<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
THERMO BIOANALYSIS CORPORATION
(Exact name of registrant as specified in its charter)
------------------------
<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>
------------------------
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)
------------------------
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)
<TABLE>
Copies to:
<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>
------------------------
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. / /
------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(1)
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value......................... $22,080,000 $7,614
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Calculated pursuant to Rule 457(o).
------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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 JULY 24, 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
UNDERWRITING
DISCOUNTS PROCEEDS TO
PRICE TO PUBLIC AND COMMISSIONS(1) COMPANY(2)
<CAPTION>
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share......................... $ $ $
- -------------------------------------------------------------------------------------------------
Total(3).......................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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."
------------------------
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
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 and
chromatography data systems, and is recognized as one of the world's leading
suppliers of these systems.
--------------------------------------
<PAGE> 5
[PICTURES]
------------------------
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.
------------------------
FOR UNITED KINGDOM PURCHASERS: THIS MEMORANDUM 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 OR THEIR TRADES, PROFESSIONS OR OCCUPATIONS.
THIS MEMORANDUM MAY ONLY BE ISSUED OR PASSED ON TO ANY PERSON IN THE UNITED
KINGDOM IF THAT PERSON IS OF A KIND DESCRIBED IN ARTICLE II(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> 6
- --------------------------------------------------------------------------------
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.
<TABLE>
THE OFFERING
<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.................................... TBC
Use of Proceeds......................................... General corporate purposes,
including acquisitions
<FN>
- ---------------
(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.
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE> 7
-------------------------------------------------------------------------------
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED (3)
----------------------
THREE MONTHS THREE MONTHS
ENDED (1) FISCAL ENDED
FISCAL YEAR ------------------- YEAR ------------
--------------------------------------------- APRIL 1, MARCH 30, ------- MARCH 30,
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 $6,229 $10,911 $80,803 $18,099
Gross Profit...................... 12,674 9,139 11,469 10,951 9,498 2,540 4,195 42,785 7,159
Research and Development
Expenses........................ 2,308 2,448 2,242 2,042 1,325 268 664 8,882 1,779
Write-off of Acquired
Technology...................... -- -- -- -- -- -- 3,500 3,500 --
Operating Income (Loss)........... 6,256 2,624 4,313 3,855 3,369 982 (2,781) 120 (2,001)
Net Income (Loss)................. 3,511 1,175 2,538 2,400 2,514 603 (3,114) (2,718) (2,015)
Earnings (Loss) per
Share (4)....................... .53 .18 .38 .36 .32 .09 (.38) (.35) (.25)
Weighted Average
Shares (4)...................... 6,617 6,617 6,617 6,617 7,811 6,756 8,219 7,811 8,219
</TABLE>
<TABLE>
<CAPTION>
MARCH 30, 1996
----------------------------
AS
PRO FORMA (5) ADJUSTED (6)
------------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Working Capital....................................................................... $33,066 $ 45,624
Total Assets.......................................................................... 96,133 108,691
Subordinated Convertible Note, Due to Parent Company.................................. 50,000 50,000
Shareholders' Investment.............................................................. 26,045 38,603
<FN>
- ---------------
(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 three months ended
March 30, 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 March 30, 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
March 30, 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.
</TABLE>
-------------------------------------------------------------------------------
4
<PAGE> 8
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."
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.
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.
A portion of the Company's sales to date have been to universities,
government research laboratories, private foundations and other institutions
where funding is dependent on grants from government agencies
5
<PAGE> 9
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"). Any 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. 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."
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
6
<PAGE> 10
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. Certain of the Company's products
are used in diagnostic testing. 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. 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 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
7
<PAGE> 11
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.
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.
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 (excluding shares issuable upon conversion of the
Convertible Note and 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. 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 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
8
<PAGE> 12
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. 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.
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> 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
March 30, 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 "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.
10
<PAGE> 14
CAPITALIZATION
<TABLE>
The following table sets forth the capitalization of the Company as of
March 30, 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
March 30, 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.
<CAPTION>
MARCH 30, 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................................................... (971) (971)
Cumulative translation adjustment..................................... 18 18
------- -------
Total Shareholders' Investment................................ 26,045 38,603
------- -------
Total Capitalization (Subordinated Convertible Note, Due
to Parent Company and Shareholders' Investment)......... $76,045 $88,603
======= =======
<FN>
- ---------------
(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.
</TABLE>
11
<PAGE> 15
DILUTION
<TABLE>
As of March 30, 1996, the Company had a negative net tangible book value of
$10,377,000 or $1.28 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 March 30, 1996 would have been
$2,181,000 or $.24 per share. This represents an immediate increase in net
tangible book value of $1.52 per share to existing shareholders and an immediate
dilution in net tangible book value of $14.26 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:
<S> <C> <C>
Assumed price to public............................................. $14.50
Negative net tangible book value per share as of March 30,
1996, before this offering.................................... $(1.28)
Increase in net tangible book value per share attributable to
this offering................................................. 1.52
-------
Net tangible book value per share as of March 30, 1996, after this
offering (1)(2).................................................... .24
------
Dilution per share to new investors (1)(2).......................... $14.26
======
<FN>
- ---------------
(1) If the Underwriters' over-allotment option were exercised in full, the net
tangible book value per share after this offering would be $.46, resulting
in an immediate dilution of $14.04 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 $4.68, resulting in an
immediate dilution of $9.82 per share to investors purchasing shares in this
offering.
</TABLE>
<TABLE>
The following table sets forth as of March 30, 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:
<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%
========= ===== =========== =====
<FN>
- ---------------
(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.
</TABLE>
12
<PAGE> 16
SELECTED FINANCIAL INFORMATION
<TABLE>
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
three month periods ended April 1, 1995 and March 30, 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 three months ended March 30, 1996 are
not necessarily indicative of results for the entire year.
<CAPTION>
PRO FORMA
COMBINED (2)
----------------------
THREE MONTHS
THREE MONTHS ENDED FISCAL ENDED
FISCAL YEAR -------------------- YEAR ------------
----------------------------------------------- APRIL 1, MARCH 30, ------- MARCH 30,
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 $ 6,229 $ 10,911 $80,803 $18,099
------- ------- ------- ------- ------- ------- -------- ------- -------
Costs and Operating Expenses:
Cost of revenues............ 12,063 10,981 13,010 14,176 13,036 3,689 6,716 38,018 10,940
Selling, general and
administrative expenses... 4,110 4,067 4,914 5,054 4,804 1,290 2,812 30,283 7,381
Research and development
expenses.................. 2,308 2,448 2,242 2,042 1,325 268 664 8,882 1,779
Write-off of acquired
technology................ -- -- -- -- -- -- 3,500 3,500 --
------- ------- ------- ------- ------- ------- -------- ------- -------
18,481 17,496 20,166 21,272 19,165 5,247 13,692 80,683 20,100
------- ------- ------- ------- ------- ------- -------- ------- -------
Operating Income (Loss)....... 6,256 2,624 4,313 3,855 3,369 982 (2,781) 120 (2,001)
Interest Income (Expense),
Net......................... -- -- -- -- 819 22 (75) (1,690) (425)
------- ------- ------- ------- ------- ------- -------- ------- -------
Income (Loss) Before Income
Taxes....................... 6,256 2,624 4,313 3,855 4,188 1,004 (2,856) (1,570) (2,426)
Income Tax Provision
(Benefit)................... 2,745 1,449 1,775 1,455 1,674 401 258 1,148 (411)
------- ------- ------- ------- ------- ------- -------- ------- -------
Net Income (Loss)............. $ 3,511 $ 1,175 $ 2,538 $ 2,400 $ 2,514 $ 603 $ (3,114) $(2,718) $(2,015)
======= ======= ======= ======= ======= ======= ======== ======= =======
Earnings (Loss) per Share
(3)......................... $ .53 $ .18 $ .38 $ .36 $ .32 $ .09 $ (.38) $ (.35) $ (.25)
======= ======= ======= ======= ======= ======= ======== ======= =======
Weighted Average Shares (3)... 6,617 6,617 6,617 6,617 7,811 6,756 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 $(16,934) $33,066
Total Assets.................. 13,830 11,767 13,688 14,349 32,907 22,199 85,133 96,133
Subordinated Convertible Note,
Due to Parent Company....... -- -- -- -- -- -- -- 50,000
Shareholders' Investment...... 7,892 7,838 8,332 10,162 29,146 18,783 26,045 26,045
<FN>
- ---------------
(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 three months ended
March 30, 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 March 30, 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.
</TABLE>
13
<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 $42.8 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 March 30, 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 three months ended March 30, 1996 includes the results of operations of
Affinity Sensors and LabSystems from March 29, 1996, the date these businesses
were acquired by Thermo Instrument. In the first quarter of 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 March 30, 1996, the accompanying March 30, 1996 financial
statements include an amount payable to Thermo Instrument of $9.0 million,
subject to a post-closing adjustment.
RESULTS OF OPERATIONS
First Quarter 1996 Compared With First Quarter 1995
Revenues increased 75% to $10.9 million in the first quarter of 1996 from
$6.2 million in the first quarter of 1995. This increase was primarily due to
the inclusion of $5.8 million in revenues from DYNEX, which was acquired in
February 1996, 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.
14
<PAGE> 18
The gross profit margin declined to 38% in the first quarter of 1996 from
41% in the first quarter of 1995 primarily within 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 26% in the first quarter of 1996 from 21% in the first quarter of
1995, due primarily to higher costs as a percentage of revenues at DYNEX. In
mid-1996 the Company implemented a cost reduction plan at DYNEX, which is
expected to reduce its selling, general and administrative expenses as a
percentage of revenues. Research and development expenses increased to $0.7
million from $0.3 million primarily due to the acquisition of DYNEX.
In the first quarter of 1996, Thermo Instrument wrote-off $3.5 million in
acquired technology in connection with the acquisition of Affinity Sensors and
LabSystems. Because, as of March 30, 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 first quarter of 1996 represents interest
associated with the $30 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
England-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.
15
<PAGE> 19
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 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 $23.9 million as of March 30, 1996,
compared with $27.1 million as of December 30, 1995. Included in working capital
are cash and cash equivalents of $9.9 million as of March 30, 1996, compared
with $17.7 million as of December 30, 1995. During the first three months of
1996, $5.2 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 $1.1 million
primarily as a result of lower balances at DYNEX due to the effect of inventory
reduction measures. During the first three months of 1996, the Company expended
$0.1 million for the purchases of property, plant and equipment. The Company
expects to expend approximately $1.5 million for additional purchases of
property, plant and equipment during the remainder of 1996.
In February 1996, the Company purchased DYNEX for approximately $42.8
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 Commercial Paper Composite Rate plus 25 basis
points, set quarterly.
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.
16
<PAGE> 20
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.
17
<PAGE> 21
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 $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
18
<PAGE> 22
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
19
<PAGE> 23
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 $31 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
20
<PAGE> 24
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 the most 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 $17,000 to
approximately $45,000.
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, and is
recognized as one of the world's leading suppliers of such systems. 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
21
<PAGE> 25
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 $522 million. The
Company believes that its Eberline health physics subsidiary offers products
which compete in approximately 35% of this worldwide market.
Approximately 70% 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.
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.
22
<PAGE> 26
- 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 $5,000 for portable survey meters to in excess of $1 million
for complete monitoring systems.
CUSTOMERS, MARKETING AND DISTRIBUTION
Customers
The Company has approximately 9,500 customers worldwide. Customers for the
Company's instrumentation products and consumables include Sanofi Diagnostias
Pasteur, Diagnostics Products Corporation, Johnson & Johnson, SmithKline Beecham
Corporation, Genentech Inc., Tokyo University and the University of California
at Los Angeles. Customers for the Company's information management systems
include Astra AB, Eli Lilly and Company, E.I. duPont de Nemours and Co. and
Biogen Inc., and customers for the Company's health physics products include the
United States government, Westinghouse Electric and Commonwealth Edison. 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." 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
23
<PAGE> 27
Corporation and Sanofi Diagnostias Pasteur, which purchase consumables and
instruments for resale to their customers.
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.
24
<PAGE> 28
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 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)
25
<PAGE> 29
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 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.
26
<PAGE> 30
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."
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. 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 March 30, 1996, the Company's backlog was approximately $15.8 million.
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.
27
<PAGE> 31
FACILITIES
<TABLE>
The Company owns and leases a number of facilities in the United States,
Europe and Asia as set forth below:
<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
<FN>
- ------------------------
(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.
</TABLE>
PERSONNEL
As of March 30, 1996, the Company had 520 employees, of which 102 were
engaged in research and development, 140 in sales and marketing, 155 in
manufacturing and 123 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.
28
<PAGE> 32
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 three months ended
March 30, 1996 Thermo Instrument had consolidated revenues of $782,662,000 and
$225,571,000, respectively, and consolidated net income of $79,306,000 and
$34,043,000, 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
three months ended March 30, 1996, Thermo Electron had consolidated revenues of
$2,207,417,000 and $635,094,000, respectively, and consolidated net income of
$140,080,000 and $40,442,000, 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
29
<PAGE> 33
internal financial policies, assisting in the formulation of long-range planning
and providing other banking and 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 three months ended March 30, 1996, Thermo Electron assessed the Company
$270,000 and $109,000 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
30
<PAGE> 34
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 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
three months ended March 30, 1996, the Company paid ThermoQuest approximately
$17,000 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
three months ended March 30, 1996, the Company sold $576,000 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 $1,260,000 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 three months ended
March 30, 1996, the Company paid ThermoQuest approximately $600,000 and
$190,000, 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
31
<PAGE> 35
December 31, 1996, and is automatically renewable for one-year periods
thereafter unless terminated by either party upon 90 days' notice. For the three
months ended March 30, 1996, the Company purchased $50,000 of 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 three months
ended March 30, 1996, the Company purchased $212,000 and $12,000 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 three months ended March 30, 1996,
LabSystems and Affinity Sensors sold an aggregate of $7,658,000 and $1,125,000
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.
32
<PAGE> 36
<TABLE>
MANAGEMENT
The directors and executive officers of the Company and their ages as of
June 30, 1996 are as follows:
<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 56 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
<FN>
- ---------------
(1) Member of the Audit and Human Resources Committees.
</TABLE>
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
or its predecessor from September 1989 to December 1995, and has been a Vice
President of Thermo Instrument 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 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 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 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.
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 from 1992 to 1995, as Chief
Executive Officer and President of ThermoQuest since June 1995, and as a Vice
President of Thermo Instrument since 1994. Dr. Chapman is a Director of
ThermoQuest and Thermo Cardiosystems Inc.
33
<PAGE> 37
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 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 or 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
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.
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,
34
<PAGE> 38
provided the Company's Common Stock is then publicly traded. A total of 100,000
shares of Common Stock have 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 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.
35
<PAGE> 39
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."
<TABLE>
SUMMARY COMPENSATION 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(TBC) $6,128
1,650(TMO)
5,000(TLZ)
Donald W. Hanna
Vice President................. $ 95,000 $18,000 21,000(TBC) $4,682
<FN>
- ---------------
(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 TBC), 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.
</TABLE>
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.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<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(TBC) 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(TBC) 5.0% $ 10.00 1/31/08 $167,160 $ 448,980
<FN>
- ---------------
(1) All options to purchase shares of the Company's Common Stock (designated in
the table as TBC) were granted after the end of fiscal 1995 but are included
in the table for clarity of presentation. The 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) are immediately
exercisable while the options
</TABLE>
36
<PAGE> 40
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, 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.
37
<PAGE> 41
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.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<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 Systems -- -- 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 $ 1,206,917 / 0
(2)
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 Systems 2,812 $ 48,366 15,000 / 0 $ 163,500 / 0
Thermo Electron -- -- 21,373 / 0 $ 390,793 / 0
(2)
ThermoSpectra -- -- 1,500 / 0 $ 8,438 / 0
<FN>
- ---------------
(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.
</TABLE>
38
<PAGE> 42
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDER
<TABLE>
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."
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS NUMBER OF SHARES OUTSTANDING SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------- ------------------ ------------------
<S> <C> <C>
Thermo Instrument Systems Inc.(1)........................ 6,500,000(2) 80.2%(2)
1275 Hammerwood Avenue
Sunnyvale, California 94089
<FN>
- --------------
(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.
</TABLE>
MANAGEMENT
<TABLE>
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.
<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
<FN>
- ---------------
(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 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.
</TABLE>
39
<PAGE> 43
(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.
40
<PAGE> 44
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.
41
<PAGE> 45
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. 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
42
<PAGE> 46
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."
43
<PAGE> 47
UNDERWRITING
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:
<TABLE>
<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
44
<PAGE> 48
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.
45
<PAGE> 49
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.
