on any
Intel 486 or Pentium-based personal computer under Microsoft Windows NT, and may
be customized to suit most hardware configurations. Multichrom is a multi-user,
multi-channel system for the DEC Alpha AXP and VAX platforms under the OpenVMS
operating system. Chromatography instruments and autosamplers from leading
vendors can be controlled centrally by XChrom and Multichrom, providing a common
interface between instruments and aiding productivity and compliance with
regulatory practices.
XChrom and Multichrom are designed for use as stand-alone data systems or
as part of an integrated system running LIMS products. Sample lists, calibration
protocols and analytical results can be shared between the two applications,
simplifying operation and avoiding transcription errors. The close interaction
between the Company's LIMS and chromatography applications is of particular
benefit to customers operating in a regulated environment.
LabSystems recently introduced Yukon, a software interface between
SampleManager and various analytical instruments. Yukon allows laboratory
personnel to automatically send analytical results from a laboratory test
instrument to SampleManager, thereby eliminating the time-consuming task of
manually transmitting such results into the management information system and
ensuring a secure information flow free of transcription errors.
Suggested U.S. list prices for SampleManager, XChrom, Multichrom and Yukon
are approximately $150,000, $50,000, $50,000 and $7,500, respectively.
Health Physics
The Company's Eberline health physics subsidiary is a leading supplier of
radiation detection and counting instrumentation and sophisticated radiation
monitoring systems to the nuclear industry. Eberline produces a broad range of
products, including portable and stand-alone instruments and computer-integrated
systems that detect and measure nuclear radiation in and around nuclear power
plants and other facilities where radioactive materials are used. In May 1986, a
portal monitor supplied by the Company's predecessor to a nuclear power plant in
Sweden provided the first indication to Western countries of unusually high
levels of nuclear radiation that resulted from the Chernobyl reactor accident in
the former Soviet Union.
According to industry sources, worldwide sales of instruments and related
products to the nuclear industry in 1994 were approximately $521 million. The
Company believes that its Eberline health physics subsidiary offers products
which compete in approximately 35% of this worldwide market.
Approximately 65% of the radiation monitoring instruments sold by Eberline
are purchased for use in nuclear power plants and United States Department of
Energy facilities. The remainder are sold to medical and educational
institutions, the military service, state and local governments and others. For
a discussion of a recent trend in purchases by the Departments of Defense and
Energy, see "Risk Factors -- Dependence on Capital Spending Policies and
Government Funding."
The Company's radiation monitoring instruments can be separated into three
broad categories:
- Automated Contamination Monitors. Eberline offers a line of automated
contamination monitors that detect and measure trace amounts of
radioactive material on personnel, clothing, tools, wastes and other
materials that are removed from radiologically controlled or potentially
contaminated areas.
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<PAGE> 29
- Environmental Monitors. Eberline manufactures and sells a complete line
of environmental monitors, including air monitors, air samplers/pumps,
area monitors and system data acquisition computers that measure
radioactive gases such as radon and radioactive particulates in the
ambient air, in work spaces, in effluents to the atmosphere and in
residential and commercial buildings.
- Portable Monitors. Eberline also offers portable survey meters that
detect and monitor nuclear radiation dose rates and contamination levels,
electronic alarming dosimeters that are worn by personnel working in
radiologically controlled areas and a complete system of readers,
computers and software to implement a fully integrated dosimetry
management and access control system. Limits placed on dose rates are the
basis for the precautions taken to ensure the safety of personnel who
enter and work in radiologically controlled areas.
Eberline also designs, manufactures and installs complete
computer-integrated systems for monitoring effluents from nuclear power plants
and for making radiation measurements at strategic locations throughout such
facilities. These systems comprise a network of radiation monitors and data
acquisition subsystems that process and store measurements and, on request,
transmit data to a central system controller for display and recordkeeping.
Eberline provides the hardware, software and customer service for these
installed systems. Since 1978, Eberline has installed systems in more than 65
nuclear facilities worldwide.
Suggested U.S. list prices for the Company's health physics products range
from approximately $500 for portable survey meters to in excess of $1 million
for complete monitoring systems.
CUSTOMERS, MARKETING AND DISTRIBUTION
Customers
The Company has approximately 9,400 customers worldwide. The Company's
customers include pharmaceutical, biotechnology, chemical and industrial
companies as well as academic institutions, government laboratories and private
foundations. The Company anticipates that it will derive a majority of its
revenues from customers located outside of North America in fiscal 1996. See
"Risk Factors -- Risks Associated with International Operations." For more
detailed financial information regarding the Company's foreign and domestic
operations and export sales, see Note 8 of Notes to the Company's Consolidated
Financial Statements. In fiscal 1995, sales of products by the Company's
Eberline subsidiary to various branches of the United States government
accounted for approximately 24% of the Company's total revenues. No other
customer accounted for more than 10% of the Company's total revenues in fiscal
1995.
Marketing and Distribution
The Company markets and distributes its products through a number of
channels, including a direct sales force, independent sales representatives,
distributors and OEMs. The method of distribution is determined by product line
and market size and potential, as well as by local business convention, industry
mix and the availability of technically-qualified representatives.
Instrumentation. DYNEX has focused its sales efforts on the clinical
diagnostic and research markets, including healthcare and hospital facilities,
chemical and pharmaceutical manufacturers, universities, medical and
pharmaceutical research laboratories, veterinary and agricultural research
laboratories and governmental institutions such as the FDA, the NIH and the
Center for Disease Control. DYNEX's products are used principally by large
clinical and research laboratories and manufacturers, including pharmaceutical
companies, where large-batch, high volume testing methods are required.
DYNEX sells to its customers principally through its direct sales force,
OEMs and through distributors throughout the major countries in the world. DYNEX
maintains direct sales offices in the Czech Republic, France, Germany, Hong
Kong, Russia, the United Kingdom and the United States. DYNEX also sells through
manufacturers' representatives. DYNEX sells to clinical laboratories and
hospitals primarily through OEM arrangements with major reagent manufacturers,
including Johnson & Johnson, Diagnostic Products Corporation and Sanofi
Diagnostias Pasteur, which purchase consumables and instruments for resale to
their customers.
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<PAGE> 30
Affinity Sensors serves a variety of geographic markets and maintains
direct sales and service offices in the United Kingdom and the United States, as
well as distributors, including in some locations Thermo Instrument, in
Australia, Belgium, France, Germany, the Netherlands, Italy, Spain, Scandinavia,
Switzerland, Singapore and Japan. See "Relationship with Thermo Electron and
Thermo Instrument."
The Company distributes its MALDI-TOF mass spectrometry products through
its direct sales force in the United States and Western Europe and through sales
representatives elsewhere in the world. The Company distributes its MALDI-TOF
mass spectrometry products in Japan through an arrangement with ThermoQuest
Corporation, a majority-owned subsidiary of Thermo Instrument ("ThermoQuest").
ThermoQuest also distributes the Company's CE products and is the exclusive
distributor of such products in jurisdictions in which it maintains a direct
sales force. See "Relationship with Thermo Electron and Thermo Instrument."
Information Management Systems. LabSystems serves a variety of geographic
markets and maintains direct sales and service offices in the United Kingdom and
the United States, as well as a network of distributors, including in some
locations Thermo Instrument, in France, Germany, Italy, Scandinavia, Spain, the
Netherlands, the Middle East, South Africa, Australia, Brazil, Canada and
Singapore. See "Relationship with Thermo Electron and Thermo Instrument."
Health Physics. Eberline sells instruments directly in the United States
and Canada and through sales representatives elsewhere in the world. Eberline
has sales and support offices in Santa Fe, New Mexico and West Columbia, South
Carolina. In addition, direct sales representatives are located in Chicago,
Illinois, Atlanta, Georgia and Santa Fe, New Mexico.
COMPETITION
The markets for the Company's products are highly competitive. In each of
the markets it serves, the Company competes with a number of companies, many of
which have greater engineering, manufacturing and marketing resources than the
Company.
Instrumentation
DYNEX competes primarily on the basis of technological innovation, cost,
performance (including throughput and sensitivity) and flexibility. DYNEX's
principal competitors in the consumables or plastics market include Nunc-Nalge
Inc., Greiner GmbH and Corning-Costar Corporation. In the detection systems
market, DYNEX competes with Bio-Tek Instruments, Inc., Life Sciences
International Inc. and Molecular Devices Corporation. In the automated systems
market, DYNEX's competitors include BioChem Pharma Inc., Immunosystems, Inc.,
Hamilton Bonaduz AG and Tecan AG.
Affinity Sensors competes in the optical biosensor market primarily on the
basis of ease and flexibility of use, technical performance, analytical
throughput and speed of data analysis. The dominant competitor in the market for
optical biosensors is the Pharmacia Biosensor subsidiary of Pharmacia & Upjohn,
Inc.
The Company competes in the MALDI-TOF mass spectrometry market primarily on
the basis of the technical performance of its MALDI-TOF mass spectrometers as
well as on the need in the analytical biochemistry community for
highly-automated mass spectrometers. To a lesser degree, the Company also
competes on the basis of price. Principal competitors in the mass spectrometry
market include PerSeptive Biosystems, Inc., Shimadzu Corporation,
Hewlett-Packard Company ("Hewlett-Packard"), Bruker Instruments Inc. and
Micromass Ltd.
The Company competes in the market for CE systems primarily on the basis of
technical performance and automation features. The Company's principal
competitors in the CE market include Beckman Instruments, Inc. ("Beckman"),
Bio-Rad Laboratories, Inc. and Hewlett-Packard.
Information Management Systems
LabSystems competes in the high-end LIMS and CDS markets primarily on the
basis of the functionality, flexibility and technical sophistication of its
systems, as well as on its ability to tailor its software
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<PAGE> 31
packages to a customer's specific laboratory protocols and to provide superior
customer service and technical support. Significant competitors in the LIMS and
CDS markets include Perkin-Elmer Corporation, Beckman, Hewlett-Packard, the
Laboratory MicroSystems, Inc. subsidiary of Instron Corporation and Waters
Instruments, Inc.
Health Physics
Although there has been a trend toward consolidation among suppliers of
health physics instrumentation over the last five years, the market for health
physics instrumentation remains fragmented. Eberline competes in this market
primarily on the basis of product reliability and technological innovation.
Significant competitors include the Nuclear Instruments Group of EG&G, Inc., the
Nuclear Products Division of Morgan Crucible Co. plc, the Bicron/NE Technology
division of Saint-Gobain/Norton Industrial Ceramics Corporation and The Rados
Companies.
RESEARCH AND DEVELOPMENT
The Company's research and development activities are designed to provide
the Company with continued technological leadership in its markets. DYNEX's
research and development activities are focused principally on detection
systems, automated systems and consumables. DYNEX introduced the MLX
luminescence detection system in May 1996, and expects to introduce a
third-generation fully automated testing system, the DIAS Ultra, in the second
half of 1996. Affinity Sensors introduced an automated system in the second
quarter of 1996, and is currently developing multi-analyte biosensors capable of
simultaneously conducting multiple tests on a single sample, software capable of
providing real-time data analysis and improved optical designs and surface
chemistries. The Company's MALDI-TOF division is currently developing DYNAMO, an
enhanced benchtop MALDI-TOF mass spectrometer. LabSystems' current research and
development efforts are focused on expanding its existing product line by
developing additional client/server applications for its SampleManager and
XChrom products.
The Company's research and development activities include new product
development, product updates and enhancement of existing products. A substantial
amount of the Company's research and development expenses are incurred in
connection with new product development. Approximately 20% of the Company's
employees are involved with research and product development. Company-funded
research and development expenditures were approximately $2.2 million, $2.0
million and $1.3 million during fiscal 1993, 1994 and 1995, respectively.
GOVERNMENT REGULATIONS
Government regulations play a significant role in the research,
development, production and commercialization of health care products, such as
pharmaceuticals, diagnostics and certain instrumentation. None of the Company's
products currently requires FDA approval except for certain of the Company's
Microtiter technology products that are used in clinical or diagnostic
applications. FDA regulations apply not only to therapeutic and other health
care products, but also to the processes and reproduction facilities used to
produce such products.
Clinical diagnostic applications of the Company's products are and will
continue to be subject to FDA device and reagent approval and regulations.
Before a medical device can be commercially distributed, the manufacturer must
submit to the FDA either a premarket notification ("510(k)") or a premarket
approval ("PMA") application. A 510(k) notification can be submitted when the
device is substantially equivalent to another device currently being marketed in
the classes of devices eligible for marketing pursuant to 510(k) notifications.
Receipt of 510(k) clearance takes at least three months, but may take much
longer and may require the submission of clinical safety and efficacy data to
the FDA. There can be no assurance that the use of a 510(k) notification will be
available for any clinical application of the Company's products or for any of
the Company's potential diagnostic products.
A PMA, which is required for medical devices not eligible to be marketed
under a 510(k) notification, must demonstrate that the product is safe and
effective and thus requires more time to prepare and a more
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<PAGE> 32
complex submission to the FDA. Following completion of laboratory evaluations
and adequately controlled clinical trials to establish safety and efficacy of
the product for its intended use, the Company would be required to file a PMA
application, which includes the results of that research and product
development, clinical studies and related information. FDA review and approval
of a PMA application often requires 12 to 18 months or longer and must be
completed before the product may be sold for clinical diagnostic use in the
United States. The process of obtaining PMAs from the FDA and other regulatory
authorities can be costly, time consuming and subject to unanticipated delays.
The Company has, to date, been required to obtain 510(k) clearance with
respect to certain clinical applications of its Microtiter technology products.
There can be no assurance that 510(k) clearance for any future product or
modification of an existing product will be granted by the FDA within a
reasonable time frame, or at all, or that in the future the FDA will not require
manufacturers of certain medical devices to engage in a more thorough and time
consuming approval process than the 510(k) process, or that the FDA or certain
corresponding government agencies will permit marketing of the Company's systems
in their respective jurisdictions. There can be no assurance that the approvals
of the Company's or its customers' products, processes or facilities will be
granted. Any failure to obtain, or delay in obtaining, any such required
approval could adversely affect the Company's marketing efforts.
As a result of the clinical applications of certain of the Company's
Microtiter technology products, the Company is registered with the FDA as a
medical device manufacturer. As such, the Company may be inspected on a routine
basis by the FDA for compliance with the FDA's regulations regarding Good
Manufacturing Practices and other applicable regulations. These regulations
require that the Company manufacture its products and maintain related
documentation in a prescribed manner with respect to manufacturing, testing and
quality control activities. Further, the Company is required to comply with
various FDA requirements for reporting of product malfunctions and other
matters. The regulatory standards for manufacturing are currently being applied
stringently by the FDA and state regulatory agencies. Noncompliance with FDA or
applicable state agency regulations or discovery of previously unknown problems
with a product, manufacturer or facility may result in restrictions on such
product or manufacturer, including fines, costly recalls, injunction or seizure
of products, refusal of the government to approve or clear product approval
applications or to allow the Company to enter into government supply contracts
or even withdrawal of the product from the market or criminal prosecution, any
of which could have a material adverse effect on the Company's business and
results of operations.
In addition, a significant percentage of the Company's product revenues are
derived from sales outside of the United States. International regulatory bodies
often establish varying regulations governing product standards, packaging
requirements, labeling requirements, import restrictions, tariff regulations,
duties and tax requirements. As a result of the Company's sales in Europe, the
Company may be required to comply with applicable European medical device
directives. Failure to receive a CE mark certification would prohibit the
Company from selling its products in Europe, which could have a material adverse
effect on the Company's business and results of operations. The Company has
obtained, or is expected to obtain in the near future, CE mark certification for
nearly all of the products that it markets in Europe.
Certain other countries require the Company to obtain clearances for its
products prior to marketing the products in those countries. In addition,
certain countries impose product specifications that differ from those mandated
in the United States. These requirements may significantly affect the efficiency
and timeliness of international market introductions of the Company's products.
The Company is also subject to numerous environmental and safety laws and
regulations, including those governing use of hazardous materials. Any
violations of, and the costs of compliance with these regulations could
adversely impact the Company's operation.
See "Risk Factors -- Government Regulations; No Assurance of Regulatory
Approvals."
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<PAGE> 33
PATENTS AND PROPRIETARY TECHNOLOGY
The Company's policy is to protect its intellectual property rights and to
apply for patent protection when appropriate. The Company currently holds
several issued United States patents expiring at various dates ranging from 2002
to 2011. The Company also has applications pending for additional United States
patents and a number of foreign counterparts for its patents in various foreign
countries. In addition, the Company has registered or other trademarks. Patent
protection provides the Company with competitive advantages with respect to
certain systems. The Company believes, however, that technical know-how and
trade secrets are more important to its business than patent protection.
The Company seeks to maintain the confidentiality of its proprietary
technology that is not covered by patent protection by requiring employees who
work with proprietary information to sign confidentiality agreements and by
limiting access by parties outside the Company to such confidential information.
There can be no assurance, however, that these measures will prevent the
unauthorized disclosure or use of this information, or that others will not be
able to independently develop such information. Moreover, as is the case with
the Company's patent rights, the enforcement by the Company of its trade secret
rights can be lengthy and costly, with no guarantee of success.
Competitors of the Company and other third parties hold issued patents and
pending patent applications relating to certain instrumentation and other
related technologies, and it is uncertain whether these patents and patent
applications will require the Company to alter its products or processes, pay
licensing fees or cease making and selling infringing products and pay damages
for past infringement. In particular, the Company is aware of a U.S. patent held
by a third party which has been asserted by such party against the design of the
cuvette used in the Company's optical biosensor system. The Company is also
aware of U.S. patents held by another third party which have been asserted by
such third party against the features of certain of the Company's MALDI-TOF mass
spectrometers. The Company had no revenues from products which allegedly
utilized features associated with these patents in fiscal 1995 because the
Company acquired its optical biosensor system in the first quarter of 1996 and
because the MALDI-TOF mass spectrometers which are the subject of certain of
these patents are currently under development. The Company believes that
revenues from products which allegedly utilized features associated with these
patents represented approximately 3% of the Company's total revenues during the
six-month period ended June 29, 1996. Although the Company believes that the
validity of these patents may be subject to challenge, if the patent holder were
successful in enforcing any such patent, the Company would be subject to damages
for past infringement and enjoined in the United States from manufacturing and
selling products utilizing the features associated with the patent, which could
have a material adverse effect on the Company's business and results of
operations. See "Risk Factors -- Dependence on Patents and Proprietary Rights."
BACKLOG
At July 1, 1995 and June 29, 1996, the Company's backlog was approximately
$2.2 million and $13.2 million, respectively. The Company includes in backlog
only those orders for which it has received firm purchase orders and for which
delivery has been specified within twelve months. Because of the possibility of
customer changes in delivery schedules, cancellation of orders and potential
delays in product shipments, the Company's backlog as of any particular date may
not be representative of actual sales for any succeeding period.
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<PAGE> 34
FACILITIES
The Company owns and leases a number of facilities in the United States,
Europe and Asia as set forth below:
<TABLE>
<CAPTION>
APPROXIMATE OWNED/ EXPIRATION
LOCATION SQUARE FEET LEASED OF LEASE USE
- ---------------------------------- ------------ ---------- ------------ ---------------------
<S> <C> <C> <C> <C>
Santa Fe, New Mexico 60,000 Owned -- Manufacturing, Sales
& Administration
Chantilly, Virginia 50,500 Leased 2001 Manufacturing, Sales
& Administration
Altrincham, England 30,000 Leased 2015 Software Production &
Administration
Guernsey, Channel Island 23,000 Leased 1997 Manufacturing
Hemel Hempstead, England 15,000 Subleased 1996(1) Manufacturing, Sales
& Administration
Cambridge, England 12,600 Leased 2002 Manufacturing, Sales
& Administration
Denkendorf, Germany 12,000 Leased --(2) Sales
Beverly, Massachusetts 8,200 Subleased --(3) Sales and
Administration
Columbia, South Carolina 7,000 Owned -- Manufacturing, Sales
and Administration
Billingshurst, England 5,000 Leased 1996 Sales
Saint Quentin En Yvelines, France 3,900 Leased 1997 Sales
Moscow, Russia 2,200 Leased 2001 Sales
Kowloon, Hong Kong 2,100 Leased 1997 Sales
Prague, Czech Republic 1,500 Leased 1996 Sales
</TABLE>
- ------------------------
(1) Subleased from ThermoQuest. See "Relationship with Thermo Electron and
Thermo Instrument."
(2) Tenancy is month-to-month.
(3) Occupied under an informal arrangement with Fisons; building lease expires
in 2008.
The Company believes that its existing facilities and offices are adequate
for its current needs and that suitable additional space will be available as
needed in the future.
PERSONNEL
As of June 29, 1996, the Company had 497 employees, of which 103 were
engaged in research and development, 132 in sales and marketing, 148 in
manufacturing and 114 in general administrative functions. The Company's
employees at its Eberline health physics subsidiary are represented by one labor
union. None of the Company's other employees are represented by a labor union,
and the Company considers its relations with its employees to be good. The
Company's current union agreement expires in June 1997.
LEGAL PROCEEDINGS
The Company is not a party to any litigation that it believes could have a
material adverse effect on the Company or its results of operations.
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<PAGE> 35
RELATIONSHIP WITH THERMO ELECTRON
AND THERMO INSTRUMENT
The Company was incorporated in Delaware in February 1995 as a wholly-owned
subsidiary of Thermo Instrument. At that time, Thermo Instrument contributed all
of the assets relating to its CE product line, its MALDI-TOF division and its
Eberline health physics division to the Company in exchange for 6,500,000 shares
of Common Stock and the assumption by the Company of substantially all of the
liabilities relating to such businesses. On February 7, 1996, the Company
acquired all of the assets, subject to certain liabilities, of DYNEX from
Dynatech Corporation. In March 1996, Thermo Instrument acquired a substantial
portion of the businesses comprising the Scientific Instruments Division of
Fisons plc ("Fisons"), a wholly-owned subsidiary of Rhone-Poulenc Rorer Inc. On
July 22, 1996, the Company acquired the Affinity Sensors and LabSystems
divisions of Fisons from Thermo Instrument for approximately $9.0 million,
subject to a post-closing adjustment.
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created publicly and/or privately held majority-owned
subsidiaries. The Company and the other Thermo Electron subsidiaries are
hereinafter referred to herein as the "Thermo Subsidiaries."
Thermo Instrument develops, manufactures and markets analytical instruments
used to detect and monitor air pollution, radioactivity, complex chemical
compounds and toxic metals and other elements in a broad range of liquids and
solids. For its fiscal year ended December 30, 1995 and the six months ended
June 29, 1996 Thermo Instrument had consolidated revenues of $782,662,000 and
$547,123,000, respectively, and consolidated net income of $79,306,000 and
$69,339,000, respectively.
Thermo Electron and its subsidiaries develop, manufacture and market
environmental monitoring and analysis instruments, biomedical products including
heart-assist systems and respiratory care products, papermaking and recycling
equipment, alternative-energy systems, industrial process equipment and other
specialized products. Thermo Electron and its subsidiaries also provide
environmental and metallurgical services and conduct advanced technology
research and development. For its fiscal year ended December 30, 1995 and the
six months ended June 29, 1996, Thermo Electron had consolidated revenues of
$2,207,417,000 and $1,398,144,000, respectively, and consolidated net income of
$140,080,000 and $85,942,000, respectively.
See "Risk Factors -- Potential Conflicts of Interest" and "--Significant
Additional Shares Eligible for Sale After this Offering."
THE THERMO ELECTRON CORPORATE CHARTER
Thermo Electron and the Thermo Subsidiaries, including the Company,
recognize that the benefits and support that derive from their affiliation are
essential elements of their individual performance. Accordingly, Thermo Electron
and each of the Thermo Subsidiaries, including the Company, have adopted the
Thermo Electron Corporate Charter (the "Charter") to define the relationships
and delineate the nature of such cooperation among themselves. The purpose of
the Charter is to ensure that (1) all of the companies and their shareholders
are treated consistently and fairly, (2) the scope and nature of the cooperation
among the companies, and each company's responsibilities, are adequately
defined, (3) each company has access to the combined resources and financial,
managerial and technological strengths of the others, and (4) Thermo Electron
and the Thermo Subsidiaries, in the aggregate, are able to obtain the most
favorable terms from outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")to
external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and
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<PAGE> 36
credit services. Pursuant to the Charter, Thermo Electron may also provide
guarantees of debt obligations of the Thermo Subsidiaries or may obtain external
financing at the parent level for the benefit of the Thermo Subsidiaries. In
certain instances, the Thermo Subsidiaries may provide credit support to, or on
behalf of, the consolidated entity or may obtain financing directly from
external financing sources. Under the Charter, Thermo Electron is responsible
for ensuring that the Thermo Group remains in compliance with all covenants
imposed by external financing sources, including covenants related to borrowings
of Thermo Electron or other members of the Thermo Group, and for apportioning
such constraints within the Thermo Group. In addition, Thermo Electron
establishes certain internal policies and procedures applicable to members of
the Thermo Group. The cost of the services provided by Thermo Electron to the
Thermo Subsidiaries is covered under existing corporate services agreements
between Thermo Electron and each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Company, may withdraw from participation in the Charter upon 30
days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement in effect between the
withdrawing company and Thermo Electron. The withdrawal from participation does
not terminate outstanding commitments to third parties made by the withdrawing
company, or by Thermo Electron or other members of the Thermo Group, prior to
the withdrawal. However, a withdrawing company is required to continue to comply
with all policies and procedures applicable to the Thermo Group and to provide
certain administrative functions mandated by Thermo Electron so long as the
withdrawing company is controlled by or affiliated with Thermo Electron.
CORPORATE SERVICES AGREEMENT
As provided in the Charter, Thermo Electron and the Company have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Company. In
1993, 1994 and 1995, Thermo Electron assessed the Company an annual fee for the
services equal to 1.25%, 1.25% and 1.20%, respectively, of the Company's
revenues. Effective January 1, 1996, the fee was reduced to 1.00% of the
Company's total revenues. The fee may be changed by mutual agreement of the
Company and Thermo Electron. For the fiscal year ended December 30, 1995 and for
the six months ended June 29, 1996, Thermo Electron assessed the Company
$270,000 and $298,000 in fees under the Services Agreement, respectively. The
Company believes that the charges under the Services Agreement are
representative of the expenses that the Company would have incurred on a stand
alone basis and that the terms of the Services Agreement are reasonable. 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. The Services Agreement automatically renews for
successive one-year terms, unless canceled by the Company upon 30 days' prior
notice. In addition, the Services Agreement terminates automatically in the
event the Company ceases to be a member of the Thermo Group or ceases to be a
participant in the Charter. In the event of a termination of the Services
Agreement, the Company will be required to pay a termination fee equal to the
fee that was paid by the Company for services under the Services Agreement for
the nine-month period prior to termination. Following termination, Thermo
Electron may provide certain administrative services on an as-requested basis by
the Company or as required in order to meet the Company's obligations under
Thermo Electron's policies and procedures. Thermo Electron will charge the
Company a fee equal to the market rate for comparable services if such services
are provided following termination.
TAX ALLOCATION AGREEMENT
The Tax Allocation Agreement between Thermo Instrument and the Company
outlines the terms under which the Company is to be included in Thermo
Electron's consolidated Federal and state income tax returns. Under current law,
the Company will be included in such tax returns so long as Thermo Electron owns
at least
34
<PAGE> 37
80% of the outstanding common stock of Thermo Instrument and Thermo Instrument
owns at least 80% of the outstanding Common Stock of the Company. Immediately
following this offering, Thermo Instrument will own less than 80% of the
Company's outstanding Common Stock and the Company will not be included in
Thermo Electron's consolidated Federal and state income tax returns for periods
commencing thereafter.
MASTER GUARANTEE REIMBURSEMENT AGREEMENTS
The Company has entered into a Master Guarantee Reimbursement Agreement
with Thermo Electron which provides that the Company will reimburse Thermo
Electron for any costs it incurs in the event it is required to pay third
parties pursuant to any guarantees it issues on the Company's behalf. Thermo
Instrument has entered into a similar agreement with Thermo Electron with regard
to the Company's obligations which are guaranteed by Thermo Electron. The
Company has also entered into a Master Guarantee Reimbursement Agreement with
Thermo Instrument which provides that the Company will reimburse Thermo
Instrument for any costs it incurs in the event that Thermo Instrument is
required to pay Thermo Electron or any other party pursuant to any guarantees it
issues on the Company's behalf.
RELATED PARTY TRANSACTIONS
The Company has entered into a lease and services arrangement with
ThermoQuest under which ThermoQuest leases approximately 15,000 square feet of
space, and provides certain services, to the Company. The Company pays
ThermoQuest rent in an amount that is approximately equal to the Company's pro
rata share of ThermoQuest's occupancy costs and an allocated portion of
ThermoQuest's costs for providing such services. This arrangement may be
terminated by the Company or by ThermoQuest upon 30 days' prior notice. For the
six months ended June 29, 1996, the Company paid ThermoQuest approximately
$34,000 under this arrangement. The Company made no payments to ThermoQuest
under this arrangement in fiscal 1995.
ThermoQuest acts as a distributor of certain of the Company's products, is
the exclusive distributor of the Company's MALDI-TOF products in Japan and is
the exclusive distributor of the Company's CE products in countries in which it
maintains a direct sales force. In consideration of such arrangements, the
Company sells ThermoQuest such products at discounted rates negotiated by the
parties. ThermoQuest is responsible for all installation and warranty labor
obligations at its expense. These arrangements may be terminated on not less
than three months' notice by either party given after December 31, 1996. For the
six months ended June 29, 1996, the Company sold $595,000 of products to
ThermoQuest under these arrangements. Prior to 1996, ThermoQuest acted as a
commission-based sales agent for these products. Under this prior arrangement,
the Company paid ThermoQuest commissions of $1,263,000 in the fiscal year ended
December 30, 1995. In addition, the Company pays ThermoQuest a finder's fee for
each qualified lead that generates an order for the Company's MALDI-TOF products
from customers in the United States and Europe.
The Company has entered into an arrangement with ThermoQuest whereby
ThermoQuest provides assembly labor for the Company's CE products on a contract
basis. Under this arrangement, ThermoQuest assembles instruments as required by
the Company for a charge based on the sum of ThermoQuest's actual cost of
materials and the allocable portion of its labor, overhead and other indirect
expenses. For the fiscal year ended December 30, 1995 and the six months ended
June 29, 1996, the Company paid ThermoQuest approximately $600,000 and $269,000,
respectively, under this arrangement.
The Company's Eberline health physics subsidiary purchases certain
controllers and detectors from Thermo Instrument under an original equipment
manufacturer agreement. Under this agreement, the Company has the exclusive
right to sell these instruments in the United States, Canada and Mexico. In
consideration of the Company's agreement to purchase certain minimum quantities
of these instruments, Thermo Instrument grants the Company certain discounts,
which are increased for volume purchases. The Company is responsible for all
warranty repair and maintenance obligations at its expense, but obtains
replacement parts from Thermo Instrument without charge. This agreement will
remain in effect until December 31, 1996, and is automatically renewable for
one-year periods thereafter unless terminated by either party upon 90 days'
notice. For the six months ended June 29, 1996, the Company purchased $132,000
of
35
<PAGE> 38
instruments from Thermo Instrument under this agreement. The Company made no
purchases under this agreement in fiscal 1995.
The Company's Eberline health physics subsidiary also acts as a distributor
of certain Thermo Instrument product lines and, with the exception of Thermo
Instrument, is the exclusive distributor of such product lines to nuclear power
plants and government agencies in the United States and Canada. In consideration
of such arrangement, Thermo Instrument sells the Company such instruments at a
discount from Thermo Instrument's published list prices, and provides additional
quantity discounts. Thermo Instrument is responsible for warranty repairs at its
own expense. For the fiscal year ended December 30, 1995 and the six months
ended June 29, 1996, the Company purchased $212,000 and $72,000 of instruments
from Thermo Instrument, respectively, under this arrangement.
Various Thermo Instrument companies act as distributors of certain of the
Company's LabSystems and Affinity Sensors products under informal arrangements
that date from prior to the acquisition of the Fisons businesses in March 1996.
In consideration of such arrangements, the Company sells the respective Thermo
Instrument companies certain products at discounted rates negotiated by the
parties. Under such arrangements, the respective Thermo Instrument companies are
generally responsible for warranty repair and maintenance obligations. For the
fiscal year ended December 30, 1995 and the six months ended June 29, 1996,
LabSystems and Affinity Sensors sold an aggregate of $7,658,000 and $4,218,000
of products to Fisons companies that were subsequently acquired by Thermo
Instrument, respectively, under these arrangements.
The Company believes that the arrangements set forth above are on terms
comparable to those the Company would receive from unaffiliated parties.
MISCELLANEOUS
Currently, Thermo Instrument beneficially owns approximately 80.2% of the
outstanding shares of Common Stock (excluding shares of Common Stock issuable
upon conversion of the Convertible Note). Thermo Instrument presently intends to
maintain a majority interest in the Company. This may require Thermo Instrument
to convert principal amounts of the Convertible Note or to purchase additional
shares of Common Stock from time to time as the number of outstanding shares
issued by the Company increases. These purchases may be made either in the open
market or directly from the Company. See "Risk Factors -- Control by Thermo
Instrument."
The Company's cash equivalents may be invested from time to time pursuant
to a repurchase agreement with Thermo Electron. Under this agreement, the
Company in effect lends excess cash to Thermo Electron, which Thermo Electron
collateralizes with investments principally consisting of corporate notes,
United States government agency securities, money market funds, commercial paper
and other marketable securities, in the amount of at least 103% of such
obligation. The Company's funds subject to the repurchase agreement will be
readily convertible into cash by the Company and have an original maturity of
three months or less. The repurchase agreement earns a rate based on the
Commercial Paper Composite Rate plus 25 basis points, set at the beginning of
each quarter.
From time to time, the Company may transact business in the ordinary course
with other companies in the Thermo Group. All such transactions are on terms
comparable to those the Company would receive from unaffiliated parties.
36
<PAGE> 39
MANAGEMENT
The directors and executive officers of the Company and their ages as of
June 30, 1996 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------------
<S> <C> <C>
Barry S. Howe 40 Chief Executive Officer, President and Director
Donald W. Hanna 40 Vice President
John N. Hatsopoulos Vice President, Chief Financial Officer and
62 Director
Paul F. Kelleher 53 Chief Accounting Officer
Jonathan W. Painter 37 Treasurer and Director
Richard W. K. Chapman, Ph.D. 51 Chairman of the Board and Director
Denis A. Helm 57 Vice Chairman of the Board and Director
Arvin H. Smith 66 Director
Elias P. Gyftopoulos,
Ph.D.(1) 68 Director
Arnold N. Weinberg, M.D.(1) 66 Director
</TABLE>
- ---------------
(1) Member of the Audit and Human Resources Committees.
All of the Company's Directors are elected annually by the shareholders and
hold office until their respective successors are duly elected and qualified.
Executive officers are elected annually by the Board of Directors and serve at
its discretion. Messrs. Hatsopoulos, Kelleher and Painter are full-time
employees of Thermo Electron, Thermo Instrument or other subsidiaries of Thermo
Electron, but these individuals devote such time to the affairs of the Company
as the Company's needs reasonably require from time to time.
Mr. Howe has been Chief Executive Officer, President and a Director of the
Company since its inception in February 1995. Mr. Howe was also President of TSP
and its predecessor, a manufacturer of chromatography instruments for
pharmaceutical, biotechnical and environmental analysis, from September 1989 to
December 1995, and has been a Vice President of Thermo Instrument, a
manufacturer of analytical, environmental-monitoring and process-control
instrumentation, since 1994.
Mr. Hanna has been Vice President of the Company since its inception in
February 1995. Mr. Hanna was President of Thermo Instrument's National Nuclear
Corporation subsidiary, a manufacturer of products for the nuclear power
industry, from 1990 through 1994 and has been President of the Company's
Eberline subsidiary since 1994.
Mr. Hatsopoulos has been Vice President, Chief Financial Officer and a
Director of the Company since its inception in February 1995. Mr. Hatsopoulos
has been a Vice President and Chief Financial Officer of Thermo Instrument since
1988, the Chief Financial Officer of Thermo Electron, a diversified technology
company, since 1988 and an Executive Vice President of Thermo Electron since
1986. He is also a Director of Thermedics Inc., Thermo Ecotek Corporation,
Thermo Fibertek Inc., Thermo Instrument, Thermo Power Corporation, Thermo
TerraTech Inc., ThermoTrex Corporation, Thermo Optek Corporation, ThermoQuest,
Thermo Sentron Inc., Trex Medical Corporation and Lehman Brothers Funds, Inc.,
an open-end management investment company.
Mr. Kelleher has been the Chief Accounting Officer of the Company since its
inception in February 1995. Mr. Kelleher has been Vice President, Finance of
Thermo Electron since 1987 and served as its Controller from January 1982 to
January 1996. He is a Director of ThermoLase Corporation.
Mr. Painter has been Treasurer and Director of the Company since its
inception in February 1995. Mr. Painter has been Treasurer of Thermo Electron
and Thermo Instrument since August 1994. Mr. Painter had served as Director of
Strategic Planning of Thermo Electron's Thermo Fibertek Inc. subsidiary, a
supplier of paper-recycling equipment, papermaking systems and accessories, from
February 1993 through September 1994. Prior to that time, Mr. Painter was
Associate General Counsel of Thermo Electron and its subsidiaries. Mr. Painter
is a Director of Thermo Fibergen Inc.
37
<PAGE> 40
Dr. Chapman has been Chairman of the Board and a Director of the Company
since its inception in February 1995. Dr. Chapman served as President of
ThermoQuest's Finnigan Corporation subsidiary, a manufacturer of mass
spectrometers and chromatography systems, from 1992 to 1995, as Chief Executive
Officer and President of ThermoQuest, the parent company of Finnigan
Corporation, since June 1995, and as a Vice President of Thermo Instrument since
1994. Dr. Chapman is a Director of ThermoQuest and Thermo Cardiosystems Inc.
Mr. Helm has been Vice Chairman of the Board and a Director of the Company
since its inception in February 1995, and President of Thermo Instrument's
Thermo Environmental Instruments Inc. subsidiary, an environmental instruments
company, since 1981. Mr. Helm has been a Senior Vice President of Thermo
Instrument since 1994 and was a Vice President of Thermo Instrument from 1986
until 1994.
Mr. Smith has been a Director of the Company since its inception in
February 1995. Mr. Smith has been a Director and President and Chief Executive
Officer of Thermo Instrument since 1986. Mr. Smith has been an Executive Vice
President of Thermo Electron since 1991 and, prior to that time, a Senior Vice
President of that corporation since 1986. Mr. Smith is also a Director of
Thermedics Inc., Thermo Optek Corporation, ThermoQuest and ThermoSpectra
Corporation.
Dr. Gyftopoulos has been a Director of the Company since its inception in
February 1995. Dr. Gyftopoulos had been the Ford Professor of Mechanical and
Nuclear Engineering at the Massachusetts Institute of Technology for more than
five years prior to his retirement in April 1996. He is also a Director of
Thermo Cardiosystems Inc., Thermo Electron, ThermoLase Corporation, Thermo
Remediation Inc., ThermoSpectra Corporation and Thermo Voltek Corp.
Dr. Weinberg has been Professor of Medicine at the Harvard Medical School
and Medical Director of the Medical Department of the Massachusetts Institute of
Technology for at least five years.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company, Thermo Instrument, Thermo
Electron or any other companies affiliated with Thermo Electron (also referred
to as "outside Directors") receive an annual retainer of $2,000 and a fee of
$1,000 per day for attending regular meetings of the Board of Directors and $500
per day for participating in meetings of the Board of Directors held by means of
conference telephone or for participating in certain meetings of committees of
the Board of Directors held by means of conference telephone. Payment of
Directors fees is made quarterly. Dr. Chapman and Messrs. Helm, Howe,
Hatsopoulos, Painter and Smith are all employees of Thermo Electron companies
and do not receive any cash compensation from the Company for their services as
Directors. Directors are also reimbursed for reasonable out-of-pocket expenses
incurred in attending such meetings.
Directors Deferred Compensation Plan. Under the Company's Deferred
Compensation Plan for Directors (the "Deferred Compensation Plan"), a Director
has the right to defer receipt of his fees until he ceases to serve as a
Director, dies or retires from his principal occupation. In the event of a
change of control or proposed change of control of the Company that is not
approved by the Board of Directors, deferred amounts become payable immediately.
For purposes of the Deferred Compensation Plan, a change in control is defined
as (a) the occurrence, without the prior approval of the Board of Directors, of
the acquisition, directly or indirectly, by any person of 50% or more of the
outstanding Common Stock or the outstanding common stock of Thermo Instrument or
25% or more of the outstanding common stock of Thermo Electron, or (b) the
failure of the persons serving on the Board of Directors immediately prior to
any contested election of directors or any exchange offer or tender offer of the
Common Stock or the common stock of Thermo Instrument or Thermo Electron to
constitute a majority of the Board of Directors at any time within two years
following any such event. Amounts deferred pursuant to the Deferred Compensation
Plan are valued at the date of deferral as units of Common Stock. When payable,
amounts deferred may be disbursed solely in shares of Common Stock accumulated
under the Deferred Compensation Plan. The Company has reserved 25,000 shares of
Common Stock under this plan. The Deferred Compensation Plan will not become
effective until completion of an initial public offering. As of the date of this
Prospectus, no units have accumulated under this plan.
38
<PAGE> 41
Directors Stock Option Plan. The Company has adopted a Directors Stock
Option Plan (the "Plan") under which options to purchase shares of the Common
Stock will be automatically granted to each non-management Director for his
service as a Director (i) upon the later of the adoption of the Plan and his
election or appointment as a Director and (ii) for his attendance at or
participation in meetings of the Board of Directors or its committees. The Plan
provides for the grant of stock options upon a Director's initial appointment
and, beginning in 2000, awards options to purchase 1,000 shares annually to
eligible Directors, provided the Company's Common Stock is then publicly traded.
A total of 100,000 shares of Common Stock has been reserved for issuance under
the Plan.
Under the Plan, each eligible Director and each new outside Director
initially joining the Board of Directors in 1996 will be granted an option to
purchase 15,000 shares of Common Stock upon the Director's appointment or
election. The size of the award to new Directors appointed to the Board of
Directors after 1996 will be reduced by 3,750 shares in each subsequent year.
Directors initially joining the Board of Directors after 1999 would not receive
an option grant upon their appointment or election to the Board of Directors,
but would be eligible to participate in the annual option awards described
below. Options evidencing initial grants to Directors vest and are exercisable
upon the fourth anniversary of the date of grant, unless the Common Stock
underlying the option grant is registered under Section 12 ("Section 12
Registration") of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), prior to the fourth anniversary of such grant. In the event that the
effective date of Section 12 Registration occurs prior to the fourth anniversary
of the date of grant, then the option becomes exercisable (on the later of 90
days after Section 12 Registration or six months after the date of grant) and
the shares acquired upon exercise will be subject to restrictions on transfer
and the right of the Company to repurchase such shares at the exercise price in
the event the Director ceases to serve as a Director of the Company or any other
Thermo Electron company. In such event, the restrictions and repurchase rights
shall lapse or be deemed to have lapsed in annual installments of 3,750 shares
per year, starting with the first anniversary of the date of grant, provided the
Director has continuously served as a Director of the Company, Thermo Electron
or any subsidiary of Thermo Electron since the grant date. These options expire
on the fifth anniversary of the grant date, unless the Director dies, ceases to
be an eligible director or otherwise ceases to serve as a Director of the
Company, Thermo Electron or any subsidiary of Thermo Electron prior to that
date.
Commencing in 2000, eligible Directors will also receive an annual grant of
options to purchase 1,000 shares of Common Stock, provided the Common Stock is
then publicly traded. The annual grant would be made at the close of business on
the date of each annual meeting of shareholders of the Company to each outside
Director then holding office, commencing with the annual meeting to be held in
2000. Options evidencing annual grants may be exercised at any time from and
after the six-month anniversary of the date of grant and prior to the expiration
of the option on the third anniversary of the date of grant. Shares acquired
upon exercise of the options would be subject to repurchase by the Company at
the exercise price if the recipient ceased to serve as a Director of the Company
or any other Thermo Electron company prior to the first anniversary of the date
of grant for any reason other than death.
The exercise price for options granted under the Plan will be determined by
the average of the closing prices reported by the American Stock Exchange (or
such other principal exchange on which the Common Stock is then traded) for the
five trading days immediately preceding and including the date the option is
granted or, if the shares underlying the option are not so traded, at the last
price paid per share by independent investors in an arms' length transaction
with the Company prior to the date of grant.
As of June 29, 1996, options to purchase 30,000 shares of the Company's
Common Stock exercisable at $10.00 per share were outstanding under the Plan.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes compensation for services to the Company in
all capacities awarded to, earned by or paid to the Company's Chief Executive
Officer and one other executive officer for the fiscal year ended December 30,
1995 (the Chief Executive Officer and such other executive officer being
hereinafter
39
<PAGE> 42
referred to as the "Named Executive Officers"). No other executive officer of
the Company who held office at the end of fiscal 1995 met the definition of
"highly compensated" within the meaning of the Securities and Exchange
Commission's executive compensation disclosure rules during this period.
The Company is required to appoint certain executive officers and full-time
employees of Thermo Electron as executive officers of the Company, in accordance
with the Thermo Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The time and effort
devoted by these individuals to the Company's affairs is provided to the Company
under the Services Agreement between the Company and Thermo Electron.
Accordingly, the compensation for these individuals is not reported in the
following table. See "Relationship with Thermo Electron and Thermo Instrument."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION SECURITIES
------------------ UNDERLYING OPTIONS (NO. OF ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS SHARES AND COMPANY)(1) COMPENSATION(2)
- ------------------------------- -------- ------- -------------------------- ---------------
<S> <C> <C> <C> <C>
Barry S. Howe
President and Chief Executive
Officer...................... $134,000 $65,000 50,000(TBA) $ 6,128
1,650(TMO)
5,000(TLZ)
Donald W. Hanna
Vice President................. $ 95,000 $18,000 21,000(TBA) $ 4,682
</TABLE>
- ---------------
(1) All options to purchase shares of the Company's Common Stock shown in the
table were granted after the end of fiscal 1995 but are included in the
table for clarity of presentation. In addition to receiving options to
purchase Common Stock (designated in the table as TBA), Mr. Howe was granted
options to purchase shares of the common stock of Thermo Electron
(designated in the table as TMO) and ThermoLase Corporation (designated in
the table as TLZ) under Thermo Electron's stock option program.
(2) Represents the amount of matching contributions made on behalf of the Named
Executive Officer by the Company under the Thermo Electron 401(k) plan.
Stock Options Granted During Fiscal 1995
The following table sets forth certain information concerning grants of
stock options made during fiscal 1995 to each of the Named Executive Officers.
It has not been the Company's policy in the past to grant stock appreciation
rights, and no such rights were granted during fiscal 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
% OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SHARES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(2)
OPTIONS IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED(1) YEAR SHARE DATE 5% 10%
- --------------------- ---------- ------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Barry S. Howe........ 50,000(TBA) 11.9% $ 10.00 1/31/08 $398,000 $1,069,000
1,650(TMO) 0.1%(3) $ 24.85 5/23/98 $ 6,468 $ 13,580
5,000(TLZ) 0.5%(3) $ 22.75 11/28/07 $ 90,550 $ 243,250
Donald W. Hanna...... 21,000(TBA) 5.0% $ 10.00 1/31/08 $167,160 $ 448,980
</TABLE>
- ---------------
(1) All options to purchase shares of the Company's Common Stock (designated in
the table as TBA) were granted after the end of fiscal 1995 but are included
in the table for clarity of presentation. The options to
40
<PAGE> 43
purchase shares of the common stock of Thermo Electron (designated in the
table as TMO) and ThermoLase Corporation (designated in the table as TLZ)
are immediately exercisable while the options to purchase shares of the
Common Stock of the Company are not exercisable until the earlier of (i) 90
days after the effective date of the registration of the Common Stock under
Section 12 of the Exchange Act and (ii) nine years after the grant date. In
all cases, the shares acquired upon exercise are subject to repurchase by
the granting corporation at the exercise price if the optionee ceases to be
employed by the granting corporation or another Thermo Electron company. The
granting corporation may exercise its repurchase rights within six months
after the termination of the optionee's employment. For publicly traded
companies, the repurchase rights generally lapse ratably over a five- to
ten-year period, depending on the option term which may vary from seven to
twelve years, provided that the optionee continues to be employed by the
granting corporation or another Thermo Electron company. For companies that
are not publicly traded, the repurchase rights lapse in their entirety on
the ninth anniversary of the grant date. The options to purchase shares of
the common stock of Thermo Electron granted to Mr. Howe have a three-year
term and the repurchase rights lapse in their entirety on the second
anniversary of the grant date. The granting corporation may permit the
holders of all such options to exercise options and satisfy tax withholding
obligations by surrendering shares equal in fair market value to the
exercise price or withholding obligation.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5% and
10%, compounded annually from the date the respective options were granted
to their expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise. Actual gains, if any, on stock option exercises will
depend on the future performance of the common stock of the granting
corporation, the optionholders' continued employment through the option
period and the date on which the options are exercised.
(3) These options were granted under a stock option plan maintained by Thermo
Electron and accordingly are reported as a percentage of total options
granted to employees of Thermo Electron and its subsidiaries.
41
<PAGE> 44
Stock Options Exercised During Fiscal 1995 and Year-End Option Values
The following table sets forth certain information concerning each exercise
of a stock option during fiscal 1995 and outstanding stock options held at the
end of fiscal 1995 by each of the Named Executive Officers. No stock
appreciation rights were exercised or outstanding during fiscal 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
NUMBER OF YEAR-END YEAR-END
SHARES ----------------- ---------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME COMPANY EXERCISE REALIZED UNEXERCISABLE(1) UNEXERCISABLE(1)
- -------------------- -------------------- ----------- -------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
Barry S. Howe(2).... Thermo BioAnalysis -- -- 0 / 50,000 $ 0 / 225,000(3)
Thermo Instrument -- -- 89,062 / 0 $1,037,803 / 0
Thermedics -- -- 4,000 / 0 $ 44,600 / 0
Thermo Ecotek -- -- 7,500 / 0 $ 71,625 / 0
Thermo Electron 6,381 $101,094 71,787 / 0(2) $1,206,917 / 0
Thermo Fibertek -- -- 15,750 / 0 $ 159,390 / 0
Thermo Power -- -- 4,000 / 0 $ 15,100 / 0
Thermo TerraTech -- -- 4,000 / 0 $ 10,380 / 0
ThermoLase -- -- 5,000 / 0 $ 15,625 / 0
ThermoSpectra -- -- 4,000 / 0 $ 22,500 / 0
ThermoTrex -- -- 5,350 / 0 $ 198,693 / 0
Donald W. Hanna..... Thermo BioAnalysis -- -- 0 / 21,000 $ 0 / 94,500(3)
Thermo Instrument 2,812 $ 48,366 15,000 / 0 $ 163,500 / 0
Thermo Electron -- -- 21,373 / 0 (2) $ 390,793 / 0
ThermoSpectra -- -- 1,500 / 0 $ 8,438 / 0
</TABLE>
- ---------------
(1) Options to purchase shares of the Company's Common Stock were granted after
the end of fiscal 1995 but are included in the table for clarity of
presentation. All of the options reported outstanding at the end of the
fiscal year were immediately exercisable, except the options to purchase
shares of the Company's Common Stock which are not exercisable until the
earlier of (i) 90 days after the effective date of the registration of the
Common Stock under Section 12 of the Exchange Act and (ii) nine years after
the grant date. In all cases, the shares acquired upon exercise of the
options reported in the table are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be employed by
such corporation or another Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months after the
termination of the optionee's employment. For companies whose shares are not
publicly traded, the repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. For publicly traded companies, the repurchase
rights generally lapse ratably over a five to ten year period, depending on
the option term, which may vary from seven to twelve years, provided that
the optionee continues to be employed by the granting corporation or another
Thermo Electron company.
(2) Options to purchase 22,500 and 11,250 shares of the common stock of Thermo
Electron granted to Mr. Howe and Mr. Hanna, respectively, are subject to the
same terms described in footnote (1), except that the repurchase rights of
the granting corporation generally do not lapse until the tenth anniversary
of the grant date. In the event of the employee's death or involuntary
termination prior to the tenth anniversary of the grant date, the repurchase
rights of the granting corporation shall be deemed to have lapsed ratably
over a five-year period commencing with the fifth anniversary of the grant
date.
(3) No public market existed for the shares underlying the options as of
December 30, 1995. Accordingly, this value has been calculated on the basis
of an assumed market value of $14.50 per share, which is the midpoint of the
estimated public offering price range.
42
<PAGE> 45
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDER
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of June 29, 1996, and as
adjusted to reflect the sale of the shares of Common Stock offered in this
offering, by Thermo Instrument, which is the only person or entity that owns
beneficially more than 5% of the outstanding shares of Common Stock. See "Risk
Factors -- Control by Thermo Instrument."
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS NUMBER OF SHARES OUTSTANDING SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------- ------------------ ------------------
<S> <C> <C>
Thermo Electron Corporation(1)........................... 6,500,000(2) 80.2%(2)
81 Wyman Street
Waltham, Massachusetts 02254
Thermo Instrument Systems Inc.(1)........................ 6,500,000(2) 80.2%(2)
1275 Hammerwood Avenue
Sunnyvale, California 94089
</TABLE>
- ---------------
(l) Thermo Instrument is a majority-owned subsidiary of Thermo Electron and,
therefore, Thermo Electron may be deemed a beneficial owner of the shares of
Common Stock beneficially owned by Thermo Instrument. Thermo Electron
disclaims beneficial ownership of these shares. After the sale of the Common
Stock in this offering, Thermo Instrument will beneficially own
approximately 71.4% of the outstanding Common Stock (approximately 70.3% if
the Underwriters' over-allotment option is exercised in full).
(2) Excludes 3,030,303 shares of Common Stock issuable upon conversion of the
Convertible Note.
MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of June 29, 1996 as well as
information regarding the beneficial ownership of the common stock of Thermo
Instrument and Thermo Electron, as of June 29, 1996, with respect to (i) each of
the Company's Directors, (ii) each of the Named Executive Officers, and (iii)
all Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
THERMO THERMO
BIOANALYSIS INSTRUMENT THERMO ELECTRON
NAME(1) CORPORATION(2) SYSTEMS INC.(3) CORPORATION(4)
------- -------------- --------------- ---------------
<S> <C> <C> <C>
Dr. Richard W.K. Chapman............................ 500 138,671 81,631
Dr. Elias P. Gyftopoulos............................ 0 47,018 71,070
Donald W. Hanna..................................... 0 16,205 22,172
John N. Hatsopoulos................................. 0 93,122 636,980
Denis A. Helm....................................... 0 161,901 160,294
Barry S. Howe....................................... 2,000 99,962 84,442
Jonathan W. Painter................................. 0 5,768 36,273
Arvin H. Smith...................................... 9,000 431,653 512,942
Dr. Arnold N. Weinberg.............................. 0 0 0
All Directors and current executive officers as a
group (10 persons)................................ 11,500 1,012,979 1,750,707
</TABLE>
- ---------------
(1) Except as reflected in the footnotes to this table, shares of Common Stock
and common stock of Thermo Instrument and Thermo Electron beneficially owned
consist of shares owned by the indicated person or by that person for the
benefit of minor children, and all share ownership involves sole voting and
investment power.
(2) Certain officers and Directors have been granted options to purchase an
aggregate of 184,000 shares of Common Stock; however, these options will not
become exercisable until 90 days after this offering. No Director or
executive officer beneficially owned more than 1% of the Common Stock
outstanding as of
43
<PAGE> 46
such date, and all Directors and executive officers as a group beneficially
owned less than 1% of the Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially owned by Dr.
Chapman, Dr. Gyftopoulos, Mr. Hanna, Mr. Hatsopoulos, Mr. Helm, Mr. Howe,
Mr. Painter, Mr. Smith and all Directors and executive officer as a group
include 121,287, 14,465, 15,000, 83,750, 112,500, 89,062, 5,625, 234,375 and
691,064 shares, respectively, that such person or group has the right to
acquire within 60 days of June 29, 1996, through the exercise of stock
options. Shares beneficially owned by Mr. Hanna, Mr. Hatsopoulos, Mr. Helm,
Mr. Howe, Mr. Painter, Mr. Smith and all Directors and executive officers as
a group include 245, 515, 380, 263, 143, 516 and 2,445 full shares,
respectively, allocated through July 1, 1995 to their respective accounts
maintained pursuant to Thermo Electron's employee stock ownership plan
("ESOP"). The trustees of the ESOP, who have investment power over its
assets, are Mr. Hatsopoulos and Mr. Peter Pantazelos. Shares beneficially
owned by Mr. Howe include 1,968 shares held in a trust of which Mr. Howe is
the trustee. No Director or executive officer beneficially owned more than
1% of the common stock of Thermo Instrument outstanding as of June 29, 1996;
all Directors and executive officers as a group beneficially owned 1.0% of
such common stock outstanding as of such date.
(4) The shares of common stock of Thermo Electron have been adjusted to reflect
three-for-two stock splits effected on May 25, 1995 and June 5, 1996. Shares
of the common stock of Thermo Electron beneficially owned by Dr. Chapman,
Dr. Gyftopoulos, Mr. Hanna, Mr. Hatsopoulos, Mr. Helm, Mr. Howe, Mr.
Painter, Mr. Smith and all Directors and executive officers as a group
include 80,284, 9,375, 20,098, 349,935, 106,347, 73,287, 32,095, 222,411 and
991,406 shares, respectively, that such person or group has the right to
acquire within 60 days of June 29, 1996, through the exercise of stock
options. Shares beneficially owned by Mr. Hanna, Mr. Hatsopoulos, Mr. Helm,
Mr. Howe, Mr. Painter, Mr. Smith and all Directors and executive officers as
a group include 777, 1,838, 1,231, 694, 391, 1,621 and 7,780 full shares,
respectively, allocated through July 1, 1995 to their respective accounts
maintained pursuant to Thermo Electron's ESOP. The trustees of the ESOP, who
have investment power over its assets, are Mr. Hatsopoulos and Mr. Peter
Pantazelos. Shares beneficially owned by Mr. Hatsopoulos include 168,750
shares held by a QTIP trust for the benefit of Mr. Hatsopoulos'
sister-in-law and of which Mr. Hatsopoulos is a trustee. No Director or
executive officer beneficially owned more than 1% of the common stock of
Thermo Electron outstanding as of June 29, 1996; all Directors and executive
officers as a group beneficially owned 1.2% of such common stock outstanding
as of such date.
44
<PAGE> 47
DESCRIPTION OF CAPITAL STOCK
As of June 29, 1996 the Company had 25,000,000 shares of Common Stock
authorized for issuance, of which 8,101,500 were issued and outstanding. Each
share of Common Stock is entitled to pro rata participation in distributions
upon liquidation and to one vote on all matters submitted to a vote of
shareholders. Dividends may be paid to the holders of Common Stock when and if
declared by the Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive, conversion or similar rights. The
outstanding shares of Common Stock are, and the shares offered hereby when
issued will be, legally issued, fully paid and nonassessable.
The shares of Common Stock have noncumulative voting rights. As a result,
the holders of more than 50% of the shares voting can elect all the Directors if
they so choose, and in such event, the holders of the remaining shares cannot
elect any Directors. Upon completion of this offering, Thermo Instrument will
continue to beneficially own at least a majority of the outstanding Common
Stock, and will have the power to elect all of the members of the Company's
Board of Directors. Thermo Instrument is a majority-owned subsidiary of Thermo
Electron and, therefore, Thermo Electron may be deemed a beneficial owner of the
shares of Common Stock beneficially owned by Thermo Instrument. Thermo Electron
disclaims beneficial ownership of these shares.
The Company's Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of Directors. The provisions eliminate a Director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions which involve intentional misconduct or a knowing violation of
law. The Company's Certificate of Incorporation also contains provisions to
indemnify the Directors and officers of the Company to the fullest extent
permitted by the General Corporation Law of Delaware. The Company believes that
these provisions will assist the Company in attracting and retaining qualified
individuals to serve as Directors and officers.
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
45
<PAGE> 48
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, there will be 9,101,500 shares of Common
Stock of the Company outstanding (assuming no exercise of the Underwriters'
over-allotment option). The shares issued in this offering will be freely
tradable without restriction or further registration under the Securities Act of
1933, as amended (the "Securities Act"), except that any shares purchased in
this offering by affiliates of the Company, as that term is defined in Rule 144
under the Securities Act (an "Affiliate"), may generally only be resold in
compliance with applicable provisions of Rule 144.
The Company has agreed, pursuant to a Stock Purchase Agreement with the
shareholders of the Company other than Thermo Instrument, to file a registration
statement under the Securities Act covering the sale of 1,601,500 shares of the
Common Stock owned by them (the "Registrable Shares") within 120 days of the
closing of this offering. All fees, costs and expenses of the registration of
the Registrable Shares will be paid by the Company. See "Risk Factors --
Significant Additional Shares Eligible for Sale After this Offering."
As of June 29, 1996, Thermo Instrument owned 6,500,000 of the outstanding
shares of Common Stock (not including 3,030,303 shares issuable upon conversion
of the Convertible Note). Thermo Electron, Thermo Instrument and the Company
have agreed, without the prior written consent of the Representatives of the
Underwriters, not to offer, sell or otherwise dispose of any shares of Common
Stock within a 180-day period after the date of this Prospectus, other than (i)
shares of Common Stock to be sold to Underwriters in this offering, (ii) the
issuance of options to purchase Common Stock pursuant to existing stock-based
compensation plans, (iii) shares of Common Stock which may be sold to Thermo
Instrument, and (iv) the issuances of shares of Common Stock as consideration
for the acquisition of one or more businesses (provided that such Common Stock
may not be resold prior to the expiration of the 180-day period referenced
above). So long as Thermo Instrument is able to elect a majority of the Board of
Directors it will be able to cause the Company at any time to register under the
Securities Act all or a portion of the Common Stock owned by Thermo Instrument
or its affiliates, in which case it would be able to sell such shares without
restriction upon effectiveness of the registration statement.
In general, under Rule 144 as currently in effect, beginning approximately
90 days after the effective date of the Registration Statement of which this
Prospectus is a part, a stockholder, including an Affiliate, who has
beneficially owned his or her restricted securities (as that term is defined in
Rule 144) for at least two years from the later of the date such securities were
acquired from the Company or (if applicable) the date they were acquired from an
Affiliate is entitled to sell, within any three-month period, a number of such
shares that does not exceed the greater of (i) 1% of the then outstanding shares
of Common Stock (approximately 91,000 after this offering) or (ii) the average
weekly trading volume in the Common Stock during the four calendar weeks
preceding the date on which notice of such sale was filed pursuant to Rule 144
provided certain requirements concerning availability of public information,
manner of sale and notice of sale are satisfied. In addition, under Rule 144(k),
if a period of at least three years has elapsed between the later of the date
restricted securities were acquired from the Company or (if applicable) the date
they were acquired from an Affiliate of the Company, a stockholder who is not an
Affiliate of the Company at the time of sale and has not been an Affiliate of
the Company for at least three months prior to the sale is entitled to sell the
shares immediately without compliance with the foregoing requirements under Rule
144. The Securities and Exchange Commission has proposed an amendment to Rule
144 which would reduce the holding period required for shares subject to Rule
144 to become eligible for sale in the public market from two years to one year,
and from three years to two years in the case of Rule 144(k).
The Company has reserved 925,000 shares of Common Stock for grants under
its existing stock-based compensation plans. As of June 29, 1996 the Company had
options outstanding to purchase up to 570,000 shares of Common Stock to certain
of its officers and directors at a weighted average exercise price of $10.51 per
share. Ninety days after the completion of the Company's initial public offering
such options will become immediately exercisable, subject to the right of the
Company to repurchase shares at the exercise price if the optionee ceases to be
employed by the Company. This repurchase right lapses ratably (on an annual
basis) over a five to ten year period depending upon the term of the option. As
of June 29, 1996, repurchase rights had not lapsed as to any of the shares
issuable upon exercise of outstanding options. The Company has
46
<PAGE> 49
reserved 355,000 shares for future grant under plans. The Company intends to
file registration statements under the Securities Act to register all shares of
Common Stock issuable under such plans. Shares covered by these registration
statements that are not subject to transferability restrictions will be eligible
for sale in the public market immediately upon the filing of such registration
statements, subject to Rule 144 limitations applicable to Affiliates as noted
above.
Prior to this offering, there has been no public market for the Common
Stock of the Company, and no prediction can be made as to the effect, if any,
that market sales of shares of Common Stock or the availability of shares for
sale will have on the market price of the Common Stock prevailing from time to
time. Nevertheless, sales of significant numbers of shares of the Common Stock
in the public market could adversely affect the market price of the Common Stock
and could impair the Company's future ability to raise capital through an
offering of its equity securities. See "Risk Factors -- Significant Additional
Shares Eligible for Sale After this Offering."
47
<PAGE> 50
UNDERWRITING
<TABLE>
Subject to the terms and conditions set forth in the Underwriting
Agreement, each of the Underwriters named below, for whom NatWest Securities
Limited, Lehman Brothers Inc. and Smith Barney Inc. are acting as
Representatives (the "Representatives"), has severally agreed to purchase from
the Company the following respective number of shares of Common Stock at the
public offering price less the underwriting discounts and commissions set forth
on the cover page of this Prospectus:
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
NatWest Securities Limited...................................................
Lehman Brothers Inc..........................................................
Smith Barney Inc.............................................................
---------
Total........................................................................ 1,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent. The nature of the
Underwriters' obligations is that they are committed to purchase all shares of
Common Stock offered in this offering if any such shares are purchased.
The Company has been advised by the Representatives that the Underwriters
propose to offer shares of Common Stock directly to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
selected dealers (who may include the Underwriters) at such price less a selling
concession not in excess of $ per share. The Underwriters may allow and such
dealers may re-allow a concession not in excess of $ per share to certain
other dealers (who may include the Underwriters). After commencement of the
offering to the public, the public offering price and other selling terms may be
changed by the Representatives. The Representatives have informed the Company
that the Underwriters do not intend to confirm sales of shares of Common Stock
to any accounts over which they exercise discretionary authority.
The Company has granted to the several Underwriters an option, exercisable
not later than 30 days after the date of this Prospectus, to purchase up to
150,000 additional shares of Common Stock at the public offering price, less the
aggregate underwriting discounts and commissions, set forth on the cover page of
this Prospectus, solely to cover over-allotments. To the extent that the
Underwriters exercise such option, each of the Underwriters will be committed,
subject to certain conditions, to purchase a number of option shares
proportionate to such Underwriter's initial commitment.
The Underwriting Agreement provides that the Company, Thermo Instrument and
Thermo Electron will indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments
that the Underwriters may be required to make in respect thereof.
Thermo Electron, Thermo Instrument and the Company have also agreed that
they will not, without the Representatives' prior written consent, sell or
otherwise dispose of any shares of Common Stock within a 180-day period after
the date of this Prospectus, other than (i) shares of Common Stock to be sold to
the Underwriters in this offering, (ii) the grant of options to purchase Common
Stock pursuant to currently existing stock-based compensation plans, (iii)
shares of Common Stock which may be sold to Thermo Instrument, and (iv) the
issuance of shares of Common Stock as consideration for the acquisition of one
or more businesses (provided that such Common Stock may not be resold prior to
the expiration of the 180-day period referenced above). See "Risk Factors --
Significant Additional Shares Eligible for Sale After this Offering" and "Shares
Eligible for Future Sale."
Certain of the Underwriters from time to time have performed, and expect to
provide in the future, various investment banking services for Thermo Electron
and its subsidiaries.
NatWest Securities Limited, a United Kingdom broker-dealer and a member of
the Securities and Futures Authority Limited, has agreed that, as part of the
distribution of the shares of Common Stock offered hereby and subject to certain
exceptions, it will not offer or sell any shares of Common Stock within the
48
<PAGE> 51
United States, its territories or possessions or to persons who are citizens
thereof or residents therein. The Underwriting Agreement does not limit sales of
shares of Common Stock offered hereby outside of the United States.
NatWest Securities Limited has also represented and agreed that (i) it has
not offered or sold and will not offer or sell any Common Stock to persons in
the United Kingdom prior to admission of the Common Stock to listing in
accordance with Part IV of the Financial Services Act 1986 (the "Act") except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purpose of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 or the Act, (ii) it has complied
and will comply with all applicable provisions of the Act with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom, and (iii) it has only issued or passed on, and
will only issue or pass on, in the United Kingdom any document received by it in
connection with the issue of the Common Stock, other than any document which
consists of or any part of listing particulars, supplementary listing
particulars or any other document required or permitted to be published by
listing rules under Part IV of the Act, to a person who is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) (No. 2) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
Prior to this offering there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation among the Company and the Representatives. Among the factors to
be considered in determining the initial public offering price will be
prevailing market and economic conditions, estimates of the business potential
and prospects of the Company, the state of the Company's business operations, an
assessment of the Company's management, the consideration of the above factors
in relation to market valuations of companies in related businesses and other
factors deemed relevant. The estimated initial public offering price range set
forth on the cover page of this preliminary prospectus is subject to change as a
result of market conditions and other factors.
LEGAL OPINIONS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Seth H. Hoogasian, Esq., General Counsel of
Thermo Electron, Thermo Instrument and the Company, and certain legal matters
will be passed upon for the Underwriters by Testa, Hurwitz & Thibeault, LLP,
Boston, Massachusetts. Mr. Hoogasian owns or has the right to acquire 3,000
shares of Common Stock, 16,737 shares of common stock of Thermo Instrument and
118,177 shares of common stock of Thermo Electron.
EXPERTS
The Consolidated Financial Statements of the Company and of others included
in this Prospectus and the financial statement schedules included in the
Registration Statement of which this Prospectus forms a part have been audited
by Arthur Andersen LLP, independent public accountants, to the extent and for
the periods as indicated in their reports with respect thereto, and are included
herein in reliance upon the reports of said firm and the authority of said firm
as experts in accounting and auditing in giving said reports.
The balance sheets as of March 31, 1995 and February 7, 1996 and the
statements of income, retained earnings and cash flows for the years ended March
31, 1994 and 1995 and the period from April 1, 1995 through February 7, 1996 of
Dynatech Medical Products Limited, referred to in this Prospectus, have been
referenced in reliance on the report of Coopers & Lybrand, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
49
<PAGE> 52
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (which term shall include all amendments,
exhibits and schedules thereto) on Form S-1 under the Securities Act with
respect to the shares of Common Stock offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, to which
Registration Statement reference is hereby made. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference. The Registration Statement and the exhibits thereto may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission
also maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission, including the Company. The address of such site is
http://www.sec.gov.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish holders of the Common Stock offered hereby
with annual reports containing financial statements audited by an independent
public accounting firm and with quarterly reports containing unaudited summary
financial statements for each of the first three quarters of each fiscal year.
50
<PAGE> 53
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
THERMO BIOANALYSIS CORPORATION
Report of Independent Public Accountants......................................... F-2
Consolidated Statement of Operations for the years ended January 1, 1994,
December 31, 1994 and December 30, 1995 and for the six months ended July 1,
1995 and June 29, 1996.......................................................... F-3
Consolidated Balance Sheet as of December 31, 1994, December 30, 1995 and June
29, 1996........................................................................ F-4
Consolidated Statement of Cash Flows for the years ended January 1, 1994,
December 31, 1994 and December 30, 1995 and for the six months ended July
1, 1995 and June 29, 1996.. F-5
Consolidated Statement of Shareholders' Investment for the years ended January 1,
1994, December 31, 1994 and December 30, 1995 and for the six months ended June
29, 1996........................................................................ F-6
Notes to Consolidated Financial Statements....................................... F-7
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
Reports of Independent Public Accountants........................................ F-15
Consolidated Statement of Operations for the years ended March 31, 1994 and 1995
and for the period from April 1, 1995 through February 7, 1996.................. F-17
Consolidated Balance Sheet as of March 31, 1995 and February 7, 1996............. F-18
Consolidated Statement of Cash Flows for the years ended March 31, 1994 and 1995
and for the period from April 1, 1995 through February 7, 1996.................. F-19
Consolidated Statement of Shareholder's Investment for the years ended March 31,
1994 and 1995 and for the period from April 1, 1995 through February 7, 1996.... F-20
Notes to Consolidated Financial Statements....................................... F-21
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
Auditors' Report................................................................. F-26
Combined Profit and Loss Accounts for the years ended December 31, 1993, 1994 and
1995, for the three months ended March 31, 1995 and for the period from January
1, 1996 through March 29, 1996.................................................. F-27
Combined Balance Sheets as of December 31, 1994 and 1995......................... F-28
Combined Cash Flow Statements for the years ended December 31, 1993, 1994 and
1995, for the three months ended March 31, 1995 and for the period from January
1, 1996 through March 29, 1996.................................................. F-29
Notes to Combined Financial Statements........................................... F-30
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF THERMO BIOANALYSIS CORPORATION,
THE DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION AND THE AFFINITY SENSORS AND
LABSYSTEMS DIVISIONS OF FISONS PLC (UNAUDITED)
Pro Forma Combined Condensed Statement of Operations for the year ended
December 30, 1995.............................................................. F-38
Pro Forma Combined Condensed Statement of Operations for the six months ended
June 29, 1996................................................................... F-39
Pro Forma Condensed Balance Sheet as of June 29, 1996............................ F-40
Notes to Pro Forma Combined Condensed Financial Statements....................... F-41
</TABLE>
F-1
<PAGE> 54
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thermo BioAnalysis Corporation:
We have audited the accompanying consolidated balance sheet of Thermo
BioAnalysis Corporation (a Delaware corporation and 80%-owned subsidiary of
Thermo Instrument Systems Inc.) and subsidiaries as of December 31, 1994 and
December 30, 1995, and the related consolidated statements of operations, cash
flows, and shareholders' investment for each of the three years in the period
ended December 30, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
BioAnalysis Corporation and subsidiaries as of December 31, 1994 and December
30, 1995 and the results of their operations and their cash flows for each of
the three years in the period ended December 30, 1995, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 10, 1996 (except with
respect to certain matters discussed in
Note 9, as to which the date is July 22, 1996)
F-2
<PAGE> 55
THERMO BIOANALYSIS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JULY 1, JUNE 29,
1993 1994 1995 1995 1996
------- ------- ------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues (Note 8)........................ $24,479 $25,127 $22,534 $11,686 $ 29,782
------- ------- ------- ------ -------
Costs and Operating Expenses:
Cost of revenues....................... 13,010 14,176 13,036 6,826 16,106
Selling, general and administrative
expenses (Note 6)................... 4,914 5,054 4,804 2,309 9,017
Research and development expenses...... 2,242 2,042 1,325 612 2,921
Write-off of acquired technology (Note
9).................................. -- -- -- -- 3,500
------- ------- ------- ------ -------
20,166 21,272 19,165 9,747 31,544
------- ------- ------- ------ -------
Operating Income (Loss).................. 4,313 3,855 3,369 1,939 (1,762)
Interest Income.......................... -- -- 819 238 293
Interest Expense......................... -- -- -- -- (668)
------- ------- ------- ------ -------
Income (Loss) Before Provision for
Income Taxes........................... 4,313 3,855 4,188 2,177 (2,137)
Provision for Income Taxes (Note 4)...... 1,775 1,455 1,674 870 546
------- ------- ------- ------ -------
Net Income (Loss)........................ $ 2,538 $ 2,400 $ 2,514 $ 1,307 $ (2,683)
======= ======= ======= ====== =======
Earnings (Loss) per Share................ $ .38 $ .36 $ .32 $ .18 $ (.33)
======= ======= ======= ====== =======
Weighted Average Shares.................. 6,617 6,617 7,811 7,403 8,219
======= ======= ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 56
THERMO BIOANALYSIS CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 29,
1996
1994 1995 -----------
------- ------- (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................................... $ 21 $17,747 $12,234
Accounts receivable, less allowances of $154, $154 and $926... 5,870 5,482 14,123
Inventories................................................... 5,665 5,968 13,417
Prepaid income taxes (Note 4)................................. 614 673 2,089
Prepaid expenses.............................................. 70 7 631
Due from parent company and affiliates........................ -- 761 --
------- ------- -------
12,240 30,638 42,494
------- ------- -------
Property, Plant and Equipment, at Cost, Net..................... 1,659 1,654 6,031
------- ------- -------
Patents and Other Assets........................................ 12 195 3,495
------- ------- -------
Cost in Excess of Net Assets of Acquired Companies.............. 438 420 33,043
------- ------- -------
$14,349 $32,907 $85,063
======= ======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Note payable, due to Thermo Electron Corporation.............. $ -- $ -- $30,000
Accounts payable.............................................. 816 432 5,094
Accrued payroll and employee benefits......................... 848 692 2,709
Accrued installation and warranty expenses.................... 248 370 1,884
Accrued income taxes.......................................... 1,815 1,665 2,080
Other accrued expenses........................................ 211 374 9,100
Due to parent company and affiliates.......................... 20 -- 7,502
------- ------- -------
3,958 3,533 58,369
------- ------- -------
Deferred Income Taxes (Note 4).................................. 229 228 228
------- ------- -------
Shareholders' Investment (Notes 2 and 7):
Net parent company investment................................. 10,162 -- --
Common stock, $.01 par value, 25,000,000 shares authorized;
8,101,500 shares issued and outstanding.................... -- 81 81
Capital in excess of par value................................ -- 26,917 26,917
Retained earnings (accumulated deficit)....................... -- 2,143 (540)
Cumulative translation adjustment............................. -- 5 8
------- ------- -------
10,162 29,146 26,466
------- ------- -------
$14,349 $32,907 $85,063
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 57
THERMO BIOANALYSIS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------
JULY 1, JUNE 29,
1993 1994 1995 1995 1996
------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
OPERATING ACTIVITIES:
Net income (loss)............................................. $ 2,538 $ 2,400 $ 2,514 $ 1,307 $ (2,683)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization............................. 243 289 346 173 1,284
Provision for losses on accounts receivable............... 132 15 -- -- 66
Deferred income tax expense (benefit)..................... (169) 279 (60) -- --
Write-off of acquired technology (Note 9)................. -- -- -- -- 3,500
Changes in current accounts, excluding the effects of
acquisition:
Accounts receivable..................................... (2,016) 269 388 837 1,074
Inventories............................................. (122) (1,265) (303) (156 ) 690
Other current assets.................................... 66 (78) (698) (139 ) 416
Accounts payable........................................ 589 (610) (384) (203 ) 1,585
Other current liabilities............................... 730 (540) (41) 1,725 2,234
------- ------- -------- -------- --------
Net cash provided by operating activities............. 1,991 759 1,762 3,544 8,166
------- ------- -------- -------- --------
INVESTING ACTIVITIES:
Acquisition, net of cash acquired............................. -- -- -- -- (43,191)
Purchases of property, plant and equipment.................... (190) (237) (313) (171 ) (451)
Other......................................................... -- -- (183) -- --
------- ------- -------- -------- --------
Net cash used in investing activities................. (190) (237) (496) (171 ) (43,642)
------- ------- -------- -------- --------
FINANCING ACTIVITIES:
Net proceeds from issuance of Company common stock (Note
7)........................................................ -- -- 14,918 14,918 --
Transfer from parent company to fund income tax payments.... 1,497 1,670 1,930 -- --
Net transfer to parent company.............................. (3,304) (2,185) (383) (267 ) --
Proceeds from issuance of note payable to parent company
(Note 9).................................................. -- -- -- -- 30,000
------- ------- -------- -------- --------
Net cash provided by (used in) financing activities... (1,807) (515) 16,465 14,651 30,000
------- ------- -------- -------- --------
Exchange Rate Effect on Cash.................................. -- -- (5) -- (37)
------- ------- -------- -------- --------
Increase (Decrease) in Cash and Cash Equivalents.............. (6) 7 17,726 18,024 (5,513)
Cash and Cash Equivalents at Beginning of Period.............. 20 14 21 21 17,747
------- ------- -------- -------- --------
Cash and Cash Equivalents at End of Period.................... $ 14 $ 21 $ 17,747 $18,045 $ 12,234
======= ======= ======== ======== ========
CASH PAID FOR:
Interest...................................................... $ -- $ -- $ -- $ -- $ 645
======= ======= ======== ======== ========
Income taxes.................................................. $ 1,497 $ 1,670 $ 1,930 $ -- $ 34
======= ======= ======== ======== ========
NONCASH ACTIVITIES:
Fair value of assets of acquired businesses................... $ -- $ -- $ -- $ -- $ 67,895
Consideration given........................................... -- -- -- -- 52,191
------- ------- -------- -------- --------
Liabilities assumed of acquired businesses................ $ -- $ -- $ -- $ -- $ 15,704
======= ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 58
THERMO BIOANALYSIS CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON CAPITAL RETAINED
NET PARENT STOCK, IN EARNINGS CUMULATIVE
COMPANY $.01 PAR EXCESS OF (ACCUMULATED TRANSLATION
INVESTMENT VALUE PAR VALUE DEFICIT) ADJUSTMENT
----------- -------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
BALANCE JANUARY 2, 1993........... $ 7,546 $ -- $ -- $ -- $ --
Net income........................ 2,538 -- -- -- --
Net transfer to parent company.... (1,807) -- -- -- --
----------- -------- --------- ------------ ----------
BALANCE JANUARY 1, 1994........... 8,277 -- -- -- --
Net income........................ 2,400
Net transfer to parent company.... (515) -- -- -- --
----------- -------- --------- ------------ ----------
BALANCE DECEMBER 31, 1994......... 10,162 -- -- -- --
Net income prior to capitalization
of
Company......................... 371 -- -- -- --
Net transfer from parent 1,547 -- -- -- --
company.........................
Capitalization of Company......... (12,080) 65 12,015 -- --
Net proceeds from private -- 16 14,902 -- --
placements
of Company common stock
(Note 7)........................