46
<PAGE> 50
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 three months ended April 1,
1995 and March 30, 1996......................................................... F-3
Consolidated Balance Sheet as of December 31, 1994, December 30, 1995 and March
30, 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 three months ended April 1,
1995 and March 30, 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 three months ended
March 30, 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 three months ended
March 30, 1996.................................................................. F-39
Pro Forma Condensed Balance Sheet as of March 30, 1996........................... F-40
Notes to Pro Forma Combined Condensed Financial Statements....................... F-41
</TABLE>
F-1
<PAGE> 51
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> 52
THERMO BIOANALYSIS CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
THREE MONTHS ENDED
----------------------
APRIL 1, MARCH 30,
1993 1994 1995 1995 1996
------- ------- ------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues (Note 8)......................... $24,479 $25,127 $22,534 $ 6,229 $10,911
------- ------- ------- ------ -------
Costs and Operating Expenses:
Cost of revenues........................ 13,010 14,176 13,036 3,689 6,716
Selling, general and administrative
expenses (Note 6).................... 4,914 5,054 4,804 1,290 2,812
Research and development expenses....... 2,242 2,042 1,325 268 664
Write-off of acquired technology (Note
9)................................... -- -- -- -- 3,500
------- ------- ------- ------ -------
20,166 21,272 19,165 5,247 13,692
------- ------- ------- ------ -------
Operating Income (Loss)................... 4,313 3,855 3,369 982 (2,781)
Interest Income........................... -- -- 819 22 172
Interest Expense.......................... -- -- -- -- (247)
------- ------- ------- ------ -------
Income (Loss) Before Provision for
Income Taxes............................ 4,313 3,855 4,188 1,004 (2,856)
Provision for Income Taxes (Note 4)....... 1,775 1,455 1,674 401 258
------- ------- ------- ------ -------
Net Income (Loss)......................... $ 2,538 $ 2,400 $ 2,514 $ 603 $(3,114)
======= ======= ======= ====== =======
Earnings (Loss) per Share................. $ .38 $ .36 $ .32 $ .09 $ (.38)
======= ======= ======= ====== =======
Weighted Average Shares................... 6,617 6,617 7,811 6,756 8,219
======= ======= ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 53
THERMO BIOANALYSIS CORPORATION
<TABLE>
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<CAPTION>
MARCH 30,
1996
1994 1995 -----------
------- ------- (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................................... $ 21 $17,747 $ 9,961
Accounts receivable, less allowances of $154, $154 and $350... 5,870 5,482 16,217
Inventories................................................... 5,665 5,968 13,033
Prepaid income taxes (Note 4)................................. 614 673 2,085
Prepaid expenses.............................................. 70 7 630
Due from parent company and affiliates........................ -- 761 --
------- ------- -------
12,240 30,638 41,926
------- ------- -------
Property, Plant and Equipment, at Cost, Net..................... 1,659 1,654 6,218
------- ------- -------
Patents and Other Assets........................................ 12 195 4,220
------- ------- -------
Cost in Excess of Net Assets of Acquired Companies.............. 438 420 32,769
------- ------- -------
$14,349 $32,907 $85,133
======= ======= =======
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Note payable, due to Thermo Electron Corporation.............. $ -- $ -- $30,000
Accounts payable.............................................. 816 432 4,724
Accrued payroll and employee benefits......................... 848 692 1,609
Accrued installation and warranty expenses.................... 248 370 1,894
Accrued income taxes.......................................... 1,815 1,665 1,782
Other accrued expenses........................................ 211 374 10,688
Due to parent company and affiliates.......................... 20 -- 8,163
------- ------- -------
3,958 3,533 58,860
------- ------- -------
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 (971)
Cumulative translation adjustment............................. -- 5 18
------- ------- -------
10,162 29,146 26,045
------- ------- -------
$14,349 $32,907 $85,133
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 54
THERMO BIOANALYSIS CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED
-----------------------
APRIL 1, MARCH 30,
1993 1994 1995 1995 1996
------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
OPERATING ACTIVITIES:
Net income (loss)............................................. $ 2,538 $ 2,400 $ 2,514 $ 603 $ (3,114)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization............................. 243 289 346 84 353
Provision for losses on accounts receivable............... 132 15 -- -- 22
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 (291 ) (859)
Inventories............................................. (122) (1,265) (303) 115 1,134
Other current assets.................................... 66 (78) (698) (142 ) 365
Accounts payable........................................ 589 (610) (384) 270 2,300
Other current liabilities............................... 730 (540) (41) 271 1,534
------- ------- -------- -------- --------
Net cash provided by operating activities............. 1,991 759 1,762 910 5,235
------- ------- -------- -------- --------
INVESTING ACTIVITIES:
Acquisition, net of cash acquired............................. -- -- -- -- (42,780)
Purchases of property, plant and equipment.................... (190) (237) (313) (142 ) (83)
Other......................................................... -- -- (183) -- (171)
------- ------- -------- -------- --------
Net cash used in investing activities................. (190) (237) (496) (142 ) (43,034)
------- ------- -------- -------- --------
FINANCING ACTIVITIES:
Net proceeds from issuance of Company common stock (Note
7)........................................................ -- -- 14,918 6,530 --
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 6,263 30,000
------- ------- -------- -------- --------
Exchange Rate Effect on Cash.................................. -- -- (5) -- 13
------- ------- -------- -------- --------
Increase (Decrease) in Cash and Cash Equivalents.............. (6) 7 17,726 7,031 (7,786)
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 $ 7,052 $ 9,961
======= ======= ======== ======== ========
CASH PAID FOR:
Interest...................................................... $ -- $ -- $ -- $ -- $ 225
======= ======= ======== ======== ========
Income taxes.................................................. $ 1,497 $ 1,670 $ 1,930 $ -- $ --
======= ======= ======== ======== ========
NONCASH ACTIVITIES:
Fair value of assets of acquired businesses................... $ -- $ -- $ -- $ -- $ 66,694
Consideration given........................................... -- -- -- -- (51,780)
------- ------- -------- -------- --------
Liabilities assumed of acquired businesses................ $ -- $ -- $ -- $ -- $ 14,914
======= ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 55
THERMO BIOANALYSIS CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
(IN THOUSANDS)
<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
------- ----- ------- ------- ----
BALANCE DECEMBER 30, 1995......... -- 81 26,917 2,143 5
(UNAUDITED)
Net loss.......................... -- -- -- (3,114) --
Translation adjustment............ -- -- -- -- 13
------- ----- ------- ------- ----
BALANCE MARCH 30, 1996............ $ -- $ 81 $26,917 $ (971) $ 18
======= ===== ======= ======= ====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 56
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.
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> 57
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> 58
THERMO BIOANALYSIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
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:
<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 March 30, 1996 and for the three-month
periods ended April 1, 1995 and March 30, 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 three-month period ended March 30, 1996 are not
necessarily indicative of the results to be expected for the entire year.
F-9
<PAGE> 59
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> 60
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> 61
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> 62
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
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.
<TABLE>
<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> 63
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 $42,780,000, 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.
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. This acquisition
has been accounted for using the purchase method of accounting. Because, as of
March 30, 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 three months
ended March 30, 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 the first quarter of 1996, the Company wrote off
$3,500,000 of acquired technology in connection with these acquisitions. Because
the Company had not paid Thermo Instrument for these businesses as of March 30,
1996, the accompanying March 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> 64
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> 65
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> 66
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> 67
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> 68
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> 69
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> 70
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
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:
<TABLE>
<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> 71
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> 72
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> 73
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.
6. GEOGRAPHICAL INFORMATION
<TABLE>
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.
<CAPTION>
PERIOD FROM
YEAR ENDED APRIL 1, 1995
MARCH 31, THROUGH
-------------------- FEBRUARY 7,
1994 1995 1996
------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
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> 74
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> 75
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> 76
AFFINITY SENSORS AND LABSYSTEMS DIVISIONS OF FISONS PLC
<TABLE>
COMBINED PROFIT AND LOSS ACCOUNTS
<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
------- ------- ------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Turnover (Note 2).................. 15,980 14,959 14,361 2,678 2,862
Cost of sales...................... (4,210) (4,220) (3,526) (542) (1,614)
------ ------ ------ ------ ------
Gross profit....................... 11,770 10,739 10,835 2,136 1,248
Distribution costs................. (2,709) (2,765) (2,111) (755) (953)
Administrative expenses............ (9,300) (8,556) (8,321) (2,014) (1,446)
------ ------ ------ ------ ------
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> 77
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> 78
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> 79
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> 80
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> 81
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> 82
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
=== ====== === ======
=== ====== === ======
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> 83
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> 84
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> 85
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> 86
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> 87
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 $42.8 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 March 30, 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 March 30, 1996 includes the results of operations of Affinity
Sensors and LabSystems from March 29, 1996, the date these businesses were
acquired by Thermo Instrument. In the first quarter of 1996, the Company
wrote-off $3.5 million of acquired technology in connection with the acquisition
of Affinity Sensors and LabSystems. Because the Company had not paid Thermo
Instrument for these businesses as of March 30, 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.
<TABLE>
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.
<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 11,578 931 30,283
Research and development expenses........ 1,325 2,861 4,696 -- 8,882
Write-off of acquired technology......... -- -- -- 3,500 3,500
------- -------- ------- ------- -------
19,165 35,210 21,775 4,533 80,683
------- -------- ------- ------- -------
Operating Income (Loss).................... 3,369 656 628 (4,533) 120
Interest Income............................ 819 194 -- -- 1,013
Interest Expense........................... -- (1,569) -- (1,134) (2,703)
------- -------- ------- ------- -------
Income (Loss) Before Income Taxes.......... 4,188 (719) 628 (5,667) (1,570)
Income Tax Provision (Benefit)............. 1,674 475 633 (1,634) 1,148
------- -------- ------- ------- -------
Net Income (Loss).......................... $ 2,514 $ (1,194) $ (5) $(4,033) $(2,718)
======= ======== ======= ======= =======
Earnings (Loss) per Share.................. $ .32 $ (.35)
======= =======
Weighted Average Shares.................... 7,811 7,811
======= =======
</TABLE>
F-38
<PAGE> 88
THERMO BIOANALYSIS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 30, 1996
(UNAUDITED)
<TABLE>
The following unaudited pro forma combined condensed statement of
operations sets forth the results of operations for the three months ended March
30, 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.
<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................................ $10,911 $2,821 $4,367 $ -- $18,099
------- ------ ------ ------ -------
Costs and Operating Expenses:
Cost of revenues...................... 6,716 1,794 2,462 (32) 10,940
Selling, general and administrative
expenses........................... 2,812 1,475 2,897 197 7,381
Research and development expenses..... 664 351 764 -- 1,779
Write-off of acquired technology...... 3,500 -- -- (3,500) --
------- ------ ------- ------ -------
13,692 3,620 6,123 (3,335) 20,100
------- ------ ------- ------ -------
Operating Income (Loss)................. (2,781) (799) (1,756) 3,335 (2,001)
Interest Income......................... 172 12 -- -- 184
Interest Expense........................ (247) (183) -- (179) (609)
------- ------ ------- ------ -------
Income (Loss) Before Income Taxes....... (2,856) (970) (1,756) 3,156 (2,426)
Income Tax Provision (Benefit).......... 258 11 -- (680) (411)
------- ------ ------- ------ -------
Net Income (Loss)....................... $(3,114) $ (981) $(1,756) $3,836 $(2,015)
======= ====== ======= ====== =======
Loss per Share.......................... $ (.38) $ (.25)
======= =======
Weighted Average Shares................. 8,219 8,219
======= =======
</TABLE>
F-39
<PAGE> 89
THERMO BIOANALYSIS CORPORATION
PRO FORMA CONDENSED BALANCE SHEET
MARCH 30, 1996
(UNAUDITED)
<TABLE>
The following unaudited pro forma condensed balance sheet sets forth the
financial position as of March 30, 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 March 30, 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.
<CAPTION>
HISTORICAL
-----------
THERMO PRO FORMA PRO
BIOANALYSIS ADJUSTMENTS FORMA
----------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................... $ 9,961 $ 11,000 $20,961
Accounts receivable, net.................................... 16,217 -- 16,217
Inventories................................................. 13,033 -- 13,033
Other current assets........................................ 2,715 -- 2,715
------- -------- -------
41,926 11,000 52,926
------- -------- -------
Property, Plant and Equipment, at Cost, Net................... 6,218 -- 6,218
------- -------- -------
Patents and Other Assets...................................... 4,220 -- 4,220
------- -------- -------
Cost in Excess of Net Assets of Acquired Companies............ 32,769 -- 32,769
------- -------- -------
$85,133 $ 11,000 $96,133
======= ======== =======
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities:
Note payable, due to Thermo Electron Corporation............ $30,000 $(30,000) $ --
Accounts payable............................................ 4,724 -- 4,724
Accrued expenses............................................ 15,973 -- 15,973
Due to (from) parent company and affiliates................. 8,163 (9,000) (837)
------- -------- -------
58,860 (39,000) 19,860
------- -------- -------
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......................................... (971) -- (971)
Cumulative translation adjustment........................... 18 -- 18
------- -------- -------
26,045 -- 26,045
------- -------- -------
$85,133 $ 1,000 $96,133
======= ======== =======
</TABLE>
F-40
<PAGE> 90
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 three months ended
March 30, 1996, respectively.
<TABLE>
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)
<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 $32,769,000 of cost in excess of net assets of
acquired companies created by the acquisition of DYNEX, and over 8 years of
$3,653,000 of product technology and capitalized software created by the
acquisition of Affinity Sensors and LabSystems............................... 1,282
-------
931
-------
WRITE-OFF OF ACQUIRED TECHNOLOGY
Record 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.................................................................. (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 THREE MONTHS ENDED MARCH 30, 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> 91
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 $32,769,000 of cost in excess of net assets of
acquired companies created by the acquisition of DYNEX, and over 8 years of
$3,653,000 of product technology and capitalized software created by the
acquisition of Affinity Sensors and LabSystems............................... 200
------
197
------
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> 92
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> 93
- ------------------------------------------------------
- ------------------------------------------------------
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>
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
The Company........................... 10
Use of Proceeds....................... 10
Dividend Policy....................... 10
Capitalization........................ 11
Dilution.............................. 12
Selected Financial Information........ 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 14
Business.............................. 17
Relationship with Thermo Electron and
Thermo Instrument................... 29
Management............................ 33
Security Ownership of Certain
Beneficial Owners and Management.... 39
Description of Capital Stock.......... 41
Shares Eligible for Future Sale....... 42
Underwriting.......................... 44
Legal Opinions........................ 45
Experts............................... 45
Additional Information................ 46
Reports to Security Holders........... 46
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> 94
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> 95
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
<TABLE>
(a) EXHIBITS
<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.
</TABLE>
II-2
<PAGE> 96
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------
<S> <C> <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
<FN>
- ---------------
* To be filed by amendment.
</TABLE>
(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> 97
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registration has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Waltham, Massachusetts,
on this 22nd day of July 1996.
THERMO BIOANALYSIS CORPORATION
BARRY S. HOWE
By:.................................
BARRY S. HOWE
President and Chief Executive
Officer
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Thermo BioAnalysis
Corporation, hereby constitute and appoint John N. Hatsopoulos, Seth H.
Hoogasian, Esq., Sandra L. Lambert, Esq. and Jonathan W. Painter and each of
them singly, our true and lawful attorneys with full power to them, and each of
them singly, to sign for us and in our names in the capacities indicated below,
the Registration Statement on Form S-1 filed herewith and any and all
pre-effective and post-effective amendments to said Registration Statement
(including any subsequent Registration Statement for the same offering which may
be filed under Rule 462(b)), and generally to do all such things in our names
and on our behalf in our capacities as officers and directors to enable Thermo
BioAnalysis Corporation to comply with the provisions of the Securities Act and
all requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Registration Statement and any and all amendments thereto.
<TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
BARRY S. HOWE Chief Executive Officer, July 22, 1996
.......................................... President and Director
BARRY S. HOWE (Principal Executive
Officer)
JOHN N. HATSOPOULOS Vice President, Chief July 22, 1996
.......................................... Financial Officer and
JOHN N. HATSOPOULOS Director (Principal
Financial Officer)
PAUL F. KELLEHER Chief Accounting Officer July 22, 1996
.......................................... (Principal Accounting
PAUL F. KELLEHER Officer)
RICHARD W. K. CHAPMAN Chairman of the Board and July 22, 1996
.......................................... Director
RICHARD W. K. CHAPMAN
DENIS A. HELM Vice Chairman of the Board July 22, 1996
.......................................... and Director
DENIS A. HELM
JONATHAN W. PAINTER Director July 22, 1996
..........................................
JONATHAN W. PAINTER
ARVIN H. SMITH Director July 22, 1996
..........................................
ARVIN H. SMITH
ELIAS P. GYFTOPOULOS Director July 22, 1996
..........................................
ELIAS P. GYFTOPOULOS
ARNOLD N. WEINBERG Director July 22, 1996
..........................................
ARNOLD N. WEINBERG
</TABLE>
II-4
<PAGE> 98
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> 99
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) $154
</TABLE>
S-2
<PAGE> 1
Exhibit 1
DRAFT 7/23/96
-------------
1,000,000 Shares
THERMO BIOANALYSIS CORPORATION
Common Stock
($.01 par value)
UNDERWRITING AGREEMENT
----------------------
_________ __, 1996
NATWEST SECURITIES LIMITED
LEHMAN BROTHERS INC.
SMITH BARNEY INC.
As Representatives of the several
Underwriters named in Schedule I hereto
c/o NatWest Securities Limited
135 Bishopsgate
London EC2M3UR
England
Dear Sirs:
Thermo BioAnalysis Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to the several underwriters named in Schedule I
hereto (the "Underwriters") 1,000,000 shares (the "Firm Shares") of Common
Stock, $.01 par value (such class of stock being herein called the "Common
Stock"), of the Company. In addition, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
150,000 shares (the "Option Shares") of Common Stock. The Firm Shares and any
Option Shares purchased pursuant to this Agreement are referred to herein as the
"Shares."
This is to confirm the agreement concerning the purchase of the Shares
from the Company by the Underwriters. You represent and warrant that you are
acting as the representatives (the "Representatives") of the Underwriters and
that you have been authorized by each of the other Underwriters to enter into
this Underwriting Agreement on its behalf and to act for it in the manner herein
provided.
<PAGE> 2
-2-
The Company currently is a majority-owned subsidiary of Thermo
Instrument Systems Inc., a Delaware corporation ("Thermo Instrument"), which is,
in turn, a majority-owned subsidiary of Thermo Electron Corporation, a Delaware
corporation ("Thermo Electron"). To the extent provided herein and for good and
valuable consideration, each of Thermo Instrument and Thermo Electron has become
a party to this Underwriting Agreement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THERMO INSTRUMENT AND
THERMO ELECTRON. The Company, Thermo Instrument and Thermo Electron jointly and
severally represent and warrant to, and agree with, each Underwriter as follows.