Net income after capitalization of
Company......................... -- -- -- 2,143 --
Translation adjustment............ -- -- -- -- 5
----------- -------- --------- ------------ ----------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
BALANCE DECEMBER 30, 1995......... -- 81 26,917 2,143 5
(UNAUDITED)
Net loss.......................... -- -- -- (2,683) --
Translation adjustment............ -- -- -- -- 3
----------- -------- --------- ------------ ----------
BALANCE JUNE 29, 1996............. $ -- $ 81 $26,917 $ (540) $ 8
======== ======== ======= ========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 59
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Thermo BioAnalysis Corporation (the "Company") develops, manufactures, and
sells instrumentation for the health physics, biopharmaceutical, and analytical
biochemistry instrumentation markets. It comprises three operations that
specialize in health physics instrumentation, matrix-assisted laser
desorption/ionization time-of-flight mass spectrometry ("MALDI-TOF"), and
capillary electrophoresis ("CE").
Relationship with Thermo Instrument Systems Inc. and Thermo Electron
Corporation
The Company was incorporated in February 1995 as a wholly owned subsidiary
of Thermo Instrument Systems Inc. ("Thermo Instrument") at which time Thermo
Instrument transferred to the Company the assets related to certain elements of
Thermo Separation Products Inc.'s CE product line, Finnigan MAT Ltd.'s MALDI-TOF
division, and Eberline Instruments' health physics instrumentation division,
including $300,000 in cash, in exchange for 6,500,000 shares of the Company's
common stock. As of December 30, 1995, Thermo Instrument owned 6,500,000 shares
of the Company's common stock, representing 80% of such stock outstanding.
Thermo Instrument is an 86%-owned subsidiary of Thermo Electron Corporation
("Thermo Electron").
The accompanying financial statements include the assets, liabilities,
income and expenses of the Company as included in Thermo Instrument's
consolidated financial statements. The accompanying financial statements do not
include Thermo Instrument's general corporate debt, which is used to finance
operations of all of its respective business segments, or an allocation of
Thermo Instrument's interest expense. The Company has had positive cash flows
from operations since 1993.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 1993, 1994 and 1995 are for the fiscal years ended January 1,
1994, December 31, 1994 and December 30, 1995, respectively.
Revenue Recognition
The Company recognizes revenues upon shipment of its products. The Company
provides a reserve for its estimate of warranty and installation costs at the
time of shipment. The Company recognizes revenue from service contracts over the
respective terms of the contracts.
Income Taxes
The Company and Thermo Instrument have a tax allocation agreement under
which both the Company and Thermo Instrument are included in Thermo Electron's
consolidated federal and certain state income tax returns. The agreement
provides that in years in which the Company has taxable income, it will pay to
Thermo Electron amounts comparable to the taxes the Company would have paid if
it had filed separate tax returns. If Thermo Instrument's equity ownership of
the Company drops below 80%, the Company would be required to file its own
income tax returns.
F-7
<PAGE> 60
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes," the Company recognizes deferred income taxes
based on the expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and liabilities,
calculated using enacted tax rates in effect for the year in which the
differences are expected to be reflected in the tax return.
Earnings per Share
Pursuant to Securities and Exchange Commission requirements, earnings per
share have been presented for all periods. Weighted average shares for all
periods include the 6,500,000 shares issued to Thermo Instrument in connection
with the capitalization of the Company and the effect of the assumed exercise of
stock options issued within one year prior to the Company's proposed initial
public offering.
Cash and Cash Equivalents
Prior to its incorporation, the cash receipts and disbursements of the
Company were combined with other Thermo Instrument corporate cash transactions
and balances, except for certain payroll accounts.
As of December 30, 1995, $17,661,000 of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this agreement,
the Company in effect lends excess cash to Thermo Electron, which Thermo
Electron collateralizes with investments principally consisting of U.S.
government agency securities, corporate notes, commercial paper, money market
funds, and other marketable securities, in the amount of at least 103% of such
obligation. The Company's funds subject to the repurchase agreement are readily
convertible into cash by the Company and have an original maturity of three
months or less. The repurchase agreement earns a rate based on the Commercial
Paper Composite Rate plus 25 basis points, set at the beginning of each quarter.
Cash equivalents are carried at cost, which approximates market value.
Inventories
<TABLE>
Inventories are stated at the lower of cost (on a weighted average basis)
or market value and include materials, labor, and manufacturing overhead. The
components of inventories are as follows:
<CAPTION>
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies......................................... $3,202 $3,501
Work in process.................................................... 1,460 1,127
Finished goods..................................................... 1,003 1,340
------ ------
$5,665 $5,968
====== ======
</TABLE>
F-8
<PAGE> 61
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property, Plant and Equipment
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings and improvements, 15 years;
machinery and equipment, 3 to 5 years; and leasehold improvements, the shorter
of the term of the lease or the life of the asset. Property, plant and equipment
consist of the following:
<TABLE>
<CAPTION>
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Land................................................................. $ 285 $ 285
Buildings............................................................ 2,594 2,603
Machinery, equipment and leasehold improvements...................... 3,433 3,429
------ ------
6,312 6,317
Less: Accumulated depreciation and amortization...................... 4,653 4,663
------ ------
$1,659 $1,654
====== ======
</TABLE>
Cost in Excess of Net Assets of Acquired Companies
The excess of cost over the fair value of net assets of acquired companies
is amortized using the straight-line method over 40 years. Accumulated
amortization was $284,000 and $302,000 at year-end 1994 and 1995, respectively.
The Company assesses the future useful life of this asset whenever events or
changes in circumstances indicate that the current useful life has diminished.
The Company considers the future undiscounted cash flows of the acquired
businesses in assessing the recoverability of this asset.
Foreign Currency
All assets and liabilities of the Company's foreign subsidiary are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected as a
separate component of shareholders' investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of operations and are not material for the three years
presented.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Interim Financial Statements
The financial statements as of June 29, 1996 and for the six-month periods
ended July 1, 1995 and June 29, 1996, are unaudited but, in the opinion of
management, reflect all adjustments of a normal recurring nature necessary for a
fair presentation of results for these interim periods. The results of
operations for the six-month period ended June 29, 1996 are not necessarily
indicative of the results to be expected for the entire year.
F-9
<PAGE> 62
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. STOCK-BASED COMPENSATION PLANS
In February 1995, the Company adopted a stock-based compensation plan for
its key employees, directors, and others, which permits the grant of a variety
of stock and stock-based awards as determined by the human resources committee
of the Company's Board of Directors (the "Board Committee"), including
restricted stock, stock options, stock bonus shares or performance-based shares.
The option recipients and the terms of options granted under this plan are
determined by the Board Committee. Options granted to date generally vest and
become immediately exercisable on the ninth anniversary of the grant date,
unless the Company's common stock becomes publicly traded prior to such date. In
such an event, options become exercisable 90 days after the Company becomes
subject to the Securities Exchange Act of 1934, 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 are deemed to have lapsed ratably
over periods ranging from five to ten years after the first anniversary of the
grant date, depending on the term of the option, which generally ranges from ten
to twelve years. Nonqualified stock options may be granted at any price
determined by the Board Committee, although incentive stock options must be
granted at not less than the fair market value of the Company's stock on the
date of grant. As of December 30, 1995, no options had been granted under this
plan. The Company also has a directors' stock option plan, adopted in November
1995, that provides for the grant of stock options to outside directors pursuant
to a formula approved by the Company's shareholders. Options granted under this
plan have the same general terms as options granted to date under the
stock-based compensation plan described above, except that the option term is
five years and the options vest and become immediately exercisable on the fourth
anniversary of the grant date, unless the Company's common stock becomes
publicly traded prior to such date. In such an event, the transfer restrictions
and repurchase rights described above generally are deemed to have lapsed
ratably over a four-year period. As of December 30, 1995, options to purchase
30,000 shares of the Company's common stock exercisable at $10.00 per share were
outstanding under this plan. As of December 30, 1995, no options have been
exercised and no options are exercisable under this plan. In addition to the
Company's stock-based compensation plans, certain officers and key employees may
also participate in the stock-based compensation plans of Thermo Electron or its
majority-owned subsidiaries.
No accounting recognition is given to options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to equity.
3. EMPLOYEE BENEFIT PLANS
Employee Stock Purchase Plan
Substantially all of the Company's full-time U.S. employees are eligible to
participate in an employee stock purchase plan sponsored by Thermo Instrument.
Prior to the November 1995 plan year, shares of Thermo Instrument's and Thermo
Electron's common stock could be purchased at the end of a 12-month plan year at
85% of the fair market value at the beginning of the plan year, and the shares
purchased were subject to a one-year resale restriction. Effective November 1,
1995, the applicable shares of common stock may be purchased at 95% of the fair
market value at the beginning of the plan year, and the shares purchased are
subject to a six-month resale restriction. Shares are purchased through payroll
deductions of up to 10% of each participating employee's gross wages.
401(k) Savings Plan and Employee Stock Ownership Plan
Substantially all of the Company's full-time U.S. employees are eligible to
participate in Thermo Electron's 401(k) savings plan and, prior to 1995, in
Thermo Electron's employee stock ownership plan ("ESOP"). Contributions to the
401(k) savings plan are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. For these
plans, the Company contributed and charged to expense $149,000, $169,000 and
$128,000 in 1993, 1994 and 1995, respectively.
F-10
<PAGE> 63
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Effective December 31, 1994, the ESOP was split into two plans: ESOP I, covering
employees of Thermo Electron's corporate office and its wholly owned
subsidiaries and ESOP II, covering employees of certain of Thermo Electron's
majority-owned subsidiaries, including the Company. Effective December 31, 1994,
the ESOP II plan was terminated and as a result, the Company's employees are no
longer eligible to participate in an ESOP.
4. INCOME TAXES
<TABLE>
The components of income before provision for income taxes are as follows:
<CAPTION>
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic................................................. $4,449 $3,684 $3,828
Foreign.................................................. (136) 171 360
------ ------ ------
$4,313 $3,855 $4,188
====== ====== ======
</TABLE>
<TABLE>
The components of the provision for income taxes are as follows:
<CAPTION>
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable:
Federal................................................ $1,563 $ 939 $1,331
State.................................................. 381 237 284
Foreign................................................ -- -- 119
------ ------ ------
1,944 1,176 1,734
------ ------ ------
Net deferred (prepaid):
Federal................................................ (139) 231 (50)
State.................................................. (30) 48 (10)
------ ------ ------
(169) 279 (60)
------ ------ ------
$1,775 $1,455 $1,674
====== ====== ======
</TABLE>
<TABLE>
The provision for income taxes in the accompanying statement of operations
differs from the provision calculated by applying the statutory federal income
tax rate of 35% to income before provision for income taxes due to the
following:
<CAPTION>
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision for income taxes at statutory rate............. $1,510 $1,349 $1,466
Increases (decreases) resulting from:
State income taxes, net of federal tax................. 228 185 178
Net foreign losses not benefited and tax rate
differential........................................ 48 (60) (7)
Tax benefit of foreign sales corporation............... (22) (34) (6)
Amortization of cost in excess of net assets of
acquired company.................................... 7 6 6
Other, net............................................. 4 9 37
------ ------ ------
$1,775 $1,455 $1,674
====== ====== ======
</TABLE>
F-11
<PAGE> 64
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:
<CAPTION>
1994 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Prepaid income taxes:
Reserves and other accruals......................................... $309 $355
Inventory basis difference.......................................... 243 256
Allowance for doubtful accounts..................................... 62 62
---- ----
$614 $673
==== ====
Deferred income taxes:
Depreciation........................................................ $229 $228
==== ====
</TABLE>
A provision has not been made for U.S. or additional foreign taxes on
$365,000 of undistributed earnings in foreign subsidiaries that could be subject
to taxation if remitted to the U.S. because the Company currently plans to keep
these amounts permanently reinvested overseas. The Company believes that any
additional U.S. tax liability due upon remittance of such earnings would be
immaterial.
5. OPERATING LEASES
The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of operations
includes expenses from operating leases of $71,000, $71,000 and $69,000 in 1993,
1994 and 1995, respectively.
6. RELATED PARTY TRANSACTIONS
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, certain
employee benefit administration, tax advice and preparation of tax returns,
centralized cash management and certain financial and other services, for which
the Company paid Thermo Electron annually an amount equal to 1.25% of the
Company's revenues in 1993 and 1994 and 1.20% of the Company's revenues in 1995.
Beginning in 1996, the Company will pay an annual fee equal to 1.0% of the
Company's revenues. The annual fee is reviewed and adjusted annually by mutual
agreement of the parties. For these services, the Company was charged $306,000,
$314,000 and $270,000 in 1993, 1994 and 1995, respectively. Management believes
that the service fee charged by Thermo Electron is reasonable and that such fees
are representative of the expenses the Company would have incurred on a
stand-alone basis. The corporate services agreement is renewed annually but can
be terminated upon 30 days' prior notice by the Company or upon the Company's
withdrawal from the Thermo Electron Corporate Charter (the Thermo Electron
Corporate Charter defines the relationship among Thermo Electron and its
majority-owned subsidiaries). For additional items such as employee benefit
plans, insurance coverage and other identifiable costs, Thermo Electron charges
the Company based upon costs attributable to the Company.
Other Related Party Transactions
The Company purchases and sells products in the ordinary course of business
with other companies associated with Thermo Electron. Sales of such products to
affiliated companies totalled $197,000, $262,000 and $279,000 in 1993, 1994 and
1995, respectively. Purchases of products from such companies totalled $313,000,
$413,000 and $414,000 in 1993, 1994 and 1995, respectively.
A majority-owned subsidiary of Thermo Electron acts as a commission-based
sales agent for certain of the Company's products. The Company paid $1,003,000,
$1,288,000 and $1,263,000 under this arrangement in 1993, 1994 and 1995,
respectively.
F-12
<PAGE> 65
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In addition, a majority-owned subsidiary of Thermo Electron assembles
certain of the Company's products. For these services, the Company paid
$652,000, $566,000 and $600,000 in 1993, 1994 and 1995, respectively.
Repurchase Agreement
The Company invests excess cash in a repurchase agreement with Thermo
Electron as discussed in Note 1.
7. COMMON STOCK
In March 1995, the Company sold 700,000 shares of its common stock in a
private placement for net proceeds of $6,530,000. In April 1995, the Company
sold 901,500 shares of its common stock in a private placement for net proceeds
of $8,388,000.
At December 30, 1995, the Company had reserved 925,000 unissued shares of
its common stock for possible issuance under stock-based compensation plans.
8. GEOGRAPHICAL INFORMATION AND SIGNIFICANT CUSTOMER
<TABLE>
The Company is engaged in one business segment: developing, manufacturing,
and selling instrumentation for the health physics, biopharmaceutical, and
analytical biochemistry instrumentation markets. The following table shows data
for the Company by geographical area.
<CAPTION>
1993 1994 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States........................................... $20,971 $19,891 $17,741
England................................................. 3,508 5,236 4,793
------- ------- -------
$24,479 $25,127 $22,534
======= ======= =======
Income before provision for income taxes:
United States (a)....................................... $ 4,449 $ 3,684 $ 3,009
England................................................. (136) 171 360
------- ------- -------
Total operating income.................................. 4,313 3,855 3,369
Interest income......................................... -- -- 819
------- ------- -------
$ 4,313 $ 3,855 $ 4,188
======= ======= =======
Identifiable assets:
United States........................................... $11,776 $11,134 $29,022
England................................................. 1,912 3,215 3,885
------- ------- -------
$13,688 $14,349 $32,907
======= ======= =======
Export revenues included in United States revenues
above (b)............................................... $ 3,609 $ 3,217 $ 2,741
======= ======= =======
<FN>
- ---------------
(a) Includes corporate general and administrative expenses.
(b) In general, export sales are denominated in U.S. dollars.
Sales to U.S. government agencies accounted for 47%, 32%, and 24% of the
Company's total revenues in 1993, 1994 and 1995, respectively.
</TABLE>
F-13
<PAGE> 66
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
9. SUBSEQUENT EVENTS
Stock-based Compensation Plans
In January 1996, the Board Committee granted options to purchase 396,000
shares of the Company's common stock at $10.00 per share, which was the fair
market value on the date of grant. In June 1996, the Board Committee granted
options to purchase 144,000 shares of the Company's common stock at $12.00 per
share, which was the fair market value on the date of grant.
Acquisitions
In February 1996, the Company acquired substantially all of the assets,
subject to certain liabilities, of the DYNEX Technologies ("DYNEX") division of
Dynatech Corporation for $43,191,000, subject to a post-closing adjustment.
DYNEX designs, manufactures and markets products used in the immunoassay segment
of the bioinstrumentation market. This acquisition has been accounted for using
the purchase method of accounting, and DYNEX's results of operations have been
included in the accompanying financial statements from the date of acquisition.
The aggregate cost of DYNEX exceeded the estimated fair value of the acquired
net assets by $32,959,000 which is being amortized over 40 years.
In March 1996, Thermo Instrument acquired a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons plc
("Fisons"), a wholly owned subsidiary of Rhone-Poulenc Rorer Inc. In July 1996,
the Company acquired the Affinity Sensors and LabSystems divisions of Fisons
from Thermo Instrument for $9,000,000 in cash, subject to a post-closing
adjustment. Affinity Sensors supplies biosensors used in life sciences research
by the pharmaceutical and biotechnology industries, universities and medical
research institutes. LabSystems designs, implements and supports laboratory
information management systems and chromatography systems used in research and
development, quality assurance and control, and process plants. Because, as of
June 29, 1996, the Company, Affinity Sensors and LabSystems were deemed for
accounting purposes to be under control of their common owner, Thermo
Instrument, the accompanying financial statements as of and for the six months
ended June 29, 1996 include the results of operations of Affinity Sensors and
LabSystems from March 29, 1996, the date these businesses were acquired by
Thermo Instrument, in a manner similar to a pooling-of-interests. During the six
months ended June 29, 1996, the Company wrote off $3,500,000 of acquired
technology in connection with these acquisitions which represents the portion of
the purchase price allocated to technology in development at the acquired
businesses, based on estimated replacement cost. Because the Company had not
paid Thermo Instrument for these businesses as of June 29, 1996, the
accompanying June 1996 financial statements include an amount payable to Thermo
Instrument of $9,000,000.
To help finance the acquisition of DYNEX, the Company borrowed $30,000,000
from Thermo Electron pursuant to a promissory note due February 1997, and
bearing interest at the Commercial Paper Composite Rate plus 25 basis points,
set at the beginning of each quarter. In conjunction with the acquisition of
Affinity Sensors and LabSystems in July 1996, the Company issued to Thermo
Instrument a $50,000,000 principal amount 4.875% subordinated convertible note,
due 2001, convertible into shares of the Company's common stock at $16.50 per
share. The Company used part of the proceeds of the subordinated convertible
note to retire the $30,000,000 promissory note.
Pro forma information for the Company, DYNEX and Affinity Sensors and
LabSystems is available elsewhere in this Prospectus.
F-14
<PAGE> 67
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the DYNEX Technologies Division of Dynatech Corporation:
We have audited the accompanying consolidated balance sheet of the DYNEX
Technologies Division of Dynatech Corporation as of March 31, 1995 and February
7, 1996, and the related consolidated statements of operations, cash flows, and
shareholder's investment for each of the two years in the period ended March 31,
1995 and the period from April 1, 1995 through February 7, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of Dynatech Medical Products Limited, which statements reflect 14
percent and 16 percent of consolidated assets as of March 31, 1995 and February
7, 1996, respectively, and 35 percent, 32 percent and 41 percent of consolidated
cost of revenues for each of the two years in the period ended March 31, 1995
and the period from April 1, 1995 through February 7, 1996, respectively. Those
statements were audited by other auditors whose report has been furnished to us
and our opinion, insofar as it relates to the amounts included for that entity,
is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the DYNEX Technologies Division of
Dynatech Corporation as of March 31, 1995 and February 7, 1996 and the results
of their operations and their cash flows for each of the two years in the period
ended March 31, 1995 and for the period from April 1, 1995 through February 7,
1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
July 19, 1996
F-15
<PAGE> 68
REPORT OF THE AUDITORS TO THE MEMBERS OF
DYNATECH MEDICAL PRODUCTS LIMITED
We have audited the accounts.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The company's directors are responsible for the preparation of the
accounts. It is our responsibility to form an independent opinion, based on our
audit, on those accounts and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includes an assessment of the significant estimates and judgements made by the
directors in the preparation of the accounts, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion, we also evaluated the overall adequacy of the
presentation of information in the accounts.
OPINION
In our opinion the accounts give a true and fair view of the state of the
company's affairs as at March 31, 1995 and at February 7, 1996 and of its income
and cash flows for the years ended March 31, 1994 and 1995 and the period from
April 1, 1995 through February 7, 1996 and have been properly prepared in
accordance with the Companies (Guernsey) Law, 1994.
Coopers & Lybrand
Chartered Accountants
Guernsey, Channel Islands
July 19, 1996
F-16
<PAGE> 69
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
--------------------- FEBRUARY 7,
1994 1995 1996
------- ------- -------------
<S> <C> <C> <C>
Revenues (Note 6)........................................ $30,130 $37,328 $28,503
------- ------- -------
Costs and Operating Expenses:
Cost of revenues....................................... 15,476 20,297 15,783
Selling, general and administrative expenses (includes
$2,515, $2,182 and $2,152 to Dynatech Corporation)
(Note 5)............................................ 12,203 12,636 11,402
Research and development expenses...................... 2,483 2,467 2,297
------- ------- -------
30,162 35,400 29,482
------- ------- -------
Operating Income (Loss).................................. (32) 1,928 (979)
Interest Income.......................................... 154 156 146
Interest Expense (includes $1,353, $1,050 and $1,427 to
Dynatech Corporation) (Note 5)......................... (1,662) (1,312) (1,610)
------- ------- -------
Income (Loss) Before Provision for Income Taxes.......... (1,540) 772 (2,443)
Provision for Income Taxes (Note 3)...................... 228 436 320
------- ------- -------
Net Income (Loss)........................................ $(1,768) $ 336 $(2,763)
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-17
<PAGE> 70
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
<TABLE>
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................... $ 5,269 $ 1,232
Accounts receivable, less allowances of $293 and $174............... 5,435 4,923
Inventories......................................................... 5,861 6,737
Prepaid expenses.................................................... 585 866
Prepaid income taxes (Note 3)....................................... 130 170
------- -------
17,280 13,928
------- -------
Property and Equipment, at Cost, Net.................................. 2,080 2,138
------- -------
$19,360 $16,066
======= =======
LIABILITIES AND SHAREHOLDER'S INVESTMENT
Current Liabilities:
Short-term debt..................................................... $ 3,732 $ --
Accounts payable.................................................... 1,670 1,094
Accrued payroll and employee benefits............................... 1,681 825
Accrued installation and warranty expenses.......................... 270 270
Customer deposits................................................... 479 483
Accrued income taxes................................................ 436 320
Deferred revenue.................................................... 106 189
Accrued sales commissions........................................... 427 264
Other accrued expenses.............................................. 781 564
------- -------
9,582 4,009
------- -------
Deferred Income Taxes (Note 3)........................................ 130 170
------- -------
Commitments (Note 4)
Shareholder's Investment:
Net parent company investment....................................... 9,292 12,056
Cumulative translation adjustment................................... 356 (169)
------- -------
9,648 11,887
------- -------
$19,360 $16,066
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-18
<PAGE> 71
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
------------------- FEBRUARY 7,
1994 1995 1996
------- ------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................ $(1,768) $ 336 $(2,763)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization....................... 1,255 1,103 874
Provision for losses on accounts receivable......... 36 74 41
Changes in current accounts:
Accounts receivable.............................. 1,462 (634) 333
Inventories...................................... 320 (887) (1,152)
Other current assets............................. 75 75 (301)
Accounts payable................................. (980) 693 (531)
Other current liabilities........................ 1,115 (721) (1,184)
------- ------- -------
Net cash provided by (used in) operating
activities..................................... 1,515 39 (4,683)
------- ------- -------
INVESTING ACTIVITIES:
Purchases of property and equipment...................... (892) (1,127) (975)
------- ------- -------
FINANCING ACTIVITIES:
Net transfer from Dynatech Corporation................... 895 1,746 5,527
Dividends paid to Dynatech Corporation................... (600) (400) --
Increase (decrease) in short-term debt................... 685 156 (3,652)
------- ------- -------
Net cash provided by financing activities........ 980 1,502 1,875
------- ------- -------
Exchange Rate Effect on Cash............................... 716 (489) (254)
------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents........... 2,319 (75) (4,037)
Cash and Cash Equivalents at Beginning of Period........... 3,025 5,344 5,269
------- ------- -------
Cash and Cash Equivalents at End of Period................. $ 5,344 $ 5,269 $ 1,232
======= ======= =======
CASH PAID FOR:
Interest................................................. $ 311 $ 260 $ 193
======= ======= =======
Income taxes............................................. $ 315 $ 305 $ 78
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-19
<PAGE> 72
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDER'S INVESTMENT
(IN THOUSANDS)
<CAPTION>
NET PARENT CUMULATIVE
COMPANY TRANSLATION
INVESTMENT ADJUSTMENT
----------- -----------
<S> <C> <C>
BALANCE MARCH 31, 1993............................................... $ 9,083 $ 41
Net loss............................................................. (1,768) --
Net transfer from Dynatech Corporation............................... 895 --
Dividends paid to Dynatech Corporation............................... (600) --
Translation adjustment............................................... -- 759
------- -----
BALANCE MARCH 31, 1994............................................... 7,610 800
Net income........................................................... 336 --
Net transfer from Dynatech Corporation............................... 1,746 --
Dividends paid to Dynatech Corporation............................... (400) --
Translation adjustment............................................... -- (444)
------- -----
BALANCE MARCH 31, 1995............................................... 9,292 356
Net loss............................................................. (2,763) --
Net transfer from Dynatech Corporation............................... 5,527 --
Translation adjustment............................................... -- (525)
------- -----
BALANCE FEBRUARY 7, 1996............................................. $12,056 $(169)
======= =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-20
<PAGE> 73
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
DYNEX Technologies (the "Company") designs, manufactures and markets
products used in the immunoassay segment of the bioinstrumentation market. The
Company is a division of Dynatech Corporation ("Dynatech"), and was formerly
known as Dynatech Laboratories.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.
Revenue Recognition
The Company recognizes revenues upon shipment of its products. The Company
provides a reserve for its estimate of warranty and installation costs at the
time of shipment. Deferred revenue in the accompanying balance sheet consists of
unearned revenue on service contracts which is recognized as revenue over the
life of the service contract. Substantially all of the deferred revenue included
in the accompanying balance sheet as of February 7, 1996, will be recognized
within one year.
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 the tax return.
Inventories
<TABLE>
Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market value and include materials, labor, and manufacturing overhead.
The components of inventories are as follows:
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
<S> <C> <C>
(IN THOUSANDS)
Raw materials and supplies.................................. $2,191 $2,054
Work in process............................................. 559 581
Finished goods.............................................. 3,111 4,102
------ ------
$5,861 $6,737
====== ======
</TABLE>
F-21
<PAGE> 74
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property and Equipment
<TABLE>
The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: machinery and equipment, 3 to 10 years;
and leasehold improvements, the shorter of the term of the lease or the life of
the asset. Property and equipment consist of the following:
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -----------
<S> <C> <C>
(IN THOUSANDS)
Machinery, equipment and leasehold improvements................. $6,782 $6,807
Less: Accumulated depreciation and amortization................. 4,702 4,669
------ ------
$2,080 $2,138
====== ======
</TABLE>
Foreign Currency
All assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year, in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected as a
separate component of shareholder's investment titled "Cumulative translation
adjustment." Foreign currency transaction gains and losses are included in the
accompanying statement of operations and are not material for all periods
presented.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. 401(K) SAVINGS PLAN
Substantially all of the Company's full-time U.S. employees are eligible to
participate in Dynatech's 401(k) savings plan. Contributions to the 401(k)
savings plan are made by both the employee and the Company. Company
contributions are based upon the level of employee contributions. In addition,
the Company may provide a discretionary contribution which is allocated based on
each employee's salary and length of service. Contributions charged to expense
were $66,000, $113,000, and $103,000 for the years ended March 31, 1994 and 1995
and for the period from April 1, 1995 through February 7, 1996, respectively.
3. INCOME TAXES
<TABLE>
The components of income (loss) before provision for income taxes are as
follows:
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
----------------- FEBRUARY 7,
1994 1995 1996
------- ----- -------------
<S> <C> <C> <C>
(IN THOUSANDS)
Domestic................................................... $(1,094) $(163) $(1,926)
Foreign.................................................... (446) 935 (517)
------- ----- -------
$(1,540) $ 772 $(2,443)
======= ===== =======
</TABLE>
F-22
<PAGE> 75
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
The components of the provision for income taxes are as follows:
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
------------- FEBRUARY 7,
1994 1995 1996
---- ---- -------------
<S> <C> <C> <C>
(IN THOUSANDS)
Currently payable
Foreign..................................................... $228 $436 $ 320
==== ==== =====
</TABLE>
<TABLE>
The provision for income taxes in the accompanying statement of operations
differs from the provision calculated by applying the statutory federal income
tax rate of 35% to income (loss) before provision for income taxes due to the
following:
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
----------------- FEBRUARY 7,
1994 1995 1996
----- ------- -------------
<S> <C> <C> <C>
(IN THOUSANDS)
Provision (benefit) for income taxes at statutory rate..... $(539) $ 270 $ (855)
Increases (decreases) resulting from:
Net foreign losses not benefited and tax rate
differential.......................................... 384 109 501
Net operating loss not benefited......................... 613 366 1,014
Other, net............................................... (230) (309) (340)
----- ------- -------
$ 228 $ 436 $ 320
===== ======= =======
</TABLE>
<TABLE>
Prepaid income taxes and deferred income taxes in the accompanying balance
sheet consist of the following:
<CAPTION>
MARCH 31, FEBRUARY 7,
1995 1996
--------- -------------
<S> <C> <C>
(IN THOUSANDS)
Prepaid income taxes:
Reserves and accruals.......................................... $ 146 $ 192
Inventory basis difference..................................... 4 5
Net operating loss carryforwards............................... 5,003 5,397
------- -------
5,153 5,594
Less: Valuation allowance...................................... 5,023 5,424
------- -------
$ 130 $ 170
======= =======
Deferred income taxes:
Depreciation................................................... $ 127 $ 167
Other.......................................................... 3 3
------- -------
$ 130 $ 170
======= =======
</TABLE>
The valuation allowance relates to uncertainty concerning the realization
of $13,875,000 of federal net operating loss carryforwards, the realization of
which is limited to the future income of the Company's U.S. subsidiary. The loss
carryforwards will expire in the years 2004 through 2011. Any tax benefit
resulting from use of the loss carryforwards will be recorded as a reduction to
the provision for income taxes.
F-23
<PAGE> 76
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A provision has not been made for U.S. or additional foreign taxes on
$2,164,000 of undistributed earnings in foreign subsidiaries that could be
subject to taxation if remitted to the U.S. because the Company currently plans
to keep these amounts permanently reinvested overseas.
4. COMMITMENTS
The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of operations
includes expenses from operating leases of $977,000, $948,000 and $688,000 for
the years ended March 31, 1994 and 1995 and for the period from April 1, 1995
through February 7, 1996, respectively. Future minimum payments due under
noncancelable operating leases are $736,000 in the remainder of calendar 1996;
$600,000 in 1997; $371,000 in 1998; $376,000 in 1999; $383,000 in 2000; and
$29,000 in 2001 and thereafter. Total future minimum lease payments are
$2,495,000.
5. RELATED PARTY TRANSACTIONS
Corporate Services Agreement
The Company and Dynatech have corporate services agreements under which
Dynatech provides certain administrative services, including risk management,
administration for certain employee benefits, tax advice and preparation of tax
returns, centralized cash management and certain other services. For these
services, the Company paid fees of approximately 1.2% of budgeted revenue and
2.6% of actual expenses incurred. In addition, Dynatech charged the Company an
interest allocation. The corporate service fees and the interest allocation
totaled $2,515,000, $2,182,000, and $2,152,000 for the years ended March 31,
1994 and 1995 and for the period from April 1, 1995 through February 7, 1996,
respectively. Management believes that the corporate service fee and interest
allocation are reasonable and representative of the expenses the Company would
have incurred on a stand-alone basis.
6. GEOGRAPHICAL INFORMATION
The Company is engaged in one business segment: developing, manufacturing,
and marketing products used in the immunoassay segment of the bioinstrumentation
market. The following table shows data for the Company by geographical area.
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
-------------------- FEBRUARY 7,
1994 1995 1996
------- -------- -------------
<S> <C> <C> <C>
(IN THOUSANDS)
Revenues:
United States........................................ $15,541 $ 18,428 $13,250
Germany.............................................. 7,212 9,962 7,169
Guernsey Channel Islands............................. 6,591 8,163 7,547
United Kingdom....................................... 3,519 3,833 2,689
France............................................... 1,907 3,064 3,617
Other................................................ 3,827 4,907 3,806
Transfers among geographical areas (a)............... (8,467) (11,029) (9,575)
------- -------- -------
$30,130 $ 37,328 $28,503
======= ======== =======
</TABLE>
F-24
<PAGE> 77
DYNEX TECHNOLOGIES DIVISION OF DYNATECH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
-------------------- FEBRUARY 7,
1994 1995 1996
------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income (loss) before provision for income taxes:
United States................................ $ (335) $ 395 $(1,257)
Germany...................................... (220) 439 286
Guernsey, Channel Islands.................... (253) 145 (573)
United Kingdom............................... 180 336 98
France....................................... (247) 125 313
Other........................................ 843 488 154
------- -------- -------
Total operating income (loss)................ (32) 1,928 (979)
Interest expense, net........................ (1,508) (1,156) (1,464)
------- -------- -------
$(1,540) $ 772 $(2,443)
======= ======== =======
Identifiable assets:
United States................................ $ 5,212 $ 5,800 $ 2,619
Germany...................................... 3,743 3,537 3,456
Guernsey, Channel Islands.................... 1,792 2,601 2,759
United Kingdom............................... 3,414 4,441 4,060
France....................................... 1,304 1,509 1,647
Other........................................ 1,506 1,472 1,525
------- -------- -------
$16,971 $ 19,360 $16,066
======= ======== =======
Export revenues included in United States
revenues above (b):
Europe....................................... $ 1,612 $ 2,519 $ 1,544
Other........................................ 1,148 1,243 878
------- -------- -------
$ 2,760 $ 3,762 $ 2,422
======= ======== =======
<FN>
- ---------------
(a) Transfers among geographical areas are accounted for at prices that are
representative of transactions with unaffiliated parties.
(b) In general, export sales are denominated in U.S. dollars.
</TABLE>
7. SUBSEQUENT EVENT
On February 7, 1996, the Company was sold to Thermo BioAnalysis
Corporation.
F-25
<PAGE> 78
AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF THERMO BIOANALYSIS CORPORATION
We have audited the combined financial statements on pages F-27 to F-37
which have been prepared under the historical cost convention and the accounting
policies set out on pages F-30 to F-31.
RESPECTIVE RESPONSIBILITIES OF MANAGEMENT AND AUDITORS
The managements of Affinity Sensors and LabSystems are responsible for
preparing financial statements for the division for which they are responsible,
which give a true and fair view of the state of affairs of the division at
December 31, 1994 and 1995, and of the results of the division for the years
ended December 31, 1993, 1994 and 1995. In preparing those financial statements,
each division's management is required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
- prepare the financial statements on the going concern basis unless it its
inappropriate to presume that the division will continue in business.
Each division's management is responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the financial
position of the division. Each division's management is also responsible for
safeguarding the assets of the division and hence for taking reasonable steps
for the prevention of fraud and other irregularities.
The responsibility for the preparation of the combined financial statements
rests with the directors of Thermo BioAnalysis Corporation.
It is our responsibility to form an independent opinion, based on our
audit, on the combined financial statements and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board which are substantially in accordance with generally
accepted auditing standards in the United States. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the significant
estimates and judgements made by management in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the
circumstances of each division, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
combined state of affairs of the divisions at December 31, 1994 and 1995 and of
their losses and cash flows for the years ended December 31, 1993, 1994 and
1995, in accordance with generally accepted accounting principles in the United
Kingdom.
Accounting practices used by the divisions and Thermo BioAnalysis
Corporation in preparing the accompanying combined financial statements conform
with generally accepted accounting principles in the United Kingdom. Had the
accompanying financial statements been prepared in accordance with United States
generally accepted accounting principles, the information included in them would
not be materially different. Accordingly, no reconciliation of net income and
owner's equity to United States generally accepted accounting principles has
been included in the combined financial statements.
ARTHUR ANDERSEN
Cambridge, England
July 22, 1996
F-26
<PAGE> 79
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
COMBINED PROFIT AND LOSS ACCOUNTS
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, THREE MONTHS JANUARY 1, 1996
---------------------------- ENDED THROUGH
1993 1994 1995 MARCH 31, 1995 MARCH 29, 1996
gbp#000 gbp#000 gbp#000 gbp#000 gbp#000
------ ------ ------ -------------- ---------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Turnover (Note 2).................. 15,980 14,959 14,361 2,678 2,862
Cost of sales...................... (4,210) (4,220) (3,526) (1,000) (1,349)
------ ------ ------ ------ ------
Gross profit....................... 11,770 10,739 10,835 1,678 1,513
Distribution costs................. (2,803) (3,075) (2,539) (636) (862)
Administrative expenses............ (9,206) (8,246) (7,893) (1,675) (1,802)
------ ------ ------ ------ ------
Profit (loss) on ordinary
activities before taxation (Note
3)............................... (239) (582) 403 (633) (1,151)
Tax on profit (loss) on ordinary
activities (Note 5).............. (292) (104) (406) -- --
------ ------ ------ ------ ------
Loss for the financial year after
taxation transferred to reserves
(Note 11)........................ (531) (686) (3) (633) (1,151)
====== ====== ====== ====== ======
</TABLE>
Movements in reserves are shown in Note 11.
All amounts relate to continuing operations.
The loss for each financial year is the only material recognised gain or loss
for each year, and accordingly a statement of total recognised gains and losses
is not presented in these financial statements.
The accompanying notes are an integral part of these profit and loss accounts.
F-27
<PAGE> 80
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
<TABLE>
COMBINED BALANCE SHEETS
<CAPTION>
DECEMBER 31,
----------------
1994 1995
gbp#000 gbp#000
-------- --------
<S> <C> <C>
FIXED ASSETS
Tangible assets (Note 6).................................................... 1,885 1,592
------ ------
CURRENT ASSETS
Stocks (Note 7)............................................................. 1,197 1,026
Debtors (Note 8)............................................................ 5,781 5,507
Cash at bank and in hand.................................................... 10,526 13,039
------ ------
17,504 19,572
Creditors: Amounts falling due within one year (Note 9)..................... (4,802) (5,033)
------ ------
Net current assets.......................................................... 12,702 14,539
------ ------
Total assets less current liabilities....................................... 14,587 16,131
Provisions for liabilities and charges (Note 10)............................ (647) (949)
------ ------
13,940 15,182
====== ======
OWNER'S EQUITY
Net parent company investment (Note 11)..................................... 13,913 15,152
Cumulative translation adjustment (Note 11)................................. 27 30
------ ------
13,940 15,182
====== ======
</TABLE>
These accounts were approved on July 22, 1996.
The accompanying notes are an integral part of these balance sheets.
F-28
<PAGE> 81
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
<TABLE>
COMBINED CASH FLOW STATEMENTS
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, THREE MONTHS JANUARY 1,
-------------------------- ENDED 1996 THROUGH
1993 1994 1995 MARCH 31, 1995 MARCH 29, 1996
gbp#000 gbp#000 gbp#000 gbp#000 gbp#000
--------- --------- --------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES
(Note 12)................................ 1,840 1,759 1,263 287 742
TAXATION
Corporation tax paid....................... (292) (104) (406) -- --
------ ------ ------ ------- -------
Tax paid................................... (292) (104) (406) -- --
------ ------ ------ ------- -------
INVESTING ACTIVITIES
Payments to acquire tangible fixed
assets................................... (1,145) (939) (795) -- (142)
Receipts from sales of tangible fixed
assets................................... -- 20 35 35 --
------ ------ ------ ------- -------
Net cash inflow (outflow) from investing
activities............................... (1,145) (919) (760) 35 (142)
------ ------ ------ ------- -------
Net cash inflow before financing........... 403 736 97 322 600
------ ------ ------ ------- -------
FINANCING
Capital injection (withdrawal) (Note 11)... 2,503 1,031 1,242 (10,848) (13,609)
------ ------ ------ ------- -------
Net cash inflow (outflow) from financing... 2,503 1,031 1,242 (10,848) (13,609)
------ ------ ------ ------- -------
Increase (decrease) in cash and cash
equivalents (Note 13).................... 2,906 1,767 1,339 (10,526) (13,009)
====== ====== ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these cash flow statements.
F-29
<PAGE> 82
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
A summary of the principal accounting policies, all of which have been
applied consistently throughout the three years ending December 31, 1993, 1994
and 1995, is set out below.
(a) Basis of preparation
The combined financial statements have been prepared as an aggregation of
the financial statements of the Affinity Sensors and LabSystems divisions of
Fisons plc, and their respective sales offices based in the United States.
In preparing this aggregation, the directors of Thermo BioAnalysis
Corporation have eliminated transactions and balances between LabSystems and its
sales office and Affinity Sensors and its sales office. Unrealised profit on
stocks and demonstration models held as tangible fixed assets have also been
eliminated. LabSystems and Affinity Sensors do not trade with each other.
(b) Basis of accounting
The financial statements are prepared under the historical cost convention
and have been prepared in accordance with applicable United Kingdom accounting
standards.
(c) Tangible fixed assets
Fixed assets are shown at cost less depreciation. Depreciation is provided
at rates calculated to write-off the cost, less estimated residual value, of
each asset on a straight-line basis over its expected useful life, as follows:
Plant and equipment, fixtures and fittings 4 years - 10 years
Leasehold improvements Over the period of the lease
(d) Stocks
Stocks and work-in-progress are stated at the lower of cost or net
realisable value.
Cost, which is calculated on the FIFO basis, comprises material and, where
appropriate, labour and factory overheads.
(e) Taxation
Corporation tax payable is provided on taxable profits at the current rate.
Corporation tax payable is settled via the capital account with Fisons plc
in the United Kingdom, and Fisons Instruments North America Inc. in the United
States. Hence no corporation tax creditors appear in these financial statements.
Deferred taxation is provided using the liability method on all timing
differences only to the extent that they are expected to reverse in the future
without being replaced.
Deferred tax assets resulting from tax losses carried forward are not
recognised in the financial statements except to the extent that they are
anticipated to be recoverable without being replaced by equivalent debit
balances.
F-30
<PAGE> 83
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(f) Foreign currency
Transactions denominated in foreign currencies are recorded using the rate
of exchange ruling at the date of the transaction or, if hedged, at the forward
contract rate.
Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are reported at the exchange rates prevailing at that date
or, if appropriate, at the forward contract rate. Any gain or loss arising from
a change in exchange rates subsequent to the date of transaction is included as
an exchange gain or loss in the profit and loss account.
The results of the sales offices in the United States are translated at the
average rate of exchange during each year and their balance sheets at the rate
ruling at each balance sheet date.
Exchange differences arising on translation of the opening net assets and
results of overseas operations are dealt with through reserves.
(g) Turnover
Turnover represents the invoiced value of goods and services sold during
the year, less trade discounts and allowances, stated net of value added tax.
(h) Research and development costs
Research and development expenditure is charged to the profit and loss
account as incurred.
(i) Leases
The company enters into operating leases as described in Note 15.
Operating leases are charged on a straight-line basis over the lease term.
(j) Pension costs
The amount charged to the profit and loss account in respect of pension
costs for defined benefit schemes is the estimated regular cost of providing the
benefits accrued in the year, adjusted to reflect variations from that cost. The
regular cost is calculated so that it represents a substantially level
percentage of current and future payroll. Variations from regular cost are
charged or credited to the profit and loss account over the estimated average
remaining working life of scheme members.
The schemes are externally funded, with the assets held separately from
those of the group in trustee administered funds. Differences between amounts
charged to the profit and loss account and amounts contributed to the schemes
are shown as either provisions or prepayments in the balance sheet.
F-31
<PAGE> 84
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. TURNOVER
<TABLE>
The analysis of turnover by geographical area is as follows:
<CAPTION>
1993 1994 1995
gbp#000 gbp#000 gbp#000
--------- --------- ---------
<S> <C> <C> <C>
United Kingdom............................................ 3,113 3,226 3,310
United States............................................. 9,158 8,582 6,911
Rest of world............................................. 3,709 3,151 4,140
------ ------ ------
15,980 14,959 14,361
====== ====== ======
</TABLE>
<TABLE>
The analysis of turnover and profit (loss) on ordinary activities before
taxation by activity is as follows:
<CAPTION>
1993 1994 1995
gbp#000 gbp#000 gbp#000
--------- --------- ---------
<S> <C> <C> <C>
Turnover
LabSystems................................................ 15,620 13,878 12,851
Affinity Sensors.......................................... 360 1,081 1,510
------ ------ ------
15,980 14,959 14,361
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
1993 1994 1995
gbp#000 gbp#000 gbp#000
--------- --------- ---------
<S> <C> <C> <C>
Profit (loss) on ordinary activities before taxation
LabSystems................................................ 1,903 927 1,975
Affinity Sensors.......................................... (2,142) (1,509) (1,572)
------ ------ ------
(239) (582) 403
====== ====== ======
</TABLE>
3. PROFIT (LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
Profit (loss) on ordinary activities is stated after charging:
<CAPTION>
1993 1994 1995
gbp#000 gbp#000 gbp#000
--------- --------- ---------
<S> <C> <C> <C>
Exceptional items included within administrative expenses
-- redundancy and restructuring costs................... -- -- 507
-- tangible fixed assets written off.................... 273 -- --
Depreciation
-- owned tangible fixed assets.......................... 604 893 781
Hire of plant and machinery under operating leases........ 17 59 154
Operating lease rentals -- land and buildings............. 156 142 266
Staff costs............................................... 4,588 5,018 4,638
Research and development.................................. 2,117 2,788 3,010
</TABLE>
4. STAFF COSTS
<TABLE>
Particulars of employees are shown below.
<CAPTION>
1993 1994 1995
gbp#000 gbp#000 gbp#000
--------- --------- ---------
<S> <C> <C> <C>
Wages and salaries........................................ 4,186 4,585 4,212
Social security costs..................................... 357 392 334
Other pension costs....................................... 45 41 92
----- ----- -----
4,588 5,018 4,638
===== ===== =====
</TABLE>
F-32
<PAGE> 85
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
The average weekly number of persons employed by the divisions was as
follows:
<CAPTION>
1993 1994 1995
NUMBER NUMBER NUMBER
------ ------ ------
<S> <C> <C> <C>
Administration............................................ 41 43 44
Sales and support......................................... 68 81 73
Research and development.................................. 66 62 48
--- --- ---
175 186 165
=== === ===
</TABLE>
5. TAX ON PROFIT (LOSS) ON ORDINARY ACTIVITIES
<TABLE>
The tax charge is based on the result for the year and comprises:
<CAPTION>
1993 1994 1995
gbp#000 gbp#000 gbp#000
--------- --------- ---------
<S> <C> <C> <C>
Corporation tax at 33%............................................ 292 104 406
=== === ===
</TABLE>
In arriving at the tax charge for each year, no account has been taken of
any deferred tax asset resulting from losses incurred by the sales offices in
the United States.
Management considers it would be imprudent to recognize such an asset as
its recovery is not expected to occur in the foreseeable future.
It is not practicable to quantify the tax losses carried forward in the
United States.
<TABLE>
6. TANGIBLE FIXED ASSETS
<CAPTION>
LEASEHOLD PLANT AND FIXTURES AND
IMPROVEMENTS EQUIPMENT FITTINGS TOTAL
gbp#000 gbp#000 gbp#000 gbp#000
------------ --------- ------------ ---------
<S> <C> <C> <C> <C>
COST
At January 1, 1994............... 432 3,804 12 4,248
Additions........................ -- 925 14 939
Disposals........................ -- (742) (6) (748)
Exchange adjustment.............. -- (19) -- (19)
--- ------ --- ------
At December 31, 1994............. 432 3,968 20 4,420
--- ------ --- ------
DEPRECIATION
At January 1, 1994............... 172 1,886 7 2,065
Charge for the year.............. 35 849 9 893
On disposals..................... -- (416) -- (416)
Exchange adjustment.............. -- (6) (1) (7)
--- ------ --- ------
At December 31, 1994............. 207 2,313 15 2,535
--- ------ --- ------
NET BOOK VALUE
At December 31, 1994............. 225 1,655 5 1,885
=== ====== === ======
At January 1, 1994............... 260 1,918 5 2,183
=== ====== === ======
COST
At January 1, 1995............... 432 3,968 20 4,420
Additions........................ -- 793 2 795
Disposals........................ -- (1,423) (6) (1,429)
Exchange adjustment.............. -- 5 -- 5
--- ------ --- ------
At December 31, 1995............. 432 3,343 16 3,791
--- ------ --- ------
</TABLE>
F-33
<PAGE> 86
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
LEASEHOLD PLANT AND FIXTURES AND
IMPROVEMENTS EQUIPMENT FITTINGS TOTAL
gbp#000 gbp#000 gbp#000 gbp#000
------------ --------- ------------ ---------
<S> <C> <C> <C> <C>
DEPRECIATION
At January 1, 1995............... 207 2,313 15 2,535
Charge for the year.............. 37 742 2 781
On disposals..................... -- (1,111) (6) (1,117)
--- ----- --- ------
At December 31, 1995............. 244 1,944 11 2,199
--- ----- --- ------
NET BOOK VALUE
At December 31, 1995............. 188 1,399 5 1,592
=== ===== === ======
At January 1, 1995............... 225 1,655 5 1,885
=== ===== === ======
</TABLE>
<TABLE>
7. STOCKS
<CAPTION>
1994 1995
gbp#000 gbp#000
--------- ---------
<S> <C> <C>
Components............................................................ 99 230
Work-in-progress...................................................... 121 58
Finished goods........................................................ 977 738
----- -----
1,197 1,026
===== =====
</TABLE>
<TABLE>
8. DEBTORS
The following are included in the net book value of debtors:
<CAPTION>
1994 1995
gbp#000 gbp#000
--------- ---------
<S> <C> <C>
Amounts falling due within one year:
Trade debtors....................................................... 4,284 3,943
Amounts owed by Fisons group undertakings........................... 1,091 1,340
Other debtors....................................................... 145 --
Prepayments and accrued income...................................... 261 224
----- -----
5,781 5,507
===== =====
</TABLE>
<TABLE>
9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<CAPTION>
1994 1995
gbp#000 gbp#000
--------- ---------
<S> <C> <C>
Bank overdraft........................................................ 210 1,384
Trade creditors....................................................... 1,120 819
Amounts owed to Fisons group undertakings............................. 698 225
Other creditors....................................................... 361 541
Accruals and deferred income.......................................... 2,413 2,064
----- -----
4,802 5,033
===== =====
</TABLE>
F-34
<PAGE> 87
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
10. PROVISIONS FOR LIABILITIES AND CHARGES
<CAPTION>
INSTALLATION OTHER
PROVISION PROVISIONS TOTAL
gbp#000 gbp#000 gbp#000
------------ ---------- ---------
<S> <C> <C> <C>
BALANCE AT JANUARY 1, 1994........................... 375 99 474
Charged to profit and loss account................... 212 83 295
Released unused...................................... (3) (116) (119)
Utilised............................................. -- (3) (3)
--- ---- ----
BALANCE AT DECEMBER 31, 1994......................... 584 63 647
Charged to profit and loss account................... 407 69 476
Released unused...................................... (98) (10) (108)
Utilised............................................. -- (66) (66)
--- ---- ----
BALANCE AT DECEMBER 31, 1995......................... 893 56 949
=== ==== ====
</TABLE>
<TABLE>
11. RECONCILIATION OF MOVEMENTS IN OWNER'S EQUITY
<CAPTION>
NET PARENT CUMULATIVE
COMPANY TRANSLATION
INVESTMENT ADJUSTMENT TOTAL
gbp#000 gbp#000 gbp#000
----------- ---------- ---------
<S> <C> <C> <C>
At January 1, 1994................................... 13,568 27 13,595
Capital injection.................................... 1,031 -- 1,031
Retained loss for the year........................... (686) -- (686)
------ --- ------
At December 31, 1994................................. 13,913 27 13,940
====== === ======
At January 1, 1995................................... 13,913 27 13,940
Capital injection.................................... 1,242 -- 1,242
Retained loss for the year........................... (3) -- (3)
Gain on foreign currency translation................. -- 3 3
------ --- ------
At December 31, 1995................................. 15,152 30 15,182
====== === ======
</TABLE>
<TABLE>
12. RECONCILIATION OF OPERATING PROFIT (LOSS) TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<CAPTION>
1993 1994 1995
gbp#000 gbp#000 gbp#000
--------- --------- ---------
<S> <C> <C> <C>
Profit (loss) on ordinary activities before
taxation........................................... (239) (582) 403
Adjustment for items not involving the movement of
cash:
Depreciation charge............................. 604 893 781
Loss on disposal of fixed assets................ 55 312 277
Decrease in debtors............................. 1,643 245 273
(Increase) decrease in stocks................... (87) (131) 171
Increase (decrease) in creditors and
provisions.................................... (163) 1,010 (640)
Translation (loss) gain on consolidation........ 27 12 (2)
----- ----- -----
Net cash inflow from operating activities............ 1,840 1,759 1,263
===== ===== =====
</TABLE>
The translation (loss) gain on consolidation is considered to be immaterial
and has not been allocated to individual captions.
F-35
<PAGE> 88
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
13. ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS DURING THE YEAR
<CAPTION>
CASH AT BANK BANK
AND IN HAND OVERDRAFTS NET
gbp#000 gbp#000 gbp#000
------------ ---------- ---------
<S> <C> <C> <C>
Balance at January 1, 1993.......................... 5,643 -- 5,643
Movement in year.................................... 3,093 (187) 2,906
------ ------ ------
Balance at December 31, 1993........................ 8,736 (187) 8,549
Movement in year.................................... 1,790 (23) 1,767
------ ------ ------
Balance at December 31, 1994........................ 10,526 (210) 10,316
Movement in year.................................... 2,513 (1,174) 1,339
------ ------ ------
Balance at December 31, 1995........................ 13,039 (1,384) 11,655
====== ====== ======
</TABLE>
14. RELATED PARTY TRANSACTIONS
Sales to other Fisons entities
<TABLE>
Both divisions make the majority of overseas sales via other Fisons
businesses, which in turn sell product to end users. These combined financial
statements include the selling operations based in the United States, but not
those in other territories as these entities are not being acquired by Thermo
BioAnalysis. The total sales to other Fisons businesses (except for those based
in the United States) are as follows:
<CAPTION>
AFFINITY
LABSYSTEMS SENSORS TOTAL
YEAR ENDED gbp#000 gbp#000 gbp#000
---------- ---------- -------- ---------
<S> <C> <C> <C>
December 31, 1993................................. 2,820 176 2,996
===== === =====
December 31, 1994................................. 2,217 271 2,488
===== === =====
December 31, 1995................................. 1,856 447 2,303
===== === =====
</TABLE>
15. OPERATING LEASE COMMITMENTS
<TABLE>
Annual commitments under noncancellable operating leases are as follows:
<CAPTION>
1993 1994 1995
gbp#000 gbp#000 gbp#000
--------- --------- ---------
<S> <C> <C> <C>
Land and buildings
Expiry date:
-- between two and five years................ 88 88 88
-- after five years.......................... 141 142 269
--- --- ---
229 230 357
=== === ===
Other
Expiry date:
-- within one year........................... -- 63 24
-- between two and five years................ 8 45 63
---
-
--- --- ---
8 108 87
=== === ===
</TABLE>
F-36
<PAGE> 89
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONCLUDED)
16. CONTINGENT LIABILITIES
A third party has claimed that a part used by Affinity Sensors in their
products may infringe one of its patents.
The management of Affinity Sensors considers that the likelihood of a
material liability resulting from this claim is remote. Accordingly, no
provision has been made in respect of this claim in these combined financial
statements..
17. PENSION ARRANGEMENTS
The majority of the United Kingdom employees of LabSystems and Affinity
Sensors belongs to group defined benefit pension schemes operated by Fisons plc.
These schemes are funded to cover future pension liabilities after allowing for
expected future earnings and pension increases.
The costs of providing these benefits are addressed in accordance with the
advice of professionally qualified actuaries. Contributions are based on pension
costs across the Fisons plc group as a whole.
Actuarial valuations of these schemes are undertaken on a regular basis by
independent qualified actuaries using the projected unit method.
The last valuation of the UK pension scheme, being the scheme principally
affecting these combined financial statements, was made at March 31, 1994.
Particulars of that valuation may be found in the Fisons plc financial
statements for the year ended December 31, 1994.
The aggregate pension cost charged in these combined financial statements
is shown in Note 4. There were no provisions or prepayments in the combined
balance sheet at either December 31, 1994 or 1995 resulting from a difference
between the amounts recognised as cost and the amounts paid to the schemes.
Following the acquisition of a substantial portion of the businesses
comprising the Scientific Instruments Division of Fisons plc by Thermo
Instrument Systems Inc., no contributions will be paid to Fisons group pension
schemes after September 1996. Those employees who are eligible have been offered
membership of certain defined contribution pension schemes operated by Thermo
Instrument Systems Inc. or its parent company.
18. POST BALANCE SHEET EVENTS
On March 29, 1996, a substantial portion of the businesses comprising the
Scientific Instruments Division of Fisons plc (of which LabSystems and Affinity
Sensors form a part) was acquired by Thermo Instrument Systems Inc., a company
incorporated in the United States.
F-37
<PAGE> 90
THERMO BIOANALYSIS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 30, 1995
(UNAUDITED)
On February 7, 1996, the Company acquired substantially all the assets of
the DYNEX Technologies ("DYNEX") division of Dynatech Corporation ("Dynatech")
for approximately $43.1 million in cash. On March 29, 1996, Thermo Instrument
Systems Inc. ("Thermo Instrument") acquired a substantial portion of the
businesses comprising the Scientific Instruments Division of Fisons plc
("Fisons"). On July 22, 1996, the Company acquired the Affinity Sensors and
LabSystems divisions of Fisons from Thermo Instrument for $9.0 million in cash.
Because, as of June 29, 1996, the Company, Affinity Sensors and LabSystems were
deemed for accounting purposes to be under control of their common owner, Thermo
Instrument, the Company's historical financial information as of and for the
period ended June 29, 1996 includes the results of operations of Affinity
Sensors and LabSystems from March 29, 1996, the date these businesses were
acquired by Thermo Instrument. During the six months ended June 29, 1996, the
Company wrote-off $3.5 million of acquired technology in connection with the
acquisition of Affinity Sensors and LabSystems. This nonrecurring expense has
been omitted from the pro forma combined condensed statements of operations.
Because the Company had not paid Thermo Instrument for these businesses as of
June 29, 1996, the consideration for the transfer of these businesses has been
reflected as an additional amount payable to parent company. To help finance the
acquisition of DYNEX, the Company borrowed $30.0 million from Thermo Electron
Corporation ("Thermo Electron") pursuant to a promissory note due February 1997,
and bearing interest at the Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter. In conjunction with the
acquisition of Affinity Sensors and LabSystems in July 1996, the Company issued
to Thermo Instrument a $50.0 million principal amount 4.875% subordinated
convertible note (the "Convertible Note"), due 2001, convertible into shares of
the Company's common stock at $16.50 per share. The Company used part of the
proceeds of the Convertible Note to retire the $30.0 million promissory note.
The following unaudited pro forma combined condensed statement of
operations sets forth the results of operations for the year ended December 30,
1995, as if the acquisitions of DYNEX and Affinity Sensors and LabSystems and
the issuance of the Convertible Note to Thermo Instrument had occurred on
January 1, 1995. DYNEX has a fiscal year which differs from the Company's fiscal
year-end. The historical results of operations for DYNEX presented below have
been adjusted to conform to the Company's fiscal year-end for purposes of the
pro forma combined condensed statement of operations. The pro forma results of
operations are not necessarily indicative of future operations or the actual
results that would have occurred had the acquisitions of DYNEX and Affinity
Sensors and LabSystems and the issuance of the Convertible Note to Thermo
Instrument occurred on January 1, 1995. These statements should be read in
conjunction with the accompanying notes, the pro forma condensed balance sheet,
and the respective historical financial statements and related notes of the
Company, DYNEX and Affinity Sensors and LabSystems appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------
DYNEX AFFINITY
TECHNOLOGIES SENSORS AND
DIVISION LABSYSTEMS PRO FORMA
THERMO OF DYNATECH DIVISIONS ------------------------
BIOANALYSIS CORPORATION OF FISONS ADJUSTMENTS COMBINED
----------- ------------ ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues................................... $22,534 $ 35,866 $22,403 $ -- $80,803
------- ------- ------- ------- -------
Costs and Operating Expenses:
Cost of revenues......................... 13,036 19,379 5,501 102 38,018
Selling, general and administrative
expenses.............................. 4,804 12,970 11,578 891 30,243
Research and development expenses........ 1,325 2,861 4,696 -- 8,882
------- ------- ------- ------- -------
19,165 35,210 21,775 993 77,143
------- ------- ------- ------- -------
Operating Income........................... 3,369 656 628 (993) 3,660
Interest Income............................ 819 194 -- -- 1,013
Interest Expense........................... -- (1,569) -- (1,134) (2,703 )
------- ------- ------- ------- -------
Income (Loss) Before Income Taxes.......... 4,188 (719) 628 (2,127) 1,970
Income Tax Provision (Benefit)............. 1,674 475 633 (1,634) 1,148
------- ------- ------- ------- -------
Net Income (Loss).......................... $ 2,514 $ (1,194) $ (5) $ (493) $ 822
======= ======= ======= ======= =======
Earnings per Share......................... $ .32 $ .11
======= =======
Weighted Average Shares.................... 7,811 7,811
======= =======
</TABLE>
F-38
<PAGE> 91
THERMO BIOANALYSIS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 29, 1996
(UNAUDITED)
The following unaudited pro forma combined condensed statement of
operations sets forth the results of operations for the six months ended June
29, 1996, as if the acquisitions of DYNEX and Affinity Sensors and LabSystems
and the issuance of the Convertible Note to Thermo Instrument had occurred on
January 1, 1995. DYNEX has a fiscal year which differs from the Company's fiscal
year-end. The historical results of operations for DYNEX presented below have
been adjusted to conform to the Company's fiscal year-end for purposes of the
pro forma combined condensed statement of operations. The pro forma results of
operations are not necessarily indicative of future operations or the actual
results that would have occurred had the acquisitions of DYNEX and Affinity
Sensors and LabSystems and the issuance of the Convertible Note to Thermo
Instrument occurred on January 1, 1995. These statements should be read in
conjunction with the accompanying notes, the pro forma condensed balance sheet,
and the respective historical financial statements and related notes of the
Company, DYNEX and Affinity Sensors and LabSystems appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------
DYNEX AFFINITY
TECHNOLOGIES SENSORS AND
DIVISION LABSYSTEMS PRO FORMA
THERMO OF DYNATECH DIVISIONS ----------------------
BIOANALYSIS CORPORATION OF FISONS ADJUSTMENTS COMBINED
----------- ------------ ------------ ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues................................ $29,782 $2,821 $ 4,367 $ -- $36,970
-------- -------- -------- -------- --------
Costs and Operating Expenses:
Cost of revenues...................... 16,106 1,794 2,059 (32) 19,927
Selling, general and administrative
expenses........................... 9,017 1,475 3,300 187 13,979
Research and development expenses..... 2,921 351 764 -- 4,036
Write-off of acquired technology...... 3,500 -- -- (3,500) --
-------- -------- -------- -------- --------
31,544 3,620 6,123 (3,345) 37,942
-------- -------- -------- -------- --------
Operating Loss.......................... (1,762) (799) (1,756) 3,345 (972 )
Interest Income......................... 293 12 -- -- 305
Interest Expense........................ (668) (183) -- (179) (1,030 )
-------- -------- -------- -------- --------
Loss Before Income Taxes................ (2,137) (970) (1,756) 3,166 (1,697 )
Income Tax Provision (Benefit).......... 546 11 -- (680) (123 )
-------- -------- -------- -------- --------
Net Loss................................ $(2,683) $ (981) $ (1,756) $ 3,846 $(1,574 )
======== ======== ======== ======== ========
Loss per Share.......................... $ (.33) $ (.19 )
======== ========
Weighted Average Shares................. 8,219 8,219
======== ========
</TABLE>
F-39
<PAGE> 92
THERMO BIOANALYSIS CORPORATION
PRO FORMA CONDENSED BALANCE SHEET
JUNE 29, 1996
(UNAUDITED)
The following unaudited pro forma condensed balance sheet sets forth the
financial position as of June 29, 1996, as if the payment of $9.0 million by the
Company to Thermo Instrument in July 1996, made in consideration for the
transfer of Affinity Sensors and LabSystems, and the issuance of the Convertible
Note to Thermo Instrument, had occurred on June 29, 1996. This statement should
be read in conjunction with the accompanying notes, the pro forma combined
condensed statements of operations and the respective historical financial
statements and related notes of the Company and Affinity Sensors and LabSystems
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL
-----------
THERMO PRO FORMA PRO
BIOANALYSIS ADJUSTMENTS FORMA
----------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................... $12,234 $ 11,000 $23,234
Accounts receivable, net.................................... 14,123 -- 14,123
Inventories................................................. 13,417 -- 13,417
Other current assets........................................ 2,720 -- 2,720
-------- -------- --------
42,494 11,000 53,494
-------- -------- --------
Property, Plant and Equipment, at Cost, Net................... 6,031 -- 6,031
-------- -------- --------
Patents and Other Assets...................................... 3,495 -- 3,495
-------- -------- --------
Cost in Excess of Net Assets of Acquired Companies............ 33,043 -- 33,043
-------- -------- --------
$85,063 $ 11,000 $96,063
======== ======== ========
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities:
Note payable, due to Thermo Electron Corporation............ $30,000 $ (30,000) $ --
Accounts payable............................................ 5,094 -- 5,094
Accrued expenses............................................ 15,773 -- 15,773
Due to (from) parent company and affiliates................. 7,502 (9,000) (1,498 )
-------- -------- --------
58,369 (39,000) 19,369
-------- -------- --------
Deferred Income Taxes......................................... 228 -- 228
-------- -------- --------
Subordinated Convertible Note, Due to Parent Company.......... -- 50,000 50,000
-------- -------- --------
Shareholders' Investment:
Common stock................................................ 81 -- 81
Capital in excess of par value.............................. 26,917 -- 26,917
Accumulated deficit......................................... (540) -- (540 )
Cumulative translation adjustment........................... 8 -- 8
-------- -------- --------
26,466 -- 26,466
-------- -------- --------
$85,063 $ 11,000 $96,063
======== ======== ========
</TABLE>
F-40
<PAGE> 93
THERMO BIOANALYSIS CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The historical financial statements of Affinity Sensors and LabSystems,
which are denominated in British pounds sterling, have been translated into U.S.
dollars for the pro forma combined condensed statements of operations at the
average exchange rate of approximately 1.56 and 1.53 British pounds sterling per
U.S. dollar for the year ended December 30, 1995 and for the six months ended
June 29, 1996, respectively.
NOTE 2 -- PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 30, 1995 (IN THOUSANDS, EXCEPT
IN TEXT)
<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
COST OF REVENUES
Increase in the finished goods inventory of DYNEX to the estimated selling
price, less the sum of the costs of disposal and a reasonable profit
allowance for the Company's selling efforts.................................. $ 102
----------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Eliminate corporate service fees charged to DYNEX by Dynatech Corporation...... (1,050)
Service fee of 1.20% of the revenues of DYNEX, Affinity Sensors and LabSystems
for services provided under a services agreement between the Company and
Thermo Electron.............................................................. 699
Amortization over 40 years of $32,959,000 of cost in excess of net assets of
acquired companies created by the acquisition of DYNEX, and over 8 years of
$3,349,000 of product technology and capitalized software created by the
acquisition of Affinity Sensors and LabSystems............................... 1,242
----------
891
----------
INTEREST EXPENSE
Eliminate the corporate interest allocation charged to DYNEX by Dynatech
Corporation.................................................................. (1,304)
Record interest expense on the Convertible Note issued to Thermo Instrument.... 2,438
----------
1,134
----------
INCOME TAX PROVISION (BENEFIT)
Income tax benefit associated with the utilization of the U.S. portion of net
operating losses at Affinity Sensors and LabSystems.......................... (1,280)
Income tax benefit associated with the adjustments above (excluding
amortization of cost in excess of net assets of acquired companies and the
write-off of acquired technology), calculated at the Company's statutory
income tax rate of 40%....................................................... (354)
----------
(1,634)
----------
</TABLE>
NOTE 3 -- PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED STATEMENT OF
OPERATIONS FOR THE SIX MONTHS ENDED JUNE 29, 1996 (IN THOUSANDS,
EXCEPT IN TEXT)
<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
COST OF REVENUES
Reverse a portion of the adjustment to record the finished goods inventory of
DYNEX at the estimated selling price, less the sum of the costs of disposal
and a reasonable profit allowance for the Company's selling efforts.......... $ (32)
------
</TABLE>
F-41
<PAGE> 94
THERMO BIOANALYSIS CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONCLUDED)
(UNAUDITED)
<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Eliminate corporate service fees charged to DYNEX by Dynatech Corporation...... (75)
Service fee of 1.0% of the revenues of DYNEX, Affinity Sensors and LabSystems
for services provided under a services agreement between the Company and
Thermo Electron.............................................................. 72
Amortization over 40 years of $32,959,000 of cost in excess of net assets of
acquired companies created by the acquisition of DYNEX, and over 8 years of
$3,349,000 of product technology and capitalized software created by the
acquisition of Affinity Sensors and LabSystems............................... 190
------
187
------
WRITE-OFF OF ACQUIRED TECHNOLOGY
Reverse the write-off of acquired technology under development associated with
the acquisition of Affinity Sensors and LabSystems........................... (3,500)
------
INTEREST EXPENSE
Eliminate the corporate interest allocation charged to DYNEX by Dynatech
Corporation.................................................................. (183)
Record interest expense on the Convertible Note issued to Thermo Instrument.... 609
Eliminate interest expense on the $30,000,000 principal amount promissory note
payable to Thermo Electron, due to its assumed repayment with the proceeds of
the Convertible Note issued to Thermo Instrument............................. (247)
------
179
------
INCOME TAX PROVISION (BENEFIT)
Income tax benefit associated with the utilization of the U.S. portion of net
operating losses at Affinity Sensors and LabSystems.......................... (623)
Income tax benefit associated with the adjustments above (excluding
amortization of cost in excess of net assets of acquired companies and the
reversal of the write-off of acquired technology), calculated at the
Company's statutory income tax rate of 40%................................... (57)
------
(680)
------
</TABLE>
NOTE 4 -- PRO FORMA ADJUSTMENTS TO PRO FORMA CONDENSED BALANCE SHEET (IN
THOUSANDS)
<TABLE>
<CAPTION>
DEBIT (CREDIT)
--------------
<S> <C>
CASH AND CASH EQUIVALENTS
Proceeds from the issuance of the Convertible Note to Thermo Instrument........ $ 50,000
Cash payment to acquire Affinity Sensors and LabSystems........................ (9,000)
Cash payment to retire the promissory note payable to Thermo Electron.......... (30,000)
11,000
NOTE PAYABLE, DUE TO THERMO ELECTRON CORPORATION
Record payment of the promissory note payable to Thermo Electron............... 30,000
DUE TO PARENT COMPANY AND AFFILIATES
Record payment to Thermo Instrument for the purchase of Affinity Sensors and
LabSystems................................................................... 9,000
SUBORDINATED CONVERTIBLE NOTE, DUE TO PARENT COMPANY
Record the Convertible Note issued to Thermo Instrument........................ (50,000)
</TABLE>
F-42
<PAGE> 95
At the top of the page is a graphic image depicting a personal computer
connected to an IAsys optical biosensor system manufactured by the Company's
Affinity Sensors division; an inset graphic depicts an optical biosensor device
being manually inserted into the system.
Below these graphic images is the following caption:
The Company's Affinity Sensors division has incorporated a patented technology
into its IAsys systems that directly detects an extensive range of analytes,
including biopharmaceuticals, proteins, peptides, DNA and cells. Researchers
use these systems to observe, in real time, the dynamic interaction of
biomolecules.
- -------------------------------------------------------------------
At the bottom of the page, a graphic image depicts a MALDI-TOF mass
spectrometer manufactured by the Company, which is connected to a personal
computer and standalone monitoring device.
To the right of this graphic image is the following caption:
The Company's MALDI-TOF mass spectrometers rapidly and accurately identify the
components of biomolecules by measuring the sample's molecular weight. The
Company's VISION 2000 research grade spectrometer can obtain detailed
structural information from complex, large-size biomolecules.
<PAGE> 96
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
The Company........................... 11
Use of Proceeds....................... 11
Dividend Policy....................... 11
Capitalization........................ 12
Dilution.............................. 13
Selected Financial Information........ 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 15
Management's Discussion and Analysis
of Results of Operations of DYNEX
Technologies........................ 18
Management's Discussion and Analysis
of Results of Operations of Affinity
Sensors and LabSystems.............. 19
Business.............................. 21
Relationship with Thermo Electron and
Thermo Instrument................... 33
Management............................ 37
Security Ownership of Certain
Beneficial Owners and Management.... 43
Description of Capital Stock.......... 45
Shares Eligible for Future Sale....... 46
Underwriting.......................... 48
Legal Opinions........................ 49
Experts............................... 49
Additional Information................ 50
Reports to Security Holders........... 50
Index to Financial Statements......... F-1
------------------------
UNTIL , 1996 (25 DAYS
AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------
- --------------------------------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
1,000,000 SHARES
THERMO BIOANALYSIS CORPORATION
COMMON STOCK
-------------------
PROSPECTUS
, 1996
-------------------
NATWEST SECURITIES LIMITED
LEHMAN BROTHERS
SMITH BARNEY INC.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 97
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates except
for the Securities and Exchange Commission (the "Commission") registration fee,
the NASD filing fee and the American Stock Exchange listing fee.
<S> <C>
Securities and Exchange Commission registration fee.......... $ 7,614
NASD filing fee.............................................. 2,708
American Stock Exchange listing fee.......................... 37,500
Legal fees and expenses...................................... 150,000
Accounting fees and expenses................................. 550,000
Blue Sky fees and expenses (including legal fees)............ 10,000
Printing and engraving expenses.............................. 120,000
Transfer agent and subscription agent fees................... 5,000
Miscellaneous................................................ 117,178
----------
Total.............................................. $1,000,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation and By-Laws limit the monetary liability of directors to the
Registrant and to its shareholders and provide for indemnification of the
Registrant's officers and directors for liabilities and expenses that they may
incur in such capacities. In general, officers and directors are indemnified
with respect to actions taken in good faith in a manner reasonably believed to
be in, or not opposed to, the best interests of the Registrant and, with respect
to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. The Registrant also has
indemnification agreements with its directors and officers that provide for the
maximum indemnification allowed by law. Reference is made to the Registrant's
Certificate of Incorporation, By-Laws and form of Indemnification Agreement for
Officers and Directors incorporated by reference as Exhibits 3.1, 3.2 and 10.10
hereto, respectively.
Thermo Electron has an insurance policy which insures the directors and
officers of Thermo Electron and its subsidiaries, including the Registrant,
against certain liabilities which might be incurred in connection with the
performance of their duties.
Under Section 6 of the Underwriting Agreement, the Underwriters are
obligated, under certain circumstances, to indemnify directors and officers of
the Registrant against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). Reference is made to
the form of Underwriting Agreement filed as Exhibit 1 hereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On February 24, 1995, Thermo Instrument transferred to the Registrant all
of the assets and operations relating to its bioinstruments business in exchange
for 6,500,000 shares of Common Stock of the Registrant and the assumption by the
Registrant of certain liabilities relating to such business. Exemption from
registration for this transaction is claimed under Section 4(2) of the
Securities Act.
On March 15, 1995, the Registrant sold an aggregate of 700,000 shares of
Common Stock to accredited investors for an aggregate purchase price of
$6,530,000 pursuant to Regulation D of the Commission promulgated under the
Securities Act. On April 19, 1995, the Registrant sold an aggregate of 901,500
shares of Common Stock to accredited investors for an aggregate purchase price
of $8,388,000 pursuant to Regulation D of the Commission promulgated under the
Securities Act.
II-1
<PAGE> 98
From February 24, 1995 (the date of the Registrant's incorporation) through
June 29, 1996, the registrant granted options under its stock-based compensation
plans to purchase an aggregate of 570,000 shares of Common Stock at a weighted
average exercise price of $10.51 per share. None of these options have been
exercised. Exemption from registration for these grants is claimed under Section
4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------
<C> <S> <C>
*1 -- Form of Underwriting Agreement.
*2 -- Purchase Agreement dated as of February 5, 1996 by and among the Registrant,
Dynatech Corporation and certain of their respective affiliates. Pursuant to
Item 601(b)(2) of Regulation S-K, schedules to this Agreement have been
omitted. The Registrant hereby undertakes to furnish supplementally a copy
of such schedules to the Commission upon request.
**3.1 -- Certificate of Incorporation of the Registrant.
**3.2 -- By-Laws of the Registrant.
**4 -- Specimen Common Stock Certificate.
**5 -- Opinion of Seth H. Hoogasian, Esq. with respect to the validity of the
securities being offered.
*10.1 -- Corporate Services Agreement dated as of February 27, 1995 between Thermo
Electron Corporation ("Thermo Electron") and the Registrant.
*10.2 -- Thermo Electron Corporate Charter, as amended and restated effective January
3, 1993 (incorporated by reference herein from 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]).
**10.3 -- Tax Allocation Agreement dated as of February 27, 1995 between Thermo
Electron and the Registrant.
**10.4 -- Master Repurchase Agreement dated as of February 27, 1995 between Thermo
Electron and the Registrant.
*10.5 -- Master Guarantee Reimbursement Agreement dated as of February 27, 1995 among
Thermo Electron, Thermo Instrument and the Registrant.
*10.6 -- Master Guarantee Reimbursement Agreement dated as of February 27, 1995
between Thermo Instrument and the Registrant.
**10.7 -- Equity Incentive Plan of the Registrant.
**10.8 -- Deferred Compensation Plan for Directors of the Registrant.
*10.9 -- Directors Stock Option Plan of the Registrant.
*10.10 -- Form of Indemnification Agreement for Officers and Directors.
*10.11 -- Asset Transfer Agreement dated as of February 27, 1995 between Thermo
Instrument and the Registrant.
*10.12 -- Asset Transfer Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
**10.13 -- Exclusive License Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
**10.14 -- Exclusive License Agreement dated as of February 27, 1995 between the
Registrant and Thermo Separation Products Inc.
*10.15 -- Manufacturing Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
**10.16 -- Note Purchase Agreement dated as of July 22, 1996 between Thermo Instrument
and the Registrant.
**10.17 -- $50,000,000 Principal Amount 4.875% Convertible Subordinated Note due 2001
dated July 22, 1996.
*10.18 -- Asset and Share Purchase Agreement dated as of July 22, 1996 among SID
Instruments Inc., HB Instruments Inc., the Registrant and Thermo Instrument.
</TABLE>
II-2
<PAGE> 99
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------
<C> <S> <C>
*10.19 -- Asset Purchase Agreement dated as of July 22, 1996 among Thermo Labsystems
Limited, FI Instruments Inc., Thermo Fast UK Limited, the Registrant and
Thermo Instrument.
In addition to the stock-based compensation plans of the Registrant, the
executive officers of the Registrant may be granted awards under stock-based
compensation plans of the Registrant's parent, Thermo Electron Corporation,
and its subsidiaries, for services rendered to the Registrant or to such
affiliated corporations. Such plans were filed as Exhibits 10.8 through
10.48 to the Annual Report on Form 10-K of Thermo Instrument for the fiscal
year ended December 30, 1995 [File No. 1-9786] and are incorporated herein
by reference.
**11 -- Computation of Earnings per Share.
**21 -- Subsidiaries of the Registrant.
**23.1 -- Consent of Arthur Andersen LLP.
**23.2 -- Consent of Coopers & Lybrand.
**23.3 -- Consent of Arthur Andersen LLP.
**23.4 -- Consent of Arthur Andersen.
**23.5 -- Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5).
*24 -- Power of Attorney. (See Signature Page of this Registration Statement.)
**27 -- Financial Data Schedule.
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
(B) FINANCIAL STATEMENT SCHEDULES
The Financial Statement Schedules as of December 30, 1995 and the Report of
Independent Public Accountants on such schedules are included in this
Registration Statement. All other schedules are omitted because they are not
applicable or are not required under Regulation S-X.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Certificate of
Incorporation and By-Laws of the Registrant and the laws of the State of
Delaware, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 100
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registration has
duly caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Waltham,
Massachusetts, on this 28th day of August, 1996.
THERMO BIOANALYSIS CORPORATION
BARRY S. HOWE
By:.................................
BARRY S. HOWE
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------------------------------
<S> <C> <C>
BARRY S. HOWE* Chief Executive Officer, August 28, 1996
.......................................... President and Director
BARRY S. HOWE (Principal Executive
Officer)
JOHN N. HATSOPOULOS* Vice President, Chief August 28, 1996
.......................................... Financial Officer and
JOHN N. HATSOPOULOS Director (Principal
Financial Officer)
PAUL F. KELLEHER* Chief Accounting Officer August 28, 1996
.......................................... (Principal Accounting
PAUL F. KELLEHER Officer)
RICHARD W. K. CHAPMAN* Chairman of the Board and August 28, 1996
.......................................... Director
RICHARD W. K. CHAPMAN
DENIS A. HELM* Vice Chairman of the Board August 28, 1996
.......................................... and Director
DENIS A. HELM
JONATHAN W. PAINTER Director August 28, 1996
..........................................
JONATHAN W. PAINTER
ARVIN H. SMITH* Director August 28, 1996
..........................................