The following representations, warranties and agreements shall be deemed to
apply to each Subsidiary (as defined in Section 13) of the Company, unless the
context does not permit:
(a) A registration statement on Form S-1 (File No. 333-_____) with
respect to the Shares (i) has been prepared by the Company in material
conformity with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, (ii) has been filed with the Commission under the Securities
Act and (iii) has become effective under the Securities Act. If any
post-effective amendment to such registration statement has been filed with
the Commission prior to the execution and delivery of this Agreement, the
most recent such amendment has been declared effective by the Commission.
Copies of such registration statement as amended to date have been
delivered by the Company to the Representatives and, to the extent
applicable, were identical to the electronically transmitted copies thereof
filed with the Commission pursuant to the Commission's Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR"), except to the extent
permitted by Regulation S-T. For purposes of this Agreement, "Effective
Time" means the date and the time as of which such registration statement,
or the most recent post-effective amendment thereto, if any, was declared
effective by the Commission; "Effective Date" means the date of the
Effective Time; "Preliminary Prospectus" means each prospectus included in
such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the
Commission by the Company pursuant to Rule 424(a) of the Rules and
Regulations; "Registration Statement" means such registration statement, as
amended at the Effective Time, including all information deemed to be a
part thereof as of the Effective Time pursuant to paragraph (b) of Rule
430A of the Rules and Regulations together with any registration statement
filed by the Company pursuant to Rule 462(b) of the Rules and Regulations;
and "Prospectus" means (i) the form of prospectus relating to the Shares,
as first filed pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules
and Regulations or (ii) the term sheet or abbreviated term sheet described
in Rule 434(b) of the Rules and Regulations, as first filed pursuant to
paragraph (7) of Rule 424(b) of the Rules and Regulations together with the
last preliminary prospectus included in the Registration Statement filed
prior to the Effective Time or filed pursuant to Rule 424(a) of the Rules
and Regulations that is delivered by the Company to the Underwriters for
delivery to purchasers of the Shares. The Commission has not issued any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus. For purposes of this Agreement, all
<PAGE> 3
-3-
references to the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement to any of the foregoing, shall
be deemed to include the respective copies thereof filed with the
Commission pursuant to EDGAR.
(b) The Registration Statement contains, and any post-effective
amendment to the Registration Statement filed with the Commission after the
Effective Time, the Prospectus and the Prospectus as amended or
supplemented will contain, all statements which are required by the
Securities Act and the Rules and Regulations; at the time of filing
thereof, any Preliminary Prospectus did not, and on the Effective Date, the
Registration Statement did not, and any post-effective amendment to the
Registration Statement filed with the Commission after the Effective Time,
the Prospectus and the Prospectus as amended or supplemented will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that the Company, Thermo
Instrument and Thermo Electron make no representation or warranty as to
information contained in or omitted from the Registration Statement, the
Preliminary Prospectus or the Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by you, or by
any Underwriter through you, specifically for inclusion therein. There is
no contract or document required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required.
(c) The accounting firm whose report appears in the Prospectus are
independent certified public accountants as required by the Securities Act
and the Rules and Regulations. The financial statements and schedules
(including the related notes) included in the Registration Statement, any
Preliminary Prospectus or the Prospectus present fairly, in all material
respects, the financial condition, results of operations and cash flows of
the entities purported to be shown thereby at the dates and for the periods
indicated and have been prepared in accordance with generally accepted
accounting principles.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus, and is
duly qualified to do business and is in good standing in each jurisdiction
in which the character of the business conducted by it or the location of
the properties owned or leased by it makes such qualification necessary
except where the failure to so qualify or be in good standing would not
have a material adverse effect on the Company and its Subsidiaries taken as
a whole; and, except as described in the Prospectus, the Company holds all
material licenses, certificates and permits from governmental authorities
necessary for the conduct of its business as described in the Prospectus.
(e) All of the outstanding shares of Common Stock have been, and the
Shares, upon issuance and delivery and payment therefor in the manner
herein described, will be, duly authorized, validly issued, fully paid and
nonassessable. Other than as described in the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of Common Stock
pursuant to the
<PAGE> 4
-4-
Company's corporate charter, by-laws or other governing documents or any
agreement or other instrument to which the Company is a party or by which
it may be bound. Neither the filing of the Registration Statement nor the
offering or sale of the Shares as contemplated by this Agreement gives rise
to any rights, other than those which have been waived or satisfied and
other than as described in the Prospectus, for or relating to the
registration of any shares of Common Stock or other securities of the
Company. The capitalization of the Company as of March 30, 1996 is as set
forth in the Prospectus and the Common Stock conforms to the description
thereof contained in the Prospectus. All of the outstanding shares of
capital stock of each Subsidiary (as defined in Section 13) of the Company
have been duly authorized and validly issued, are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of any claim, lien, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party.
(f) Except as described in or contemplated by the Registration Statement
and the Prospectus, there has not been any material adverse change in, or
any adverse development which materially affects, the condition (financial
or other), results of operations, business or prospects of the Company and
its Subsidiaries on a consolidated basis from the date as of which
information is given in the Prospectus.
(g) The Company is not, and would not be with the giving of notice or
lapse of time or both, in violation of or in default under, nor will the
execution or delivery hereof or consummation of the transactions
contemplated hereby result in a violation of, or constitute a default
under, the corporate charter, by-laws or other governing documents of the
Company, or any material agreement, indenture or other instrument to which
the Company is a party or by which it is bound, or to which any of its
properties is subject, nor will the performance by the Company of its
obligations hereunder violate any existing law, rule, administrative
regulation or decree of any court or any governmental agency or body having
jurisdiction over the Company or any of its properties, or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company, which would be material to the Company
and its Subsidiaries taken as a whole. Except for permits and similar
authorizations required under the Securities Act and the securities or
"Blue Sky" laws of certain jurisdictions and for such permits and
authorizations as have been obtained, no consent, approval, authorization
or order of any U.S. court, governmental agency or body or any financial
institution is required in connection with the consummation by the Company
of the transactions contemplated by this Agreement.
(h) This Agreement has been duly authorized, executed and delivered by
the Company.
(i) The Company owns, or has valid rights to use, all items of real and
personal property which are material to the business of the Company and its
Subsidiaries taken as a whole, free and clear of all liens, encumbrances
and claims which may materially interfere with the business, properties,
financial condition or results of operations of the Company on a
consolidated basis.
<PAGE> 5
-5-
(j) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company or Thermo Instrument or Thermo
Electron is a party or to which any property of the Company is subject or
which is pending or, to the knowledge of the Company, Thermo Instrument or
Thermo Electron, contemplated against the Company or Thermo Instrument that
is required to be disclosed in the Prospectus and that is not so disclosed.
(k) The Company is not in violation of any law, ordinance, governmental
rule or regulation or court decree to which it is subject, which violation
could have a material adverse effect on the condition (financial or other),
results of operations, business or prospects of the Company and its
Subsidiaries on a consolidated basis.
(l) The Company owns or possesses adequate licenses or other rights to
use all intellectual property rights, including patents and trademarks,
necessary to conduct its business as described or referred to in the
Prospectus, except where such failure, singularly or in the aggregate would
not have a material adverse effect on the Company and its Subsidiaries on a
consolidated basis, and, except as disclosed in the Prospectus, neither
Thermo Electron, Thermo Instrument nor the Company has received any notice
of infringement of or conflict with (or knows of any such infringement of
or conflict with) rights or claims of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how, that if the
subject of an unfavorable decision, ruling or finding, would result in a
material adverse effect upon the Company and its Subsidiaries on a
consolidated basis, and, except as disclosed in the Prospectus, all
products or processes referred to in the Prospectus and relating to the
business of the Company now conducted by it do not infringe upon or
conflict with any right or patent, or with any discovery, invention,
product or process which is the subject of any patent application known to
the Company or Thermo Electron, in a manner which would materially and
adversely affect the Company and its Subsidiaries on a consolidated basis.
(m) Each of the Corporate Services Agreement between the Company and
Thermo Electron (the "Services Agreement"), and the other agreements
between the Company and Thermo Instrument or Thermo Electron pursuant to
which the Company was initially organized and capitalized (collectively,
the "Organization Agreements"), and the Tax Allocation Agreement between
Thermo Electron and the Company (all of the foregoing agreements being
referred to herein as the "Inter-corporate Agreements") has been duly and
validly authorized, executed and delivered by the Company and is the valid
and binding agreement of the Company enforceable in accordance with its
terms, except as provided by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally and subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) (collectively, "applicable
bankruptcy laws"). The execution, delivery and performance of the
Inter-corporate Agreements by the Company, the consummation of the
transactions therein contemplated and compliance with the terms thereof do
not and will not result in a violation of, or constitute a default under,
the corporate charter, by-laws or other governing documents of the Company,
or any agreement, indenture or other instrument to which the Company is a
party or by which it is
<PAGE> 6
-6-
bound, or to which any of its properties is subject, and do not and will
not violate any existing law, rule, administrative regulation or decree of
any court or any governmental agency or body having jurisdiction over the
Company or any of its properties, or result in the creation or imposition
of any lien, charge, claim or encumbrance upon any property or asset of the
Company, which would be material to the Company and its Subsidiaries taken
as a whole. No consent, approval, authorization or order of any court,
governmental agency or body or financial institution is required in
connection with the consummation of the transactions contemplated by such
Inter-corporate Agreements.
(n) Neither the Company nor Thermo Electron nor Thermo Instrument or any
other Subsidiary of Thermo Electron has taken and none of such companies
shall take, directly or indirectly, any action designed to cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the shares of
Common Stock to facilitate the sale or resale of the Shares.
(o) The Shares have been approved for listing on the American Stock
Exchange, subject only to official notice of issuance.
1A. REPRESENTATIONS AND WARRANTIES OF THERMO INSTRUMENT AND THERMO
ELECTRON. Thermo Instrument and Thermo Electron each represent and warrant to,
and agree with, each Underwriter that:
(a) Each of Thermo Instrument and Thermo Electron has been duly
organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, with full power and
authority (corporate and other) to own or lease its properties and conduct
its business, and is duly qualified to do business and is in good standing
in each jurisdiction in which the character of the business conducted by it
or the location of the properties owned or leased by it makes such
qualification necessary, except where the failure to so qualify or be in
good standing would not have a material adverse effect on Thermo Electron
and its Subsidiaries taken as a whole.
(b) There has not been any material adverse change in, or any adverse
development which materially affects, the condition (financial or other),
results of operations, business or prospects of Thermo Electron and its
Subsidiaries taken as a whole, from the date as of which information is
given in the most recent quarterly or annual report filed by Thermo
Electron pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except any as may have been disclosed to the public.
(c) Except as described in their filings with the Commission under the
Exchange Act, neither Thermo Instrument nor Thermo Electron is, nor with
the giving of notice or lapse of time or both would be, in violation of or
in default under, nor will the execution or delivery hereof or consummation
of the transactions contemplated hereby result in a violation of, or
constitute a default under, the corporate charter, by-laws or other
governing documents of Thermo Instrument or Thermo Electron, or any
material agreement, indenture or other instrument to which Thermo
Instrument or Thermo Electron is a party or by which any of
<PAGE> 7
-7-
them is bound, or to which any of their properties is subject, nor will the
performance by Thermo Instrument or Thermo Electron of its obligations
hereunder violate any existing law, rule, administrative regulation or
decree of any court or any governmental agency or body having jurisdiction
over Thermo Instrument or Thermo Electron or any of their respective
properties, or result in the creation or imposition of any lien, charge,
claim or encumbrance upon any property or asset of Thermo Instrument or
Thermo Electron, which would be material to Thermo Electron and its
Subsidiaries taken as a whole. Except for permits and similar
authorizations required under the Securities Act and the securities or
"Blue Sky" laws of certain jurisdictions and for such permits and
authorizations as have been obtained, no consent, approval, authorization
or order of any court, governmental agency or body or financial institution
is required in connection with the consummation by Thermo Instrument and
Thermo Electron of the transactions contemplated by this Agreement.
(d) This Agreement has been duly authorized, executed and delivered by
Thermo Instrument and Thermo Electron.
(e) Thermo Instrument owns, and will own as of each Closing Date (as
defined below), of record and beneficially, the number of shares of Common
Stock of the Company set forth in the Prospectus, free and clear of any
liens, encumbrances, claims or restrictions, except that certain of such
shares are reserved for issuance pursuant to stock option and other benefit
plans under which options to purchase Common Stock of the Company owned by
Thermo Instrument are granted to certain employees, directors or
consultants of Thermo Electron and its Subsidiaries.
(f) The most recent Annual Report on Form 10-K of Thermo Instrument and
of Thermo Electron and any subsequent reports filed pursuant to the
Exchange Act complied as of the date thereof in all material respects with
the Exchange Act and the rules and regulations thereunder.
(g) The transfer by Thermo Instrument to the Company of certain stock
and/or assets, as described in the Prospectus and in the Organization
Agreements, has been completed by all required corporate and other action.
Each of the Inter-corporate Agreements to which Thermo Instrument is a
party has been duly and validly authorized, executed and delivered by
Thermo Instrument and is the valid and binding agreement of Thermo
Instrument enforceable in accordance with its terms, except as provided by
applicable bankruptcy laws. The execution, delivery and performance of each
of the Inter-corporate Agreements to which Thermo Instrument is a party by
Thermo Instrument, the consummation of the transactions therein
contemplated and compliance with the terms thereof do not and will not
result in a violation of, or constitute a default under, the corporate
charter, by-laws or other governing documents of Thermo Instrument, or any
agreement, indenture or other instrument to which Thermo Instrument is a
party or by which it is bound, or to which any of its properties is
subject, and do not and will not violate any existing law, rule,
administrative regulation or decree of any court or any governmental agency
or body having jurisdiction over Thermo Instrument or any of its
properties, or result in the creation or
<PAGE> 8
-8-
imposition of any lien, charge, claim or encumbrance upon any property or
asset of Thermo Instrument, which would be material to Thermo Instrument.
No consent, approval, authorization or order of any court, governmental
agency or body or financial institution is required in connection with the
consummation by Thermo Instrument of the transactions contemplated by the
Inter-corporate Agreements to which Thermo Instrument is a party, except
such as have been obtained.
(h) The Services Agreement has been duly and validly authorized,
executed and delivered by Thermo Electron and is the valid and binding
agreement of Thermo Electron, enforceable in accordance with its terms.
1B. REPRESENTATIONS AND WARRANTIES OF NATWEST SECURITIES LIMITED.
NatWest Securities Limited represents and agrees that (i) it has not offered or
sold and will not offer or sell any Shares to persons in the United Kingdom
prior to admission of the Shares 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 Shares 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 Shares, 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) Order 1995 or is a
person to whom the document may otherwise lawfully be issued or passed on.
2. PURCHASE OF THE SHARES BY THE UNDERWRITERS. (a) Subject to the terms
and conditions and upon the basis of the representations and warranties herein
set forth, the Company agrees to issue and sell to the Underwriters the Firm
Shares and each of the Underwriters agrees, severally and not jointly, to
purchase at a price of $_______ per Share, the number of Firm Shares set forth
opposite such Underwriter's name in Schedule I hereto. The Underwriters agree to
offer the Firm Shares to the public as set forth in the Prospectus.
(b) The Company hereby grants to the Underwriters an option to
purchase from the Company, solely for the purpose of covering over-allotments in
the sale of Firm Shares, all or any portion of the Option Shares for a period of
thirty (30) days from the date hereof at the purchase price per Share set forth
above. Option Shares shall be purchased from the Company, severally and not
jointly, for the accounts of the several Underwriters in proportion to the
number of Firm Shares set forth opposite such Underwriter's name in Schedule I
hereto, except that the respective purchase obligations of each Underwriter
shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Shares other than in 100-share quantities.
<PAGE> 9
-9-
3. DELIVERY OF AND PAYMENT FOR THE SHARES. Delivery of certificates for
the Firm Shares and certificates for the Option Shares, if the option to
purchase the same is exercised on or before the second Business Day (as defined
in Section 13 hereof) prior to the First Closing Date (as defined below), to be
purchased by the Underwriters from the Company and payment therefor shall be
made at the offices of Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston,
Massachusetts 02110 (or such other place as mutually may be agreed upon), at
10:00 A.M., Eastern time, on the third business day after the date of this
Agreement (the "First Closing Date").
The option to purchase Option Shares from the Company granted in Section
2 hereof may be exercised during the term thereof by written notice to the
Company from the Representatives. Such notice shall set forth the aggregate
number of Option Shares as to which the option is being exercised and the time
and date, not earlier than either the First Closing Date or the second Business
Day after the date on which the option shall have been exercised nor later than
the third Business Day after the date of such exercise, as determined by the
Representatives, when the Option Shares are to be delivered (the "Option Closing
Date"). Delivery and payment for such Option Shares are to be at the offices set
forth above for delivery and payment of the Firm Shares. (The First Closing Date
and the Option Closing Date are herein individually referred to as a "Closing
Date" and collectively referred to as the "Closing Dates.")
Delivery of certificates for the Shares shall be made by or on behalf of
the Company to you, for the respective accounts of the Underwriters, against
payment by you, for the several accounts of the Underwriters, of the purchase
price therefor by certified or official bank check payable in New York Clearing
House funds to the order of the Company. The certificates for the Shares shall
be registered in such names and denominations as you shall have requested at
least two full Business Days prior to the applicable Closing Date, and shall be
made available for checking and packaging at a location in New York, New York as
may be designated by you at least one full Business Day prior to such Closing
Date. Time shall be of the essence and delivery at the time and place specified
in this Agreement is a further condition to the obligations of each Underwriter.
4. COVENANTS OF THE COMPANY, THERMO INSTRUMENT AND THERMO ELECTRON. The
Company, Thermo Instrument and Thermo Electron, jointly and severally, covenant
and agree with each Underwriter that:
(a) The Company shall comply with the provisions of, and make all
requisite filings with the Commission pursuant to, Rule 430A and Rule
424(b) of the Rules and Regulations and shall notify you promptly (in
writing, if requested) of all such filings. The Company shall notify you
promptly of any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for
additional information; the Company shall prepare and file with the
Commission, promptly upon your request, any amendments or supplements to
the Registration Statement or the Prospectus which, in your opinion, may be
necessary or advisable in connection with the distribution of the Shares;
and the Company shall not file any amendment or supplement to the
Registration Statement
<PAGE> 10
-10-
or the Prospectus, which filing is not consented to by you after reasonable
notice thereof, such consent not to be unreasonably withheld or delayed.