ARVIN H. SMITH
ELIAS P. GYFTOPOULOS* Director August 28, 1996
..........................................
ELIAS P. GYFTOPOULOS
ARNOLD N. WEINBERG* Director August 28, 1996
..........................................
ARNOLD N. WEINBERG
</TABLE>
JONATHAN W. PAINTER
By:................................
JONATHAN W. PAINTER
ATTORNEY-IN-FACT
II-4
<PAGE> 101
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THERMO BIOANALYSIS CORPORATION:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Thermo BioAnalysis Corporation included
in Thermo BioAnalysis Corporation's Form S-1 and have issued our report thereon
dated May 10, 1996 (except with respect to the matters discussed in Note 9 as to
which the date is July 22, 1996). Our audits were made for the purpose of
forming an opinion on the basic consolidated financial statements taken as a
whole. Thermo BioAnalysis Corporation's schedule of Valuation and Qualifying
Accounts, included in Schedule II on page S-2, is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly states, in all material respects, the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 10, 1996
S-1
<PAGE> 102
SCHEDULE II
THERMO BIOANALYSIS CORPORATION
<TABLE>
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<CAPTION>
BALANCE AT CHARGES TO BALANCE
BEGINNING ACCOUNTS COSTS AND ACCOUNTS AT END
DESCRIPTION OF PERIOD RECOVERED EXPENSES WRITTEN OFF OF PERIOD
- -------------------------------------- ---------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JANUARY 1, 1994
Allowance for Doubtful Accounts..... $139 $132 $ 5 $(123) $153
YEAR ENDED DECEMBER 31, 1994
Allowance for Doubtful Accounts..... $153 $ 15 $ -- $ (14) $154
YEAR ENDED DECEMBER 30, 1995
Allowance for Doubtful Accounts..... $154 $ -- $ 2 $ (2) $154
</TABLE>
S-2
<PAGE> 103
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------
<S> <C> <C>
*1 -- Form of Underwriting Agreement.
*2 -- Purchase Agreement dated as of February 5, 1996 by and among the Registrant,
Dynatech Corporation and certain of their respective affiliates. Pursuant to
Item 601(b)(2) of Regulation S-K, schedules to this Agreement have been
omitted. The Registrant hereby undertakes to furnish supplementally a copy
of such schedules to the Commission upon request.
**3.1 -- Certificate of Incorporation of the Registrant.
**3.2 -- By-Laws of the Registrant.
**4 -- Specimen Common Stock Certificate.
**5 -- Opinion of Seth H. Hoogasian, Esq. with respect to the validity of the
securities being offered.
*10.1 -- Corporate Services Agreement dated as of February 27, 1995 between Thermo
Electron Corporation ("Thermo Electron") and the Registrant.
*10.2 -- Thermo Electron Corporate Charter, as amended and restated effective January
3, 1993 (incorporated by reference herein from 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]).
**10.3 -- Tax Allocation Agreement dated as of February 27, 1995 between Thermo
Electron and the Registrant.
**10.4 -- Master Repurchase Agreement dated as of February 27, 1995 between Thermo
Electron and the Registrant.
*10.5 -- Master Guarantee Reimbursement Agreement dated as of February 27, 1995 among
Thermo Electron, Thermo Instrument and the Registrant.
*10.6 -- Master Guarantee Reimbursement Agreement dated as of February 27, 1995
between Thermo Instrument and the Registrant.
**10.7 -- Equity Incentive Plan of the Registrant.
**10.8 -- Deferred Compensation Plan for Directors of the Registrant.
*10.9 -- Directors Stock Option Plan of the Registrant.
*10.10 -- Form of Indemnification Agreement for Officers and Directors.
*10.11 -- Asset Transfer Agreement dated as of February 27, 1995 between Thermo
Instrument and the Registrant.
*10.12 -- Asset Transfer Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
**10.13 -- Exclusive License Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
**10.14 -- Exclusive License Agreement dated as of February 27, 1995 between the
Registrant and Thermo Separation Products Inc.
*10.15 -- Manufacturing Agreement dated as of February 27, 1995 between Thermo
Separation Products Inc. and the Registrant.
**10.16 -- Note Purchase Agreement dated as of July 22, 1996 between Thermo Instrument
and the Registrant.
**10.17 -- $50,000,000 Principal Amount 4.875% Convertible Subordinated Note due 2001
dated July 22, 1996.
*10.18 -- Asset and Share Purchase Agreement dated as of July 22, 1996 among SID
Instruments Inc., HB Instruments Inc., the Registrant and Thermo Instrument.
*10.19 -- Asset Purchase Agreement dated as of July 22, 1996 among Thermo Labsystems
Limited, FI Instruments Inc., Thermo Fast UK Limited, the Registrant and
Thermo Instrument.
In addition to the stock-based compensation plans of the Registrant, the
executive officers of the Registrant may be granted awards under stock-based
compensation plans of the Registrant's parent, Thermo Electron Corporation,
and its subsidiaries, for services rendered to the Registrant or to such
affiliated corporations. Such plans were filed as Exhibits 10.8 through
10.48 to the Annual Report on Form 10-K of Thermo Instrument for the fiscal
year ended December 30, 1995 [File No. 1-9786] and are incorporated herein
by reference.
</TABLE>
<PAGE> 104
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- --------------------------------------------------------------
<S> <C> <C>
**11 -- Computation of Earnings per Share.
**21 -- Subsidiaries of the Registrant.
**23.1 -- Consent of Arthur Andersen LLP.
**23.2 -- Consent of Coopers & Lybrand.
**23.3 -- Consent of Arthur Andersen LLP.
**23.4 -- Consent of Arthur Andersen.
**23.5 -- Consent of Seth H. Hoogasian, Esq. (included in Exhibit 5).
*24 -- Power of Attorney. (See Signature Page of this Registration
Statement).
**27 -- Financial Data Schedule.
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
THERMO BIOANALYSIS CORPORATION
* * * * * * *
FIRST: The name of the corporation is:
Thermo BioAnalysis Corporation
SECOND: The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the corporation
shall have authority to issue is twenty-five million (25,000,000), and the par
value of each of such shares is one-tenth of one cent ($0.001), amounting in the
aggregate to twenty-five thousand dollars ($25,000.00) of capital stock.
FIFTH: The name and mailing address of the sole incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Eileen M. O'Halloran 81 Wyman Street
Waltham, Massachusetts 02254
SIXTH: The names and mailing addresses of the persons who are to serve as
directors until the first annual meeting of the stockholders or until their
successors are elected and qualified are as follows:
<PAGE> 2
NAME MAILING ADDRESS
---- ---------------
Richard W. K. Chapman 355 River Oaks Parkway
San Jose, CA 95134
Denis A. Helm 8 West Forge Parkway
Franklin, MA 02038
Barry S. Howe 3661 Interstate Park Road, North
Riviera Beach, FL 33419
Jonathan W. Painter 81 Wyman Street
Waltham, MA 02254
Arvin H. Smith 1851 Central Drive, Suite 220
Bedford, TX 76021
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The private property of the stockholders shall not be subject to
the payment of the corporation debts to any extent whatever.
NINTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation and for defining
and regulating the powers of the corporation and its directors and stockholders
and are in the furtherance and not in limitation of the powers conferred upon
the corporation by statute:
(a) The by-laws of the corporation may fix and alter, or provide the
manner for fixing and altering, the number of directors constituting the
whole Board. In case of any vacancy on the Board of Directors or any
increase in the number of directors constituting the whole Board, the
vacancies shall be filled by the directors or by the stockholders at the
time having voting power, as may be prescribed in the by-laws. Directors
need not be stockholders of the corporation, and the election of directors
need not be by ballot.
(b) The Board of Directors shall have the power and authority:
(1) to make, alter or repeal by-laws of the corporation, subject
only to such limitation, if any, as may be from time to time imposed
by law or by the by-laws; and
(2) to the full extent permitted or not prohibited by law, and
without the consent of or other action by the stockholders, to
authorize or
-2-
<PAGE> 3
create mortgages, pledges or other liens or encumbrances upon any or
all of the assets, real, personal or mixed, and franchises of the
corporation, including after-acquired property, and to exercise all of
the powers of the corporation in connection therewith; and
(3) subject to any provision of the by-laws, to determine
whether, to what extent, at what times and places and under what
conditions and regulations the accounts, books and papers of the
corporation (other than the stock ledger), or any of them, shall be
open to the inspection of the stockholders, and no stockholder shall
have any right to inspect any account, book or paper of the
corporation except as conferred by statute or authorized by the
by-laws or by the Board of Directors.
TENTH: Meetings of stockholders may be held outside the State of Delaware,
if the by-laws so provide. The books of the corporation may be kept outside of
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the by-laws of the corporation.
ELEVENTH: The corporation shall indemnify each director and officer of the
corporation, his heirs, executors and administrators, and may indemnify each
employee and agent of the corporation, his heirs, executors, administrators and
all other persons whom the corporation is authorized to indemnify under the
provisions of the General Corporation Law of the State of Delaware, to the
maximum extent permitted by law (a) against all expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any action, suit or proceeding, whether
civil, criminal, administrative or investigative (except an action by or in the
right of the corporation), or in connection with any appeal therein, or
otherwise, and (b) against all expenses (including attorney's fees) actually and
reasonably incurred by him in connection with the defense or settlement of any
action or suit by or in the right of the corporation, or otherwise; and no
provision of this Article Eleventh is intended to be construed as limiting,
prohibiting, denying or abrogating any of the general or specific powers or
rights conferred by the General Corporation Law of the State of Delaware upon
the corporation to furnish, or upon any court to award, such indemnification, or
indemnification as otherwise authorized pursuant to the General Corporation Law
of the State of Delaware or any other law now or hereafter in effect.
The Board of Directors of the corporation may, in its discretion, authorize
the corporation to purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the foregoing paragraph of this Article Eleventh.
-3-
<PAGE> 4
TWELFTH: To the maximum extent that Delaware law in effect from time to
time permits limitation of the liability of directors, no director of the
corporation shall be liable to the corporation or its stockholders for money
damages. Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the corporation's Certificate of
Incorporation or by-laws inconsistent with this Article, shall apply to or
affect in any respect the applicability of the preceding sentence with respect
to any act or failure to act which occurred prior to such amendment, repeal or
adoption. The limitation on liability provided by this Article applies to events
occurring at the time a person serves as a director of the corporation whether
or not such person is a director at the time of any proceeding in which
liability is asserted.
THIRTEENTH: The corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this certificate, hereby declaring and certifying
that this is my act and deed and the facts stated herein are true, and
accordingly have hereunto set my hand this 24th day of February, 1995.
/s/ Eileen M. O'Halloran
------------------------------
Eileen M. O'Halloran
-4-
<PAGE> 5
CERTIFICATE OF CORRECTION FILED TO CORRECT
CERTAIN ERROR IN THE CERTIFICATE OF INCORPORATION
OF THERMO BIOANALYSIS CORPORATION
FILED IN THE OFFICE OF THE SECRETARY OF STATE
OF DELAWARE ON FEBRUARY 24, 1995
Thermo BioAnalysis Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. The name of the corporation is Thermo BioAnalysis Corporation.
2. That a Certificate of Incorporation was filed by the Secretary of State of
Delaware on February 24, 1995 and that said Certificate requires correction
as permitted by Section 103 of the General Corporation Law of the State of
Delaware.
3. The inaccuracy or defect of said Certificate to be corrected is as follows:
Par value is incorrect.
4. Article 4 of the Certificate is corrected to read as follows:
The total number of shares of capital stock which the corporation shall
have authority to issue is twenty-five million (25,000,000), and the par value
of each of such shares is one cent ($.01), amounting in the aggregate to two
hundred and fifty thousand dollars ($250,000) of capital stock.
IN WITNESS WHEREOF, said Thermo BioAnalysis Corporation has caused this
Certificate to be signed by John N. Hatsopoulos, its Vice President and attested
by Sandra L. Lambert, its Secretary, this 1st day of August, 1996.
Thermo BioAnalysis Corporation
By: /s/ John N. Hatsopoulos
---------------------------------
John N. Hatsopoulos, Vice President
ATTEST
By: /s/ Sandra L. Lambert
-----------------------------
Sandra L. Lambert, Secretary
<PAGE> 1
Exhibit 3.2
THERMO BIOANALYSIS CORPORATION
BY-LAWS
<PAGE> 2
THERMO BIOANALYSIS CORPORATION
BY-LAWS
TABLE OF CONTENTS
-----------------
Article I - General .......................................... 1
Section 1.1. Offices ...................................... 1
Section 1.2. Seal ......................................... 1
Section 1.3. Fiscal Year .................................. 1
Article II - Stockholders .................................... 1
Section 2.1. Place of Meetings ............................ 1
Section 2.2. Annual Meeting ............................... 1
Section 2.3. Quorum ....................................... 1
Section 2.4. Right to Vote; Proxies ....................... 2
Section 2.5 Voting ....................................... 2
Section 2.6. Notice of Annual Meetings .................... 2
Section 2.7. Stockholders' List ........................... 2
Section 2.8. Special Meetings ............................. 2
Section 2.9. Notice of Special Meetings ................... 3
Section 2.10. Inspectors ................................... 3
Section 2.11. Stockholders' Action by Consent .............. 3
Article III - Directors ...................................... 3
Section 3.1. Number of Directors .......................... 3
Section 3.2. Change in Number of Directors; Vacancies ..... 4
Section 3.3. Resignation .................................. 4
Section 3.4. Removal ...................................... 4
Section 3.5. Place of Meetings and Books .................. 4
Section 3.6. General Powers ............................... 4
Section 3.7. Executive Committee .......................... 4
Section 3.8. Other Committees ............................. 4
Section 3.9. Powers Denied to Committees .................. 5
Section 3.10. Substitute Committee Member .................. 5
Section 3.11. Compensation of Directors .................... 5
Section 3.12. Annual Meeting ............................... 5
Section 3.13. Regular Meetings ............................. 5
Section 3.14. Special Meetings ............................. 5
Section 3.15. Quorum ....................................... 5
Section 3.16. Telephonic Participation in Meetings ......... 6
Section 3.17. Action by Consent ............................ 6
(i)
<PAGE> 3
Article IV - Officers ........................................ 6
Section 4.1. Selection; Statutory Officers ................ 6
Section 4.2. Time of Election ............................. 6
Section 4.3. Additional Officers .......................... 6
Section 4.4. Terms of Office .............................. 6
Section 4.5. Compensation of Officers ..................... 6
Section 4.6. Chairman of the Board ........................ 7
Section 4.7. President .................................... 7
Section 4.8. Vice-Presidents .............................. 7
Section 4.9. Treasurer .................................... 7
Section 4.10. Secretary .................................... 7
Section 4.11. Assistant Secretary .......................... 8
Section 4.12. Assistant Treasurer .......................... 8
Section 4.13. Subordinate Officers ......................... 8
Article V - Stock ............................................ 8
Section 5.1. Stock ........................................ 8
Section 5.2. Fractional Share Interests ................... 9
Section 5.3. Transfers of Stock ........................... 9
Section 5.4. Record Date .................................. 9
Section 5.5. Transfer Agent and Registrar ................. 10
Section 5.6. Dividends .................................... 10
1. Power to Declare ..................................... 10
2. Reserves ............................................. 10
Section 5.7. Lost, Stolen or Destroyed Certificates ....... 10
Section 5.8. Inspection of Books .......................... 10
Article VI - Miscellaneous Management Provisions ............. 10
Section 6.1. Checks, Drafts and Notes ..................... 10
Section 6.2. Notices ...................................... 10
Section 6.3. Conflict of Interest ......................... 11
Section 6.4. Voting of Securities Owned by this Co11oration 11
Section 6.5. Indemnification .............................. 12
Article VII - Amendments ..................................... 12
Section 7.1. Amendments ................................... 12
(ii)
<PAGE> 4
THERMO BIOANALYSIS CORPORATION
BY-LAWS
Article I - General
-------------------
SECTION 1.1. OFFICES. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware. The Corporation may also
have offices at such other places both within and without the State of Delaware
as the Board of Directors may from time to time determine or the business of the
Corporation may require.
SECTION 1.2. SEAL. The seal of the Corporation shall be in the form
approved by the Board of Directors.
SECTION 1.3. FISCAL YEAR. The fiscal year of the Corporation shall end on
the Saturday closest to December 31 of each year.
Article II - Stockholders
-------------------------
SECTION 2.1. PLACE OF MEETINGS. All meetings of the stockholders shall be
held at such place within or without the State of Delaware as may be designated
from time to time by the Board of Directors or the President or, if not so
designated, at the registered office of the Corporation.
SECTION 2.2. ANNUAL MEETING. The annual meeting of stockholders for the
election of directors and for the transaction of such other business as may
properly be brought before the meeting shall be held on a date to be fixed by
the Board of Directors, the Chairman of the Board, if any, or the President
(which date shall not be a legal holiday in the place where the meeting is to be
held) at the time and place to be fixed by the Board of Directors, the Chairman
of the Board, if any, or the President and stated in the notice of the meeting.
If no annual meeting is held in accordance with the foregoing provisions, the
Board of Directors shall cause the meeting to be held as soon thereafter as
convenient. If no annual meeting is held in accordance with the foregoing
provisions, a special meeting may be held in lieu of the annual meeting, and any
action taken at that special meeting shall have the same effect as if it had
been taken at the annual meeting, and in such case all references in these
by-laws to the annual meeting of the stockholders shall be deemed to refer to
such special meeting.
SECTION 2.3. QUORUM. At all meetings of the stockholders the holders of a
majority of the stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum requisite
for the transaction of business except as otherwise provided by law, by the
Certificate of Incorporation or by these by-laws. If, however, such majority
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or by proxy, by a
majority vote, shall have the power to adjourn the meeting from time to time
without notice other than announcement at the meeting
1
<PAGE> 5
until the requisite amount of voting stock shall be present. If the adjournment
is for more than thirty (30) days, or if after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting. At such
adjourned meeting, at which the requisite amount of voting stock shall be
represented, any business may be transacted which might have been transacted if
the meeting had been held as originally called.
SECTION 2.4. RIGHT TO VOTE; PROXIES. Each stockholder having the right to
vote at any meeting shall be entitled to one vote for each share of stock held
by him. Any stockholder entitled to vote at any meeting of stockholders may vote
either in person or by proxy, but no proxy which is dated more than three years
prior to the meeting at which it is offered shall confer the right to vote
thereat unless the proxy provides that it shall be effective for a longer
period. Every proxy shall be in writing, subscribed by a stockholder or his duly
authorized attorney in fact, and dated, but need not be sealed, witnessed, or
acknowledged.
SECTION 2.5 VOTING. At all meetings of stockholders all questions, except
as otherwise expressly provided for by statute, the Certificate of Incorporation
or these by-laws, shall be determined by a majority vote of the stockholders
present in person or represented by proxy. Except as otherwise expressly
provided by law, the Certificate of Incorporation or these by-laws, at all
meetings of stockholders the voting shall be by voice vote, but any stockholder
qualified to vote on the matter in question may demand a stock vote, by shares
of stock, upon such question, whereupon such stock vote shall be taken by
ballot, each of which shall state the name of the stockholder voting and the
number of shares voted by him, and, if such ballot be cast by a proxy, it shall
also state the name of the proxy. All elections of directors shall be decided in
accordance with Article FOURTH of the Certificate of Incorporation.
SECTION 2.6. NOTICE OF ANNUAL MEETINGS. Written notice of the annual
meeting of the stockholders shall be mailed to each stockholder entitled to vote
thereat at such address as appears on the stock books of the Corporation at
least ten (10) days (and not more than sixty (60) days) prior to the meeting. It
shall be the duty of every stockholder to furnish to the Secretary of the
Corporation or to the transfer agent, if any, of the class of stock owned by
him, his post office address and to notify said Secretary or transfer agent of
any change therein.
SECTION 2.7. STOCKHOLDERS' LIST. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order
and showing the address of each stockholder, and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary and filed
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held, at least ten days before such meeting,
and shall at all times during the usual hours for business, and during the whole
time of said election, be open to the examination of any stockholder for a
purpose germane to the meeting.
SECTION 2.8. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes, unless otherwise provided by statute, may be called by the
Board of Directors, the Chairman of the Board, if any, the President or any Vice
President.
2
<PAGE> 6
SECTION 2.9. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting of stockholders, stating the time and place and object thereof shall be
mailed, postage prepaid, not less than ten (10) nor more than sixty (60) days
before such meeting, to each stockholder entitled to vote thereat, at such
address as appears on the books of the corporation. No business may be
transacted at such meeting except that referred to in said notice, or in a
supplemental notice given also in compliance with the provisions hereof, or such
other business as may be germane or supplementary to that stated in said notice
or notices.
SECTION 2.10. INSPECTORS. One or more inspectors may be appointed by the
Board of Directors before or at any meeting of stockholders, or, if no such
appointment shall have been made, the presiding officer may make such
appointment at the meeting. At the meeting for which the inspector or inspectors
are appointed, he or they shall open and close the polls, receive and take
charge of the proxies and ballots, and decide all questions touching on the
qualifications of voters, the validity of proxies and the acceptance and
rejection of votes. If any inspector previously appointed shall fail to attend
or refuse or be unable to serve, the presiding officer shall appoint an
inspector in his place.
SECTION 2.11. STOCKHOLDERS' ACTION BY CONSENT. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action by any provisions of the statutes, the
Certificate of Incorporation, or these by-laws, the meeting and vote of
stockholders may be dispensed with, and any corporate action upon which a vote
of stockholders is required or permitted may be taken with the written consent
of stockholders having not less than 50% of all of the stock entitled to vote
upon the action if a meeting were held; provided that in no case shall the
written consent be by holders having less than the minimum percentage of the
total vote required by statute for the proposed corporate action and provided
that prompt notice be given to all stockholders of the taking of such corporate
action without a meeting and by less than unanimous consent.
Article III - Directors
-----------------------
SECTION 3.1. NUMBER OF DIRECTORS. Except as otherwise provided by law, the
Certificate of Incorporation or these by-laws, the property and business of the
Corporation shall be managed by or under the direction of a board of not less
than one nor more than thirteen directors. Within the limits specified, the
number of directors shall be determined by resolution of the Board of Directors
or by the stockholders at the annual meeting. Directors need not be
stockholders, residents of Delaware or citizens of the United States. The
directors shall be elected by ballot at the annual meeting of the stockholders
and each director shall be elected to serve until his successor shall be elected
and shall qualify or until his earlier resignation or removal; provided that in
the event of failure to hold such meeting or to hold such election at such
meeting, such election may be held at any special meeting of the stockholders
called for that purpose. If the office of any director becomes vacant by reason
of death, resignation, disqualification, removal, failure to elect, or
otherwise, the remaining directors, although more or less than a quorum, by a
majority vote of such remaining directors may elect a successor or successors
who shall hold office for the unexpired term.
3
<PAGE> 7
SECTION 3.2. CHANGE IN NUMBER OF DIRECTORS; VACANCIES. The maximum number
of directors may be increased by an amendment to these by-laws adopted by a
majority vote of the Board of Directors or by a majority vote of the capital
stock having voting power, and if the number of directors is so increased by
action of the Board of Directors or of the stockholders or otherwise, then the
additional directors may be elected in the manner provided above for the filling
of vacancies in the Board of Directors or at the annual meeting of stockholders
or at a special meeting called for that purpose.
SECTION 3.3. RESIGNATION. Any director of this Corporation may resign at
any time by giving written notice to the Chairman of the Board, if any, the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, at the time of receipt if no time is
specified therein and at the time of acceptance if the effectiveness of such
resignation is conditioned upon its acceptance. Unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 3.4. REMOVAL. Any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
SECTION 3.5. PLACE OF MEETINGS AND BOOKS. The Board of Directors may hold
their meetings and keep the books of the Corporation outside the State of
Delaware, at such places as they may from time to time determine.
SECTION 3.6. GENERAL POWERS. In addition to the powers and authority
expressly conferred upon them by these by-laws, the board may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
SECTION 3.7. EXECUTIVE COMMITTEE. There may be an executive committee of
one or more directors designated by resolution passed by a majority of the whole
board. The act of a majority of the members of such committee shall be the act
of the committee. Said committee may meet at stated times or on notice to all by
any of their own number, and shall have and may exercise those powers of the
Board of Directors in the management of the business affairs of the Company as
are provided by law and may authorize the seal of the Corporation to be affixed
to all papers which may require it. Vacancies in the membership of the committee
shall be filled by the Board of Directors at a regular meeting or at a special
meeting called for that purpose.
SECTION 3.8. OTHER COMMITTEES. The Board of Directors may also designate
one or more committees in addition to the executive committee, by resolution or
resolutions passed by a majority of the whole board; such committee or
committees shall consist of one or more directors of the Corporation, and to the
extent provided in the resolution or resolutions designating them, shall have
and may exercise specific powers of the Board of Directors in the management of
the business and affairs of the Corporation to the extent permitted by statute
and shall have power to authorize the seal of the Corporation to be affixed to
all papers which may require it. Such
4
<PAGE> 8
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
SECTION 3.9. POWERS DENIED TO COMMITTEES. Committees of the Board of
Directors shall not, in any event, have any power or authority to amend the
Certificate of Incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommend to the
stockholders a dissolution of the Corporation or a revocation or a dissolution
or to amend the by-laws of the Corporation. Further, committees of the Board of
Directors shall not have any power or authority to declare a dividend or to
authorize the issuance of stock.
SECTION 3.10. SUBSTITUTE COMMITTEE MEMBER. In the absence or on the
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent or disqualified
member. Any committee shall keep regular minutes of its proceedings and report
the same to the board as may be required by the board.
SECTION 3.11. COMPENSATION OF DIRECTORS. The Board of Directors shall have
the power to fix the compensation of directors and members of committees of the
Board. The directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
SECTION 3.12. ANNUAL MEETING. The newly elected board may meet at such
place and time as shall be fixed and announced by the presiding officer at the
annual meeting of stockholders, for the purpose of organization or otherwise,
and no further notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a quorum shall be
present, or they may meet at such place and time as shall be stated in a notice
given to such directors two (2) days prior to such meeting, or as shall be fixed
by the consent in writing of all the directors.
SECTION 3.13. REGULAR MEETINGS. Regular meetings of the board may be held
without notice at such time and place as shall from time to time be determined
by the board.
SECTION 3.14. SPECIAL MEETINGS. Special meetings of the board may be called
by the Chairman of the Board, if any, or the President, on two (2) days' notice
to each director, or such shorter period of time before the meeting as will
nonetheless be sufficient for the convenient assembly of the directors so
notified; special meetings shall be called by the Secretary in like manner and
on like notice, on the written request of two or more directors.
SECTION 3.15. QUORUM. At all meetings of the Board of Directors, a majority
of the total number of directors shall be necessary and sufficient to constitute
a quorum for the transaction of
5
<PAGE> 9
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically permitted or provided by statute, or by the
Certificate of Incorporation, or by these by-laws. If at any meeting of the
board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum is obtained, and no further
notice thereof need be given other than by announcement at said meeting which
shall be so adjourned.
SECTION 3.16. TELEPHONIC PARTICIPATION IN MEETINGS. Members of the Board of
Directors or any committee designated by such board may participate in a meeting
of the board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
SECTION 3.17. ACTION BY CONSENT. Unless otherwise restricted by the
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if written consent thereto is signed by all
members of the board or of such committee as the case may be and such written
consent is filed with the minutes of proceedings of the board or committee.
Article IV - Officers
---------------------
SECTION 4.1. SELECTION; STATUTORY OFFICERS. The officers of the Corporation
shall be chosen by the Board of Directors. There shall be a President, a
Secretary and a Treasurer, and there may be a Chairman of the Board of
Directors, one or more Vice Presidents, one or more Assistant Secretaries, and
one or more Assistant Treasurers, as the Board of Directors may elect. Any
number of offices may be held by the same person, except that the offices of
President and Secretary shall not be held by the same person simultaneously.
SECTION 4.2. TIME OF ELECTION. The officers above named shall be chosen by
the Board of Directors at its first meeting after each annual meeting of
stockholders. None of said officers need be a director.
SECTION 4.3. ADDITIONAL OFFICERS. The board may appoint such other officers
and agents as it shall deem necessary, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
SECTION 4.4. TERMS OF OFFICE. Each officer of the Corporation shall hold
office until his successor is chosen and qualified, or until his earlier
resignation or removal. Any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors.
SECTION 4.5. COMPENSATION OF OFFICERS. The Board of Directors shall have
power to fix the compensation of all officers of the Corporation. It may
authorize any officer, upon whom the power of appointing subordinate officers
may have been conferred, to fix the compensation of such subordinate officers.
6
<PAGE> 10
SECTION 4.6. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors
shall preside at all meetings of the stockholders and directors, and shall have
such other duties as may be assigned to him from time to time by the Board of
Directors.
SECTION 4.7. PRESIDENT. Unless the Board of Directors otherwise determines,
the President shall be the chief executive officer and head of the Corporation.
Unless there is a Chairman of the Board, the President shall preside at all
meetings of directors and stockholders. Under the supervision of the Board of
Directors and of the executive committee, the President shall have the general
control and management of its business and affairs, subject, however, to the
right of the Board of Directors and of the executive committee to confer any
specific power, except such as may be by statute exclusively conferred on the
President, upon any other officer or officers of the Corporation. The President
shall perform and do all acts and things incident to the position of President
and such other duties as may be assigned to him from time to time by the Board
of Directors or the executive committee.
SECTION 4.8. VICE-PRESIDENTS. The Vice-Presidents shall perform such of the
duties of the President on behalf of the Corporation as may be respectively
assigned to them from time to time by the Board of Directors or by the executive
committee or by the President. The Board of Directors or the executive committee
may designate one of the Vice-Presidents as the Executive Vice-President, and in
the absence or inability of the President to act, such powers and discharge all
of the duties of the President, subject to the control of the board and of the
executive committee.
SECTION 4.9. TREASURER. The Treasurer shall have the care and custody of
all the funds and securities of the Corporation which may come into his hands as
Treasurer, and the power and authority to endorse checks, drafts and other
instruments for the payment of money for deposit or collection when necessary or
proper and to deposit the same to the credit of the Corporation in such bank or
banks or depository as the Board of Directors or the executive committee, or the
officers or agents to whom the Board of Directors or the executive committee may
delegate such authority, may designate, and he may endorse all commercial
documents requiring endorsements for or on behalf of the Corporation. He may
sign all receipts and vouchers for the payments made to the Corporation. He
shall render an account of his transactions to the Board of Directors or to the
executive committee as often as the board or the committee shall require the
same. He shall enter regularly in the books to be kept by him for that purpose
full and adequate account of all moneys received and paid by him on account of
the Corporation. He shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors and of the executive
committee. He shall when requested, pursuant to vote of the Board of Directors
or the executive committee, give a bond to the Corporation conditioned for the
faithful performance of his duties, the expense of which bond shall be borne by
the Corporation.
SECTION 4.10. SECRETARY. The Secretary shall keep the minutes of all
meetings of the Board of Directors and of the stockholders; he shall attend to
the giving and serving of all notices of the Corporation. Except as otherwise
ordered by the Board of Directors or the executive committee, he shall attest
the seal of the Corporation upon all contracts and instruments executed under
such seal and shall affix the seal of the Corporation thereto and to all
certificates of shares
7
<PAGE> 11
of the Capital Stock. He shall have charge of the stock certificate book,
transfer book and stock ledger, and such other books and papers as the Board of
Directors or the executive committee may direct. He shall, in general, perform
all the duties of Secretary, subject to the control of the Board of Directors
and of the executive committee.
SECTION 4.11. ASSISTANT SECRETARY. The Board of Directors or any two of the
officers of the Corporation acting jointly may appoint or remove one or more
Assistant Secretaries of the Corporation. Any Assistant Secretary upon his
appointment shall perform such duties of the Secretary, and also any and all
such other duties as the executive committee or the Board of Directors or the
President or the Executive Vice-President or the Treasurer or the Secretary may
designate.
SECTION 4.12. ASSISTANT TREASURER. The Board of Directors or any two of the
officers of the Corporation acting jointly may appoint or remove one or more
Assistant Treasurers of the Corporation. Any Assistant Treasurer upon his
appointment shall perform such of the duties of the Treasurer, and also any and
all such other duties as the executive committee or the Board of Directors or
the President or the Executive Vice-President or the Treasurer or the Secretary
may designate.
SECTION 4.13. SUBORDINATE OFFICERS. The Board of Directors may select such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority, and perform such duties as the
Board of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
Article V - Stock
-----------------
SECTION 5.1. STOCK. Each stockholder shall be entitled to a certificate or
certificates of stock of the Corporation in such form as the Board of Directors
may from time to time prescribe. The certificates of stock of the Corporation
shall be numbered and shall be entered in the books of the Corporation as they
are issued. They shall certify the holder's name and number and class of shares
and shall be signed by both of (a) either the Chairman of the Board, the Chief
Executive Officer, the President or a Vice-President, and (b) any one of the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary,
and shall be sealed with the corporate seal of the Corporation. If such
certificate is countersigned (1) by a transfer agent other than the Corporation
or its employee, or, (2) by a registrar other than the Corporation or its
employee, the signature of the officers of the Corporation and the corporate
seal may be facsimiles. In case any officer or officers who shall have signed,
or whose facsimile signature or signatures shall have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature shall have been used
thereon had not ceased to be such officer or officers of the Corporation.
8
<PAGE> 12
SECTION 5.2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not
be required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (a) arrange for the disposition of fractional
interests by those entitled thereto, (b) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (c) issue scrip or warrants in registered or bearer form which
shall entitle the holder to receive a certificate for a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share shall, but scrip or warrants shall not unless otherwise
provided therein, entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the corporation in
the event of liquidation. The Board of Directors may cause scrip or warrants to
be issued subject to the conditions that they shall become void if not exchanged
for certificates representing full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
SECTION 5.3. TRANSFERS OF STOCK. Subject to any transfer restrictions then
in force, the shares of stock of the Corporation shall be transferable only upon
its books by the holders thereof in person or by their duly authorized attorneys
or legal representatives and upon such transfer the old certificates shall be
surrendered to the Corporation by the delivery thereof to the person in charge
of the stock and transfer books and ledgers or to such other person as the
directors may designate by whom they shall be cancelled and new certificates
shall thereupon be issued. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person whether or not it shall
have express or other notice thereof save as expressly provided by the laws of
Delaware.
SECTION 5.4. RECORD DATE. For the purpose of determining the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or the allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty (60) days nor less than ten (10) days
before the date of such meeting, nor more than sixty (60) days prior to any
other action. If no such record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; the record date for determining stockholders entitled to express consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is necessary, shall be the day on which the first written
consent is expressed; and the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at any meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
9
<PAGE> 13
SECTION 5.5. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint one or more transfer agents or transfer clerks and one or more
registrars and may require all certificates of stock to bear the signature or
signatures of any of them.
SECTION 5.6. DIVIDENDS.
1. POWER TO DECLARE. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of the capital stock, subject to the provisions of the Certificate
of Incorporation and the laws of Delaware.
2. RESERVES. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or fo
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall think
conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
SECTION 5.7. LOST, STOLEN, OR DESTROYED CERTIFICATES. No certificates for
shares of stock of the Corporation shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed, except upon production of such
evidence of the loss, theft or destruction and upon indemnification of the
Corporation and its agents to such extent and in such manner as the Board of
Directors may from time to time prescribe.
SECTION 5.8. INSPECTION OF BOOKS. The stockholders of the Corporation, by a
majority vote at any meeting of stockholders duly called, or in case the
stockholders shall fail to act, the Board of Directors shall have power from
time to time to determine whether and to what extent and at what times and
places and under what conditions and regulations the accounts and books of the
Corporation (other than the stock ledger) or any of them, shall be open to
inspection of stockholders; and no stockholder shall have any right to inspect
any account or book or document of the Corporation except as conferred by
statute or authorized by the Board of Directors or by a resolution of the
stockholders.
Article VI - Miscellaneous Management Provisions
------------------------------------------------
SECTION 6.1. CHECKS, DRAFTS AND NOTES. All checks, drafts or orders for the
payment of money, and all notes and acceptances of the Corporation shall be
signed by such officer or officers, agent or agents as the Board of Directors
may designate.
10
<PAGE> 14
SECTION 6.2 NOTICES.
1. Notices to directors may, and notices to stockholders shall, be in
writing and delivered personally or mailed to the directors or stockholders
at their addresses appearing on the books of the Corporation. Notice by
mail shall be deemed to be given at the time when the same be mailed.
Notice to directors may also be given by telegram or orally, by telephone
or in person.
2. Whenever any notice is required to be given under the provisions of
the statutes or of the Certificate of Incorporation of the Corporation or
of these by-laws, a written waiver of notice, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 6.3. CONFLICT OF INTEREST. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the board of or committee thereof which
authorized the contract or transaction, or solely because his or their votes are
counted for such purpose, provided that the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee and the board or committee
in good faith authorizes the contract or transaction by the affirmative vote of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum or provided that the contract or transaction is
otherwise authorized in accordance with the laws of Delaware. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes the
contract of transaction.
SECTION 6.4. VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject always
to the specific directions of the Board of Directors, (a) any shares or other
securities issued by any other Corporation and owned or controlled by this
Corporation may be voted in person at any meeting of security holders of such
other corporation by the President of this Corporation if he is present at such
meeting, or in his absence by the Treasurer of this Corporation if he is present
at such meeting, and (b) whenever, in the judgment of the President, it is
desirable for this corporation to execute a proxy or written consent in respect
to any shares or other securities issued by any other Corporation and owned by
this Corporation, such proxy or consent shall be executed in the name of this
Corporation by the President, without the necessity of any authorization by the
Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer, provided that if the President is unable to
execute such proxy or consent by reason of sickness, absence from the United
States or other similar cause, the Treasurer may execute such proxy or
11
<PAGE> 15
consent. Any person or persons designated in the manner above stated as the
proxy or proxies of this Corporation shall have full right, power and authority
to vote the shares or other securities issued by such other corporation and
owned by this Corporation the same as such shares or other securities might be
voted by this Corporation.
SECTION 6.5. INDEMNIFICATION. The Corporation shall indemnify each director
and officer against all judgments, fines, settlement payments and expenses,
including reasonable attorneys' fees, paid or incurred in connection with any
claim, action, suit or proceeding, civil or criminal, to which he may be made a
party or with which he may be threatened by reason of his being or having been a
director or officer of the Corporation, or, at its request, a director, officer,
stockholder or member of any other Corporation, firm or association of which the
Corporation is a stockholder or creditor and by which he is not so indemnified,
or by reason or any action or omission by him in such capacity, whether or not
he continues to be a director or officer at the time of incurring such expenses
or at the time the indemnification is made. No indemnification shall be made
hereunder (a) with respect to payments and expenses incurred in relation to
matters as to which he shall be finally adjudged in such action, suit or
proceeding not to have acted in good faith and in the reasonable belief that his
action was in the best interests of the Corporation, or (b) otherwise prohibited
by law. The foregoing right of indemnification shall not be exclusive of other
rights to which any director or officer may otherwise be entitled and shall
inure to the benefit of the executor or administrator of such director or
officer.
Article VII - Amendments
------------------------
SECTION 7.1. AMENDMENTS. The by-laws of the Corporation may be altered,
amended or repealed at any meeting of the Board of Directors upon notice thereof
in accordance with these by-laws, or at any meeting of the stockholders by the
vote of the holders of the majority of the stock issued and outstanding and
entitled to vote at such meeting, in accordance with the provisions of the
Certificate of Incorporation of the corporation and of the laws of Delaware.
12
<PAGE> 1
Exhibit 4
[FRONT OF STOCK CERTIFICATE]
THERMO BIOANALYSIS CORPORATION
<TABLE>
<S> <C> <C>
TBA
COMMON STOCK PAR Incorporated under the laws of the State COMMON STOCK
VALUE $.01 of Delaware
CUSIP 88355H 10 8
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
</TABLE>
This certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR VALUE, OF
THERMO BIOANALYSIS CORPORATION
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. The Certificate and the shares represented hereby are issued under and
shall be subject to the laws of the State of Delaware and all the provision of
the Certificate of Incorporation and the By-Laws of the Corporation, and all the
amendments from time to time made thereto. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
[ THERMO BIOANALYSIS CORPORATION ]
[ Corporate Seal ]
Secretary President and Chief Executive Officer
<PAGE> 2
[BACK OF STOCK CERTIFICATE]
THERMO BIOANALYSIS CORPORATION
This Corporation will furnish without charge to each stockholder who so
requests, a copy of the designations, powers, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof, and the qualifications, limitation or restrictions of such preferences
and/or rights. Any such requests may be addressed to the Secretary of the
Corporation.
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - _________ Custodian ___________
(Cust) (Minor)
TEN ENT - as tenants by the entities under Uniform Gifts to Minors
JT TEN - as joint tenants with right of Act _________________________
survivorship and not as (State)
tenants in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
________________________________________________________________________________
____________________________________________________________ Shares of the Stock
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ________________________________________________________________________
________________________________________________________________________________
Attorney to transfer the said Stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated ________________________ _____________________________________
Signature
_____________________________________
THE SIGNATURES TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE CERTIFICATE
IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATSOEVER.
<PAGE> 1
Exhibit 5
August 27, 1996
Thermo BioAnalysis Corporation
504 Airport Road
Santa Fe, New Mexico 87504
Re: Registration Statement on Form S-1 (Registration No. 333-08697)
Relating to Shares of the Common Stock, $.01 par value, of Thermo
BioAnalysis Corporation
------------------------------------------------------------------
Ladies and Gentlemen:
I am General Counsel to Thermo BioAnalysis Corporation, a Delaware
corporation (the "Company"), and have acted as counsel in connection with the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), on Form S-1 (the "Registration Statement") of shares of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), with a proposed
maximum aggregate offering price of $22,080,000. Such shares, together with any
shares of Common Stock registered under a registration statement related to the
offering contemplated by the Registration Statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act (a "462(b) Registration
Statement"), are collectively referred to herein as the "Shares."
I or a member of my legal staff have reviewed the corporate proceedings
taken by the Company with respect to the authorization of the issuance of the
Shares. I or a member of my legal staff have also examined and relied upon
originals or copies, certified or otherwise authenticated to my satisfaction, of
all corporate records, documents, agreements or other instruments of the Company
and have made all investigations of law and have discussed with the Company's
representatives all questions of fact that I have deemed necessary or
appropriate.
Based upon and subject to the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Delaware.
<PAGE> 2
2. The issuance and sale of the Shares registered pursuant to the
Registration Statement have been duly authorized by the Company and the issuance
and sale of the Shares registered pursuant to a 462(b) Registration Statement
will have been duly authorized by the Company prior to their issuance and sale.
3. The Shares, when issued and sold in accordance with the provisions
of the Underwriting Agreement between the Company and the several Underwriters
named on Schedule I thereto (in the form of Exhibit 1 to the Registration
Statement) will be validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement or any 462(b) Registration Statement.
Very truly yours,
Seth H. Hoogasian
General Counsel
SHH/cfb
<PAGE> 1
Exhibit 10.3
TAX ALLOCATION AGREEMENT
------------------------
THIS AGREEMENT is made as of February 27, 1995 between Thermo Electron
Corporation, a Delaware corporation ("TMO"), and Thermo BioAnalysis Corporation,
a Delaware corporation ("BioAnalysis" - The term "BioAnalysis" shall refer to
BioAnalysis and those of its subsidiaries that are at least 80% owned by Thermo
BioAnalysis Corporation).
Preliminary Statement
---------------------
TMO is the parent of an affiliate group of corporations (including
BioAnalysis) within the meaning of Section 1504(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
TMO owns more than 80% of the issued and outstanding shares of voting
common stock of Thermo Instruments Systems Inc., which in turn owns more than
80% of the issued and outstanding shares of voting common stock of BioAnalysis,
the only class of stock that BioAnalysis is authorized to issue. BioAnalysis is
required to file consolidated federal income tax returns with TMO.
TMO is the common parent of an affiliated group of corporations and
BioAnalysis recognizes that any one of them that sustains a net operating loss
or otherwise generates beneficial tax attributes for a taxable period may be
deprived of such benefits when offset in that or other periods against income or
tax liabilities of the others.
By this Agreement, the parties desire to set forth the understanding they
have reached with respect to the filing of the consolidated United States
federal income tax returns. Foreign tax returns are not subject to this
Agreement.
Agreements
----------
IT IS MUTUALLY agreed by the parties hereto as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. The Term "TMO Group" means the group of corporations of which TMO
is common parent and with which TMO files an affiliated consolidated federal
income tax return, excluding BioAnalysis and subsidiaries of BioAnalysis that
may exist now or in the future. For purposes of this Agreement, the TMO Group
shall be treated as a single corporate entity. The TMO Group and BioAnalysis and
its subsidiaries, respectively, are sometimes herein referred to collectively as
the "Two Companies" or the "Companies." This Agreement anticipates that TMO will
set aside and retain certain sums calculated as provided herein. All reference
to TMO paying sums to itself pursuant to this Agreement shall be satisfied by
TMO setting aside sums in respect of the obligations established under this
Agreement.
1.2. The paragraph titles used herein are for convenience of reference
only and will not be considered in the interpretation or construction of any of
the provisions hereof. Words may be construed in the singular or the plural as
the context requires.
<PAGE> 2
2. TAX RETURNS.
2.1. FEDERAL TAX RETURNS. TMO as the common parent will prepare and
file or cause to be prepared and filed federal and state income tax returns on a
consolidated basis, for the TMO Group and BioAnalysis and its subsidiaries for
all fiscal periods as to which a consolidated return is appropriate in
accordance with the terms of this Agreement.
2.2. STATE TAX RETURNS. TMO as the common parent will prepare and file
or cause to be filed state income tax returns on a combined, consolidated,
unitary, or other method that TMO believes will result in a lower overall tax
liability to the Two Companies. BioAnalysis will reimburse TMO for its portion
of the tax. Such reimbursement will be the tax BioAnalysis would have paid on a
separate return basis, but only if it was required to file a return in that
state.
3. TIME OF PAYMENT OF FEDERAL OBLIGATIONS TO TMO. The obligations of the
Companies for Federal income tax payments will be determined and paid as
follows:
(a) Not later than the 15th day after the end of the fourth, sixth,
ninth and twelfth months of each consolidated taxable year of TMO, TMO will make
a reasonable determination (consistent with the provisions of Section 6655 of
the Code) of the separate federal income tax liability that each Company would
be required to pay as estimated payments on a separate return basis for that
period. Each Company shall pay to TMO the amount of such liability within ten
days.
(b) After the end of TMO's fourth accounting quarter and before the
15th day of the third month thereafter, each Company will promptly pay to TMO
the entire amounts estimated to be due and payable under such Company's federal
income tax return as if filed on a separate return basis less all amounts
previously paid with respect to that year pursuant to subparagraph (a) of this
Paragraph 3.
(c) If upon the filing of the consolidated income tax return, a
revised calculation is made in the manner set forth in subparagraph (b) of this
Paragraph 3, and it is determined that either Company has paid to TMO with
respect to the consolidated taxable year an amount greater than that required by
Paragraph 3(b), then that excess will be promptly paid by TMO to that Company.
4. TAX OBLIGATIONS OF TMO. TMO will pay the consolidated tax liabilities of
the Companies arising from filing a consolidated federal income tax return.
5. PAYMENT OF FUNDS BY TMO. After the end of TMO's fourth quarter and
before the 15th day of the third month thereafter, if in any year BioAnalysis
incurs a loss, TMO shall pay to BioAnalysis a sum equal to the amount of benefit
realized by TMO that is attributable to the loss incurred by BioAnalysis.
6. CHANGES IN PRIOR YEAR'S TAX LIABILITIES. In the event that the
consolidated tax liability or the separate tax liability referred to in
Paragraphs 3 and 4 hereof for any year for which a consolidated tax return for
the two Companies was filed is or would be increased or decreased by reason of
filing an amended return or returns (including carry-back claims), or by reason
of the examination of the returns by the Internal Revenue Service, the amounts
due TMO for payment of taxes under Paragraph 3 hereof, and the amount to be paid
to TMO for allocation to BioAnalysis under Paragraph 4 hereof for each such year
will be recomputed by TMO to reflect the adjustments to taxable income and tax
credits for the taxable year and interest or penalties, if any. In accordance
with those recomputations, additional sums will be paid by the Companies to TMO
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or paid by TMO to the Companies regardless of whether a member has become a
Departing Member (as defined in Paragraph 8 hereof) subsequent to the taxable
year of recomputation.
7. NEW MEMBERS. The Companies agree that if, subsequent to the execution of
this Agreement, TMO becomes the parent, as that term is used in Section 1504 of
the Code, of one or more subsidiary corporations, in addition to BioAnalysis,
then each newly acquired subsidiary corporation may become a separate party to
this Agreement by consenting in writing to be bound by its provisions, effective
immediately upon its delivery to TMO, but the income, deductions and tax credits
of the newly acquired subsidiary corporations will first be included in the
consolidated federal income tax return as required by the Code.
8. DEPARTING MEMBERS.
8.1. The term "Departing Member," as used herein, will mean a Company
that is no longer permitted under the Code to be included in the consolidated
federal income tax return.
8.2. In applying this Agreement to a Departing Member for the final
taxable year in which its income, deductions, and tax credits are required to be
included in the consolidated federal income tax return: (i) the amount required
to be paid by a Departing Member under the provisions of Paragraph 3 hereof and
(ii) the amount that the Departing Member is entitled to receive under the
provisions of Paragraph 4 hereof, will be determined by taking into account the
income, deductions and tax credits of the Departing Member only for the
fractional part of such year as the Departing Member was a member of the
consolidated group and included in the consolidated federal income tax return.
8.3. After the filing of the consolidated federal income tax return
for the last taxable year that the Departing Member was included therein, the
Departing Member will be informed of the amount of consolidated carry-overs as
of the end of the taxable year or period which are attributable to the Departing
Member, as provided by Treasury Regulations Section 1.1502-79 or otherwise,
including the agreement of the parties.
9. DETERMINATION OF SUMS DUE FROM AND PAYABLE TO MEMBERS. TMO will
determine the sums due from and payable to the Companies under the provisions of
this Agreement (including the determination for purposes of Paragraph 6 hereof).
The Companies agree to provide TMO with such information as may reasonably be
necessary to make these determinations. Issues arising in the course of the
determinations that are not expressly provided for in this Agreement will be
resolved in an equitable manner.
10. TAX CONTROVERSIES. If a consolidated federal income tax return for any
taxable year during which this Agreement is in effect is examined by the
Internal Revenue Service, the examination, as well as any other matters relating
to that tax return, including any tax litigation, will be handled solely by TMO.
BioAnalysis will cooperate with TMO and to this end will execute protests,
petitions, and any other documents as TMO determines to be necessary or
appropriate. The cost and expense of TMO's handling of a tax controversy,
including legal and accounting fees, will be allocated to and paid by the
Company to whom the tax controversy relates. If the tax controversy relates to
both Companies, the cost and expense will be allocated between the Companies in
the proportion that each Company's potential additional tax liability bears to
the total potential additional tax liability of both Companies (determined in
accordance with Paragraph 6 hereto and assuming that the tax controversy is
resolved in favor of the Internal Revenue Service) for the taxable year on
issue. If the tax controversy encompasses more than one taxable year, TMO will
first allocate the cost and expense to each taxable year in the
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proportion that the potential additional tax liability for each taxable year
bears to the total potential additional tax liability for the taxable years in
issue.
11. EFFECTIVE DATE. This Agreement shall be effective beginning as of the
date of this Agreement, and will continue on a year-to-year basis thereafter
with respect to BioAnalysis for so long as BioAnalysis is permitted to file a
consolidated federal income tax return with TMO.
12. STATE TAXES. The two Companies will jointly file any state tax return
on a combined, consolidated, unitary, or other method that TMO determines
results in a lower overall tax liability to the Two Companies. In the event that
said state tax returns shall be filed, the provisions of sections 1 through 11
hereof shall apply, MUTATIS MUTANDIS (the necessary changes being made) to the
allocation, preparation, filing and payment related to such state taxes and tax
returns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By: /s/ George N. Hatsopoulos
--------------------------
Title: Chairman and President
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
--------------------------
Title: Chief Executive Officer
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<PAGE> 1
Exhbibit 10.4
MASTER REPURCHASE AGREEMENT
---------------------------
AGREEMENT dated as of February 27, 1995 between Thermo Electron
Corporation, a Delaware corporation ("Seller"), and Thermo BioAnalysis
Corporation, a Delaware corporation (the "Buyer").
1. APPLICABILITY
From time to time Buyer and Seller may enter into transactions in which
Seller agrees to transfer to Buyer certain securities and/or financial
instruments ("Securities") against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities on demand,
against the transfer of funds by Seller. Each such transaction shall be referred
to herein as a "Transaction" and shall be governed by this Agreement, unless
otherwise agreed in writing.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to either party (i) the commencement
by such party as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar law, or such
party seeking the appointment of a receiver, trustee, custodian or similar
official for such party or any substantial part of its property; or (ii) the
commencement of any such case or proceeding against such party, or another
seeking such an appointment, which (A) is consented to or not timely contested
by such party, (B) results in the entry of an order for relief, such an
appointment or the entry of an order having a similar effect, or (C) is not
dismissed within 15 days; or (iii) the making by a party of a general assignment
for the benefit of creditors; or (iv) the admission in writing by a party of
such party's inability to pay such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4(a) hereof;
(c) "Income", with respect to any Security at any time, any principal
thereof then payable and all interest, dividends or other distributions thereon;
(d) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally recognized
source agreed to by the parties or the most recent closing bid quotation from
such a source, plus accrued Income to the extent not included therein (other
than any Income transferred to Seller pursuant to Paragraph 6 hereof) as of such
date (unless contrary to market practice for such Securities);
(e) "Other Buyers", third parties that have entered into an agreement with
Seller that is substantially similar to this Agreement;
(f) "Pricing Rate", a rate equal to the Commercial Paper Composite rate for
30-day maturities provided by Merrill Lynch, Pierce, Fenner & Smith Incorporated
(or, if such rate is not available, a substantially equivalent rate agreed to by
Buyer and Seller) plus 25 basis points, which rate shall be adjusted on the
first business day of each fiscal quarter and shall be in effect for the
entirety such fiscal quarter;
(g) "Purchase Price", the price at which Purchased Securities are
transferred by Seller to Buyer;
(h) "Purchased Securities", the Securities transferred by Seller to Buyer
in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities" with respect
to any Transaction at any time also shall include Additional Purchase
<PAGE> 2
Securities transferred pursuant to Paragraph 4(a) and shall exclude Securities
returned pursuant to Paragraph 4(b);
(i) "Repurchase Collateral Account", a book account maintained by Seller
containing, among other Securities, the Purchased Securities; and
(j) "Repurchase Price", for any Purchased Security, an amount equal to the
Purchase Price paid by Buyer to Seller for such Purchased Security.
3. TRANSACTIONS
(a) A Transaction may be initiated by Buyer upon the transfer of the
Purchase Price to Seller's account. Upon such transfer, Seller shall transfer to
Buyer Purchased Securities having a Market Value equal to 103% of the Purchase
Price.
(b) Purchased Securities shall be held in custody for Buyer by Seller in
the Repurchase Collateral Account. Seller shall indicate on its books for such
account Buyer's ownership of the Purchased Securities. Upon reasonable request
from Buyer, Seller shall provide Buyer with a complete list of Purchased
Securities owned by Buyer.
(c) Upon demand by Buyer or Seller, Seller shall repurchase from Buyer, and
Buyer shall sell to Seller, for the Repurchase Price all or any part of the
Purchased Securities then owned by Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased Securities
then owned by Buyer is less than 103% of the aggregate Repurchase Price for such
Purchased Securities, then Seller shall transfer to Buyer additional Securities
("Additional Purchased Securities"), so that the aggregate Market Value of such
Purchased Securities, including any such Additional Purchased Securities, will
thereupon equal or exceed 103% of such aggregate Repurchase Price.
(b) If at any time the aggregate Market Value of all Purchased Securities
then owned by Buyer exceeds 103% of the aggregate Repurchase Price for such
Purchased Securities, then Seller may transfer Purchased Securities to Seller,
so that the aggregate Market Value of such Purchased Securities will thereupon
not exceed 103% of such aggregate Repurchase Price.
5. INTEREST PAYMENTS
If during any fiscal month Buyer owned Purchased Securities, then on the
first day of the next following fiscal month Seller shall pay to Buyer an amount
equal to the sum of the aggregate Repurchase Prices of the Purchased Securities
owned by Buyer at the close of each day during the preceding fiscal month
divided by the number of days in such month and the product multiplied by the
Pricing Rate times the number of days in such month divided by 360.
6. INCOME PAYMENTS AND VOTING RIGHTS
Where a particular Transaction's term extends over an Income payment date
on the Purchased Securities subject to that Transaction, Buyer shall, on the
date such Income is payable, transfer to Seller an amount equal to such Income
payment or payments with respect to any Purchased Securities subject to such
Transaction. Seller shall retain all voting rights with respect to Purchased
Securities sold to Buyer under this Agreement.
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7. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction and this
Agreement, and shall be deemed to have granted to Buyer a security interest in,
all of the Purchased Securities with respect to all Transactions hereunder and
all proceeds thereof.
8. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder shall be
in immediately available funds. As used herein with respect to Securities,
"transfer" is intended to have the same meaning as when used in Section 8-313 of
the Massachusetts Uniform Commercial Code or, where applicable, in any federal
regulation governing transfers of the Securities.
9. SUBSTITUTION
Buyer hereby grants Seller the authority to manage, in Seller's sole
discretion, the Purchased Securities held in custody for Buyer by Seller in the
Repurchase Collateral Account. Buyer expressly agrees that Seller may (i)
substitute other Securities for any Purchased Securities and (ii) commingle
Purchased Securities with other Securities held in the Repurchase Collateral
Account. Substitutions shall be made by transfer to Buyer of such other
Securities and transfer to Seller of the Purchased Securities for which
substitution is being made. After substitution, the substituted Securities shall
be deemed to be Purchased Securities. Securities which are substituted for
Purchased Securities shall have a Market Value at the time of substitution equal
to or greater than the Market Value of the Purchase Securities for which such
Securities were substituted.
10. REPRESENTATIONS
Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) the person signing this Agreement on its behalf is duly
authorized to do so on its behalf, (iii) it has obtained all authorizations of
any governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect and
(iv) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, by-law or
rule applicable to it or any agreement by which it is bound or by which any of
its assets are affected. On the date for any Transaction Buyer and Seller shall
each be deemed to repeat all the foregoing representations made by it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to repurchase or Buyer fails to transfer
Purchased Securities upon demand for repurchase from either Buyer or Seller,
(ii) Seller or Buyer fails, after one business day's notice, to comply with
Paragraph 4 hereof, (iii) Buyer fails to make payment to Seller pursuant to
Paragraph 6 hereof, (iv) Seller fails to comply with Paragraph 5 hereof, (v) an
Act of Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or untrue in
any material respect when made or repeated or deemed to have been made or
repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or
its intention not to, perform any of its obligations hereunder (each an "Event
of Default"):
(a) At the option of the nondefaulting party, exercised by written notice
to the defaulting party (which option shall be deemed to have been exercised,
even if no notice is given, immediately upon the occurrence of any Act of
Insolvency), Seller shall become obligated to repurchase, and Buyer
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shall become obligated to sell, all Purchased Securities then owned by Buyer for
the Repurchase Price of such Purchased Securities.
(b) If Seller is the defaulting party and Buyer exercises or is deemed to
have exercised the option referred to in subparagraph (a) of this Paragraph, (i)
the Seller's obligations hereunder to repurchase all Purchased Securities in
such Transactions shall thereupon become immediately due and payable, (ii) all
Income paid after such exercise or deemed exercise shall be retained by Buyer
and applied to the aggregate unpaid Repurchase Prices owed by Seller, and (iii)
Seller shall immediately deliver to Buyer any Purchased Securities subject to
such Transactions then in Seller's possession.
(c) In all Transactions in which Buyer is the defaulting party, upon tender
by Seller of payment of the aggregate Repurchase Prices for all such
Transactions, Buyer's right, title and interest in all Purchased Securities
subject to such Transactions shall be deemed transferred to Seller, and Buyer
shall deliver all such Purchased Securities to Seller.
(d) After one business day's notice to the defaulting party (which notice
need not be given if an Act of Insolvency shall have occurred, and which may be
the notice given under subparagraph (a) of this Paragraph or the notice referred
to in clause (ii) of the first sentence of this Paragraph), the nondefaulting
party may:
(i) as to Transactions in which Seller is the defaulting party, (A)
immediately sell, in a recognized market at such price or prices as Buyer may
reasonably deem satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase
Prices and any other amounts owing by Seller hereunder or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give Seller credit for such Purchased Securities in an amount
equal to the price therefor on such date, obtained from a generally recognized
source or the most recent closing bid quotation from such a source, against the
aggregate unpaid Repurchase Prices and any other amounts owing by Seller
hereunder; and
(ii) as to Transactions in which Buyer is the defaulting party, (A)
purchase securities ("Replacement Securities") of the same class and amount as
any Purchased Securities that are not delivered by Buyer to Seller as required
hereunder or (B) in its sole discretion elect, in lieu of purchasing Replacement
Securities, to be deemed to have purchased Replacement Securities at the price
therefor on such date, obtained from a generally recognized source or the most
recent closing bid quotation from such a source.
(e) As to Transactions in which Buyer is the defaulting party , Buyer shall
be liable to Seller (i) with respect to Purchased Securities (other than
Additional Purchased Securities), for any excess of the price paid (or deemed
paid) by Seller for Replacement Securities therefor over the Repurchase Price
for such Purchased Securities and (ii) with respect to Additional Purchased
Securities, for the price paid (or deemed paid) by Seller for the Replacement
Securities therefor.
(g) The defaulting party shall be liable to the nondefaulting party for the
amount of all reasonable legal or other expenses incurred by the nondefaulting
party in connection with or as a consequence of an Event of Default.
(h) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other agreement or
applicable law.
12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a
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default by it in respect of all Transactions hereunder, (ii) that each of them
shall be entitled to set off claims and apply property held by them in respect
of any Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other transfers
made by either of them in respect of any Transaction shall be deemed to have
been made in consideration of payments, deliveries and other transfers in
respect of any other Transactions hereunder, and the obligations to make any
such payments, deliveries and other transfers may be applied against each other
and netted.
13. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement and agreement herein shall be treated as separate and
independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision or
agreement.
14. NON-ASSIGNABILITY; TERMINATION
The rights and obligations of the parties under this Agreement and under
any Transactions shall not be assigned by either party without the prior written
consent of the other party. Subject to the foregoing, this Agreement and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. This Agreement may be canceled by
either party upon giving written notice to the other, except that this Agreement
shall, notwithstanding such notice, remain applicable to any Transactions then
outstanding.
15. GOVERNING LAW
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts without giving effect to the conflict of law principles thereof.
16. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a wavier of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto.
19. INTENT
(a) The parties recognize that each Transaction is a "repurchase agreement"
as that term is defined in Section 101 of Title 11 of the United States Code, as
amended (except insofar as the type of Securities subject to such Transaction or
the term of such Transaction would render such definition inapplicable), and a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
(b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Paragraph 11 hereof, is a contractual right to
liquidate such Transaction as described in Sections 555 and 559 of Title 11 of
the United States Code, as amended.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THERMO ELECTRON CORPORATION THERMO BIOANALYSIS CORPORATION
By /s/ George N. Hatsopoulos By /s/ Barry S. Howe
------------------------- -------------------------
(Signature) (Signature)
George N. Hatsopoulos Barry S. Howe
------------------------- -------------------------
(Print Name) (Print Name)
Title Chairman and President Title Chief Executive Officer
6
<PAGE> 1
Exhibit 10.7
THERMO BIOANALYSIS CORPORATION
EQUITY INCENTIVE PLAN
---------------------
(As amended on June 13, 1996)
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to secure for
Thermo BioAnalysis Corporation (the "Company") and its Stockholders the benefits
arising from capital stock ownership by employees, officers and Directors of,
and consultants to, the Company and its subsidiaries or other persons who are
expected to make significant contributions to the future growth and success of
the Company and its subsidiaries. The Plan is intended to accomplish these goals
by enabling the Company to offer such persons equity-based interests,
equity-based incentives or performance-based stock incentives in the Company, or
any combination thereof ("Awards").
2. ADMINISTRATION
The Plan will be administered by the Board of Directors of the Company (the
"Board"). The Board shall have full power to interpret and administer the Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan and
Awards, and full authority to select the persons to whom Awards will be granted
("Participants"), determine the type and amount of Awards to be granted to
Participants (including any combination of Awards), determine the terms and
conditions of Awards granted under the Plan (including terms and conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture, restrictions, dividends and interest, if any,
on deferred amounts), waive compliance by a participant with any obligation to
be performed by him or her under an Award, waive any term or condition of an
Award, cancel an existing Award in whole or in part with the consent of a
Participant, grant replacement Awards, accelerate the vesting or lapse of any
restrictions of any Award and adopt the form of instruments evidencing Awards
under the Plan and change such forms from time to time. Any interpretation by
the Board of the terms and provisions of the Plan or any Award thereunder and
the administration thereof, and all action taken by the Board, shall be final,
binding and conclusive on all parties and any person claiming under or through
any party. No Director shall be liable for any action or determination made in
good faith. The Board may, to the full extent permitted by law, delegate any or
all of its responsibilities under the Plan to a committee (the "Committee")
appointed by the Board and consisting of two or more members of the Board, each
of whom shall be deemed a "disinterested person" within the meaning of Rule
16b-3 (or any successor rule) of the Securities Exchange Act of 1934 (the
"Exchange Act").
3. EFFECTIVE DATE
The Plan shall be effective as of the date first approved by the Board of
Directors, subject to the approval of the Plan by the Corporation's
Stockholders. Grants of Awards under the Plan
<PAGE> 2
2
made prior to such approval shall be effective when made (unless otherwise
specified by the Board at the time of grant), but shall be conditioned on and
subject to such approval of the Plan.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 10.6, the total number of
shares of the common stock, $.01 par value per share, of the Company (the
"Common Stock"), reserved and available for distribution under the Plan shall be
800,000 shares. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares.
If any Award of shares of Common Stock requiring exercise by the
Participant for delivery of such shares terminates without having been exercised
in full, is forfeited or is otherwise terminated without a payment being made to
the Participant in the form of Common Stock, or if any shares of Common Stock
subject to restrictions are repurchased by the Company pursuant to the terms of
any Award or are otherwise reacquired by the Company to satisfy obligations
arising by virtue of any Award, such shares shall be available for distribution
in connection with future Awards under the Plan.
5. ELIGIBILITY
Employees, officers and Directors of, and consultants to, the Company and
its subsidiaries, or other persons who are expected to make significant
contributions to the future growth and success of the Company and its
subsidiaries shall be eligible to receive Awards under the Plan. The Board, or
other appropriate committee or person to the extent permitted pursuant to the
last sentence of Section 2, shall from time to time select from among such
eligible persons those who will receive Awards under the Plan.
6. TYPES OF AWARDS
The Board may offer Awards under the Plan in any form of equity-based
interest, equity-based incentive or performance-based stock incentive in Common
Stock of the Company or any combination thereof. The type, terms and conditions
and restrictions of an Award shall be determined by the Board at the time such
Award is made to a Participant.
An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board and
shall conform to the general rules applicable under the Plan as well as any
special rules then applicable under federal tax laws or regulations or the
federal securities laws relating to the type of Award granted.
Without limiting the foregoing, Awards may take the following forms and
shall be subject to the following rules and conditions:
<PAGE> 3
3
6.1 OPTIONS
An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under the
Plan may be either incentive stock options ("incentive stock options") that meet
the requirements of Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"), or options that are not intended to meet the requirements
of Section 422A ("non-statutory options").
6.1.1 OPTION PRICE. The price at which Common Stock may be purchased upon
exercise of an option shall be determined by the Board, provided however, the
exercise price shall not be less than the par value per share of Common Stock.
6.1.2 OPTION GRANTS. The granting of an option shall take place at the time
specified by the Board. Options shall be evidenced by option agreements. Such
agreements shall conform to the requirements of the Plan, and may contain such
other provisions (including but not limited to vesting and forfeiture
provisions, acceleration, change of control, protection in the event of merger,
consolidations, dissolutions and liquidations) as the Board shall deem
advisable. Option agreements shall expressly state whether an option grant is
intended to qualify as an incentive stock option or non-statutory option.
6.1.3 OPTION PERIOD. An option will become exercisable at such time or
times (which may be immediately or in such installments as the Board shall
determine) and on such terms and conditions as the Board shall specify. The
option agreements shall specify the terms and conditions applicable in the event
of an option holder's termination of employment during the option's term.
Any exercise of an option must be in writing, signed by the proper person
and delivered or mailed to the Company, accompanied by (1) any additional
documents required by the Board and (2) payment in full in accordance with
Section 6.1.4 for the number of shares for which the option is exercised.
6.1.4 PAYMENT OF EXERCISE PRICE. Stock purchased on exercise of an option
shall be paid for as follows: (1) in cash or by check (subject to such
guidelines as the Company may establish for this purpose), bank draft or money
order payable to the order of the Company or (2) if so permitted by the
instrument evidencing the option (or in the case of a non-statutory option, by
the Board at or after grant of the option), (i) through the delivery of shares
of Common Stock that have been outstanding for at least six months (unless the
Board expressly approves a shorter period) and that have a fair market value
(determined in accordance with procedures prescribed by the Board) equal to the
exercise price, (ii) by delivery of a promissory note of the option holder to
the Company, payable on such terms as are specified by the Board, (iii) by
delivery of an unconditional and irrevocable undertaking by a broker to deliver
promptly to the Company sufficient funds to pay the exercise price, or (iv) by
any combination of the permissible forms of payment.
<PAGE> 4
4
6.1.5 BUYOUT PROVISION. The Board may at any time offer to buy out for a
payment in cash, shares of Common Stock, deferred stock or restricted stock, an
option previously granted, based on such terms and conditions as the Board shall
establish and communicate to the option holder at the time that such offer is
made.
6.1.6 SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. Each provision of the Plan
and each option agreement evidencing an incentive stock option shall be
construed so that each incentive stock option shall be an incentive stock option
as defined in Section 422A of the Code or any statutory provision that may
replace such Section, and any provisions thereof that cannot be so construed
shall be disregarded. Instruments evidencing incentive stock options must
contain such provisions as are required under applicable provisions of the Code.
Incentive stock options may be granted only to employees of the Company and its
subsidiaries. The exercise price of an incentive stock option shall not be less
than 100% (110% in the case of an incentive stock option granted to a more than
ten percent Stockholder of the Company) of the fair market value of the Common
Stock on the date of grant, as determined by the Board. An incentive stock
option may not be granted after the tenth anniversary of the date on which the
Plan was adopted by the Board and the latest date on which an incentive stock
option may be exercised shall be the tenth anniversary (fifth anniversary, in
the case of any incentive stock option granted to a more than ten percent
Stockholder of the Company) of the date of grant, as determined by the Board.
6.2 RESTRICTED AND UNRESTRICTED STOCK
An Award of restricted stock entitles the recipient thereof to acquire
shares of Common Stock upon payment of the purchase price subject to
restrictions specified in the instrument evidencing the Award.
6.2.1 RESTRICTED STOCK AWARDS. Awards of restricted stock shall be
evidenced by restricted stock agreements. Such agreements shall conform to the
requirements of the Plan, and may contain such other provisions (including
restriction and forfeiture provisions, change of control, protection in the
event of mergers, consolidations, dissolutions and liquidations) as the Board
shall deem advisable.
6.2.2 RESTRICTIONS. Until the restrictions specified in a restricted stock
agreement shall lapse, restricted stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of, and upon certain conditions
specified in the restricted stock agreement, must be resold to the Company for
the price, if any, specified in such agreement. The restrictions shall lapse at
such time or times, and on such conditions, as the Board may specify. The Board
may at any time accelerate the time at which the restrictions on all or any part
of the shares shall lapse.
6.2.3 RIGHTS AS A STOCKHOLDER. A Participant who acquires shares of
restricted stock will have all of the rights of a Stockholder with respect to
such shares including the right to receive dividends and to vote such shares.
Unless the Board otherwise determines, certificates evidencing shares of
restricted stock will remain in the possession of the Company until such shares
are free of all restrictions under the Plan.
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6.2.4 PURCHASE PRICE. The purchase price of shares of restricted stock
shall be determined by the Board, in its sole discretion, but such price may not
be less than the par value of such shares.
6.2.5 OTHER AWARDS SETTLED WITH RESTRICTED STOCK. The Board may provide
that any or all the Common Stock delivered pursuant to an Award will be
restricted stock.
6.2.6 UNRESTRICTED STOCK. The Board may, in its sole discretion, sell to
any Participant shares of Common Stock free of restrictions under the Plan for a
price determined by the Board, but which may not be less than the par value per
share of the Common Stock.
6.3 DEFERRED STOCK
6.3.1 DEFERRED STOCK AWARD. A deferred stock Award entitles the recipient
to receive shares of deferred stock which is Common Stock to be delivered in the
future. Delivery of the Common Stock will take place at such time or times, and
on such conditions, as the Board may specify. The Board may at any time
accelerate the time at which delivery of all or any part of the Common Stock
will take place.
6.3.2 OTHER AWARDS SETTLED WITH DEFERRED STOCK. The Board may, at the time
any Award described in this Section 6 is granted, provide that, at the time
Common Stock would otherwise be delivered pursuant to the Award, the Participant
will instead receive an instrument evidencing the right to future delivery of
deferred stock.
6.4 PERFORMANCE AWARDS
6.4.1 PERFORMANCE AWARDS. A performance Award entitles the recipient to
receive, without payment, an Amount, in cash or Common Stock or a combination
thereof (such form to be determined by the Board), following the attainment of
performance goals. Performance goals may be related to personal performance,
corporate performance, departmental performance or any other category of
performance deemed by the Board to be important to the success of the Company.
The Board will determine the performance goals, the period or periods during
which performance is to be measured and all other terms and conditions
applicable to the Award.
6.4.2 OTHER AWARDS SUBJECT TO PERFORMANCE CONDITIONS. The Board may, at the
time any Award described in this Section 6 is granted, impose the condition (in
addition to any conditions specified or authorized in this Section 6 of the
Plan) that performance goals be met prior to the Participant's realization of
any payment or benefit under the Award.
7. PURCHASE PRICE AND PAYMENT
Except as otherwise provided in the Plan, the purchase price of Common
Stock to be acquired pursuant to an Award shall be the price determined by the
Board, provided that such price shall not be less than the par value of the
Common Stock. Except as otherwise provided in the Plan, the Board may determine
the method of payment of the exercise price or purchase price
<PAGE> 6
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of an Award granted under the Plan and the form of payment. The Board may
determine that all or any part of the purchase price of Common Stock pursuant to
an Award has been satisfied by past services rendered by the Participant. The
Board may agree at any time, upon request of the Participant, to defer the date
on which any payment under an Award will be made.
8. LOANS AND SUPPLEMENTAL GRANTS
The Company may make a loan to a Participant, either on or after the grant
to the Participant of any Award, in connection with the purchase of Common Stock
under the Award or with the payment of any obligation incurred or recognized as
a result of the Award. The Board will have full authority to decide whether the
loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the loan is to be repaid and the conditions, if
any, under which it may be forgiven.
In connection with any Award, the Board may at the time such Award is made
or at a later date, provide for and make a cash payment to the participant not
to exceed an amount equal to (a) the amount of any federal, state and local
income tax or ordinary income for which the Participant will be liable with
respect to the Award, plus (b) an additional amount on a grossed-up basis
necessary to make him or her whole after tax, discharging all the participant's
income tax liabilities arising from all payments under the Plan.
9. CHANGE IN CONTROL
9.1 IMPACT OF EVENT
In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options or other stock-based Awards awarded under the Plan
that were not previously exercisable and vested shall become fully
exercisable and vested.
(b) Awards of restricted stock and other stock-based Awards subject to
restrictions and to the extent not fully vested, shall become fully vested
and all such restrictions shall lapse so that shares issued pursuant to
such Awards shall be free of restrictions.
(c) Deferral limitations and conditions that relate solely to the passage
of time, continued employment or affiliation, will be waived and removed as
to deferred stock Awards and performance Awards. Performance of other
conditions (other than conditions relating solely to the passage of time,
continued employment or affiliation) will continue to apply unless
otherwise provided in the agreement evidencing the Awards or in any other
agreement between the Participant and the Company or unless otherwise
agreed by the Board.
<PAGE> 7
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9.2 DEFINITION OF "CHANGE IN CONTROL"
"Change in Control" means any one of the following events: (i) when, any
Person is or becomes the beneficial owner (as defined in Section 13(d) of the
Exchange Act and the Rules and Regulations thereunder), together with all
Affiliates and Associates (as such terms are used in Rule 12b-2 of the General
Rules and Regulations of the Exchange Act) of such Person, directly or
indirectly, of 50% or more of the outstanding Common Stock of the Company or its
parent corporation, Thermo Instrument Systems Inc. ("Thermo Instrument"), or the
beneficial owner of 25% or more of the outstanding common stock of Thermo
Electron Corporation ("Thermo Electron"), without the prior approval of the
Prior Directors of the applicable issuer, (ii) the failure of the Prior
Directors to constitute a majority of the Board of Directors of the Company,
Thermo Instrument or Thermo Electron, as the case may be, at any time within two
years following any Electoral Event, or (iii) any other event that the Prior
Directors shall determine constitutes an effective change in the control of the
Company, Thermo Instrument or Thermo Electron. As used in the preceding
sentence, the following capitalized terms shall have the respective meanings set
forth below:
(a) "Person" shall include any natural person, any entity, any "affiliate"
of any such natural person or entity as such term is defined in Rule 405
under the Securities Act of 1933 and any "group" (within the meaning of
such term in Rule 13d-5 under the Exchange Act);
(b) "Prior Directors" shall mean the persons sitting on the Company's,
Thermo Instrument's or Thermo Electron's Board of Directors, as the case
may be, immediately prior to any Electoral Event (or, if there has been no
Electoral Event, those persons sitting on the applicable Board of Directors
on the date of this Agreement) and any future director of the Company,
Thermo Instrument or Thermo Electron who has been nominated or elected by a
majority of the Prior Directors who are then members of the Board of
Directors of the Company, Thermo Instrument or Thermo Electron, as the case
may be; and
(c) "Electoral Event" shall mean any contested election of Directors, or
any tender or exchange offer for the Company's, Thermo Instrument's or
Thermo Electron's Common Stock, not approved by the Prior Directors, by any
Person other than the Company, Thermo Instrument, Thermo Electron or a
majority-owned subsidiary of Thermo Electron.
10. GENERAL PROVISIONS
10.1 DOCUMENTATION OF AWARDS
Awards will be evidenced by written instruments, which may differ among
Participants, prescribed by the Board from time to time. Such instruments may be
in the form of agreements to be executed by both the Participant and the Company
or certificates, letters or similar instruments which need not be executed by
the participant but acceptance of which will evidence agreement to the terms
thereof. Such instruments shall conform to the requirements of the Plan and may
contain such other provisions (including provisions relating to events of
merger, consolidation,
<PAGE> 8
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dissolution and liquidations, change of control and restrictions affecting
either the agreement or the Common Stock issued thereunder), as the Board deems
advisable.
10.2 RIGHTS AS A STOCKHOLDER
Except as specifically provided by the Plan or the instrument evidencing
the Award, the receipt of an Award will not give a Participant rights as a
Stockholder with respect to any shares covered by an Award until the date of
issue of a stock certificate to the participant for such shares.
10.3 CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove any restriction from shares previously
delivered under the Plan (a) until all conditions of the Award have been
satisfied or removed, (b) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, (c)
if the outstanding Common Stock is at the time listed on any stock exchange,
until the shares have been listed or authorized to be listed on such exchange
upon official notice of issuance, and (d) until all other legal matters in
connection with the issuance and delivery of such shares have been approved by
the Company's counsel. If the sale of Common Stock has not been registered under
the Securities Act of 1933, as amended, the Company may require, as a condition
to exercise of the Award, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such act and may require
that the certificates evidencing such Common Stock bear an appropriate legend
restricting transfer.
If an Award is exercised by the participant's legal representative, the
Company will be under no obligation to deliver Common Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.
10.4 TAX WITHHOLDING
The Company will withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all federal, state and local withholding tax
requirements (the "withholding requirements").
In the case of an Award pursuant to which Common Stock may be delivered,
the Board will have the right to require that the participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the Board
with regard to such requirements, prior to the delivery of any Common Stock. If
and to the extent that such withholding is required, the Board may permit the
participant or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirement.
10.5 NONTRANSFERABILITY OF AWARDS
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Except as otherwise specifically provided by the Board in the case of
participants who are not reporting persons under Section 16 of the Exchange Act,
no Award (other than an Award in the form of an outright transfer of cash or
Common Stock not subject to any restrictions) may be transferred other than by
the laws of descent and distribution, except pursuant to the terms of a
qualified domestic relations order as defined in the Code, and during a
Participant's lifetime an Award requiring exercise may be exercised only by him
or her (or in the event of incapacity, the person or persons properly appointed
to act on his or her behalf).
10.6 ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTIONS
(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capitalization, or other
distribution with respect to common Stockholders other than normal cash
dividends, the Board will make (i) appropriate adjustments to the maximum number
of shares that may be delivered under the Plan under Section 4 above, and (ii)
appropriate adjustments to the number and kind of shares of stock or securities
subject to Awards then outstanding or subsequently granted, any exercise prices
relating to Awards and any other provisions of Awards affected by such change.
(b) The Board may also make appropriate adjustments to take into account
material changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions, repurchases or similar corporate
transactions, or any other event, if it is determined by the Board that
adjustments are appropriate to avoid distortion in the operation of the Plan,
but no such adjustments other than those required by law may adversely affect
the rights of any Participant (without the Participant's consent) under any
Award previously granted.