The Company shall advise you promptly of its receipt of notice of the
issuance by the Commission or any state or other regulatory body of any
stop order or other order suspending the effectiveness of the Registration
Statement, suspending or preventing the use of any Preliminary Prospectus
or the Prospectus or suspending the qualification of the Shares for
offering or sale in any jurisdiction, or of the institution of any
proceedings for any such purpose; and the Company shall use its best
efforts to prevent the issuance of any stop order or other such order and,
should a stop order or other such order be issued, to obtain as soon as
possible the lifting thereof.
(b) The Company shall furnish to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration Statement as
originally filed and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith, and shall furnish to
the Underwriters such number of conformed copies of the Registration
Statement, as originally filed and each amendment thereto (excluding
exhibits other than this Agreement), the Prospectus and all amendments and
supplements to any of such documents in each case as soon as available and
in such quantities as the Representatives may from time to time reasonably
request. To the extent applicable, the copies of the Registration Statement
and each amendment thereto (including all exhibits filed therewith), any
Preliminary Prospectus or Prospectus (in each case, as amended or
supplemented) furnished to the Representative and counsel to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(c) Within the time during which a prospectus relating to the Shares is
required to be delivered under the Securities Act, the Company shall comply
with all requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from time to time
in force, so far as is necessary to permit the continuance of sales of or
dealings in the Shares as contemplated by the provisions hereof and by the
Prospectus. If during such period any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend
the Registration Statement or to supplement the Prospectus in order to
comply with the Securities Act or to file any document, the Company shall
promptly notify you and shall amend the Registration Statement or
supplement the Prospectus or file such document (at the expense of the
Company) so as to correct such statement or omission or to effect such
compliance.
(d) The Company shall take or cause to be taken all necessary action and
furnish to whomever you may direct such information as may be required in
qualifying the Shares for sale under the laws of such jurisdictions as you
shall designate, and to continue such qualifications in effect for as long
as may be necessary for the distribution of the Shares;
<PAGE> 11
-11-
except that in no event shall the Company be obligated in connection
therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(e) The Company shall make generally available to its security holders
(and shall deliver to the Representatives), in the manner contemplated by
Rule 158(b) of the Rules and Regulations or otherwise, as soon as
practicable but in any event not later than 45 days after the end of its
fiscal quarter in which the first anniversary date of the Effective Date
occurs, an earnings statement satisfying the requirements of Section 11(a)
of the Securities Act and covering a period of at least 12 consecutive
months beginning after the Effective Date.
(f) The Company, Thermo Instrument and Thermo Electron shall not, during
the 180-day period following the date of the Prospectus, except with your
prior written consent, offer for sale, sell or otherwise dispose of,
directly or indirectly, any shares of Common Stock (except for the issuance
of shares of Common Stock pursuant to existing stock option, purchase and
compensation plans, or upon conversion of any currently outstanding
convertible securities described in the Prospectus, except for sales of
shares of Common Stock by the Company to Thermo Instrument), or sell or
grant options, rights or warrants with respect to any shares of Common
Stock (other than the grant of options pursuant to existing stock option,
purchase and compensation plans), otherwise than in accordance with this
Agreement or as contemplated in the Prospectus. The Company, Thermo
Instrument and Thermo Electron will not permit any employee stock option,
director stock option or other stock option to purchase Common Stock of the
Company granted by it to be exercised, and the Common Stock issued upon
exercise of the stock option to be sold, prior to the expiration of the
180-day period following the date of this Prospectus, without your prior
written consent. The Company will not accelerate the date on which its
outstanding convertible subordinated debentures may first be converted into
Common Stock according to their current terms, without your prior written
consent.
(g) The Company shall take such steps as shall be necessary to ensure
that neither the Company nor any Subsidiary shall become an "investment
company" within the meaning of such term under the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
(h) Whether or not this Agreement is terminated or the sale of the
Shares to the Underwriters is consummated, the Company shall pay or cause
to be paid (A) all expenses (including stock transfer taxes) incurred in
connection with the delivery to the several Underwriters of the Shares, (B)
all fees and expenses (including, without limitation, fees and expenses of
the Company's accountants and counsel, but excluding fees and expenses of
counsel for the Underwriters) in connection with the preparation, printing,
filing, delivery and shipping of the Registration Statement (including the
financial statements therein and all amendments and exhibits thereto), each
Preliminary Prospectus, the Prospectus and any amendments or supplements of
the foregoing and the printing, delivery and shipping of this Agreement and
other underwriting documents, including, but not limited to, any
Underwriters' Questionnaires, Underwriters' Powers of Attorney, Blue Sky
Memoranda, Agreements Among Underwriters and Selected Dealer Agreements,
(C) all filing fees and
<PAGE> 12
-12-
fees and disbursements of counsel to the Underwriters incurred in
connection with qualification of the Shares under state securities laws as
provided in Section 4(d) hereof, (D) the filing fee of the National
Association of Securities Dealers, Inc., (E) any applicable listing or
other fees, (F) the cost of printing certificates representing the Shares,
(G) the cost and charges of any transfer agent or registrar, and (H) all
other costs and expenses incident to the performance of its obligations
hereunder for which provision is not otherwise made in this Section. It is
understood, however, that, except as provided in this Section, Section 6
and Section 8 hereof, the Underwriters shall pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes due
upon resale of any of the Shares by them and any advertising expenses
incurred in connection with any offers they may make. If the sale of the
Shares provided for herein is not consummated by reason of any failure,
refusal or inability on the part of the Company, Thermo Instrument or
Thermo Electron to perform any agreement on its part to be performed or
because any other condition of the Underwriters' obligations hereunder is
not fulfilled or if the Underwriters shall decline to purchase the Shares
for any reason permitted under this Agreement, the Company shall reimburse
the several Underwriters for all reasonable out-of-pocket disbursements
(including fees and disbursements of counsel) incurred by the Underwriters
in connection with any investigation or preparation made by them in respect
of the marketing of the Shares or in contemplation of the performance by
them of their obligations hereunder.
(i) The Company shall on or prior to each Closing Date use its best
efforts to cause the Shares to be purchased on such date by the
Underwriters to be approved for listing on the American Stock Exchange,
subject only to official notice of issuance, and shall take such action as
shall be necessary to comply with the rules and regulations of the American
Stock Exchange with respect to such Shares.
(j) During a period of five years from the Effective Date, the Company
shall furnish to the Representatives copies of all reports or other
communications furnished to shareholders and copies of any reports or
financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the
Company is listed. To the extent applicable, such reports or documents
shall be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and each Closing Date (as if made at such Closing Date), of the
representations and warranties of the Company, Thermo Instrument and Thermo
Electron contained herein, to the performance by the Company, Thermo Instrument
and Thermo Electron of their respective obligations hereunder and to the
following additional conditions:
(a) The Prospectus shall have been filed with the Commission in a timely
fashion in accordance with Section 4(a) hereof, all post-effective
amendments to the Registration Statement shall have become effective, all
filings required by Rule 430A and Rule 424 of
<PAGE> 13
-13-
the Rules and Regulations shall have been made and no such filings shall
have been made without the consent of the Representatives; no stop order
suspending the effectiveness of the Registration Statement or any amendment
or supplement thereto shall have been issued; no proceedings for the
issuance of any such order shall have been initiated or threatened; and any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
disclosed to you and complied with to your satisfaction.
(b) No Underwriter shall have been advised by the Company, Thermo
Instrument or Thermo Electron or shall have discovered and disclosed to the
Company that the Registration Statement, or the Prospectus or any amendment
or supplement thereto, contains an untrue statement of fact which in your
reasonable opinion, or in the reasonable opinion of counsel for the
Underwriters, is material, or omits to state a fact which, in your
reasonable opinion, or in the reasonable opinion of counsel to the
Underwriters, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) On or prior to each Closing Date, you shall have received from
Testa, Hurwitz & Thibeault, LLP, counsel for the Underwriters, such opinion
or opinions with respect to corporate proceedings by the Company, Thermo
Instrument and Thermo Electron, the form of the Registration Statement and
Prospectus (other than financial statements and other financial or
statistical data), the validity of the Shares, and other related matters as
you may reasonably request and such counsel shall have received such
documents and information as they reasonably request to enable them to pass
upon such matters.
(d) On each Closing Date there shall have been furnished to you the
opinion (addressed to the Underwriters) of Seth H. Hoogasian, Esq., General
Counsel of Thermo Electron, Thermo Instrument and the Company, dated such
Closing Date and in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) Each of the Company and its Significant Subsidiaries has been
duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with full
corporate power and authority to own or lease its properties and conduct
its business as described in the Prospectus, and is duly qualified to do
business and is in good standing in each jurisdiction in which the
character of the business conducted by it or the location of the
properties owned or leased by it makes such qualification necessary,
except where the failure to so qualify or be in good standing would not
have a material adverse effect on the Company and its Subsidiaries taken
as a whole.
(ii) Each of Thermo Electron and its Significant Subsidiaries (as
defined in Section 13) has been duly organized and is validly existing
as a corporation in good standing under the laws of the jurisdiction of
its incorporation, with full corporate power and authority to own or
lease its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business and is in good standing
in each
<PAGE> 14
-14-
jurisdiction in which the character of the business conducted by it or
the location of the properties owned or leased by it makes such
qualification necessary, except where the failure to so qualify or be in
good standing would not have a material adverse effect on Thermo
Electron and its Subsidiaries taken as a whole.
(iii) All of the outstanding shares of Common Stock have been and
the Shares, upon issuance and delivery and payment therefor in the
manner herein described, will be, duly authorized, validly issued, fully
paid and nonassessable. There are no preemptive or other rights to
subscribe for or to purchase, or any restriction upon the voting or
transfer of, any of the Shares pursuant to the Company's corporate
charter, by-laws, other governing documents, or any agreement or other
instrument known to such counsel to which the Company or a Subsidiary
thereof is a party or by which the Company or a Subsidiary thereof may
be bound or to which any of their respective properties is subject; and,
to the best of such counsel's knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights for or relating
to the registration of any shares of Common Stock except such as have
been waived or satisfied, other than as described in the Prospectus. The
Common Stock conforms in all material respects to the description
thereof contained in the Prospectus. All of the outstanding shares of
capital stock of each Significant Subsidiary of the Company have been
duly authorized and validly issued, are fully paid and nonassessable and
are owned directly or indirectly by the Company free and clear of any
claim, lien, encumbrance or security interest known to such counsel
(except for certain obligations of the Company pursuant to stock and
benefit plans maintained primarily for the benefit of employees,
officers, directors and consultants of the Company and its
Subsidiaries).
(iv) Each of the Company and its Significant Subsidiaries is not,
nor with the giving of notice or lapse of time or both would be, in
violation of or in default under, nor will the execution or delivery
hereof or consummation of the transactions contemplated hereby result in
a violation of, or constitute a default under, the corporate charter,
by-laws or other governing documents of the Company or any of its
Significant Subsidiaries or, to the best knowledge of such counsel, any
material agreement, indenture or other instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries may be bound, or to which any of the properties of the
Company or any of its Subsidiaries is subject, nor, to best of such
counsel's knowledge, will the performance by the Company of its
obligations hereunder violate any existing law, rule, administrative
regulation or decree of any court or any governmental agency or body
having jurisdiction over the Company or any of its Subsidiaries or the
properties of the Company or any of its Subsidiaries, or, to the best
knowledge of such counsel, result in the creation or imposition of any
lien, charge, claim or encumbrance upon the properties or assets of the
Company or any of its Subsidiaries which would be material to the
Company and its Subsidiaries taken as a whole. Except for permits and
similar authorizations required under the Securities Act and the
securities or "Blue Sky" laws of certain jurisdictions and for such
permits and authorizations as have been obtained, no consent, approval,
authorization or order of any court, governmental agency
<PAGE> 15
-15-
or body or financial institution is required in connection with the
consummation by the Company, Thermo Instrument or Thermo Electron of the
transactions contemplated by this Agreement.
(v) Each of Thermo Electron and its Significant Subsidiaries is
not, nor with the giving of notice or lapse of time or both would be, in
violation of or in default under, nor will the execution or delivery
hereof or consummation of the transactions contemplated hereby result in
a violation of, or constitute a default under, the corporate charter,
by-laws or other governing documents of Thermo Electron or any of its
Significant Subsidiaries or, except as described in the Exchange Act
filings of Thermo Instrument and Thermo Electron, to the best knowledge
of such counsel, any material agreement, indenture, or other instrument
to which Thermo Electron or any of its Significant Subsidiaries is a
party or by which Thermo Electron or any of it Significant Subsidiaries
may be bound, or to which any of the properties of Thermo Electron or
any of its Significant Subsidiaries is subject, nor will the performance
by Thermo Electron of its obligations hereunder violate any existing
law, rule, administrative regulation or decree of any court or any
governmental agency or body having jurisdiction over Thermo Electron or
any of its Significant Subsidiaries or the properties of Thermo Electron
or any of its Significant Subsidiaries, or, to the best knowledge of
such counsel, result in the creation or imposition of any lien, charge,
claim or encumbrance upon the properties or assets of Thermo Electron or
any of its Significant Subsidiaries, which would be material to Thermo
Electron and its Subsidiaries taken as a whole.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company, Thermo Instrument and Thermo Electron.
(vii) Each of the Inter-corporate Agreements has been duly
authorized, executed and delivered by Thermo Instrument and Thermo
Electron, as the case may be, and is the valid and binding agreement of
Thermo Instrument and Thermo Electron enforceable in accordance with its
terms except as provided by applicable bankruptcy laws. The execution,
delivery and performance of each of the Inter-corporate Agreements by
each of the parties thereto, the consummation of the transactions
therein contemplated and compliance with the terms thereof do not and
will not result in a violation of, or constitute a default under the
corporate charter, by-laws or other governing documents of Thermo
Instrument or Thermo Electron, or any material agreement, indenture or
other instrument known to such counsel to which Thermo Instrument or
Thermo Electron is a party or by which any of them is bound, or to which
any of their properties is subject and do not and will not violate any
existing law, rule, administrative regulation or decree of any court or
any governmental agency or body having jurisdiction over Thermo
Instrument or Thermo Electron or any of their properties, or, to the
best of such counsel's knowledge, result in the creation or imposition
of any lien, charge, claim or encumbrance upon any property or asset of
Thermo Instrument or Thermo Electron, which would be material to Thermo
Electron and its Subsidiaries taken as a whole. Except for permits and
similar authorizations required under the Securities Act and the
securities or "Blue Sky" laws of certain jurisdictions and for such
permits and authorizations as have been
<PAGE> 16
-16-
obtained, no consent, approval, authorization or order of any court,
governmental agency or body or, to the knowledge of such counsel,
financial institution is required in connection with the consummation of
the transactions contemplated by the Inter-corporate Agreements.
(viii) The Registration Statement and all post-effective amendments
thereto have become effective under the Securities Act and, to the best
of such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending before or contemplated
by the Commission. All filings required by Rule 424 and Rule 430A of the
Rules and Regulations have been made; the Registration Statement as of
the Effective Date, and the Prospectus and any amendment or supplement
thereto as of their respective dates, complied as to form in all
material respects with the requirements of the Securities Act and the
Rules and Regulations (it being understood that such counsel need
express no opinion on the financial statements or other financial and
statistical data included therein). Such counsel has no reason to
believe that (i) the Registration Statement, as of its Effective Date,
or any amendment thereto, at the time it became effective contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, or (ii) the Prospectus or any
supplement or amendment thereto, or any supplement or amendment thereto,
on such Closing Date or at the time such Prospectus or supplement or
amendment thereto was issued contains or contained any untrue statement
of a material fact or omits or omitted to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express
no opinion with respect to the financial statements or other financial
and statistical data included in the Registration Statement and the
Prospectus).
(ix) To the best knowledge of such counsel, all descriptions in
the Prospectus of statutes, regulations, legal or governmental
proceedings, contracts and other documents are accurate in all material
respects, and fairly present in all material respects the information
required to be shown and such counsel does not know of any contracts or
documents of a character required to be summarized or described therein
or to be filed as exhibits thereto that are not so summarized, described
or filed, nor does such counsel know of any pending or threatened
litigation or any governmental proceeding, statute or regulation
required to be described in the Prospectus that is not so described.
In rendering the foregoing opinion, counsel may rely, as to matters of
fact, upon certificates of officers of the Company, Thermo Instrument and
Thermo Electron and certificates of public officials. Certificates so
relied upon shall be furnished to you and shall be satisfactory to you and
your counsel.
(e) On each Closing Date there shall have been furnished to you the
opinion (addressed to the Underwriters) of ___________________________,
special patent counsel
<PAGE> 17
-17-
to the Company, with respect to such matters as the Underwriters or counsel
for the Underwriters may reasonably request.
(f) There shall have been furnished to you a certificate, dated such
Closing Date and addressed to you, signed by the President or a Vice
President and by the Treasurer or Secretary of the Company to the effect
that: (i) the representations and warranties of the Company contained in
this Agreement are true and correct, as if made at and as of such Closing
Date, and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to
such Closing Date; (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been initiated or, to the knowledge of the signers of such
certificate, threatened; (iii) all filings required by Rule 424 and Rule
430A of the Rules and Regulations have been made; (iv) the signers of said
certificate have carefully examined the Registration Statement and the
Prospectus, and any amendments or supplements thereto and such documents
contain all statements and information required to be included therein, and
do not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and (v) since the effective date of the
Registration Statement, there has occurred no event required to be set
forth in an amendment or supplement to the Registration Statement or the
Prospectus which has not been so set forth.