10.7 EMPLOYMENT RIGHTS
Neither the adoption of the Plan nor the grant of Awards will confer upon
any person any right to continued employment with the Company or any subsidiary
or interfere in any way with the right of the Company or subsidiary to terminate
any employment relationship at any time or to increase or decrease the
compensation of such person. Except as specifically provided by the Board in any
particular case, the loss of existing or potential profit in Awards granted
under the Plan will not constitute an element of damages in the event of
termination of an employment relationship even if the termination is in
violation of an obligation of the Company to the employee.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Board at the time. For purposes of this Plan, transfer of
employment between the Company and its subsidiaries shall not be deemed
termination of employment.
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10.8 OTHER EMPLOYEE BENEFITS
The value of an Award granted to a Participant who is an employee, and the
amount of any compensation deemed to be received by an employee as a result of
any exercise or purchase of Common Stock pursuant to an Award or sale of shares
received under the Plan, will not constitute "earnings" or "compensation" with
respect to which any other employee benefits of such employee are determined,
including without limitation benefits under any pension, stock ownership, stock
purchase, life insurance, medical, health, disability or salary continuation
plan.
10.9 LEGAL HOLIDAYS
If any day on or before which action under the Plan must be taken falls on
a Saturday, Sunday or legal holiday, such action may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.
10.10 FOREIGN NATIONALS
Without amending the Plan, Awards may be granted to persons who are foreign
nationals or employed outside the United States or both, on such terms and
conditions different from those specified in the Plan, as may, in the judgment
of the Board, be necessary or desirable to further the purpose of the Plan.
11. TERMINATION AND AMENDMENT
The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 11, the Board may at any
time or times amend the Plan or any outstanding Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards. No amendment, unless approved by the Stockholders,
shall be effective if it would cause the Plan to fail to satisfy the
requirements of the federal tax law or regulation relating to incentive stock
options or the requirements of Rule 16b-3 (or any successor rule) of the
Exchange Act. No amendment of the Plan or any agreement evidencing Awards under
the Plan may adversely affect the rights of any participant under any Award
previously granted without such participant's consent.
<PAGE> 1
Exhibit 10.8
THERMO BIOANALYSIS CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
SECTION 1. PARTICIPATION. Any director of Thermo BioAnalysis Corporation (the
"Company") may elect to have such percentage as he or she may specify of the
fees otherwise payable to him or her deferred and paid to him or her as provided
in this Plan. A director who is also an officer of the Company or its parent
corporation, Thermo Electron Corporation, shall not be eligible to participate
in this Plan. Each election shall be made by notice in writing delivered to the
Secretary of the Company, in such form as the Secretary shall designate, and
each election shall be applicable only with respect to fees earned subsequent to
the date of the election for the period designated in the form. The term
"participant" as used herein refers to any director who shall have made an
election. No participant may defer the receipt of any fees to be earned after
the later to occur of either (a) the date on which the participant shall retire
from or otherwise cease to engage in his or her principal occupation or
employment or (b) the date on which he or she shall cease to be a director of
the Company, or such earlier date as the Board of Directors of the Company, with
the participant's consent, may designate (the "deferral termination date"). In
the event that the participant's deferral termination date is the date on which
he or she ceases to engage in his or her principal occupation or employment, the
participant or a personal representative shall advise the Company of that date
by written notice delivered to the Secretary of the Company.
SECTION 2. ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNTS. There shall be
established for each participant an account to be designated as that
participant's deferred compensation account.
SECTION 3. ALLOCATIONS TO DEFERRED COMPENSATION ACCOUNTS. There shall be
allocated to each participant's deferred compensation account, as of the end of
each quarter, an amount equal to his or her fees for that quarter which that
participant shall have elected to have deferred pursuant to Section 1.
SECTION 4. STOCK UNITS AND STOCK UNIT ACCOUNTS. All amounts allocated to a
participant's deferred compensation account pursuant to Section 3 and Section 5
shall be converted, at the end of each quarter, into stock units by dividing the
accumulated balance in the deferred compensation account as of the end of that
quarter by the average last sale price per share of the Company's common stock
as reported on in the WALL STREET JOURNAL, for the five business days up to and
including the last business day of that quarter. The number of stock units, so
determined, rounded to the nearest one-hundredth of a share, shall be credited
to a separate stock unit account to be established for the participant, and the
aggregate value thereof as of the last business day of that quarter shall be
charged to the participant's deferred compensation account. No amounts credited
to the participant's deferred compensation account pursuant to Section 5
subsequent to the close of the fiscal
<PAGE> 2
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year in which occurs the participant's deferral termination date shall be
converted into stock units. Any such amount shall be distributed in cash as
provided in Section 8. A maximum number of 25,000 shares of the Company's common
stock may be represented by stock units credited under this Plan, subject to
proportionate adjustment in the event of any stock dividend, stock split or
other capital change affecting the Company's common stock.
SECTION 5. CASH DIVIDEND CREDITS. Additional credits shall be made to a
participant's deferred compensation account, until all distributions shall have
been made from the participant's stock unit account, in amounts equal to the
cash dividends (or the fair market value of dividends paid in property other
than dividends payable in common stock of the Company) which the participant
would have received from time to time had he or she been the owner on the record
dates for the payment of such dividends of the number of shares of the Company's
common stock equal to the number of units in his or her stock unit account on
those dates.
SECTION 6. STOCK DIVIDEND CREDITS. Additional credits shall be made to a
participant's stock unit account, until all distributions shall have been made
from the participant's stock unit account, of a number of units equal to the
number of shares of the Company's common stock, rounded to the nearest
one-hundredth share, which the participant would have received from time to time
as stock dividends had he or she been the owner on the record dates for the
payments of such stock dividends of the number of units of the Company's common
stock equal to the number of units credited to his or her stock unit account on
those dates.
SECTION 7. RECAPITALIZATION. If, as a result of a recapitalization of the
Company (including a stock split), the Company's outstanding shares of common
stock shall be changed into a greater or smaller number of shares, the number of
units then credited to a participant's stock unit account shall be appropriately
adjusted on the same basis.
SECTION 8. DISTRIBUTION OF STOCK AND CASH AFTER PARTICIPANT'S DEFERRAL
TERMINATION DATE. When a participant's deferral termination date shall occur,
the Company shall become obligated to make the distributions prescribed in the
following paragraphs (a) and (b).
(a) The Company shall distribute to the participant the number of shares of
the common stock of the Company which shall equal the total number of units
accumulated in his or her stock unit account as of the close of the fiscal year
in which the participant's deferral termination date occurs. Such distribution
of stock shall be made in ten annual installments, unless, at least six months
prior to his or her deferral termination date, the participant shall have
elected, by notice in writing filed with the Secretary of the Company, to have
such distribution made in five annual installments. In either such case, the
installments shall be of as nearly equal number of shares as practicable,
adjusted to reflect any changes pursuant to Sections 6 and 7 in the number of
units remaining in the participant's stock unit account. The first such
installment shall be distributed within 60
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days after the close of the fiscal year in which the participant's deferral
termination date occurs. The remaining installments shall be distributed at
annual intervals thereafter. Anything herein to the contrary notwithstanding,
the Company shall have the option, if its Board of Directors shall by resolution
so determine, in lieu of making distribution in ten or five annual installments
as set forth above, with the participant's consent, to distribute stock or any
remaining installments thereof in a single distribution at any time following
the close of the fiscal year in which the participant's deferral termination
date occurs. Distribution of stock made hereunder may be made from shares of
common stock held in the treasury and/or from shares of authorized but
previously unissued shares of common stock. All distributions under the plan
shall be completed not later than December 31, 2025.
(b) The Company shall distribute to the participant sums in cash equal to
the balance credited to his or her deferred compensation account as of the close
of the fiscal year in which his or her deferral termination date occurs plus
such additional amounts as shall be credited thereto from time to time
thereafter pursuant to Section 5. The cash distribution shall be made on the
same dates as the annual distributions made pursuant to paragraph (a) above, and
each cash distribution shall consist of the entire balance credited to the
participant's deferred compensation account at the time of the annual
distribution.
If a participant's deferral termination date shall occur by reason of his
or her death or if he or she shall die after his or her deferral termination
date but prior to receipt of all distributions of stock and cash provided for in
this Section 8, all stock and cash remaining distributable hereunder shall be
distributed to such beneficiary as the participant shall have designated in
writing and filed with the Secretary of the Company or, in the absence of
designation, to the participant's personal representative. Such distributions
shall be made in the same manner and at the same intervals as they would have
been made to the participant had he or she continued to live.
SECTION 9. PARTICIPANT'S RIGHTS UNSECURED. The right of any participant to
receive distributions under Section 8 shall be an unsecured claim against the
general assets of the Company. The Company may but shall not be obligated to
acquire shares of its outstanding common stock from time to time in anticipation
of its obligation to make such distributions, but no participant shall have any
rights in or against any shares of stock so acquired by the Company. All such
stock shall constitute general assets of the Company and may be disposed of by
the Company at such time and for such purposes as it may deem appropriate.
SECTION 10. TERMINATION OF THE PLAN. The Plan shall terminate and full
distribution shall be made from all participants' deferred compensation accounts
and stock unit accounts upon any change of control of the Company. Either of the
following shall be deemed to be a change of control: (a) the occurrence, without
the prior approval of the Board of Directors, of the acquisition, directly or
indirectly, by any person of 50% or more of the outstanding common stock of
either the Company or its parent corporation, Thermo Instrument Systems Inc.
("Thermo Instrument"), or the beneficial owner of 25%
<PAGE> 4
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or more of the outstanding common stock of Thermo Electron Corporation ("Thermo
Electron"), without the prior approval of the prior directors of the Company,
Thermo Instrument, or Thermo Electron, as the case may be; (b) the failure of
the prior directors to constitute a majority of the Board of Directors of the
Company, Thermo Instrument or Thermo Electron, at any time within two years
following any electoral event. As used in this sentence and the preceding
sentence, person shall mean a natural person, an entity (together with an
affiliate thereof, as defined in Rule 405 under the Securities Act of 1933) or a
group, as defined in Rule 13d-5 under the Securities Exchange Act of 1934; prior
directors shall mean the persons serving on the Board of Directors immediately
prior to any electoral event; and electoral event shall mean any contested
election of directors or any tender or exchange offer for common stock of the
Company, Thermo Instrument or Thermo Electron by any person other than the
Company, Thermo Instrument, Thermo Electron or a subsidiary of any of the
foregoing companies. The Board of Directors at any time, at its discretion, may
terminate the Plan. If the Board of Directors terminates the Plan after any
person or group of persons shall have acquired or proposed to acquire control of
the Company through the Board of Directors, Thermo Instrument or Thermo
Electron, full and prompt distribution shall be made from all participants'
deferred compensation accounts and stock unit accounts. Otherwise, distributions
in respect of credits to participants' deferred compensation accounts and stock
unit accounts as of the date of termination shall be made in the manner and at
the time prescribed in Section 8.
SECTION 11. AMENDMENT OF THE PLAN. The Board of Directors of the Company may
amend the Plan at any time and from time to time, PROVIDED, HOWEVER, that no
amendment affecting credits already made to any participant's deferred
compensation account or stock unit account may be made without the consent of
that participant or, if that participant has died, that participant's
beneficiary.
SECTION 12. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective
commencing upon the date the U. S. Securities and Exchange Commission shall have
declared effective the registration of shares of the Company's Common Stock in
an underwritten public offering pursuant to the Securities Act of 1933, as
amended.
<PAGE> 1
Exhibit 10.13
EXCLUSIVE LICENSE AGREEMENT
---------------------------
THIS EXCLUSIVE LICENSE AGREEMENT dated as of February 27, 1995 (the
"Effective Date") is between Thermo Separation Products Inc., a Delaware
corporation ("Licensor"), and Thermo BioAnalysis Corporation, a Delaware
corporation ("Licensee"). (Licensor and Licensee are sometimes referred to
individually as a "Party" or collectively as the "Parties".)
WHEREAS, Licensor is the owner of certain Technology (defined below) which
is or may be useful in the conduct of business in the CE Field (defined below);
WHEREAS, Licensee desires to obtain an exclusive license under such
Technology to conduct business in the CE Field throughout the world, as well as
an option to obtain a license in the said territory to any Improvements (defined
below) to such Technology;
WHEREAS, Licensor is willing to grant Licensee such an exclusive license
subject to Licensee's obligation to grant an option to Licensor to obtain a
license to any Improvements to the Technology for use other than in the CE Field
and subject to the other terms and conditions of this Agreement; and
WHEREAS, Licensee is willing to accept such license;
NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants
set forth below, and of other good and valuable consideration, receipt of which
is hereby acknowledged, the Parties hereby agree as follows:
SECTION 1
DEFINITIONS
As used in this Agreement, the following terms have the meanings set forth
below:
1.1 "Affiliate" shall mean an entity that directly, or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with a Party. "Control" shall mean the possession of the power to direct
or cause the direction of the management and policies of such Party, whether
through the ownership of voting stock, by contract or otherwise. In the case of
a corporation "control" shall mean, among other things, the direct or indirect
ownership of more than fifty percent (50%) of its outstanding voting stock.
Notwithstanding the foregoing, no entity which is an Affiliate of the Licensor
or of the Licensee shall also be deemed to be an Affiliate of the Licensee or of
the Licensor (as the case may be), if such entity would not otherwise be an
Affiliate of the Licensee or Licensor (as the case may be) but for the equity
interest of Thermo Instrument Systems Inc. in both Licensor and Licensee.
<PAGE> 2
1.2 "Claims" shall mean any and all liabilities, damages, losses,
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees).
1.3 "Licensor Patent Rights" mean (a) the patents issued and patent
applications listed on Exhibit A that are pending in the Territory, (b) any
patent application constituting an equivalent, counterpart, reissue, extension
or continuation (including, without limitation, a continuation in part or a
division) of any of the foregoing applications having force in the Territory,
and (c) any patent issued or issuing upon any of the foregoing applications in
any country in the Territory.
1.4 "Licensed Technology" means all Technology in the CE Field owned or
controlled by Licensor as of the date hereof. "Owned or controlled" shall
include Technology which the Licensor owns, or under which the Licensor is
licensed and has the right to grant sublicenses and/or grant immunity from suit.
1.5 "Technology" shall mean any public or non-public technical or other
information, patents, patent applications, know-how, unpatented inventions,
copyrights and copyright applications, mask works, trademarks, service marks,
trade names, marks and logos, plans, drawings, sketches, designs, processes,
trade secrets, specifications, computer software and all rights related thereto,
and all other intellectual property rights of any nature.
1.6 "CE Field" means the use of capillary electrophoresis technology to
purify or separate biochemical compounds.
1.7 "Improvements" means any Technology constituting a change, addition,
upgrade, modification or revision to the Licensed Technology, or any other
Technology in the CE Field which either Party owns or controls subsequent to the
Effective Date during the Term hereof. "Owned or controlled" shall include
Technology which either Party owns, or under which either Party is licensed and
has the right to grant sublicenses and/or grant immunity from suit.
1.8 "Improvement Patent Rights" means (a) any patent application having
one or more claims covering Improvements, (b) any patent application
constituting an equivalent, counterpart, reissue, extension or continuation of
any of the foregoing applications (including, without limitation, a continuation
in part or division), or (c) any patent issued or issuing upon any of the
foregoing applications.
1.9 "Territory" shall mean the entire world.
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SECTION 2
GRANTS OF LICENSES
2.1 GRANT OF LICENSES TO LICENSEE.
(a) LICENSOR TECHNOLOGY. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee an exclusive
(against Licensor and all other entities), fully-paid right and
license, terminable only as set forth herein, to utilize the
Licensed Technology in the Field throughout the Territory.
Licensee shall have the right to grant sublicenses, including the
right to authorize further sublicenses, of equal or lesser scope
under the foregoing license, subject to the terms of this
Agreement.
(b) RESERVATION. Licensor reserves the exclusive right to utilize,
and to license to any entity and authorize further sublicenses,
the Licensed Technology outside of the CE Field.
(c) TRADEMARK LICENSES TO LICENSEE. Licensor hereby grants to
Licensee a royalty-free, fully paid, exclusive (against Licensor
and all other entities) right and license to use, in connection
with services in the CE Field in the Territory, any trademarks or
service marks which Licensor owns during the term of this
Agreement and which are used in the CE Field (the "Licensor
Marks") subject to Licensee maintaining such reasonable quality
standards for such services rendered under the Licensor Marks as
Licensor shall from time to time specify, which standards shall
be no more stringent than Licensor's standards for comparable
services rendered under the Licensor Marks outside of the CE
Field. Licensor reserves the exclusive right to use the Licensor
Marks on goods or services outside the CE Field. Licensor may
terminate Licensee's license to use a Licensor Mark if Licensee
fails to meet Licensor's established quality standards, which
failure is not cured within 120 days of notice thereof. Licensor
makes no warranties or representations with respect to the
Licensor Marks. The provisions of Section 4 shall apply to the
Licensor Marks mutatis mutandis.
2.2 OPTIONS FOR LICENSES TO IMPROVEMENTS.
(a) LICENSOR OPTION TO LICENSEE IMPROVEMENTS. Licensee hereby grants
to Licensor a first option to obtain an exclusive license, on
commercially reasonable terms (including, if appropriate,
royalties or other compensation), to utilize Improvements of
Licensee or its Affiliates outside of the CE Field. Such option
shall extend for a period of one hundred eighty (180) days from
the date Licensor receives notification in writing, in the case
of Improvement Patent Rights, of filing of any United States or
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foreign patent application and a copy of such patent application,
and in the case of other Improvements, of a description of such
Improvement in reasonable detail. Licensor may exercise its
option by informing Licensee in writing during the said one
hundred eighty (180) day period that it desires to obtain such a
license. Licensee and Licensor shall thereupon negotiate in good
faith a license agreement for such Improvement on commercially
reasonable terms. In the event that Licensor does not exercise
its option to license an Improvement or the Parties do not
execute a license agreement for the Improvement at the close of
ninety (90) days from Licensor's written notice of exercise,
Licensee shall be free to grant a license for the Improvement on
terms of its own choosing to a third party.
(b) LICENSEE OPTION TO LICENSOR IMPROVEMENTS. Licensor hereby grants
to Licensee a first option to obtain an exclusive license, on
commercially reasonable terms (including, if appropriate,
royalties or other compensation), to utilize Improvements of
Licensor or its Affiliates in the CE Field. Such option shall
extend for a period of one hundred eighty (180) days from the
date Licensee receives notification in writing, in the case of
Improvement Patent Rights, of filing of any United States or
foreign patent application and a copy of such patent application,
and in the case of other Improvements, of a description of such
Improvement in reasonable detail. Licensee may exercise its
option by informing Licensor in writing during the said one
hundred eighty (180) day period that it desires to obtain such a
license. Licensee and Licensor shall thereupon negotiate in good
faith a license agreement for such Improvement on commercially
reasonable terms. In the event that Licensee does not exercise
its option to license an Improvement or the parties do not
execute a license agreement to the Improvement at the close of
ninety (90) days from Licensee's written notice of exercise,
Licensor shall be free to grant a license for the Improvement in
the Territory on terms of its own choosing to a third party.
SECTION 3
TRANSFER OF TECHNOLOGY
3.1 TRANSFER OF LICENSED TECHNOLOGY. Promptly after the Effective Date,
Licensor will deliver to Licensee copies of written documents and other
materials containing, or relating to, the Licensed Technology. For a period of
up to one (1) year thereafter, Licensor will make available to Licensee
reasonable technical assistance free of charge to enable Licensee to fully
implement the Licensed Technology, except that Licensor's reasonable travel,
living and incidental expenses shall be reimbursed by Licensee. If Licensee
requests technical assistance in addition to the above amount, Licensor agrees
to provide such assistance subject to Section 3.3 below.
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3.2 TRANSFER OF IMPROVEMENTS.
(a) Licensee agrees to keep Licensor informed of any Improvements
developed or acquired by it and, to the extent requested by
Licensor, to provide technical documentation and technical
assistance (subject to Section 3.3 below) relating thereto so as
to enable Licensor to impleme any such Improvement to which
Licensor has obtained a license under Section 2.2(a).
(b) Licensor agrees to keep Licensee informed of any Improvements
developed or acquired by it and, to the extent requested by
Licensee, to provide technical documentation and technical
assistance (subject to Section 3.3 below) relating thereto so as
to enable Licensee to impleme any such Improvement to which
Licensee has obtained a license under Section 2.2(b).
3.3 COST OF TECHNICAL ASSISTANCE.
(a) If either Party hereunder sends its engineers to visit the
facilities of the other Party for technical assistance, the
sending Party shall bear its own out-of-pocket expenses in
connection with such visit, and the sending Party shall also be
charged a consulting fee by the other Party on the basis of such
other Party's then-standard consulting rates.
(b) If either Party hereunder requests that the other Party send
technical assistance personnel to provide the requesting Party
with technical assistance, the requesting Party shall bear the
out-of-pocket expenses of the sending Party in connection with
such visit, and the requesting Party shall also be charged a
consulting fee by the sending Party on the basis of the sending
Party's then-standard consulting rates.
SECTION 4
INTELLECTUAL PROPERTY RIGHTS
4.1 FILING AND MAINTENANCE OF PATENT RIGHTS. Licensor shall be
responsible for the preparation, filing, prosecution and maintenance of all
Licensor Patent Rights in the name of the Licensor, provided, however, that if
Licensor determines to abandon preparation, filing or the prosecution of any
such Patent Rights or to discontinue making any payment necessary to maintain
such Patent Rights, it shall notify Licensee in sufficient time for Licensee to
assume such prosecution or make such payment.
4.2 INFRINGEMENTS BY OTHERS. Each Party shall, as soon as possible after
coming to its notice, notify the other Party of any infringement by a third
party of the Licensed Technology and
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the Parties shall consult concerning the action to be taken. Each Party shall
have the right, but not the obligation, to prosecute, at its own expense any
such infringement. Any recovery or damages derived from such action shall be
retained by the prosecuting Party.
4.3 COOPERATION IN INFRINGEMENT ACTIONS. In any infringement suit as
either Party may institute to enforce the Licensed Technology pursuant to this
Agreement, the other Party hereto shall, at the request and expense of the Party
initiating such suit, cooperate in all respects and, to the extent possible,
have its employees testify when requested and make available relevant records,
papers, information, samples and the like.
SECTION 5
PROPRIETARY INFORMATION
5.1 PROPRIETARY INFORMATION. "Proprietary Information" shall mean all
confidential, proprietary or secret information, including without limitation
drawings, data sketches, plans, programs, specifications, techniques, processes,
algorithms, inventions and other information or materials, owned, possessed or
used by either Party that is at any time so designated by such Party in writing,
whether by letter or by the use of a proprietary stamp or legend, prior to the
time any such Proprietary Information is disclosed to the other Party. In
addition, information that is orally or visually disclosed to the other Party or
which is not designated in writing as confidential, proprietary or secret at the
time of disclosure shall constitute Proprietary Information if, within thirty
(30) days after such disclosure, the disclosing Party delivers to the receiving
Party a written document describing such Proprietary Information and referencing
the place and date of such disclosure and the names of the employees of the
Party to whom such disclosure was made.
5.2 EXCLUSIONS FROM PROPRIETARY INFORMATION. Notwithstanding the
provisions of subsection 5.1 above, Proprietary Information shall not include
any information to the extent it (i) is or becomes a part of the public domain
through no act or omission on the part of the receiving Party; (ii) is disclosed
to third parties by the disclosing Party without restriction on such third
parties; (iii) is in the receiving Party's possession, without actual or
constructive knowledge of an obligation of confidentiality with respect thereto,
at or prior to the time of disclosure under this Agreement; (iv) is disclosed to
the receiving Party by a third party having no obligation of confidentiality
with respect thereto; (v) is required to be disclosed pursuant to order of a
court or governmental agency or otherwise required by law or the rules of any
exchange on which the securities of the receiving Party are then listed for
trading, provided that the disclosing Party shall have been given reasonable
notice prior to such disclosure; (vi) is independently developed by the
receiving Party without reference to the disclosing Party's proprietary
information; or (vii) is released from confidential treatment by written consent
of the disclosing Party.
5.3 OBLIGATIONS OF PARTIES. Licensor and Licensee shall hold in
confidence and not disclose (except on a confidential basis to its employees who
need to know in connection with the matter described herein and who are bound to
preserve the confidentiality thereof) all Proprietary Information received from
the other Party in the same manner and to the same extent as it holds in
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confidence its own Proprietary Information of a similar nature and value, and
shall not use any such Proprietary Information except for the purposes
contemplated hereunder.
5.4 COMPLIANCE OF EMPLOYEES OF PARTIES. Licensor and Licensee shall take
appropriate action by instruction or agreement with its employees to satisfy its
obligations under this Section 5 of the Agreement.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 WARRANTIES OF BOTH PARTIES. Each Party represents and warrants that
it has the full authority to enter into this Agreement.
6.2 WARRANTIES OF LICENSOR. Licensor represents and warrants to Licensee
that: (i) it has the right and power to grant to Licensee the licenses and
rights granted herein; (ii) there are no liens or encumbrances of any kind
against any information or technology to be delivered by Licensor under this
Agreement or any outstanding agreements, assignments, or encumbrances
inconsistent with the provisions of this Agreement; and (iii) the utilization by
Licensee of the Licensed Technology in the CE Field in the Territory will not
infringe any patent or other intellectual property right of any third party.
6.3 INDEMNITY. Licensor shall indemnify Licensee, pay on demand and
protect, defend, save and hold harmless Licensee from and against, on an
after-tax basis, any and all Claims incurred by or asserted against Licensee
based upon infringement of patent or other proprietary rights, arising from or
occurring as a result of the use of the Licensed Technology in the Territory in
the CE Field by Licensee or any Affiliate, agent, customer or sublicensee of
Licensee. Licensee shall promptly notify Licensor of any Claim with respect to
which Licensee is seeking indemnification hereunder, upon becoming aware
thereof, and permit Licensor at Licensor's cost to defend against such Claim and
shall cooperate in the defense thereof. Neither Licensor nor Licensee shall
enter into, or permit, any settlement of any such Claim without the express
written consent of the other Party which consent shall not be unreasonably
withheld or delayed. Licensee may, at its option and expense, have its own
counsel participate in any proceeding which is under the direction of Licensor
and will cooperate with Licensor or its insurer in the disposition of any such
matter; provided, however, that if Licensor shall not defend such Claim,
Licensee shall have the right to defend such Claim itself and recover from
Licensor all reasonable attorneys' fees incurred by it during the course of such
defense.
6.4 NO WARRANTY OF PERFORMANCE. Licensor makes no warranty with respect
to the results to be obtained by Licensee from the use of any technology
licensed to Licensee under this Agreement. EXCEPT AS OTHERWISE PROVIDED HEREIN,
NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSES, ARE MADE
HEREUNDER.
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6.5 NO CONSEQUENTIAL DAMAGES. With the exception of Claims subject to
indemnification by Licensor pursuant to Section 6.3 above, no Party shall be
liable to any other for any lost revenue, lost profits, replacement of goods or
services, or other incidental, consequential, special or indirect damages by
reason of any performance or non-performance under this Agreement.
SECTION 7
TERM AND TERMINATION
7.1 EFFECTIVE DATE AND TERM. This Agreement shall commence upon the
Effective Date hereof and shall, unless sooner terminated as provided below,
continue in full force and effect indefinitely.
7.2 TERMINATION FOR CAUSE. Upon any material breach of this Agreement by
Licensor, Licensee shall, without limitation of other remedies, have the right
to terminate this Agreement and the rights, privileges and licenses hereunder
granted upon ninety (90) days written notice to Licensor. Upon any material
breach of this Agreement by Licensee, Licensor shall, without limitation of
other remedies, have the right to terminate this Agreement, and the rights,
privileges and licenses hereunder granted upon ninety (90) days written notice
to Licensee. Such termination shall become effective immediately at the
conclusion of such notice period unless the breaching Party shall have cured any
such breach or default prior to the expiration of the ninety (90) day period.
7.3 EFFECT OF EXPIRATION OR TERMINATION. Upon expiration of this
Agreement or termination hereof for any reason, nothing herein shall be
construed to release either Party from any obligation that matured prior to the
effective date of such termination.
7.4 SURVIVAL. The rights and obligations of the following Sections and
Subsections of this Agreement shall survive and continue after the expiration or
termination hereof and shall bind the Parties and their legal representatives,
successors, heirs and assigns: 5, 6, 7.3, 7.4, and 8.
SECTION 8
MISCELLANEOUS
8.1 NOTICE OF COMMUNICATION. Any notice or other communication shall be
in writing and shall be personally delivered, or sent by overnight or second day
courier or by first class mail, return receipt requested, to the Party to whom
such notice or other communication is to be given or made at such Party's
address set forth below, or to such other address as such Party shall designate
by written notice to the other Party as follows:
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If to Licensor:
Thermo Separation Products Inc.
3661 Interstate Park Road, North
P. O. Box 10235
Riviera Beach, Florida 33419-0235
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to Licensee:
Thermo BioAnalysis Corporation
504 Airport Road
Santa Fe, New Mexico 87504-2108
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
provided that any notice of change of address, and any notice or other
communication given otherwise than as specified above shall be effective only
upon receipt; and further that any presumption of receipt by the addressee shall
be inoperable during the period of any interruption in Postal Service.
8.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Parties with respect to its subject matter, and supersedes all prior
agreements, written or oral, with respect thereto.
8.3 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION OF
REMEDIES. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the Parties or, in the case of a waiver, by the Party waiving
compliance. No delay on the part of either Party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any waiver on
the part of either Party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that either Party may otherwise have at law or in equity.
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8.4 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
8.5 COMPLIANCE WITH GOVERNMENT REGULATIONS. Each Party agrees to comply
with all federal, state and local laws, regulations and ordinances insofar as
such laws, regulations and ordinances relate to any of the activities to be
performed by either Party under this Agreement. Each Party agrees to cooperate
with the other Party with respect to any filings required to be made under
applicable regulations or legislation.
8.6 SEVERABILITY. If any one or more of the provisions of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
8.7 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Parties, their Affiliates, permitted assigns and their respective
successors and legal representatives.
8.8 ASSIGNMENT. Neither this Agreement nor any part hereof shall be
assignable by either Party without the express written consent of the other
Party, which consent will not be unreasonably withheld or delayed. Any merger,
consolidation, sale of substantially all of the assets of, or the sale of a
controlling interest in, either Party shall be deemed an assignment for purposes
of this Section 8.8. Notwithstanding anything to the contrary contained in this
Agreement, either Party shall have the right to transfer its rights, duties and
privileges hereunder (a) to any of its Affiliates and (b) in connection with a
merger or consolidation with another entity or the sale to another entity of the
entire business to which this Agreement pertains provided that such entity shall
first have agreed with the other Party to assume and perform the obligations of
such Party hereunder.
8.9 COUNTERPARTS. This Agreement may be executed by the Parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
8.10 HEADINGS. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Agreement under seal as
of the date first above written.
LICENSOR
--------
THERMO SEPARATION PRODUCTS INC.
By: /s/ Barry S. Howe
---------------------------
Name: Barry S. Howe
Title: President
LICENSEE
--------
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
---------------------------
Name: Barry S. Howe
Title: President
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EXHIBIT A
List of Patent Rights
---------------------
Number Title
------ -----
4,989,965 Collet Mounting for an Optical Element
5,037,199 Ball Lens Micro-Cell
12
<PAGE> 1
Exhibit 10.14
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT dated as of February 27, 1995 (the
"Effective Date") is between Thermo BioAnalysis Corporation, a Delaware
corporation ("Licensor"), and Thermo Separation Products Inc., a Delaware
corporation ("Licensee"). (Licensor and Licensee are sometimes referred to
individually as a "Party" or collectively as the "Parties".)
WHEREAS, pursuant to an Asset Transfer Agreement of even date herewith,
Licensee has transferred to Licensee all of its right, title and interest in and
to certain Technology (defined below) which is or may be useful in the conduct
of business outside of the CE Field (defined below);
WHEREAS, Licensee desires to obtain an exclusive license under such
Technology to conduct business outside of the CE Field throughout the world, as
well as an option to obtain a license in the said territory to any Improvements
(defined below) to such Technology;
WHEREAS, Licensor is willing to grant Licensee such an exclusive license
subject to Licensee's obligation to grant an option to Licensor to obtain a
license to any Improvements to the Technology for use in the CE Field and
subject to the other terms and conditions of this Agreement; and
WHEREAS, Licensee is willing to accept such license;
NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants
set forth below, and of other good and valuable consideration, receipt of which
is hereby acknowledged, the Parties hereby agree as follows:
SECTION 1
DEFINITIONS
As used in this Agreement, the following terms have the meanings set forth
below:
1.1 "Affiliate" shall mean an entity that directly, or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with a Party. "Control" shall mean the possession of the power to direct
or cause the direction of the management and policies of such Party, whether
through the ownership of voting stock, by contract or otherwise. In the case of
a corporation "control" shall mean, among other things, the direct or indirect
ownership of more than fifty percent (50%) of its outstanding voting stock.
Notwithstanding the foregoing, no entity which is an Affiliate of the Licensor
or of the Licensee shall also be deemed to be an Affiliate of the Licensee or of
the Licensor (as the case may be), if such entity would not
<PAGE> 2
otherwise be an Affiliate of the Licensee or Licensor (as the case may be) but
for the equity interest of Thermo Instrument Systems Inc. in both Licensor and
Licensee.
1.2 "Claims" shall mean any and all liabilities, damages, losses,
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees).
1.3 "Licensor Patent Rights" mean (a) the patents issued and patent
applications listed on Exhibit A that are pending in the Territory, (b) any
patent application constituting an equivalent, counterpart, reissue, extension
or continuation (including, without limitation, a continuation in part or a
division) of any of the foregoing applications having force in the Territory,
and (c) any patent issued or issuing upon any of the foregoing applications in
any country in the Territory.
1.4 "Licensed Technology" means all Technology outside of the CE Field
owned or controlled by Licensor as of the date hereof. "Owned or controlled"
shall include Technology which the Licensor owns, or under which the Licensor is
licensed (other than by Licensee) and has the right to grant sublicenses and/or
grant immunity from suit.
1.5 "Technology" shall mean any public or non-public technical or other
information, patents, patent applications, know-how, unpatented inventions,
copyrights and copyright applications, mask works, trademarks, service marks,
trade names, marks and logos, plans, drawings, sketches, designs, processes,
trade secrets, specifications, computer software and all rights related thereto,
and all other intellectual property rights of any nature.
1.6 "CE Field" means the use of capillary electrophoresis technology to
purify or separate biochemical compounds.
1.7 "Improvements" means any Technology constituting a change, addition,
upgrade, modification or revision to the Licensed Technology, or any other
Technology outside of the CE Field which either Party owns or controls
subsequent to the Effective Date during the Term hereof. "Owned or controlled"
shall include Technology which either Party owns, or under which either Party is
licensed and has the right to grant sublicenses and/or grant immunity from suit.
1.8 "Improvement Patent Rights" means (a) any patent application having
one or more claims covering Improvements, (b) any patent application
constituting an equivalent, counterpart, reissue, extension or continuation of
any of the foregoing applications (including, without limitation, a continuation
in part or division), or (c) any patent issued or issuing upon any of the
foregoing applications.
1.9 "Territory" shall mean the entire world.
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SECTION 2
GRANTS OF LICENSES
2.1 GRANT OF LICENSES TO LICENSEE.
(a) LICENSOR TECHNOLOGY. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee an exclusive
(against Licensor and all other entities), fully-paid right and
license, terminable only as set forth herein, to utilize the
Licensed Technology outside of the CE Field throughout the
Territory. Licensee shall have the right to grant sublicenses,
including the right to authorize further sublicenses, of equal
or lesser scope under the foregoing license, subject to the
terms of this Agreement.
(b) RESERVATION. Licensor reserves the exclusive right to utilize,
and to license to any entity and authorize further sublicenses,
the Licensed Technology in the CE Field.
(c) TRADEMARK LICENSES TO LICENSEE. Licensor hereby grants to
Licensee a royalty-free, fully paid, exclusive (against Licensor
and all other entities) right and license to use, in connection
with services outside of the CE Field in the Territory, any
trademarks or service marks Licensor owns during the term of this
Agreement and which are used outside of the CE Field (the
"Licensor Marks") subject to Licensee maintaining such reasonable
quality standards for such services rendered under the Licensor
Marks as Licensor shall from time to time specify, which
standards shall be no more stringent than Licensor's standards
for comparable services rendered under the Licensor Marks in the
CE Field. Licensor reserves the exclusive right to use the
Licensor Marks on goods or services in the CE Field. Licensor may
terminate Licensee's license to use a Licensor Mark if Licensee
fails to meet Licensor's established quality standards, which
failure is not cured within 120 days of notice thereof. Licensor
makes no warranties or representations with respect to the
Licensor Marks. The provisions of Section 4 shall apply to the
Licensor Marks mutatis mutandis.
2.2 OPTIONS FOR LICENSES TO IMPROVEMENTS.
(a) LICENSOR OPTION TO LICENSEE IMPROVEMENTS. Licensee hereby grants
to Licensor a first option to obtain an exclusive license, on
commercially reasonable terms (including, if appropriate,
royalties or other compensation), to utilize Improvements of
Licensee or its Affiliates in the CE Field. Such option shall
extend for a period of one hundred eighty (180) days from the
date Licensor receives notification in writing, in the case of
Improvement Patent Rights, of filing of any United States or
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foreign patent application and a copy of such patent application,
and in the case of other Improvements, of a description of such
Improvement in reasonable detail. Licensor may exercise its
option by informing Licensee in writing during the said one
hundred eighty (180) day period that it desires to obtain such a
license. Licensee and Licensor shall thereupon negotiate in good
faith a license agreement for such Improvement on commercially
reasonable terms. In the event that Licensor does not exercise
its option to license an Improvement or the Parties do not
execute a license agreement for the Improvement at the close of
ninety (90) days from Licensor's written notice of exercise,
Licensee shall be free to grant a license for the Improvement on
terms of its own choosing to a third party.
(b) LICENSEE OPTION TO LICENSOR IMPROVEMENTS. Licensor hereby grants
to Licensee a first option to obtain an exclusive license, on
commercially reasonable terms (including, if appropriate,
royalties or other compensation), to utilize Improvements of
Licensor or its Affiliates outside of the CE Field. Such option
shall extend for a period of one hundred eighty (180) days from
the date Licensee receives notification in writing, in the case
of Improvement Patent Rights, of filing of any United States or
foreign patent application and a copy of such patent application,
and in the case of other Improvements, of a description of such
Improvement in reasonable detail. Licensee may exercise its
option by informing Licensor in writing during the said one
hundred eighty (180) day period that it desires to obtain such a
license. Licensee and Licensor shall thereupon negotiate in good
faith a license agreement for such Improvement on commercially
reasonable terms. In the event that Licensee does not exercise
its option to license an Improvement or the parties do not
execute a license agreement to the Improvement at the close of
ninety (90) days from Licensee's written notice of exercise,
Licensor shall be free to grant a license for the Improvement in
the Territory on terms of its own choosing to a third party.
SECTION 3
TRANSFER OF TECHNOLOGY
3.1 TRANSFER OF LICENSED TECHNOLOGY. Promptly after the Effective Date,
Licensor will deliver to Licensee copies of written documents and other
materials containing, or relating to, the Licensed Technology. For a period of
up to one (1) year thereafter, Licensor will make available to Licensee
reasonable technical assistance free of charge to enable Licensee to fully
implement the Licensed Technology, except that Licensor's reasonable travel,
living and incidental expenses shall be reimbursed by Licensee. If Licensee
requests technical assistance in addition to the above amount, Licensor agrees
to provide such assistance subject to Section 3.3 below.
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3.2 TRANSFER OF IMPROVEMENTS.
(a) Licensee agrees to keep Licensor informed of any Improvements
developed or acquired by it and, to the extent requested by
Licensor, to provide technical documentation and technical
assistance (subject to Section 3.3 below) relating thereto so as
to enable Licensor to impleme any such Improvement to which
Licensor has obtained a license under Section 2.2(a).
(b) Licensor agrees to keep Licensee informed of any Improvements
developed or acquired by it and, to the extent requested by
Licensee, to provide technical documentation and technical
assistance (subject to Section 3.3 below) relating thereto so as
to enable Licensee to impleme any such Improvement to which
Licensee has obtained a license under Section 2.2(b).
3.3 COST OF TECHNICAL ASSISTANCE.
(a) If either Party hereunder sends its engineers to visit the
facilities of the other Party for technical assistance, the
sending Party shall bear its own out-of-pocket expenses in
connection with such visit, and the sending Party shall also be
charged a consulting fee by the o Party on the basis of such
other Party's then-standard consulting rates.
(b) If either Party hereunder requests that the other Party send
technical assistance personnel to provide the requesting Party
with technical assistance, the requesting Party shall bear the
out-of-pocket expenses of the sending Party in connection with
such visit, and the requesting Party shall also be charged a
consulting fee by the sending Party on the basis of the sending
Party's then-standard consulting rates.