(g) There shall have been furnished to you certificates, dated such
Closing Date and addressed to you, signed by the President or a Vice
President and by the Treasurer or Secretary of each of Thermo Instrument
and Thermo Electron to the effect that: (i) the representations and
warranties of Thermo Electron or Thermo Instrument (as applicable)
contained in this Agreement are true and correct, as if made at and as of
such Closing Date, and Thermo Electron and Thermo Instrument (as
applicable) has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such
Closing Date; (ii) the signers of said certificate have carefully examined
the Registration Statement and the Prospectus, and any amendments or
supplements thereto, and such documents contain all statements and
information required to be included therein and do not include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading; and (iii) since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amendment or supplement to the Registration Statement or the Prospectus
which has not been so set forth.
(h) Since the Effective Time, neither the Company nor any of the
Subsidiaries of the Company shall have sustained any loss by fire, flood,
accident or other calamity, or shall have become a party to or the subject
of any litigation, which is material to the Company and its Subsidiaries
taken as a whole, nor shall there have been a material adverse change in
the general affairs, operations, business, prospects, key personnel,
capitalization, financial condition or net worth of the Company and its
Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business, which loss, litigation or change, in your
<PAGE> 18
-18-
judgment, shall render it inadvisable to proceed with the payment for and
delivery of the Shares.
(i) On the date of this Agreement and on each Closing Date you shall
have received a letter from each accounting firm whose report appears in
the Prospectus, dated the date of this Underwriting Agreement or such
Closing Date, as the case may be, and addressed to you, confirming that
they are independent certified public accountants within the meaning of the
Securities Act and the applicable published Rules and Regulations, and
stating, as of the date of such letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date
not more than five days prior to the date of each such letter), the
conclusions and findings of each such firm with respect to the financial
information and other matters covered by its letter delivered to you
concurrently with the execution of this Agreement, and with respect to each
letter delivered on a Closing Date confirming the conclusions and findings
set forth in such prior letter.
(j) You shall have been furnished with such additional documents and
certificates as you or counsel for the Underwriters may reasonably request.
(k) The Shares to be purchased on such Closing Date by the Underwriters
shall be approved for listing on the American Stock Exchange, subject only
to official notice of issuance.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and to counsel for the Underwriters. The Company,
Thermo Instrument and Thermo Electron shall furnish to you such conformed copies
of such opinions, certificates, letters and other documents as you shall
reasonably request. If any of the conditions specified in this Section 5 shall
not have been fulfilled when and as required by this Agreement, this Agreement
and all obligations of the Underwriters hereunder may be canceled at, or at any
time prior to, such Closing Date, by you. Any such cancellation shall be without
liability of the Underwriters to the Company, Thermo Instrument or Thermo
Electron. Notice of such cancellation shall be given to the Company in writing,
or by telegraph or telephone and confirmed in writing.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company, Thermo Instrument and Thermo Electron, jointly and
severally, shall indemnify and hold harmless each Underwriter against any
loss, claim, damage or liability (or any action in respect thereof), joint
or several, to which such Underwriter may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage or
liability (or action in respect thereof) arises out of or is based upon (i)
any untrue statement or alleged untrue statement made by the Company,
Thermo Instrument or Thermo Electron in Section 1 hereof or by Thermo
Instrument or Thermo Electron in Section 1A hereof, or (ii) any untrue
statement or alleged untrue statement of a material fact contained
<PAGE> 19
-19-
(A) in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement to any thereof, or (B) in any
"Blue Sky" application or other document executed by the Company
specifically for that purpose or based upon any written information
furnished by the Company filed in any state or other jurisdiction in order
to qualify any or all of the Shares under the securities laws thereof (any
such application, document or information being hereinafter called "Blue
Sky Information"), or (iii) the omission or alleged omission to state in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment or supplement to any thereof, or in any Blue Sky Information
a material fact required to be stated therein or necessary to make the
statements therein not misleading or (iv) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause
(ii) or (iii) above (provided that the Company, Thermo Instrument and
Thermo Electron shall not be liable under this clause (iv) to the extent
that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly or indirectly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its gross negligence,
willful misconduct or breach of this Agreement); and shall reimburse each
Underwriter promptly after receipt of invoices from such Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending against or appearing as a
third-party witness in connection with any such loss, claim, damage,
liability or action, notwithstanding the possibility that payments for such
expenses might later be held to be improper, in which case the person
receiving them shall promptly refund them; provided, however, that the
Company, Thermo Instrument and Thermo Electron shall not be liable in any
such case to the extent, but only to the extent, that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with written information furnished to the Company
through you by or on behalf of any Underwriter specifically for use in the
preparation of the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement to any thereof, or any Blue Sky
Information; and provided, further, that as to any Preliminary Prospectus
this indemnity agreement shall not inure to the benefit of any Underwriter
on account of any loss, claim, damage, liability or action arising from the
sale of Shares to any person by that Underwriter if that Underwriter failed
to send or give a copy of the Prospectus, as the same may be amended or
supplemented, to that person within the time required by the Securities Act
and the Rules and Regulations, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact in such Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by the Company
with Section 4(b).
(b) Each Underwriter severally, but not jointly, shall indemnify and
hold harmless the Company, Thermo Instrument and Thermo Electron against
any loss, claim, damage or liability (or action in respect thereof) to
which the Company, Thermo Instrument or Thermo Electron may become subject,
under the Securities Act or otherwise, insofar as such loss,
<PAGE> 20
-20-
claim, damage or liability (or action in respect thereof) arises out of or
is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement to any thereof,
or (B) in any Blue Sky Information, or (ii) the omission or alleged
omission to state in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement to any thereof,
or in any Blue Sky Information a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
shall reimburse any legal or other expenses reasonably incurred by the
Company, Thermo Instrument or Thermo Electron promptly after receipt of
invoices from the Company, Thermo Instrument or Thermo Electron in
connection with investigating or defending against any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments
for such expenses might later be held to be improper, in which case the
Company, Thermo Instrument and Thermo Electron shall promptly refund them;
provided, however, that such indemnification shall be available in each
such case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through you by or on behalf of such Underwriter specifically for
use in the preparation thereof.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 6 except to the extent it has been prejudiced in any material
respect by such failure or from any liability which it may have to an
indemnified party otherwise than under this Section 6. If any such claim or
action shall be brought against an indemnified party, and it shall notify
the indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it or they wish, jointly with
any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under such subsection
for any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable costs of
investigation, except that the Representatives shall have the right to
employ counsel to represent you and those other Underwriters who may be
subject to liability arising out of any claim in respect of which indemnity
may be sought by the Underwriters against the Company, Thermo Instrument or
Thermo Electron under such subsection if, in your reasonable judgment, it
is advisable for you and those Underwriters to be represented by separate
counsel, and in that event the fees and expenses of such separate counsel
shall be paid by the indemnifying party or parties; provided, however, in
no event, shall the indemnifying party or parties be responsible for the
expenses of more than one separate counsel for all such indemnified
parties.
<PAGE> 21
-21-
(d) If the indemnification provided for in this Section 6 is unavailable
or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, Thermo Instrument and Thermo Electron on the one
hand and the Underwriters on the other from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company, Thermo Instrument and Thermo Electron on the one hand
and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company, Thermo Instrument and Thermo Electron on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by one of the parties and such parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, Thermo Instrument,
Thermo Electron and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were to be
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred to in the
first sentence of this subsection (d). The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to
in the first sentence of this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending against any action or claim
which is the subject of this subsection (d), subject to the proviso in the
last sentence of subsection (c). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint. Each party entitled to contribution
agrees that upon the service of a summons or other initial legal process
upon it in any action instituted against it in respect of which
contribution may be sought, it shall promptly give written notice of such
service to the party or parties from whom contribution may be sought, but
the omission so to notify such party or parties of any such service shall
not relieve the party from whom contribution may be sought from any
<PAGE> 22
-22-
obligation it may have hereunder or otherwise (except as specifically
provided in subsection (c) hereof).
(f) The obligations of the Company, Thermo Instrument and Thermo Electron
under this Section 6 shall be in addition to any liability which the
Company, Thermo Instrument and Thermo Electron may otherwise have, and
shall extend, upon the same terms and conditions, to each person, if any,
who controls any Underwriter within the meaning of the Securities Act or
the Exchange Act; and the obligations of the Underwriters under this
Section 6 shall be in addition to any liability that the respective
Underwriters may otherwise have, and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to Thermo Instrument and Thermo Electron, and
each other person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act.
7. SUBSTITUTION OF UNDERWRITERS. If any Underwriter defaults in its
obligation to purchase the number of Shares which it has agreed to purchase
under this Agreement, the non-defaulting Underwriters shall be obligated to
purchase (in the respective proportions which the number of Shares set forth
opposite the name of each non-defaulting Underwriter in Schedule I hereto bears
to the total number of Shares set forth in Schedule I hereto) the Shares which
the defaulting Underwriter agreed but failed to purchase; except that the
non-defaulting Underwriters shall not be obligated to purchase any of the Shares
if the total number of Shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase exceed 9.09% of the total number of Shares, and
any non-defaulting Underwriters shall not be obligated to purchase more than
110% of the number of Shares set forth opposite its name in Schedule I hereto
plus the total number of Option Shares purchasable by it pursuant to the terms
of Section 2. If the foregoing maximums are exceeded, the non-defaulting
Underwriters, and any other underwriters satisfactory to you that so agree,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) all of the Shares. If the
non-defaulting Underwriters or the other underwriters satisfactory to you do not
elect to purchase the Shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase, the Agreement shall terminate without liability
on the part of any non-defaulting Underwriter, the Company, Thermo Instrument or
Thermo Electron except for the payment of expenses to be borne by the Company,
Thermo Instrument and Thermo Electron and the Underwriters as provided in
Section 4(h) hereof and the indemnity and contribution agreements of the
Company, Thermo Instrument, Thermo Electron and the Underwriters contained in
Section 6 hereof.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have for damages caused by its default. If the other
underwriters satisfactory to you are obligated or agree to purchase the Shares
of a defaulting Underwriter, either you or the Company may postpone the First
Closing Date for up to seven full Business Days in order to effect any changes
that may be necessary in the Registration Statement or the Prospectus or in any
other document or agreement, and to file promptly any amendments or any
supplements to the Registration Statement or the Prospectus which in your
opinion may thereby be made necessary.
<PAGE> 23
-23-
8. TERMINATION.
(a) Until the First Closing Date, this Agreement may be terminated by
you by giving notice as hereinafter provided to the Company, if (i) the
Company, Thermo Instrument or Thermo Electron shall have failed, refused or
been unable, at or prior to the First Closing Date, to perform any
agreement on its part to be performed hereunder, (ii) any other condition
of the obligations of the Underwriters hereunder is not fulfilled, (iii)
trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or the International Stock Exchange of the United
Kingdom or the over-the-counter market shall have been suspended or minimum
prices shall have been established on any of such exchanges or such market
by the Commission or by such exchange or other regulatory body or
governmental authority having jurisdiction, (iv) a banking moratorium shall
have been declared by Federal, New York, United Kingdom or Massachusetts
authorities, or (v) the United States or the United Kingdom is or becomes
engaged in hostilities which result in the declaration of a national
emergency or war, or (vi) there shall have been such a material adverse
change in general economic, political or financial conditions, or the
effect of international conditions on the financial markets in the United
States or the United Kingdom shall be such, as to, in the judgment of a
majority in interest of the several Underwriters, make it inadvisable or
impracticable to proceed with the delivery of the Shares. Any termination
of this Agreement pursuant to this Section 8 shall be without liability on
the part of the Company, Thermo Instrument, Thermo Electron or any
Underwriter, except as otherwise provided in Sections 4(h) and 6 hereof.
Any notice referred to above may be given at the address specified in
Section 10 hereof in writing or by telegraph or telephone, and if by telegraph
or telephone, shall be immediately confirmed in writing.
9. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND
REPRESENTATIONS. The agreements contained in Section 6 and the representations,
warranties and agreements of the Company, Thermo Instrument and Thermo Electron
in Sections 1, 1A and 4 shall survive the delivery of the Shares to the
Underwriters hereunder and shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of any indemnified party.
10. NOTICES. Except as otherwise provided in this Agreement, (a)
whenever notice is required by the provisions of this Agreement to be given to
the Company, Thermo Instrument or Thermo Electron, such notice shall be in
writing addressed to the Company, Thermo Instrument or Thermo Electron at 81
Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02254-9046; and (b) whenever
notice is required by the provisions of the Agreement to be given to the several
Underwriters, such notice shall be in writing addressed to you in care of
NatWest Securities Limited, 135 Bishopsgate, London EC2M3UR, England, Attention:
Syndicate Department.
11. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth
in the last paragraph on the outside cover page, the paragraph containing
stabilization information on
<PAGE> 24
-24-
the inside front cover page and the statements under the caption "Underwriting"
in any Preliminary Prospectus and in the Prospectus, constitute the only written
information furnished by or on behalf of any Underwriter referred to in
paragraph (b) of Section 1 hereof and in paragraphs (a) and (b) of Section 6
hereof.
12. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters, the Company, Thermo Instrument and Thermo
Electron, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(a) the representations, warranties, indemnities and agreements of the Company,
Thermo Instrument and Thermo Electron contained in this Agreement shall also be
deemed to be for the benefit of the person or persons, if any, who control any
Underwriter within the meaning of the Securities Act or the Exchange Act and (b)
the indemnity agreement of the Underwriters contained in Section 6 hereof shall
be deemed to be for the benefit of directors of the Company, officers of the
Company who signed the Registration Statement, and any person controlling the
Company, including Thermo Instrument and Thermo Electron. Nothing in this
Agreement shall be construed to give any person, other than the persons referred
to in this paragraph, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
13. DEFINITION OF "BUSINESS DAY", "SUBSIDIARY" AND "SIGNIFICANT
SUBSIDIARY". For purposes of this Agreement, (a) "Business Day" means any day on
which the American Stock Exchange is open for trading, (b) "Subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations and (c) "Significant
Subsidiary" has the meaning set forth in Item 1-02(v) of the Regulation S-X of
the Rules and Regulations.
14. PERFORMANCE BY THE COMPANY. Thermo Electron and Thermo Instrument
agree to cause the Company to perform each of the agreements and obligations of
the Company contained in this Agreement.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
choice of law or conflict of law principles thereof.
16. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which together shall constitute one and the same
agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 25
-25-
Please confirm, by signing and returning to us eight counterparts of
this Agreement, that you are acting on behalf of yourselves and the other
several Underwriters and that the foregoing correctly sets forth the agreement
among the Company, Thermo Instrument, Thermo Electron and the several
Underwriters.
Very truly yours,
THERMO BIOANALYSIS CORPORATION
By:
-------------------------------------
Title:
THERMO INSTRUMENT SYSTEMS INC.
By:
-------------------------------------
Title:
THERMO ELECTRON CORPORATION
By:
-------------------------------------
Title:
Confirmed and accepted as of the
date first above mentioned:
NATWEST SECURITIES LIMITED
LEHMAN BROTHERS INC.
SMITH BARNEY INC.
as Representatives of the several
Underwriters named in Schedule I hereto
By: NATWEST SECURITIES LIMITED
By:
-------------------------------
Authorized Signatory
<PAGE> 26
-26-
<TABLE>
SCHEDULE I
<CAPTION>
Number of Firm
Shares To Be
Underwriter Purchased
----------- ---------
<S> <C>
NatWest Securities Limited
Lehman Brothers Inc.
Smith Barney Inc.
---------
Total.............................................. 1,000,000
=========
</TABLE>
<PAGE> 1
Exhibit 2
PURCHASE AGREEMENT
by and among
Thermo BioAnalysis Corporation,
Thermo BioAnalysis Limited,
Thermo BioAnalysis (Guernsey) Limited,
Thermo BioAnalysis SA,
DLW Inc. and
BioAnalysis International Sales Inc.
(as Buyers),
Thermo Instrument Systems Inc.