SECTION 4
INTELLECTUAL PROPERTY RIGHTS
4.1 FILING AND MAINTENANCE OF PATENT RIGHTS. Licensor shall be
responsible for the preparation, filing, prosecution and maintenance of all
Licensor Patent Rights in the name of the Licensor, provided, however, that if
Licensor determines to abandon preparation, filing or the prosecution of any
such Patent Rights or to discontinue making any payment necessary to maintain
such Patent Rights, it shall notify Licensee in sufficient time for Licensee to
assume such prosecution or make such payment.
4.2 INFRINGEMENTS BY OTHERS. Each Party shall, as soon as possible after
coming to its notice, notify the other Party of any infringement by a third
party of the Licensed Technology and
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<PAGE> 6
the Parties shall consult concerning the action to be taken. Each Party shall
have the right, but not the obligation, to prosecute, at its own expense any
such infringement. Any recovery or damages derived from such action shall be
retained by the prosecuting Party.
4.3 COOPERATION IN INFRINGEMENT ACTIONS. In any infringement suit as
either Party may institute to enforce the Licensed Technology pursuant to this
Agreement, the other Party hereto shall, at the request and expense of the Party
initiating such suit, cooperate in all respects and, to the extent possible,
have its employees testify when requested and make available relevant records,
papers, information, samples and the like.
SECTION 5
PROPRIETARY INFORMATION
5.1 PROPRIETARY INFORMATION. "Proprietary Information" shall mean all
confidential, proprietary or secret information, including without limitation
drawings, data sketches, plans, programs, specifications, techniques, processes,
algorithms, inventions and other information or materials, owned, possessed or
used by either Party that is at any time so designated by such Party in writing,
whether by letter or by the use of a proprietary stamp or legend, prior to the
time any such Proprietary Information is disclosed to the other Party. In
addition, information that is orally or visually disclosed to the other Party or
which is not designated in writing as confidential, proprietary or secret at the
time of disclosure shall constitute Proprietary Information if, within thirty
(30) days after such disclosure, the disclosing Party delivers to the receiving
Party a written document describing such Proprietary Information and referencing
the place and date of such disclosure and the names of the employees of the
Party to whom such disclosure was made.
5.2 EXCLUSIONS FROM PROPRIETARY INFORMATION. Notwithstanding the
provisions of subsection 5.1 above, Proprietary Information shall not include
any information to the extent it (i) is or becomes a part of the public domain
through no act or omission on the part of the receiving Party; (ii) is disclosed
to third parties by the disclosing Party without restriction on such third
parties; (iii) is in the receiving Party's possession, without actual or
constructive knowledge of an obligation of confidentiality with respect thereto,
at or prior to the time of disclosure under this Agreement; (iv) is disclosed to
the receiving Party by a third party having no obligation of confidentiality
with respect thereto; (v) is required to be disclosed pursuant to order of a
court or governmental agency or otherwise required by law or the rules of any
exchange on which the securities of the receiving Party are then listed for
trading, provided that the disclosing Party shall have been given reasonable
notice prior to such disclosure; (vi) is independently developed by the
receiving Party without reference to the disclosing Party's proprietary
information; or (vii) is released from confidential treatment by written consent
of the disclosing Party.
5.3 OBLIGATIONS OF PARTIES. Licensor and Licensee shall hold in
confidence and not disclose (except on a confidential basis to its employees who
need to know in connection with the matter described herein and who are bound to
preserve the confidentiality thereof) all Proprietary Information received from
the other Party in the same manner and to the same extent as it holds in
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<PAGE> 7
confidence its own Proprietary Information of a similar nature and value, and
shall not use any such Proprietary Information except for the purposes
contemplated hereunder.
5.4 COMPLIANCE OF EMPLOYEES OF PARTIES. Licensor and Licensee shall take
appropriate action by instruction or agreement with its employees to satisfy its
obligations under this Section 5 of the Agreement.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 WARRANTIES OF BOTH PARTIES. Each Party represents and warrants that
it has the full authority to enter into this Agreement.
6.2 WARRANTIES OF LICENSOR. Licensor represents and warrants to Licensee
that: (i) it has the right and power to grant to Licensee the licenses and
rights granted herein; and (ii) there are no liens or encumbrances of any kind
against any information or technology to be delivered by Licensor under this
Agreement (except as may have been created by Licensee) or any outstanding
agreements, assignments, or encumbrances inconsistent with the provisions of
this Agreement (except as may have been created by Licensee).
6.3 NO OTHER WARRANTIES.
(a) Licensor makes any warranty with respect to the results to be
obtained by Licensee from the use of any technology licensed to
Licensee under this Agreement.
(b) Licensee acknowledges that the Licensed Technology was
transferred by Licensee to Licensor pursuant to an Asset Transfer
Agreement of even date herewith. Accordingly, Licensor makes no
representation or warranty with respect to whether the
utilization by Licensee of the Licensed Technology outside of the
CE Field in the Territory may infringe any patent or other
intellectual property right of any third party.
(c) EXCEPT AS OTHERWISE PROVIDED HEREIN, NO WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSES, ARE MADE
HEREUNDER.
6.4 NO CONSEQUENTIAL DAMAGES. No Party shall be liable to any other for
any lost revenue, lost profits, replacement of goods or services, or other
incidental, consequential, special or indirect damages by reason of any
performance or non-performance under this Agreement.
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<PAGE> 8
SECTION 7
TERM AND TERMINATION
7.1 EFFECTIVE DATE AND TERM. This Agreement shall commence upon the
Effective Date hereof and shall, unless sooner terminated as provided below,
continue in full force and effect indefinitely.
7.2 TERMINATION FOR CAUSE. Upon any material breach of this Agreement by
Licensor, Licensee shall, without limitation of other remedies, have the right
to terminate this Agreement and the rights, privileges and licenses hereunder
granted upon ninety (90) days written notice to Licensor. Upon any material
breach of this Agreement by Licensee, Licensor shall, without limitation of
other remedies, have the right to terminate this Agreement, and the rights,
privileges and licenses hereunder granted upon ninety (90) days written notice
to Licensee. Such termination shall become effective immediately at the
conclusion of such notice period unless the breaching Party shall have cured any
such breach or default prior to the expiration of the ninety (90) day period.
7.3 EFFECT OF EXPIRATION OR TERMINATION. Upon expiration of this
Agreement or termination hereof for any reason, nothing herein shall be
construed to release either Party from any obligation that matured prior to the
effective date of such termination.
7.4 SURVIVAL. The rights and obligations of the following Sections and
Subsections of this Agreement shall survive and continue after the expiration or
termination hereof and shall bind the Parties and their legal representatives,
successors, heirs and assigns: 5, 6, 7.3, 7.4, and 8.
SECTION 8
MISCELLANEOUS
8.1 NOTICE OF COMMUNICATION. Any notice or other communication shall be
in writing and shall be personally delivered, or sent by overnight or second day
courier or by first class mail, return receipt requested, to the Party to whom
such notice or other communication is to be given or made at such Party's
address set forth below, or to such other address as such Party shall designate
by written notice to the other Party as follows:
If to Licensor:
Thermo BioAnalysis Corporation
504 Airport Road
Santa Fe, New Mexico 87504-2108
8
<PAGE> 9
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to Licensee:
Thermo Separation Products Inc.
3661 Interstate Park Road, North
P. O. Box 10235
Riviera Beach, Florida 33419-0235
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
provided that any notice of change of address, and any notice or other
communication given otherwise than as specified above shall be effective only
upon receipt; and further that any presumption of receipt by the addressee shall
be inoperable during the period of any interruption in Postal Service.
8.2 ENTIRE AGREEMENT. This Agreement, contains the entire agreement
between the Parties with respect to its subject matter, and supersedes all prior
agreements, written or oral, with respect thereto.
8.3 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION OF
REMEDIES. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the Parties or, in the case of a waiver, by the Party waiving
compliance. No delay on the part of either Party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any waiver on
the part of either Party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that either Party may otherwise have at law or in equity.
8.4 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
8.5 COMPLIANCE WITH GOVERNMENT REGULATIONS. Each Party agrees to comply
with all federal, state and local laws, regulations and
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<PAGE> 10
ordinances insofar as such laws, regulations and ordinances relate to any of the
activities to be performed by either Party under this Agreement. Each Party
agrees to cooperate with the other Party with respect to any filings required to
be made under applicable regulations or legislation.
8.6 SEVERABILITY. If any one or more of the provisions of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
8.7 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Parties, their Affiliates, permitted assigns and their respective
successors and legal representatives.
8.8 ASSIGNMENT. Neither this Agreement nor any part hereof shall be
assignable by either Party without the express written consent of the other
Party, which consent will not be unreasonably withheld or delayed. Any merger,
consolidation, sale of substantially all of the assets of, or the sale of a
controlling interest in, either Party shall be deemed an assignment for purposes
of this Section 8.8. Notwithstanding anything to the contrary contained in this
Agreement, either Party shall have the right to transfer its rights, duties and
privileges hereunder (a) to any of its Affiliates and (b) in connection with a
merger or consolidation with another entity or the sale to another entity of the
entire business to which this Agreement pertains provided that such entity shall
first have agreed with the other Party to assume and perform the obligations of
such Party hereunder.
8.9 COUNTERPARTS. This Agreement may be executed by the Parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
8.10 HEADINGS. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
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<PAGE> 11
IN WITNESS WHEREOF, the Parties have executed this Agreement under seal as
of the date first above written.
LICENSOR
--------
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
---------------------------
Name: Barry S. Howe
Title: President
LICENSEE
--------
THERMO SEPARATION PRODUCTS INC.
By: /s/ Barry S. Howe
---------------------------
Name: Barry S. Howe
Title: President
11
<PAGE> 12
EXHIBIT A
<TABLE>
List of Patent Rights
---------------------
<CAPTION>
Number Title
------ -----
<S> <C>
5,037,523 Air Cooled Cartridge for Capillary Electrophoresis
5,066,382 Thermal Control for Capillary Electrophoresis Apparatus
5,021,646 Remote Optical Path for Capillary Electrophoresis Instrument
5,047,134 Buffer Gradient & Temperature Gradient Capillary Electrophoresis
5,053,115 Automated Neutral Marker for Capillary Electrophoresis
</TABLE>
12
<PAGE> 1
Exhibit 10.16
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of July 22,
1996, is made by and between Thermo BioAnalysis Corporation, a Delaware
corporation ("BioAnalysis"), and Thermo Instrument Systems Inc., a Delaware
corporation ("Thermo").
In consideration of the mutual covenants set forth herein, and for other
good and valuable consideration, the receipt of which is acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
ISSUANCE OF THE NOTE
1.01 SALE AND PURCHASE OF THE NOTE. At the Closing referred to in
Section 1.02 hereof (the "Closing"), BioAnalysis will sell and issue to Thermo
its $50,000,000 principal amount 4.875% Subordinated Convertible Note Due 2001
(the "Note"). The Note shall be substantially in the form set forth in Appendix
A hereto, and shall be subject to the subordination, conversion and other terms
and conditions set forth in Article II of this Agreement. The terms "Note" or
"Notes" shall also include any note or notes delivered in exchange or
replacement for the Note. Any shares of BioAnalysis' common stock issuable upon
conversion of the Note, and such shares when issued, are herein referred to as
the "Conversion Shares."
1.02 CLOSING. The Closing of the sale and purchase of the Note
contemplated by this Agreement (the "Closing") shall take place immediately upon
the execution of this Agreement by the parties hereto, or at such other time as
the parties mutually agree. The date on which the Closing occurs is referred to
herein as the "Closing Date." At the Closing, BioAnalysis will deliver the Note
to Thermo and Thermo will wire to an account or accounts designated by
BioAnalysis $50,000,000 in immediately available funds.
ARTICLE II
TERMS OF THE NOTE
2.01 EVENTS OF DEFAULT; REMEDIES.
(a) EVENTS OF DEFAULT. Each of the following is an event of
default hereunder:
<PAGE> 2
(i) default in the payment of any interest on a Note when it
becomes payable and continuance of such default for a period of 10 days after
notice thereof; or
(ii) default in the payment of the principal or premium, if
any, of a Note at its maturity or otherwise; or
(iii) default in the observance of any other covenant or
agreement of BioAnalysis hereunder and continuance of such default for a period
of 60 days after notice thereof; provided, however, that in the event
BioAnalysis shall within the aforesaid period of 60 days commence legal action
in a court of competent jurisdiction seeking a determination that BioAnalysis
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
BioAnalysis had failed to duly perform or observe one or more of such terms,
covenants or agreements; or
(iv) a court having jurisdiction shall enter a decree or order
for relief in respect of BioAnalysis 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 BioAnalysis or for any
substantial part of the property of BioAnalysis, or ordering the winding-up or
liquidation of the affairs of BioAnalysis and such decree or order shall remain
unstayed and in effect for a period of 20 consecutive days; or
(v) BioAnalysis 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 BioAnalysis, 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.
(b) REMEDIES; ACCELERATION. If such an event of default occurs and
continues, then the holders of the Notes may, by notice to BioAnalysis, declare
all of the unpaid principal of the Notes to be, and all of the unpaid principal
of the Notes shall then be, forthwith due and payable together with interest
accrued thereon.
2.02 CONVERSION OF THE NOTES.
(a) CONVERSION. Subject to and upon compliance with the provisions
of this Agreement, a holder of Notes is entitled, at his option, at any time
after the date thereof, and at any time on or before the close of business on
July 23, 2001, to convert such Note (or any portion
2
<PAGE> 3
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 near 1/1,000
of a share) of Common Stock at a conversion price equal to U.S. $16.50 aggregate
principal amount of Notes 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 Note, together with (i) a
conversion notice and (ii) instruments of transfer, each in form satisfactory to
BioAnalysis and duly executed by the holder or by his duly authorized attorney.
(b) INTEREST; FRACTIONAL SHARES. No payment or adjustment is to be
made on conversion for dividends on the Common Stock delivered on conversion.
Accrued interest from the immediately preceding interest payment date until the
date of conversion will be paid to the holder within two 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 BioAnalysis shall pay a cash adjustment in an amount
equal to the same fraction of the Closing Price (as defined below) per share of
Common Stock on the close of business on the Conversion Date.
(c) ADJUSTMENTS OF CONVERSION PRICE.
(i) In case at any time BioAnalysis shall pay or make a
dividend or other distribution on any class of its capital stock 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 BioAnalysis 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 BioAnalysis 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 Note surrendered for conversion after such time shall be entitled
to receive the aggregate number and kind of shares which, if such Note 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.
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<PAGE> 4
(iii) In case at any time BioAnalysis 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 shares less than the current market price per share (determined as provided
in paragraph (v) of this Section 2.02) 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 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 BioAnalysis 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 Section 2.02(c), any rights or warrants referred to in paragraph
(iii) of this Section 2.02(c), and any dividend or distribution paid in cash out
of the retained earnings of BioAnalysis), 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 Section 2.02(c) on such record date, less the
fair market value (as determined by the Board of Directors of BioAnalysis, whose
determination shall be conclusive) 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 Section 2.02(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 BioAnalysis commencing not less than 20 nor more than
30 days before the date in question. For purposes of this Agreement, the
"Closing Price" for any date 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
4
<PAGE> 5
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 BioAnalysis.
(vi) BioAnalysis may make such adjustments in the Conversion
Price, in addition to those required by paragraphs (i), (ii) and (iii) of this
Section 2.02(c), 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 Section 2.02(c) shall be made to the nearest cent or
to the nearest 1/1,000 of a share, as the case may be.
(d) LISTING OF CONVERSION SHARES. BioAnalysis shall in good faith
use its best efforts to list the shares of Common Stock required to be issued or
delivered upon conversion of the Notes 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.
(e) RESERVATION OF SHARES. BioAnalysis shall, from and after the
date on which the Notes 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 Notes, the full number of
shares of Common Stock then issuable upon the conversion of all Notes.
BioAnalysis covenants that all shares of Common Stock which may be issued or
delivered upon conversion of Notes will upon issue be fully paid and
nonassessable.
(f) MERGERS, ETC. In case of any consolidation with, or merger of
BioAnalysis into, any other corporation, or in case of any merger of another
corporation into BioAnalysis (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of BioAnalysis), or in case of any sale or transfer of all or
substantially all of the assets of BioAnalysis, 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 BioAnalysis an agreement providing
that the holder of each Note shall have the right during the period such Note
shall be convertible as specified in Section 2.02(a) hereof to convert such Note
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 BioAnalysis into which such Note might have been
converted immediately prior to such consolidation, merger, sale or transfer.
Such agreement shall provide for adjustments which, for events subsequent to the
effective date of such agreement, shall be as
5
<PAGE> 6
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.
(g) ACCOUNTANT'S CERTIFICATE AS TO ADJUSTMENTS. In each case of
any adjustment or readjustment in the shares of Common Stock (or other
securities into which the Note is convertible) issuable on the conversion of the
Notes, BioAnalysis at its expense will promptly provide each holder of the
Notes, at the election of such holder, a certificate of the president, any vice
president or the treasurer of BioAnalysis setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.
2.03 SUBORDINATION.
(a) SUBORDINATION TO SENIOR INDEBTEDNESS. BioAnalysis, Thermo and
each holder of any Notes covenants and agrees that the payment of the principal
of and interest on the Notes is hereby expressly subordinated in right of
payment to the prior payment in full of the principal of (and premium, if any)
and interest on (i) any indebtedness of BioAnalysis for money borrowed, whether
or not evidenced by debentures, notes or similar instruments, and whether now
outstanding or subsequently created or incurred, and (ii) renewals, extensions,
refundings, amendments and modifications of any such indebtedness, unless it is
provided in any of the foregoing that such indebtedness is not senior to the
Notes (collectively, "Senior Indebtedness").
(b) MECHANICS OF SUBORDINATION.
(i) No payment on account of principal of or interest on the
Notes shall be made if at the time of such payment or immediately after giving
effect thereto, (A) there shall exist a default in any payment with respect to
any Senior Indebtedness or (B) there shall have occurred an event of default
(other than a default in the payment of amounts due thereon) with respect to any
Senior Indebtedness, as defined in the instrument under which it is outstanding,
permitting the holders to accelerate the maturity thereof, and such event of
default shall not have been cured or waived or shall not have ceased to exist.
(ii) In the event of any insolvency or bankruptcy proceedings,
or any receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to BioAnalysis 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 BioAnalysis, or in the event of any
assignment for the benefit of creditors of BioAnalysis or any marshaling of
assets of BioAnalysis, the holders of all Senior Indebtedness shall be entitled
to receive payment in full of the principal of, premium, if any, and interest,
including interest accruing after the commencement of any such proceeding, on
all Senior Indebtedness, before the holders of the Notes will be entitled to
receive any payment in respect thereof. Upon the maturity of any Senior
Indebtedness by lapse of time, acceleration or otherwise, such Senior
Indebtedness shall first be paid in full (to
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<PAGE> 7
the same extent as provided in the preceding sentence), or provided for, before
any payment is made by BioAnalysis on the Notes.
(iii) Subject to the provisions of this subsection 2.03(b),
BioAnalysis may make payments of the principal of, any interest on, the Notes,
if at the time of payment, and immediately after giving effect thereto, (A)
there exists no default in any payment with respect to any Senior Indebtedness
or (B) there shall not have occurred any event of default (other than a default
in the payment of amounts due thereon) with respect to any Senior Indebtedness,
as defined in the instrument under which it is outstanding, permitting the
holders to accelerate the maturity thereof, other than an event of default which
shall have been cured or waived or shall have ceased to exist.
2.04 MISCELLANEOUS TERMS.
(a) REDEMPTION. The Notes may be redeemed, at the option of
BioAnalysis, in whole or in part at any time on or after July 22, 1997, at a
redemption price equal to 100% of the principal amount, together with accrued
interest to the date fixed for redemption. BioAnalysis will provide the holders
of the Notes with notice of its intention to redeem Notes not more than 60 nor
less than 30 days prior to the date fixed for redemption. Such notice shall
specify the date fixed for redemption, the applicable redemption price, the date
the conversion privilege expires and, in the case of a partial redemption, the
aggregate principal amount of the Notes to be redeemed and the aggregate
principal amount of the Notes which will be outstanding after such partial
redemption.
(b) PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made
shall be due on a Saturday, Sunday or a public holiday under the laws of the
Commonwealth of Massachusetts, such payment may be made on the next succeeding
business day, and the extension of time shall in such a case be included in the
computation of payment of interest due.
(c) REGISTRATION, ETC. BioAnalysis shall maintain at its principal
office a register of the Notes and shall record therein the names and addresses
of the registered holders of the Notes, the address to which notices are to be
sent and the address to which payments are to be made as designated by the
registered holder if other than the address of the holder, and the particulars
of all transfers, exchanges and replacements of the Notes. No transfer of a Note
shall be valid unless made on such register by the registered holder or its duly
appointed attorney, upon surrender therefor for exchange as hereinafter
provided, accompanied by an instrument in writing, in form and execution
reasonably satisfactory to BioAnalysis. Each Note issued hereunder, whether
originally or upon transfer, exchange or replacement of a Note, shall be
registered on the date of execution thereof by BioAnalysis and each such Note
shall be dated the date to which interest has been paid on such Note. The
registered holder of a Note shall be that person (which term shall be construed
to include an individual, corporation, partnership, joint venture, trust, or
unincorporated organization, or a government or any agency or political
subdivision thereof) in whose name the Note has been so registered by
BioAnalysis. A registered holder shall be deemed
7
<PAGE> 8
the owner of a Note for all purposes of this Agreement and, subject to the
provisions hereof, shall be entitled to the principal, premium, if any, and
interest evidenced by such Note free from all equities or rights of setoff or
counterclaim between BioAnalysis and the transferor of such registered holder or
any previous registered holder of such Note.
(d) TRANSFER AND EXCHANGE OF NOTES. The registered holder of any
Note or Notes may, prior to maturity thereof, surrender such Note at the
principal office of BioAnalysis for transfer or exchange. Within a reasonable
time after notice to BioAnalysis from a registered holder of its intention to
make such exchange and without expense (other than transfer taxes, if any) to
such registered holder, BioAnalysis shall issue in exchange therefor another
Note for the same aggregate principal amount as the unpaid principal amount of
the Note so surrendered (or in such multiples thereof as may be requested by the
registered holder) and having the same maturity and rate of interest, containing
the same provisions and subject to the same terms and conditions as the Note so
surrendered. Each new Note shall be made payable to such person or persons, or
registered assigns, as the registered holder of such surrendered Note may
designate, and such transfer or exchange shall be made in such a manner that no
gain or loss of principal or interest shall result therefrom.
(e) REPLACEMENT OF NOTE. Upon receipt of evidence satisfactory to
BioAnalysis of the loss, theft, destruction or mutilation of any Note and, if
requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or other agreement or security reasonably satisfactory to
BioAnalysis, or, in the case of any such mutilation, upon surrender and
cancellation of such Note, BioAnalysis will issue a new Note, of like tenor and
amount and dated the date to which interest has been paid, in lieu of such lost,
stolen, destroyed or mutilated Note; provided, however, if any Note of which
Thermo, its nominee, or any of its subsidiaries is the registered holder is
lost, stolen or destroyed, the affidavit of the President, Treasurer or
Assistant Treasurer of the registered holder, including a representation to the
effect that such Note has not been negotiated and setting forth the
circumstances with respect to such loss, theft or destruction shall be accepted
as satisfactory evidence thereof, and no indemnity bond or other security shall
be required as a condition to the execution and delivery by BioAnalysis of a new
Note in replacement of such lost, stolen or destroyed Note other than the
registered holder's written agreement to indemnify BioAnalysis.
(f) DEFINITION OF "COMMON STOCK". For purposes of this Article II
only, "Common Stock" includes (i) BioAnalysis' Common Stock, $.01 par value, as
authorized on the date of this Agreement, (ii) any other capital stock of any
class or classes (however designated) of BioAnalysis, authorized on or after the
date hereof, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares ordinarily, in the absence of contingencies, be entitled to vote for the
election of a majority of directors of BioAnalysis (even though the right so to
vote has been suspended by the happening of such a contingency), and (iii) any
other securities into which or for which any of the securities described
8
<PAGE> 9
in (i) or (ii) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THERMO
Thermo represents and warrants to BioAnalysis that:
3.01 ORGANIZATION AND GOOD STANDING. Thermo is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder.
3.02 AUTHORIZATION AND ENFORCEABILITY. The execution, delivery and
performance by Thermo of this Agreement and of each instrument to be executed
and delivered by Thermo pursuant hereto (a) have been duly and validly
authorized by all necessary corporate actions on the part of Thermo, (b) will
not contravene any provision of the governing instruments of Thermo, nor violate
any provision of law, rule, ordinance or regulation or any order, judgment or
decree applicable to Thermo and (c) will not, with or without the giving of
notice or the lapse of time, or both, constitute a breach of or default under,
require the consent or approval of any other party to, or cause the acceleration
of any obligation under, any agreement or instrument to which Thermo is a party
or by which its assets may be bound or affected. This Agreement has been duly
executed and delivered by Thermo, and the Agreement and each of the instruments
to be executed and delivered by Thermo pursuant hereto shall constitute the
legal, valid and binding obligations of Thermo, enforceable against it in
accordance with their respective terms.
3.03 LITIGATION. Thermo is not engaged in, or a party to, or threatened
with, any claim or legal action or other proceeding before any court, any
arbitrator of any kind or any administrative agency, or any governmental
investigation, which seeks to prevent the execution, delivery or performance of
this Agreement, nor does any basis for any such claim or legal action or other
proceeding or governmental investigation exist.
3.04 INVESTMENT REPRESENTATION. Thermo's present intention is to
acquire the Note for its own account. The Note is being and will be acquired for
the purpose of investment and not with a view to distribution or resale thereof.
The acquisition by Thermo of the Note shall constitute a confirmation by it of
this representation.
3.05 REPRESENTATIONS AND WARRANTIES SEPARATE. Each individual
representation and warranty contained herein shall be interpreted and enforced
separately. No representation or warranty contained herein shall be construed as
limiting any other representation or warranty contained herein.
9
<PAGE> 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BIOANALYSIS
BioAnalysis represents and warrants to Thermo that:
4.01 ORGANIZATION AND GOOD STANDING. BioAnalysis is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own or lease
its assets and to conduct the business it now conducts, to enter into this
Agreement and to perform its obligations hereunder. BioAnalysis is duly
qualified and in good standing as a foreign corporation, duly authorized to do
business, in all other jurisdictions wherein the character of the properties
owned or leased by it or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified and in good standing
would not have a material adverse affect on BioAnalysis.
4.02 AUTHORIZATION AND ENFORCEABILITY. The execution, delivery and
performance by BioAnalysis of this Agreement, of the Note and of each other
instrument to be executed and delivered by BioAnalysis pursuant hereto, (a) have
been duly and validly authorized by all necessary corporate actions on the part
of BioAnalysis, (b) will not contravene any provision of the governing
instruments of BioAnalysis, nor violate any provision of law, rule, ordinance or
regulation or any order, judgment or decree applicable to BioAnalysis, (c) will
not, with or without the giving of notice or the lapse of time, or both,
constitute a breach of or default under, require the consent or approval of any
other party to, or cause the acceleration of any obligation under, any agreement
or instrument to which BioAnalysis is a party or by which its assets may be
bound or affected and (d) will not result in the creation or imposition of any
lien, encumbrance, charge, claim or restriction upon any of its assets. This
Agreement has been, and, when delivered, the Note will be, duly executed and
delivered by BioAnalysis, and the Agreement, the Note and each of the
instruments to be executed and delivered by BioAnalysis pursuant hereto shall
constitute the legal, valid and binding obligations of BioAnalysis, enforceable
against it in accordance with their respective terms.
4.03 LITIGATION. BioAnalysis is not engaged in, or a party to, or
threatened with, any claim or legal action or other proceeding before any court,
any arbitrator of any kind or any administrative agency, or any governmental
investigation, which seeks to prevent the execution, delivery or performance of
this Agreement, nor does any basis for any such claim or legal action or other
proceeding or governmental investigation exist. There is no outstanding order,
ruling, injunction, judgment, writ, decree or stipulation to which BioAnalysis
is a party or which would affect its business or any of its assets.
10
<PAGE> 11
4.04 DISCLOSURE. There is no condition or circumstance that at the time
of the Closing is known by BioAnalysis but is not public knowledge and that will
have a material adverse affect on the business of BioAnalysis subsequent to the
Closing.
4.05 REPRESENTATIONS AND WARRANTIES SEPARATE. Each individual
representation and warranty contained herein shall be interpreted and enforced
separately. No representation or warranty contained herein shall be construed as
limiting any other representation or warranty contained herein.
ARTICLE V
MISCELLANEOUS
5.01 SURVIVAL OF REPRESENTATIONS. All representations and warranties
set forth in Article III with respect to Thermo and in Article IV with respect
to BioAnalysis shall survive the Closing. No investigation by or on behalf of
the parties hereto, whether before or after the Closing, shall be deemed to
alter or limit any of the representations or warranties referred to in the
preceding sentence or shall be used as a basis for any defense to any claim made
with respect thereto.
5.02 SCOPE, AMENDMENT AND WAIVER. This Agreement, together with the
Note and the other documents executed contemporaneously herewith represent the
entire understanding of the parties with respect to the subject matters thereof
and any previous agreements or understandings between the parties regarding the
subject matters thereof are merged into and superseded by this Agreement and
such other agreements. This Agreement cannot be modified, amended or changed,
nor may compliance with any provision hereof be waived, except by an instrument
in writing executed by the party against whom enforcement of such modification,
amendment, change or wavier is sought. Any waiver by a party of the breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict compliance with any
provision of this Agreement at any time shall not deprive such party of the
right to insist upon strict compliance with such provision at any other time or
of the right to insist upon strict compliance with any other provision hereof at
any time.
5.03 COMMUNICATIONS. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (i)
personally delivered, (ii) sent by overnight courier (with delivery confirmed)
or (iii) mailed, first-class, registered or certified mail, postage prepaid:
(a) if to Thermo:
11
<PAGE> 12
Thermo Instrument Systems Inc.
c/o Thermo Electron Corporation
P. O. Box 9046
Waltham, Massachusetts 02254-9046
Attention: Sandra L. Lambert,
Secretary
with a copy to:
Thermo Electron Corporation
81 Wyman Street
P. O. Box 9046
Waltham, Massachusetts 02254-9046
Attention: Seth H. Hoogasian, Esq.,
General Counsel
(b) if to BioAnalysis:
Thermo BioAnalysis Corporation
504 Airport Road
Santa Fe, New Mexico 87504
Attention: President
with a copy to:
Thermo Electron Corporation
81 Wyman Street
P. O. Box 9046
Waltham, Massachusetts 02254-9046
Attention: Seth H. Hoogasian, Esq.,
General Counsel
or to such other address or addresses as may hereafter be furnished by
BioAnalysis to Thermo or by Thermo to BioAnalysis.
5.04 GOVERNING LAW. This Agreement shall be governed by the law of the
Commonwealth of Massachusetts.
5.05 BINDING EFFECT. This Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and assigns.
12
<PAGE> 13
5.06 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.07 HEADINGS. The headings of the Articles, Sections and Subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
5.08 SEALED INSTRUMENT. This Agreement is executed as an instrument
under seal.
5.09 FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of either party, the other party shall execute and deliver such
instruments, documents and other writings as may be necessary or desirable to
confirm and carry out and to effectuate fully the intent and purposes of this
Agreement and the Note.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THERMO: BIOANALYSIS:
THERMO INSTRUMENT THERMO BIOANALYSIS
SYSTEMS INC. CORPORATION
By: /s/ Jonathan W. Painter By: /s/ Barry S. Howe
---------------------------- ---------------------------
Title: Treasurer Title: President and Chief
13
<PAGE> 14
APPENDIX A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT, AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE SECURITIES OR (2)
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THERMO BIOANALYSIS CORPORATION
4.875% Convertible Subordinated Note Due 2001
Waltham, Massachusetts
July 22, 1996
For value received, THERMO BIOANALYSIS CORPORATION, a Delaware
corporation (the "Company"), hereby promises to pay to Thermo Instrument Systems
Inc. (hereinafter referred to as the "Payee"), or registered assigns, on July
23, 2001, as described below, the principal sum of FIFTY MILLION DOLLARS
($50,000,000.00) or such part thereof as then remains unpaid, to pay interest
from the date hereof on the whole amount of said principal sum remaining from
time to time unpaid at the rate of four and seven-eights percent (4.875%) per
annum, such interest to be payable in arrears on each January 1 and July 1
(each, an "Interest Payment Date"), the first such payment to be due and payable
on July 1, 1997, until the whole amount of the principal hereof remaining unpaid
shall become due and payable. Principal and all accrued but unpaid interest
shall be repaid on July 23, 2001. 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 Payee or at such other place as the legal holder may
designate from time to time in writing to the Company. Interest shall be
computed on the basis of a 360-day year, comprised of twelve 30-day months.
This Note is issued pursuant to and is entitled to the benefits of a
certain Note Purchase Agreement dated as of July 22, 1996, between the Company
and Thermo Instrument Systems Inc. (as the same may be amended from time to
time, the "Agreement"), and each holder of this Note, by its acceptance hereof,
agrees to be bound by the provisions of the Agreement, a copy of which may be
inspected by the legal holder hereof at the principal office of the Company. As
provided in the Agreement, (i) this Note is convertible into Common Stock of the
Company in the manner set forth in the Agreement, (ii) payments of principal of,
and interest on, this Note is subordinated to the payment in full of all Senior
Indebtedness, as set forth in the Agreement, and (iii) this Note
<PAGE> 15
may not be redeemed in whole or in part prior to July 22, 1997, after which date
it may be redeemed in whole or in part at the option of the Company without
premium or penalty.
As further provided in the Agreement, upon surrender of this Note for
transfer or exchange, a new Note or new Notes of the same tenor and in an
aggregate principal amount equal to the unpaid principal amount of the Note so
surrendered will be issued to, and registered in the name of, the transferee or
transferees. The Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment and for all
other purposes.
This Note shall be governed by and construed in accordance with, the
laws of the Commonwealth of Massachusetts and shall have the effect of a sealed
instrument.
The Company and all endorsers and guarantors of this Note hereby waive
presentment, demand, notice of nonpayment, protect and all other demands and
notices in connection with the delivery, acceptance, performance or enforcement
of this Note.
THERMO BIOANALYSIS CORPORATION
By: _________________________________________
Title: President and Chief Executive Officer
[Corporate Seal]
Attest:
___________________________
<PAGE> 1
Exhibit 10.17
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT, AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE SECURITIES OR (2)
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THERMO BIOANALYSIS CORPORATION
4.875% Convertible Subordinated Note Due 2001
Waltham, Massachusetts
July 22, 1996
For value received, THERMO BIOANALYSIS CORPORATION, a Delaware corporation
(the "Company"), hereby promises to pay to Thermo Instrument Systems Inc.
(hereinafter referred to as the "Payee"), or registered assigns, on July 23,
2001, as described below, the principal sum of FIFTY MILLION DOLLARS
($50,000,000.00) or such part thereof as then remains unpaid, to pay interest
from the date hereof on the whole amount of said principal sum remaining from
time to time unpaid at the rate of four and seven-eights percent (4.875%) per
annum, such interest to be payable in arrears on each January 1 and July 1
(each, an "Interest Payment Date"), the first such payment to be due and payable
on July 1, 1997, until the whole amount of the principal hereof remaining unpaid
shall become due and payable. Principal and all accrued but unpaid interest
shall be repaid on July 23, 2001. 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 Payee or at such other place as the legal holder may
designate from time to time in writing to the Company. Interest shall be
computed on the basis of a 360-day year, comprised of twelve 30-day months.
This Note is issued pursuant to and is entitled to the benefits of a
certain Note Purchase Agreement dated as of July 22, 1996, between the Company
and Thermo Instrument Systems Inc. (as the same may be amended from time to
time, the "Agreement"), and each holder of this Note, by its acceptance hereof,
agrees to be bound by the provisions of the Agreement, a copy of which may be
inspected by the legal holder hereof at the principal office of the Company. As
provided in the Agreement, (i) this Note is convertible into Common Stock of the
Company in the manner set forth in the Agreement, (ii) payments of principal of,
and interest on, this Note is subordinated to the payment in full of all Senior
Indebtedness, as set forth in the Agreement, and (iii) this Note may not be
redeemed in whole or in part prior to July 22, 1997, after which date it may be
redeemed in whole or in part at the option of the Company without premium or
penalty.
<PAGE> 2
As further provided in the Agreement, upon surrender of this Note for
transfer or exchange, a new Note or new Notes of the same tenor and in an
aggregate principal amount equal to the unpaid principal amount of the Note so
surrendered will be issued to, and registered in the name of, the transferee or
transferees. The Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment and for all
other purposes.
This Note shall be governed by and construed in accordance with, the laws
of the Commonwealth of Massachusetts and shall have the effect of a sealed
instrument.
The Company and all endorsers and guarantors of this Note hereby waive
presentment, demand, notice of nonpayment, protect and all other demands and
notices in connection with the delivery, acceptance, performance or enforcement
of this Note.
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
----------------------------------------
Title: President and Chief Executive Officer
[Corporate Seal]
Attest:
/s/ Sandra L. Lambert
- ---------------------
Secretary
<PAGE> 1
EXHIBIT 11
THERMO BIOANALYSIS CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
-------------------------------------------- --------------------------
JANUARY 1, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1994 1994 1995 1995 1996
---------- ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
COMPUTATION OF PRIMARY EARNINGS (LOSS) PER
SHARE:
Net Income (Loss)(a)........................ $2,538,000 $2,400,000 $2,514,000 $1,307,000 $(2,683,000)
---------- ---------- ---------- ---------- -----------
Shares:
Weighted average shares
outstanding............................. 6,500,000 6,500,000 7,693,637 7,285,775 8,101,500
Add: Shares issuable from assumed exercise
of options (as determined by the
application of the treasury stock
method)................................. 117,450 117,450 117,450 117,450 117,450
---------- ---------- ---------- ---------- -----------
Weighted average shares, as adjusted(b)... 6,617,450 6,617,450 7,811,087 7,403,225 8,218,950
---------- ---------- ---------- ---------- -----------
Primary Earnings (Loss) per Share (a)/(b)... $ .38 $ .36 $ .32 $ .18 $ (.33)
========== ========== ========== ========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
JURISDICTION OF
SUBSIDIARY INCORPORATION % OWNERSHIP
Thermo BioAnalysis Limited England 100%
Thermo BioAnalysis S.A. France 100%
DYNEX Technologies Inc. Virginia 100%
DYNEX Technologies GmbH Germany 100%
DYNEX Technologies (Asia) Inc. Delaware 100%
DYNEX Technologies spol. s.r.o. Czech Republic 100%
DYNEX Technologies (Guernsey) Ltd. Guernsey 100%
Thermo Fast UK Limited England 100%
Thermo LabSystems Inc. Massachusetts 100%
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thermo BioAnalysis Corporation:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 27, 1996
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of
our report dated July 19, 1996, on our audits of the financial statements of
Dynatech Medical Products Limited. We also consent to the reference to our firm
under the caption "Experts."
Guernsey, Channel Islands
August 27, 1996 COOPERS & LYBRAND
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To DYNEX Technologies Division of Dynatech Corporation:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 27, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Affinity Sensors and LabSystems Divisions of Fisons plc:
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN
Cambridge, England
August 27, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
BIOANALYSIS CORPORATION'S REGISTRATION STATEMENT ON FORM S-1 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 17,747
<SECURITIES> 0
<RECEIVABLES> 5,636
<ALLOWANCES> 154
<INVENTORY> 5,968
<CURRENT-ASSETS> 30,638
<PP&E> 6,317
<DEPRECIATION> 4,663
<TOTAL-ASSETS> 32,907
<CURRENT-LIABILITIES> 3,533
<BONDS> 0
<COMMON> 81
0
0
<OTHER-SE> 29,065
<TOTAL-LIABILITY-AND-EQUITY> 32,907
<SALES> 22,534
<TOTAL-REVENUES> 22,534
<CGS> 13,036
<TOTAL-COSTS> 13,036
<OTHER-EXPENSES> 1,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,188
<INCOME-TAX> 1,674
<INCOME-CONTINUING> 2,514
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,514
<EPS-PRIMARY> .32
<EPS-DILUTED> 0
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
BIOANALYSIS CORPORATION'S REGISTRATION STATEMENT ON FORM S-1 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1996
[CASH] 12,234
[SECURITIES] 0
[RECEIVABLES] 15,049
[ALLOWANCES] 926
[INVENTORY] 13,417
[CURRENT-ASSETS] 42,494
[PP&E] 11,486
[DEPRECIATION] 5,455
[TOTAL-ASSETS] 85,063
[CURRENT-LIABILITIES] 58,369
[BONDS] 0
[COMMON] 81
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 26,385
[TOTAL-LIABILITY-AND-EQUITY] 85,063
[SALES] 29,782
[TOTAL-REVENUES] 29,782
[CGS] 16,106
[TOTAL-COSTS] 16,106
[OTHER-EXPENSES] 6,421
[LOSS-PROVISION] 66
[INTEREST-EXPENSE] 668
[INCOME-PRETAX] (2,137)
[INCOME-TAX] 546
[INCOME-CONTINUING] (2,683)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (2,683)
[EPS-PRIMARY] (.33)
[EPS-DILUTED] 0
</TABLE>