(as Buyers' Parent),
and
Dynatech Laboratories, Inc.,
Dynatech Hong Kong Ltd.,
Dynatech Corporation Limited,
Laboratoires Dynatech, S.A.R.L.,
Dynatech Medical Products Limited and
Dynatech Corporation
(as Sellers)
February 5, 1996
<PAGE> 2
PURCHASE AGREEMENT
INDEX
<TABLE>
<S> <C>
SECTION 1. PURCHASE AND SALE OF ASSETS 2
1.1 Sale of Assets 2
1.2 Excluded Assets 3
1.3 Assumption of Liabilities 4
1.4 Purchase Price and Payment 6
1.5 The Closing 7
1.6 Delivery of Agreements of Assumption of Liabilities 8
1.7 Transfer of Subject Assets; Closing Deliveries 8
1.8 Delivery of Records and Contracts; Further Assurances 8
1.9 Allocation of Purchase Price 9
1.10 Sales and Transfer Taxes 10
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS 10
2.1 Organization and Qualification of the Sellers, Dynatech sro and
Dynatech GmbH 10
2.2 Subsidiaries; Dynatech sro and Dynatech GmbH 10
2.3 Ownership of Capital Stock of the Sellers, Dynatech sro and
Dynatech GmbH 11
2.4 Authority of the Sellers 11
2.5 Finder's Fee 12
2.6 Status of Tangible Property 12
2.7 Financial Statements 13
2.8 Taxes 14
2.9 Accounts Receivable 14
2.10 Absence of Certain Changes 14
2.11 Consents and Approvals 15
2.12 Intellectual Property 15
2.13 Litigation 16
2.14 Insurance 16
2.15 Environmental Matters 16
2.16 Employee Benefit Plans 17
2.17 Permits 18
2.18 Customers and Distributors; Relationships 18
2.19 Transactions with Affiliates 18
2.20 Inventories 19
2.21 Contracts 19
2.22 Compliance with Laws 19
2.23 Employees; Labor Matters 20
2.24 Backlog 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
2.25 Product Quality; Warranties; Recalls 20
2.26 Disclaimer 21
2.27 Sufficient Funds 21
2.28 Definition of Knowledge 21
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BUYERS 21
3.1 Organization 21
3.2 Ownership of the Buyers 21
3.3 Authority of the Buyer and Buyers' Parent 22
3.4 Consents and Approvals 22
3.5 Litigation 22
3.6 Finder's Fee 23
3.7 No Knowledge of Breach 23
3.8 Sufficient Funds 23
SECTION 4. CONDITIONS TO OBLIGATIONS 23
4.1 Conditions to Obligations of the Buyers 23
4.2 Conditions to Obligations of the Sellers 24
SECTION 5. CERTAIN COVENANTS 25
5.1 Proprietary Information; Confidentiality 25
5.2 No Solicitation or Hiring of Former Employees 26
5.3 Noncompetition Agreement 27
5.4 Provision of Financial Information 27
5.5 Product Warranty Matters 27
5.6 Transitional Use of Dynatech Names 28
5.7 Subleases; Assignments 30
5.8 Certain Bonuses Payable by Dynatech 30
SECTION 6. MODIFICATION, WAIVER AND TERMINATION 31
6.1 Modification and Amendments 31
6.2 Waivers 31
6.3 Termination 31
6.4 Effect of Termination 31
SECTION 7. EMPLOYEES 32
7.1 Offers of Employment of Employees; Benefits 32
7.2 Responsibility for Obligations to Non-Transferred Employees;
Constructive Termination 32
7.3 No Third Party Rights 33
7.4 Certain Transitional Benefit Matters 33
7.5 Effect of Transfer Regulations 34
7.6 Hong Kong Employees 34
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
SECTION 8. [INTENTIONALLY OMITTED]
SECTION 9. INDEMNIFICATION 35
9.1 Indemnification by the Sellers 35
9.2 Limitations on Indemnification by the Sellers 36
9.3 Indemnification by the Buyers 37
9.4 Limitations on Indemnification by the Buyers 38
9.5 Notice; Defense of Claims 38
9.6 Payment of Claims; Arbitration 39
9.7 Definition of Damages 39
9.8 Limitation on Remedies 40
SECTION 10. MISCELLANEOUS 40
10.1 Bulk Sales Law 40
10.2 Fees and Expenses 40
10.3 Governing Law 40
10.4 Notices 40
10.5 Entire Agreement 41
10.6 Assignability; Binding Effect 42
10.7 Captions and Gender 42
10.8 Execution in Counterparts 42
10.9 Amendments 42
10.10 Press Releases 42
10.11 Consent to Jurisdiction 43
</TABLE>
DISCLOSURE MEMORANDUM
EXHIBITS
1.1 Identity of Buyers and Sellers
1.6 Form of Agreement of Assumption of Liabilities and Excluded
Liabilities
1.9 Allocation of Purchase Price
3.1 Organization of the Buyers and Buyers' Parent
5.4 Financial Information to be Provided to the Sellers
7.1 List of Employees
<PAGE> 5
PURCHASE AGREEMENT
AGREEMENT entered into as of February 5, 1996 by and among (i) Thermo
BioAnalysis Corporation, a Delaware corporation ("BioAnalysis"); Thermo
BioAnalysis Limited, a company organized under the laws of England; Thermo
BioAnalysis (Guernsey) Limited, a company organized under the laws of Guernsey;
Thermo BioAnalysis SA, a French socite anonyme; DLW Inc., a Virginia
corporation; BioAnalysis International Sales Inc., a Delaware corporation (each
such entity, a "Buyer" and such entities, collectively, the "Buyers"); and
Thermo Instrument Systems, Inc., a Delaware corporation of which the Buyers are
direct or indirect subsidiaries ("Buyers' Parent"); on the one hand, and (ii)
Dynatech Laboratories, Inc., a Delaware corporation; Dynatech Hong Kong Ltd., a
private company organized under the laws of Hong Kong; Dynatech Corporation
Limited, a company organized under the laws of England; Laboratoires Dynatech,
S.A.R.L., a French limited liability company; and Dynatech Medical Products
Limited, a company organized under the laws of Guernsey (each such entity,
together with Dynatech Laboratories spol. s.r.o, a limited liability company
organized under the laws of the Czech Republic ("Dynatech sro"), and Dynatech
Deutschland GmbH, a limited liability company organized under the laws of the
Federal Republic of Germany ("Dynatech GmbH"), a "Dynatech Entity" and all such
entities, together with Dynatech sro and Dynatech GmbH, collectively, the
"Dynatech Entities"); and Dynatech Corporation, a Massachusetts corporation
("Dynatech"), of which the Dynatech Entities are direct or indirect wholly-owned
subsidiaries. The Dynatech Entities (other than Dynatech sro and Dynatech GmbH)
are sometimes hereinafter referred to collectively as the "Sellers" or
individually as a "Seller."
W I T N E S S E T H
WHEREAS, the Dynatech Entities are engaged in the business of
designing, manufacturing and marketing in vitro diagnostic instrumentation and
disposables for the worldwide immunodiagnostic market (the "Business").
WHEREAS, subject to the terms and conditions hereof, each Seller
desires to sell the portion of the Business conducted by such Seller; each
Seller other than Dynatech and Dynatech Corporation Limited desires to sell
substantially all of its properties and assets; Dynatech Corporation Limited
desires to sell certain of its assets and properties used by Dynatech
Corporation Limited in the conduct of the portion of its business conducted by
its Dynatech Laboratories division (the "UK Business"); and Dynatech desires to
sell all of the ownership interests in Dynatech sro and all of the share capital
of Dynatech GmbH; and
WHEREAS, subject to the terms and conditions hereof, the Buyers desire
to purchase said properties and assets of the Sellers for the consideration
specified herein and the assumption by the Buyers of certain liabilities and
obligations of the Dynatech Entities;
1
<PAGE> 6
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
1.1 Sale of Assets. Subject to the provisions of this Agreement, each
Seller agrees to sell and each Buyer as identified on Exhibit 1.1 hereto agrees
to purchase, at the Closing (as defined in Section 1.5 hereof), all of the
properties, assets and rights of such Seller of every kind and description,
tangible and intangible, real, personal or mixed, and wherever located, owned by
such Seller as of the Closing Date (as defined in Section 1.6) which are used
primarily by such Seller in the conduct of the portion of the Business, or in
the case of Dynatech Corporation Ltd., the UK Business, conducted by such Seller
other than the Excluded Assets (as defined in Section 1.2 below), including,
without limitation:
(a) All of such Seller's machinery, equipment, tools, furniture,
fixtures, motor vehicles, supplies, catalogs, product literature and other
tangible assets listed in Section 1.1(a) of the Disclosure Memorandum attached
hereto (the "Disclosure Memorandum");
(b) All of such Seller's inventories of raw materials, work in
process, finished products and resale merchandise listed in Section 1.1(b) of
the Disclosure Memorandum;
(c) All of the contracts, agreements and personal property leases
to which such Seller is a party, including, without limitation, the contracts,
agreements and personal property leases listed in Section 1.1(c) of the
Disclosure Memorandum, excluding in the case of Dynatech Corporation Limited
contracts and agreements which are not related to the UK Business (the
"Contracts");
(d) All of such Seller's patents, trademarks, trade names (except
as set forth in Section 1.2(d) hereof), service marks, copyrights, trade
secrets, technology, inventions, proprietary information, know-how, licenses,
data, designs, drawings, specifications and other documents related thereto,
including without limitation those items listed in Section 1.1(d) of the
Disclosure Memorandum;
(e) All of such Seller's accounts, accounts receivable and notes
receivable, excluding in the case of Dynatech Corporation Limited accounts and
notes receivable booked with respect to the portion of Dynatech Corporation
Limited's business that is not a part of the UK Business;
(f) All of such Seller's licenses, permits and regulatory approvals
(to the extent transferable) listed in Section 2.17 of the Disclosure
Memorandum;
2
<PAGE> 7
(g) Except as set forth in Section 1.2(b) below, all of such
Seller's books and records, wherever located, that relate primarily to the
Business;
(h) All of such Seller's other intangible assets not described
above that are primarily related to the Business;
(i) All of the issued and outstanding share capital of Dynatech
GmbH and of Dynatech sro (collectively, the "Shares"); and
(j) Dynatech Laboratories, Inc.'s lock-box maintained at Bank of
Boston; Dynatech Corporation Limited's lock-box maintained at Barclays Bank; and
Laboratoires Dynatech S.A.R.L.'s lock-box maintained at BNP.
The assets, property and rights of the Sellers to be sold to and
purchased by the Buyers under this Agreement (including the Shares) are
hereinafter sometimes referred to as the "Subject Assets."
1.2 Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, there shall be excluded from the Subject Assets those assets listed on
Section 1.2 of the Disclosure Memorandum and the following property:
(a) Cash and intercompany accounts between any of the Dynatech
Entities (including Dynatech sro and Dynatech GmbH) on the one hand, and
Dynatech or any of its subsidiaries (other than the Dynatech Entities (including
Dynatech sro and Dynatech GmbH)) on the other hand;
(b) Each Seller's corporate seals, corporate franchise, Articles of
Incorporation (or comparable charter document) ("Charter"), By-laws, stock
record books, corporate record books containing minutes of meetings of directors
and stockholders and such other records as have to do exclusively with such
Seller's organization or stock capitalization (collectively, the "Corporate
Records");
(c) All assets of Dynatech Corporation Limited which are not used
primarily in the UK Business; and
(d) All of Dynatech's and each Seller's right, title and interest
in the name "Dynatech", other than the rights granted to the Buyers for the
six-month period commencing on the Closing Date in accordance with Section 5.6
hereof.
The assets, property and rights of the Sellers to be excluded from the
sale to the Buyers shall be referred to as the "Excluded Assets."
3
<PAGE> 8
1.3 Assumption of Liabilities. Upon the sale and purchase of the
Subject Assets, and subject to the provisions of this Agreement, each Buyer as
identified on Exhibit 1.1 hereto agrees to assume and to pay or to discharge
when due in accordance with their respective terms, only the following
liabilities and obligations (collectively, the "Liabilities"):
(a) The liabilities and obligations of the Dynatech Entities shown
or reflected and reserved against on the Base Balance Sheet (as defined in
Section 2.7 hereof) (but not in amounts in excess of the amounts so shown,
reflected or reserved against), excluding any of such liabilities and
obligations discharged since the date of the Base Balance Sheet;
(b) All liabilities and obligations of the Dynatech Entities
incurred in connection with the Business in the ordinary course of such business
from and after the date of the Base Balance Sheet to the Closing Date to the
extent such liabilities or obligations (i) have not been satisfied prior to the
Closing Date and (ii) are shown or reflected and reserved against on the Closing
Net Asset Statement (as defined in Section 1.4(b) hereof) (but not in amounts in
excess of the amounts so shown, reflected or reserved against);
(c) Liabilities and obligations with respect to product or service
warranties (excluding product liability claims) for products or services of the
Business sold or delivered by any of the Dynatech Entities prior to the Closing;
and
(d) All liabilities and obligations of the Dynatech Entities under
the Contracts listed in Section 1.1(c) of the Disclosure Memorandum to the
extent that such liabilities or obligations accrue subsequent to the Closing or
relate to the period of time after the Closing.
Notwithstanding the foregoing, the Buyers shall not assume and shall
not pay any of the following liabilities or obligations:
(i) Taxes (as defined in Section 2.8 hereof) of Dynatech or of
any Dynatech Entity relating to periods before the Closing or incurred
by Dynatech or by any of the Dynatech Entities in connection with this
Agreement and the transactions provided for herein), including any
liability for Taxes arising out of the inclusion of any of the Dynatech
Entities in any group filing consolidated, combined or unitary tax
returns or arising out of any transferee liability, it being
specifically agreed that the Buyers shall not be deemed to be the
Sellers' transferees with respect to any Tax liability;
(ii) Liabilities of Dynatech or of any Dynatech Entity under
any Environmental Law (as defined in Section 2.15 hereof) (A) arising
from the generation, transportation, storage, treatment, disposal or
management of any Hazardous Waste (as defined in Section 2.15) at any
facility of Dynatech or of any Dynatech Entity or at any site to which
any such Hazardous Waste generated by Dynatech or by any Dynatech
Entity was transported prior to the Closing Date or (B) otherwise
resulting from the conduct of the Business by any Dynatech Entity prior
to the Closing Date;
4
<PAGE> 9
(iii) Liabilities in connection with or relating to any and all
actions, suits, claims, proceedings, demands, assessments and
judgments, costs, losses, liabilities, damage, deficiencies and
expenses (whether or not arising out of third-party claims) in
connection with any litigation or any governmental or administrative
proceedings to the extent arising out of events occurring prior to the
Closing Date;
(iv) Liabilities and obligations of any of the Dynatech
Entities for product liability claims with respect to products sold by
any of the Dynatech Entities prior to the Closing Date;
(v) Liabilities and obligations of Dynatech or of any of the
Dynatech Entities with respect to any current, retired or former
employee of such Dynatech Entities, including liabilities for salary,
bonuses, commissions, contingent payments and other compensation for
services provided prior to the Closing Date, and including liabilities
for worker's compensation and other employee claims, grievances or
other proceedings arising out of events occurring prior to the Closing
Date (but excluding any liabilities for accrued vacation on the books
of Dynatech GmbH, which shall be assumed);
(vi) Liabilities and obligations of Dynatech or of any of the
Dynatech Entities under any pension, benefit, profit sharing,
retirement, stock, deferred compensation, welfare, insurance,
disability, salary continuation (other than the salary continuation
obligations assumed by the Buyers pursuant to Section 7.1 hereof) and
other similar plans, programs and agreements maintained by Dynatech or
by any Dynatech Entity at any time in the past; or
(vii) Any other liabilities and obligations of Dynatech or of
any of the Dynatech Entities (including without limitation any
liabilities, penalties or other costs which may be imposed on any of
the Buyers or any of the Dynatech Entities arising out of any violation
of any applicable law by any of the Dynatech Entities prior to the
Closing Date and/or any failure by any Dynatech Entity to have obtained
and have in effect at all relevant times any permit, license, approval
or authorization necessary to conduct its business as such business was
conducted prior to the Closing Date), except for the Liabilities, as
defined in Sections 1.3(a) through Section 1.3(d) above.
The liabilities and obligations which are not assumed by the Buyers
under this Agreement are hereinafter sometimes referred to as the "Excluded
Liabilities." Upon the sale and purchase of the Subject Assets, and subject to
the provisions of this Agreement, Dynatech and the Sellers hereby expressly
agree to assume and to pay or to discharge when due any of the Excluded
Liabilities to the extent that such Excluded Liabilities may be liabilities or
obligations of Dynatech sro or Dynatech GmbH. Any Excluded Liability to which
any Buyer shall succeed as a matter of law notwithstanding the express terms of
this Agreement shall, as between the parties, nonetheless be deemed to be an
Excluded Liability, which, as between the Parties shall be the sole obligation
5
<PAGE> 10
of Dynatech and the Sellers. The assumption of said Liabilities by any party
hereunder shall not enlarge any rights of third parties under contracts or
arrangements with the Buyers or the Sellers and nothing herein shall prevent any
party from contesting in good faith with any third party any of said
Liabilities.
1.4 Purchase Price and Payment.
(a) In consideration of the sale by the Sellers to the Buyers of
the Subject Assets, subject to the assumption by the Buyers of the Liabilities
and the satisfaction of all of the conditions contained herein, the Buyers agree
that at the Closing they will deliver to an account or accounts designated in
writing by Dynatech a bank cashier's check(s) or wire transfer(s) of immediately
available funds in the aggregate amount of Forty-Three Million Dollars
($43,000,000) (the "Purchase Price"), subject to adjustment as set forth in
Section 1.4(b) hereof. The Purchase Price shall be allocated among the Sellers
in the manner provided in Section 1.9 hereof and, to the extent that any funds
representing any portion of the aggregate Purchase Price so allocated to the
acquisition of the Subject Assets or Shares from any Seller are in fact received
from the Buyers by Dynatech, Dynatech shall receive such funds solely as agent
for such Seller.
(b) Within 30 calendar days after the Closing, Dynatech shall
deliver to BioAnalysis a statement setting forth the Net Tangible Assets of the
Business (as defined below) of the Closing Date (the "Closing Net Asset
Statement"). BioAnalysis shall provide Dynatech and its accountants and advisors
with access (during BioAnalysis' normal business hours and upon reasonable
notice) to all data, workpapers and other information reasonably required for
Dynatech to prepare the Closing Net Asset Statement. The Purchase Price shall
then be either (i) increased by the amount by which the Net Tangible Assets of
the Business as set forth on the Closing Net Asset Statement exceed $13,500,000;
or (ii) decreased by the amount by which $13,500,000 exceeds the Net Tangible
Assets of the Business as set forth on the Closing Net Asset Statement (such
amount, as the case may be, the "Purchase Price Adjustment"); provided, however,
that no Purchase Price Adjustment will be due or payable to any party hereto in
the event that the difference between the Net Tangible Assets of the Business as
set forth on the Closing Net Asset Statement and $13,500,000 is less than
$200,000.
(c) For purposes of this Section 1.4, the Net Tangible Assets of
the Business shall equal the value of the tangible Subject Assets (excluding the
value of the Shares but including the value of the assets of Dynatech sro and
Dynatech GmbH (collectively, the "Incorporated Assets") as reflected on the
Closing Net Asset Statement less the Liabilities, and the value of the tangible
Subject Assets shall be determined in accordance with Dynatech's standard
accounting practices and policies, provided, however that (i) such practices and
policies shall conform in all material respects to United States generally
accepted accounting principles and (ii) such practices and policies shall be
applied on a basis consistent with Dynatech's practices for prior year-end
audits.
6
<PAGE> 11
(d) Dynatech shall provide BioAnalysis and its accountants and
advisors with access (during Dynatech's normal business hours and upon
reasonable notice) to all data, workpapers and other information from which the
Closing Net Asset Statement was prepared. If BioAnalysis notifies Dynatech in
writing of any disagreement with respect to any amount set forth in the Closing
Net Asset Statement submitted by Dynatech within the 45 days after the receipt
thereof by BioAnalysis, then BioAnalysis and Dynatech shall attempt to resolve
any such disagreement in good faith and on a reasonable schedule. If BioAnalysis
does not provide such a written notice to Dynatech within 45 days after the
receipt of the Closing Net Asset Statement by BioAnalysis (as such period may be
extended pursuant to Section 5.8 hereof) , then the Closing Net Asset Statement
submitted by Dynatech shall be deemed to be accepted by BioAnalysis and shall be
final and binding on the parties for purposes of determining the Purchase Price
Adjustment (if any). If the parties are unable to agree on the Closing Net Asset
Statement or the Purchase Price Adjustment by the close of business on the 120th
day after the Closing, then the parties shall retain an internationally
recognized accounting firm (which shall not be Coopers & Lybrand LLP or Arthur
Andersen LLP) to resolve any dispute between them and the Closing Net Asset
Statement and the Purchase Price Adjustment determined by such accounting firm
shall be binding upon the parties. BioAnalysis and Dynatech shall each pay
one-half of such accounting firm's fees and expenses.
(e) In the event an adjustment to the Purchase Price is made or
resolved pursuant to the terms of this Section 1.4, the following payments shall
be made:
(i) if the Purchase Price has been adjusted upward, the Buyers
shall, within two (2) business days of the resolution of such
adjustment, pay to an account or accounts designated in writing by
Dynatech such adjustment amount; or
(ii) if the Purchase Price has been adjusted downward, Dynatech
shall, within two (2) business days of the resolution of such
adjustment, pay to an account or accounts designated in writing by
BioAnalysis such adjustment amount.
1.5 The Closing. The closing of the purchase and sale provided for in
this Agreement (herein called the "Closing") shall take place at the offices of
Thermo Electron Corporation, 81 Wyman Street, Waltham, Massachusetts 02254 at
10:00 a.m., local time, on the later of (i) February 7, 1996 and (ii) the
satisfaction of all other conditions to Closing as set forth in Section 5
hereof, or at such other time or date as may be mutually agreeable to the
parties hereto (the date on which the Closing occurs being herein called the
"Closing Date"). All transactions at the Closing shall be deemed to take place
as of the end of the business day in Boston, Massachusetts, on the Closing Date
simultaneously and no transaction shall be deemed to have been completed and no
document or certificate shall be deemed to have been delivered until all
transactions are completed and all documents (other than the Local Transfer
Agreements (as defined in Section 10.5)) are delivered.
7
<PAGE> 12
1.6 Delivery of Agreements of Assumption of Liabilities. At the
Closing, each Buyer shall deliver or cause to be delivered to the appropriate
Seller, as identified on Exhibit 1.1, an Agreement for Assumption of the
Liabilities by such Buyer in substantially the form of Exhibit 1.6 hereto, and
Dynatech shall deliver or cause to be delivered to BioAnalysis an Agreement for
Assumption of the Excluded Liabilities of Dynatech sro and Dynatech GmbH by
Dynatech in substantially the form of Exhibit 1.6 hereto.
1.7 Transfer of Subject Assets; Closing Deliveries.
(a) At the Closing, each Seller shall deliver or cause to be
delivered to the appropriate Buyer, as identified on Exhibit 1.1, good and
sufficient instruments of transfer transferring to such Buyer all of such
Seller's right, title and interest in and to all the Subject Assets owned by
such Seller. Such instruments of transfer (a) shall be in the form and will
contain provisions not inconsistent with the provisions hereof which are usual
and customary for transferring the type of property involved under the laws of
the jurisdictions applicable to such transfers, (b) shall be in form and
substance reasonably satisfactory to the Buyers and their counsel, and (c) shall
effectively vest in the appropriate Buyer all of the appropriate Seller's right,
title and interest in and to the Subject Assets, free and clear of all liens,
restrictions and encumbrances other than the Liabilities.
(b) At the Closing, in addition to the taking of such other actions
as may be provided in this Agreement, each party shall deliver such closing
certificates, documents and opinions of counsel as may be reasonably requested
by counsel to the other parties hereto.
1.8 Delivery of Records and Contracts; Further Assurances.
(a) At the time of the Closing, subject to Section 1.8(b) below,
each Seller shall deliver or cause to be delivered to the appropriate Buyer all
of such Seller's leases, contracts, commitments, agreements and rights which are
included in the Subject Assets, with such assignments thereof and consents to
assignments as are necessary to assure such Buyer of the full benefit of the
same. Each Seller shall also deliver to the appropriate Buyer at the time of the
Closing all of such Seller's business records, copies of all Tax returns, books
and other data relating to the Business (or the UK Business) (except corporate
records and other property of such Seller excluded under Section 1.2(b)), and
each Seller shall take all requisite steps to put the Buyer in actual possession
and operating control of the Subject Assets of the Seller. For a period of six
(6) years after Closing, or such longer period as may be reasonably requested by
Dynatech, upon written request of Dynatech, BioAnalysis or its successor shall
make or cause to be made available to Dynatech, as the case may be, (i) all
books and records included in the Subject Assets that are needed by any Seller
or any successors or assigns for a valid business purpose, and permit Dynatech
and its agents to inspect and copy such books and records and (ii) assistance in
arranging discussions with officers, employees and agents of the Buyers and
their parent or affiliate companies on matters which relate to the Business as
previously conducted by the Sellers and the same as continued by the Buyers,
provided that all such inspection or assistance shall be at
8
<PAGE> 13
reasonable times as may be mutually agreed upon by such BioAnalysis and Dynatech
and shall be at Dynatech's sole cost and expense.
(b) If an attempted sale, conveyance, assignment, transfer or
delivery of any contracts, claims, leases, commitments, franchises, privileges,
permits, consents, certificates, licenses or any other assets, rights or
benefits to be sold, conveyed, assigned, transferred and delivered to any Buyer
which are included in the Subject Assets (collectively, the "Rights") would be
ineffective without the consent of any other person, and such consent has not
been obtained on or before the Closing Date, this Agreement shall not constitute
an assignment or an attempted assignment of such Right if such assignment or
attempted assignment would constitute a breach thereof or be unlawful. In such
case, each Seller at and after the Closing will, at the request and under the
direction of the Buyers and in the name of such Seller or otherwise as the
Buyers shall specify, take or cause to be taken all such action (including
without limitation the appointment of the Buyers as attorney-in-fact for such
Seller, but with powers limited to the specific purposes contemplated hereby)
and do or cause to be done all such things as shall in the reasonable opinion of
the Buyers or their counsel be necessary or proper to (a) assure that Rights
shall be preserved for the benefit of the Buyers, and (b) facilitate receipt by
the Buyers of the consideration to which the Sellers would otherwise be entitled
in and under all Rights, which consideration shall be held for the benefit of,
and shall be delivered to, the Buyers. In order to accomplish the foregoing, the
Sellers may designate the Buyers as subcontractors to perform obligations of any
Seller under any Rights. The Seller whose Rights are being assigned shall also
use commercially reasonable efforts to obtain, as soon as practicable, the
consent of each such or other person in all cases in which such consent is
required, and such Seller and the Buyers will cooperate in any reasonable
arrangement designed to enable such Seller to perform its obligation hereunder,
and to provide for the assumption by the appropriate Buyer of the benefits,
risks and burdens of any such agreement. Nothing in this Section shall in any
way diminish the obligations hereunder of the Sellers to use commercially
reasonable efforts to obtain all consents and approvals and to take all such
other actions prior to or at Closing as are necessary to enable the Sellers to
convey or assign valid title to all the Subject Assets to the Buyers.
(c) The Sellers from time to time after the Closing at the request
of the Buyers and without further consideration shall execute and deliver
further instruments of transfer and assignment and take such other action as the
Buyers may reasonably require to more effectively transfer and assign to, and
vest in, the Buyers each of the Subject Assets.
1.9 Allocation of Purchase Price. The Purchase Price and all other
capitalized costs of consummating the transactions contemplated by this
Agreement shall be allocated among the Subject Assets as set forth on Exhibit
1.9 hereto. Such allocation shall be binding upon the Buyers and the Sellers for
all purposes (including financial accounting purposes, financial and regulatory
reporting purposes and tax purposes). The Buyers and the Sellers also each agree
to report all federal, state, foreign, provincial and local income and other tax
consequences of the transactions contemplated hereby consistently with the
foregoing and agree not to take any
9
<PAGE> 14
position inconsistent therewith upon examination of any tax return, in any
refund claim, in any litigation or otherwise.
1.10 Sales and Transfer Taxes. Notwithstanding any other provision of
this Agreement, all sales, transfer or similar taxes required to be paid in
respect of the conveyances, assignments or transfers contemplated hereby shall
be paid by the Buyers.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
The Sellers hereby represent and warrant to the Buyers, jointly and
severally, that except as set forth in the Disclosure Memorandum (specifying the
relevant subsection of this Section 2):
2.1 Organization and Qualification of the Sellers, Dynatech sro and
Dynatech GmbH. Each Seller, and each of Dynatech sro and Dynatech GmbH, has been
duly organized, validly existing and in good standing under the laws of the
jurisdiction set forth next to its name in Section 2.1 of the Disclosure
Memorandum with full corporate power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted. The
copies of the Articles of Association of Dynatech GmbH (as amended to date and
as certified by its Commercial Registry) and the Prague Commercial Register
Extract of Dynatech sro (as amended to date), each heretofore delivered to the
Buyers' counsel, are complete and correct, and no amendments thereto are
pending. Each Seller, and each of Dynatech sro and Dynatech GmbH, is duly
qualified and to conduct its business and own its property in all jurisdictions
wherein the character of the properties owned or leased by them or the nature of
the activities thereof makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
Subject Assets or the Business or financial condition of the Dynatech Entities
(excluding the portion of Dynatech Corporation Limited's business that is not a
part of the UK Business) taken as a whole (a "Material Adverse Effect").
2.2 Subsidiaries; Dynatech sro and Dynatech GmbH.
(a) No Seller has any subsidiaries except as set forth in Section
2.2 of the Disclosure Memorandum. No Seller owns or has any interest in any
corporation, partnership or joint venture except as set forth in Section 2.2 of
the Disclosure Memorandum.
(b) The registered capital of Dynatech sro amounts to 100,000 Czech
crowns, all of which are fully paid and registered in the Prague Commercial
Register. The books and records of Dynatech sro, including without limitation
the books of account and minute books, are complete and correct in all respects
except as would not have a material adverse effect on the business of Dynatech
sro.
(c) The registered share capital of Dynatech GmbH amounts to DM
2,000,000, and consists of two shares in the nominal amounts of DM 100,000 and
DM 1,900,000,
10
<PAGE> 15
all of which are fully paid up. The books and records of Dynatech GmbH,
including without limitation the books of account and minute books, are complete
and correct in all respects except as would not have a material adverse effect
on the business of Dynatech GmbH.
2.3 Ownership of Capital Stock of the Sellers, Dynatech sro and
Dynatech GmbH. The beneficial and record owner of all of the issued and
outstanding shares (or registered share capital, as the case may be) of each
Dynatech Entity is set forth in Section 2.3 of the Disclosure Memorandum.
Without limiting the generality of the foregoing, Dynatech is the lawful record
and beneficial owner of all of the Shares, free and clear of any liens, claims,
restrictions (including restrictions upon transfer), equities or encumbrances.
All of the outstanding Shares have been duly authorized and validly issued, are
fully paid, nonassessable and free of preemptive rights and/or
sub-participations. There are no options, warrants, contracts, calls,
commitments or demands of any nature relating to the Shares, or to authorized,
issued or unissued ownership interests in Dynatech sro or share capital of
Dynatech GmbH.
2.4 Authority of the Sellers. Each Seller has all necessary authority
and power to enter into this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance by each Seller of
this Agreement and the consummation by each Seller of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
of each Seller, and no other action on the part of each Seller is required in
connection therewith. This Agreement constitutes, and the other agreements
executed by each Seller in connection herewith constitute, the valid and binding
obligations of each Seller, enforceable against each Seller in accordance with
their respective terms. Except as set forth in Section 2.11 of the Disclosure
Memorandum, the execution, delivery and performance by each Seller of this
Agreement and the other agreements executed by each Seller in connection
herewith do not, and the performance by each Seller of the transactions
contemplated hereby and thereby, will not:
(i) violate any provision of the Charter or By-laws of such
Seller, of Dynatech sro or of Dynatech GmbH;
(ii) violate any laws of the United States, or any country,
state or other jurisdiction, or any order, judgment or decree,
applicable to such Seller, to Dynatech sro or to Dynatech GmbH or
require such Seller or Dynatech sro or Dynatech GmbH to obtain any
approval, consent or waiver of, or make any filing with, any person or
entity (governmental or otherwise) that has not been obtained or made;
(iii) with or without notice or lapse of time or both, result
in a violation or any breach of or constitute a default under, or
require the consent or approval of any third party under, any material
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which such
Seller or Dynatech sro or Dynatech GmbH is a party or to which any of
the Subject Assets (including the Shares and the Incorporated Assets)
are subject; or
11
<PAGE> 16
(iv) result in the creation or imposition of any lien,
encumbrance, charge, claim or restriction upon any of the Subject
Assets, the Shares or the Incorporated Assets.
2.5 Finder's Fee. No Dynatech Entity has incurred or become liable for
any broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement, except for amounts payable to The
Bridgeford Group which shall be paid by the Sellers.
2.6 Status of Tangible Property.
(a) Owned Real Property. No Dynatech Entity owns any real property.
(b) Leased Real Property. Section 2.6(b) of the Disclosure
Memorandum contains a complete and correct list of the addresses of all real
property leased by each Dynatech Entity (the "Leased Real Property").
(i) Leases. True, complete and accurate copies of all leases or
other agreements ("Leases") under which each Dynatech Entity leases
Leased Real Property, together with all amendments thereto, have been
heretofore delivered to the Buyers and all such Leases are identified
on Section 2.6(b) of the Disclosure Memorandum. Each such Lease has
been duly authorized and executed by the parties thereto and is in full
force and effect. No Dynatech Entity is in default under any of such
Leases, nor has any event occurred which, with notice or passage of
time, or both, would give rise to a default.
(ii) Taxes. There are no taxes or betterment assessments other
than ordinary real estate taxes pending or payable against the Leased
Real Property.
(iii) Utilities. All water, sewer, gas, electric, telephone,
drainage and other utility equipment required by law or necessary for
the current operation of the Leased Real Property are installed and
connected to the Leased Real Property and such utilities are available
in sufficient quantities and such connections are adequate to service
the Leased Real Property as it is currently improved and operated.
(iv) Condition. Except as set forth on Section 2.6(b) of the
Disclosure Memorandum, to the best of the Sellers' knowledge, there are
no material defects in the physical or mechanical condition of any
improvements constituting a part of the Leased Real Property, and all
such items are in reasonable operating condition and repair, normal
wear and tear excepted.
(v) Compliance with Law; Government Approvals. No Dynatech
Entity has received any notice from any governmental authority of any
violation of any law, ordinance, regulation, license, permit or
authorization issued with respect to any of
12
<PAGE> 17
the Leased Real Property that has not been corrected heretofore, and no
such violation exists which could have a Material Adverse Effect.
(vi) Regulatory Proceedings. To the best of the Sellers'
knowledge, there are no condemnation, environmental, zoning,
expropriation, reserve or other land-use regulation proceedings either
instituted or planned to be instituted which would detrimentally affect
the use and operation of the Leased Real Property in the manner in
which the Leased Real Property is now used and operated.
(c) Personal Property. Each Dynatech Entity has good and valid,
legal title to all of the personal property identified in Section 1.1(a) of the
Disclosure Memorandum as being owned by such Dynatech Entity, in each case
subject to no mortgage, hypothec, attachment, lien, pledge, option, title
retention, conditional sale or other security interest, restriction, claim,
charge or other encumbrance of any kind, and each Seller has the complete and
unrestricted right to sell assign, transfer, convey and deliver such assets to
the Buyers at the Closing without any restrictions of any kind.
(d) Nature of Assets. Except as identified in Section 2.6(d) of the
Disclosure Memorandum (and other than (i) Excluded Assets, (ii) licenses and
permits that are by their terms or as a matter of law not transferable and that
are identified in Section 2.17 of the Disclosure Memorandum and (iii) services
and benefits provided to the Dynatech Entities by Dynatech or its affiliates
other than other Dynatech Entities and identified in Section 2.19 of the
Disclosure Memorandum), the Subject Assets and the Incorporated Assets include
all of the assets, properties and rights used in the operation of the Business
as presently conducted, and, with the exception of assets sold, consumed or
otherwise disposed of in the ordinary course, include all of the assets
reflected on the Base Balance Sheet.
2.7 Financial Statements. The Buyers have received the following
financial statements, copies of which are attached hereto as a part of Section
2.7 of the Disclosure Memorandum:
(i) unaudited consolidated financial statements of the Dynatech
Entities (excluding the portion of Dynatech Corporation Limited
business that is not part of the UK Business) for its fiscal years
ending on March 31, 1994 and 1995; and
(ii) an unaudited consolidated balance sheet of the Dynatech
Entities (excluding the portion of Dynatech Corporation Limited's
business that is not part of the UK Business) as of September 30, 1995
(the "Base Balance Sheet") and a related statement of income for the
period then ended.
Said financial statements have been prepared in accordance with Dynatech's
standard accounting policy for its consolidated operations, which policy
conforms in all material respects with United States generally accepted
accounting principles ("GAAP"), applied consistently during the periods covered
thereby and present fairly the financial condition of the Dynatech Entities
(excluding the
13
<PAGE> 18
portion of Dynatech Corporation Limited's business that is not part of the UK
Business) at the dates of said statements and the results of its operations for
the periods covered thereby; provided, however, that none of the financial
statements have footnotes required under GAAP and the Base Balance Sheet is
subject to normal year-end adjustments.
2.8 Taxes. Each Seller, and Dynatech sro and Dynatech GmbH has timely
filed all federal or foreign, as the case may be, income Tax returns and all
other material state, local and foreign Tax returns and reports required to be
filed by it through the date hereof. Section 2.8 of the Disclosure Memorandum
indicates those Tax returns that are currently the subject of an audit. Except
as set forth in Section 2.8 of the Disclosure Memorandum, no taxing authority or
agency is now asserting or, to the knowledge of the Sellers, threatening to
assert against any Seller any material deficiency or material claim for
additional Taxes or interest thereon or penalties in connection therewith. There
are no liens for Taxes upon the assets of any Seller or of Dynatech sro or of
Dynatech GmbH. For purposes of this Agreement, "Tax" means any federal, state,
provincial, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including without limitation Taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax or other fiscal charges of any kind whatsoever,
including without limitation any interest, penalty, or addition thereto, whether
disputed or not).
2.9 Accounts Receivable. Section 2.9 of the Disclosure Memorandum sets
forth the accounts receivable of each Dynatech Entity and aging information with
respect to such accounts receivable as at the dates indicated. All of such
accounts receivable have arisen and were booked in the ordinary course of the
Dynatech Entities' business and represent bona fide amounts due as a result of
products actually sold or services actually provided by the Dynatech Entities.
2.10 Absence of Certain Changes. Since the date of the Base Balance
Sheet, except as set forth in Section 2.10 of the Disclosure Memorandum, there
has not been:
(a) any change in the financial condition, properties, assets,
liabilities, business or operations of any Dynatech Entity which, either
individually or in the aggregate, has had or will have a Material Adverse
Effect;
(b) any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of any Dynatech Entity other than in the ordinary course of
business;
(c) any damage, destruction or loss, whether or not covered by
insurance, with respect to any property or asset of any Dynatech Entity that has
had or will have a Material Adverse Effect;
14
<PAGE> 19
(d) any material obligation or liability of any nature incurred by
any Dynatech Entity, whether absolute, contingent or otherwise, other than
obligations and liabilities incurred in the ordinary course of business;
(e) any material change in the compensation payable by any Dynatech
Entity to any of its officers, employees, agents or independent contractors
other than normal merit increases in accordance with its usual practices;
(f) any change in accounting methods or practices, credit
practices, or collection policies used by any Dynatech Entity;
(g) to the best of the Sellers' knowledge, any statute, rule,
regulation, ordinance, order or government policy adopted, which is specifically
applicable to firms in the line of business in which the Seller is engaged due
to its conduct of the Business, which may, in the Sellers' reasonable judgment,
have a Material Adverse Effect; or
(h) any strike, labor dispute or any other new event, development
or condition of any character which could have a Material Adverse Effect.
2.11 Consents and Approvals. Except as set forth in Section 2.11 of the
Disclosure Memorandum, the execution and delivery of this Agreement by each
Seller do not, and the performance of the transactions contemplated by this
Agreement by each Seller will not, require any filing with or notification to,
or any consent, approval, authorization or permit from, any governmental or
regulatory authority (a "Governmental Entity") or any other person except (a)
filings under Section 7A of the Clayton Act (the "Hart-Scott-Rodino Act") and
under the merger control laws of the Federal Republic of Germany, and (b) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications (i) would not prevent or delay the
consummation of the transactions contemplated by this Agreement, and (ii) would
not have a Material Adverse Effect.
2.12 Intellectual Property. Section 2.12 of the Disclosure Memorandum
sets forth a true and correct list of all patents, patent applications,
trademarks, trademark registrations and applications and registered copyrights
owned by or licensed to each Dynatech Entity, and all applications therefor,
other than retail software which each Dynatech Entity licenses for its own
internal use (collectively, "Intellectual Property"). Except as set forth in
Section 2.12 of the Disclosure Memorandum, each Dynatech Entity owns or has a
valid license to use all proprietary rights used in the operation of the
Business as heretofore conducted, including all of such Intellectual Property.
Except as set forth in any license identified in Section 2.12 of the Disclosure
Memorandum, no Seller and no Dynatech Entity has granted to any other person or
entity any rights to any of the Intellectual Property. No Seller has any
knowledge of any infringement by others of any of its Intellectual Property
rights. To the knowledge of the Sellers, the present business, activities and
products of the Dynatech Entities does not infringe any Intellectual Property of
any other person or entity. Since January 1 1993, (and, to the knowledge
15
<PAGE> 20
of the Sellers, since January 1, 1991), no Seller or Dynatech GmbH has received
any complaint, claim or notice in writing alleging any such infringement, which
complaint, claim or notice has not been resolved to the mutual satisfaction of
the parties involved in a manner which involves no future obligations of any
Dynatech Entity. No Seller or Dynatech GmbH has agreed, except either (i) in the
ordinary course of business in conjunction with product sales or (ii) as
identified in any contract identified in Section 1.1(c) of the Disclosure
Memorandum or in any other section of the Disclosure Memorandum, to indemnify
any person or entity for or against any infringement, misappropriation or other
conflict with any Intellectual Property.
2.13 Litigation. Except as set forth in Section 2.13 of the Disclosure
Memorandum, there is no litigation or, to the knowledge of the Sellers,
governmental or administrative proceeding or investigation pending against any
Seller, or against Dynatech sro or Dynatech GmbH or, to the knowledge of the
Sellers, threatened against any Seller, or against Dynatech sro or Dynatech
GmbH, which may have a Material Adverse Effect or which would prevent or hinder
the consummation of the transactions contemplated by this Agreement.
2.14 Insurance. A summary of insurance coverage of each Dynatech Entity
or of Dynatech for the benefit of any Dynatech Entity is contained in Section
2.14 of the Disclosure Memorandum. All policies providing such coverage are
nontransferable other than any such policies obtained by Dynatech sro or by
Dynatech GmbH. Neither Dynatech sro nor Dynatech GmbH is in default with respect
to any provisions of any policy of general liability, fire, title or other form
of insurance covering the portion of the Business conducted by such entity or
the Incorporated Assets. Dynatech sro and Dynatech GmbH are each current in the
payment of all premiums due with respect to such insurance. To the best of the
Sellers' knowledge, no basis exists which would jeopardize the coverage under
any such insurance.
2.15 Environmental Matters.
(a) To the best knowledge of the Sellers, except as set forth in
Section 2.15 of the Disclosure Memorandum:
(i) No Dynatech Entity is or has been in violation, in any
material respect, of any federal, foreign, state, municipal or
provincial law, regulation, order, decree or rule relating to the
prevention of pollution or the protection of the environment
("Environmental Laws");
(ii) the Leased Real Property has never been the subject of a
material cleanup or remediation of environmental contamination;
(iii) the Leased Real Property does not contain any Hazardous
Material (as defined below) in amounts which would require removal or
remediation under any Environmental Law applicable to any such
property;
16
<PAGE> 21
(iv) no Dynatech Entity has ever owned or operated a petroleum
or Hazardous Waste (as defined below) landfill or any petroleum or
other Hazardous Waste treatment, storage or disposal facility subject
to any permit requirements;
(v) there are no proceedings under any Environmental Law
applicable to any of the Leased Real Property pending or, to the best
of the Sellers' knowledge, threatened which could have a material
adverse effect on the present or future use of the Leased Real Property
for the purpose for which it is currently used;
(vi) the Leased Real Property is not and has not been on any
federal, foreign or state "Superfund" list and is not on the
Comprehensive Response, Compensation and Liability Information System
list compiled by the United States Environmental Protection Agency or
on any analogous state or foreign environmental agency list;
(vii) with regard to the Leased Real Property, neither Dynatech
nor any of the Dynatech Entities has received any notice from any
governmental agency or other party alleging any liability under any
Environmental Law;
(viii) the Leased Real Property is not subject to a lien under
any Environmental Laws;
(ix) none of the Leased Real Property contains any Hazardous
Substances (as defined below) which requires release reporting or
removal or remediation under any Environmental Law.
For purposes of this Agreement, "Hazardous Material" means any material
as so defined under the Federal Hazardous Materials Transportation Act, codified
within 49 U.S.C. Sections 5101-5127 and its implementing regulations, or under
any similar federal, state, provincial and county and foreign laws; "Hazardous
Waste" means any material as so defined under the Federal Solid Waste Disposal
Act as amended by the Resource Conservation and Recovery Act, as codified within
42 U.S.C. Sections 6901-6992k and its implementing regulations, or under any
similar federal, state, provincial and county and foreign laws; and "Hazardous
Substances" means those substances listed or identified pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986 in Section
302.4 of the National Contingency Plan (Title 40 of the Code of Federal
Regulations) as in effect as of the Closing Date, or under any similar federal,
state, provincial and county and foreign laws.
2.16 Employee Benefit Plans.
(a) Disclosure. Section 2.16 of the Disclosure Memorandum contains
a true and complete list of all pension, benefit, profit sharing, retirement,
stock, deferred compensation,
17
<PAGE> 22
welfare, insurance, disability, salary continuation and other similar plans,
programs and agreements, currently maintained by any of the Dynatech Entities
for the benefit of its U.S. employees (or by Dynatech or any of its affiliates
for the benefit of the U.S. employees of any of the Dynatech Entities),
including such plans which are "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(the "Employee Plans").
(b) Claims and Litigation. Except as set forth in Section 2.16 of
the Disclosure Memorandum, there are no pending claims, suits or other
proceedings by present or former employees of any of the Dynatech Entities, or
of any plan participants, beneficiaries or spouses of any of the above, with
respect to or involving any Employee Plan, or any rights or benefits thereunder,
other than claims by participants or beneficiaries of such Employee Plans for
ordinary and usual benefits to which such beneficiaries of participants are
entitled under the terms of such Employee Plans.
2.17 Permits. Section 2.17 of the Disclosure Memorandum lists all
permits, registrations, licenses, franchises, certifications and other approvals
required from federal, foreign, state, or local authorities in order for the
Dynatech Entities to conduct the Business, the loss or absence of which could
have a Material Adverse Effect.
2.18 Customers and Distributors; Relationships. Section 2.18 of the
Disclosure Memorandum lists, separately for each Dynatech Entity, any sales
representative, distributor or direct customer (whether pursuant to a
commission, royalty or other arrangement) who accounted for more than 10% of the
sales of such Dynatech Entity for the nine months ended December 31, 1995
(collectively, the "Customers and Distributors"). To the best of the Sellers'
knowledge, no relationship between any of the Dynatech Entities and any
Customer, Distributor, material supplier or officer or key employee of any of
the Dynatech Entities will be terminated or adversely affected as a result of
the execution of this Agreement or the consummation of the transactions
contemplated hereby.
2.19 Transactions with Affiliates. Except as set forth in Section 2.19
of the Disclosure Memorandum, no Dynatech Entity owns, and, to the best of the
Sellers' knowledge, none of the Dynatech Entities' stockholders, officers,
employees or directors own directly or indirectly on an individual or joint
basis any interest in (other than passive investments of less than 5% of the
equity ownership of a publicly-traded enterprise), or serve as an officer or
director or in another similar capacity of, any competitor or supplier of
Dynatech or of any Dynatech Entity, or, to the knowledge of the Sellers, any
organization which has any material contract or arrangement with Dynatech or
with any Dynatech Entity. Except as set forth in Section 2.19 of the Disclosure
Memorandum, no Dynatech Entity is or, during the nine-month period ending on
December 31, 1995, has been a party to any material sales or purchase contract
or transaction with any affiliate of Dynatech other than any other Dynatech
Entity.
18
<PAGE> 23
2.20 Inventories. All of each Dynatech Entities' inventory items (net
of any reserve therefor identified on the Base Balance Sheet) are of a quality
and quantity salable in the ordinary course of its business. The values of the
inventories stated in the Base Balance Sheet reflect the normal inventory
valuation policies of each Dynatech Entity and were determined in accordance
with Dynatech's accounting policy described in Section 2.7.
2.21 Contracts. Except for contracts, commitments, plans, agreements
and licenses described in Section 1.1(c), Section 1.2, Section 1.3, Section
2.11, Section 2.16, Section 2.19 or Section 2.21 of the Disclosure Memorandum,
no Dynatech Entity is a party to or subject to:
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
(b) any employment contract or contract for services which requires
the payment of more than $75,000 annually or which is not terminable within 30
days by each Dynatech Entity without liability for any penalty or severance
payment (other than as required by statute or by commonly recognized employment
practices that may require the giving of additional notice, severance payments
or both);
(c) except for purchase orders in the ordinary course for less than
$100,000 in the aggregate for any single vendor, any contract or agreement for
the purchase of any commodity, material or equipment which is not terminable
without penalty or other obligation upon 90 days' notice;
(d) any contract with any sales agent or distributor of products
which is not terminable without penalty or other obligation upon 90 days'
notice;
(e) any contract containing covenants limiting the freedom of any
Dynatech Entity to compete in any line of business or with any person or entity;
(f) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money; or
(g) any contract or agreement with any officer, employee, director
or stockholder of any Dynatech Entity or with any persons or organizations
controlled by or affiliated with any of them.
Each Dynatech Entity is in compliance in all material respects with
such contracts, plans or agreements, except for such defaults thereunder as
would not have a Material Adverse Effect.
2.22 Compliance with Laws. Each Dynatech Entity is in compliance in all
material respects with all applicable statutes, ordinances, orders, rules and
regulations promulgated by any
19
<PAGE> 24
federal, foreign, state, municipal or other governmental authority which apply
to the conduct of its business, and no Dynatech Entity has received any notice
of a violation or alleged violation of any such statute, ordinance, order, rule
or regulation.
2.23 Employees; Labor Matters. Each Dynatech Entity employs
approximately the number of employees set forth in Section 2.23 of the
Disclosure Memorandum next to its respective name and generally enjoys a good
employer-employee relationship. No Dynatech Entity is delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it to the date hereof or
amounts required to be reimbursed to such employees. No Dynatech Entity is party
to any collective bargaining agreement or recognizes (or is required to
recognize) any trade union. There is not currently, and within the last three
years no Dynatech Entity has experienced, any strike, picketing, boycott, work
stoppage or slow down or union organization activity. Except as may be described
in Section 2.23 of the Disclosure Memorandum, no Dynatech Entity has received
written notice within the last three years (i) of any allegation, charge or
complaint of unfair labor practice, employment discrimination or other matter
relating to the employment of labor pending or threatened against it, or (ii)
that it has not complied in all material respects with all applicable laws
relating to the employment of labor.
2.24 Backlog. The firm sales orders and commitments for the Dynatech
Entities' products and services that make up the Dynatech Entities' backlog as
of the date of the Base Balance Sheet (which in each case are subject to
cancellation by the customer in the ordinary course of business) was not less
than $5,378,000 at September 30, 1995. All such orders and commitments and any
quotations for work which were outstanding at that time arose and were booked in
the ordinary course of the Dynatech Entities' business and contained terms and
conditions that were consistent with the past practice of the Dynatech Entities
over the past year.
2.25 Product Quality; Warranties; Recalls.
(a) Product Quality. Since January 1, 1993, (i) there has not
existed any pattern of return of shipments by customers, cancellation of
purchase orders, rejection of products by customers or claims by customers for
allowances that would indicate a problem with respect to the quality of any
products sold by the Business; and (ii) no products sold by the Business have
been authorized to be returned or, to the best knowledge of the Sellers,
rejected by the purchasers which products have not, in either case, been
returned to and accepted by any Dynatech Entity prior to the Closing except for
such returns and rejections of items occurring in the normal course of business.
(b) Product Warranties. A statement of the current standard product
warranty used for each of the products of the Business is set forth in Section
2.25(b) of the Disclosure Memorandum. Such Section of the Disclosure Memorandum
also lists and accurately summarizes any and all other product warranties (other
than express or implied product warranties required by law) made by or on behalf
of any Dynatech Entity in connection with the Business which deviate
20
<PAGE> 25
in any material respect from such Dynatech Entity's current standard product
warranty and which remain in effect on the date hereof, or pursuant to which any
of the Dynatech Entities has any remaining obligations.
(c) Recalls. To the best knowledge of the Sellers, there is no
basis for the recall, withdrawal or suspension of any approval by any
governmental regulatory agency with respect to any product or service sold or
proposed to be sold by the Business. None of the Business's products or services
is the subject of any recall proceedings, no such proceedings have been
threatened, and (except as set forth on Section 2.25(c) of the Disclosure
Memorandum) no product or service of the Business has been recalled since
January 1, 1993.
2.26 Disclaimer. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF THE
SELLERS CONTAINED HEREIN, THE SELLERS DISCLAIM ALL WARRANTIES, EXPRESS, IMPLIED
OR STATUTORY, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE.
2.27 Sufficient Funds. Dynatech and the Sellers have and will have
funds sufficient to perform and discharge the Excluded Liabilities.
2.28 Definition of Knowledge. In each case where a representation or
warranty by the Sellers contained in this Agreement is qualified as being "to
the best of the Sellers' knowledge" (or otherwise similarly qualified), such
knowledge shall be deemed to consist of the actual knowledge of Robert H. Hertz
and Samuel W. Tishler, and the actual knowledge of the principal executive,
financial and operating officers of each Dynatech Entity as identified in
Section 2.28 of the Disclosure Memorandum next to their respective names, in
each case after actually conducting a reasonable investigation.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BUYERS.
The Buyers and Buyers' Parent hereby represent and warrant to the
Sellers, jointly and severally, that:
3.1 Organization. Each Buyer and Buyers' Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction set forth next to its name in Exhibit 3.1 hereto with full
corporate power and authority to own or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is currently conducted.
3.2 Ownership of the Buyers. Buyer's Parent owns a majority of the
issued and outstanding capital stock of BioAnalysis. BioAnalysis directly or
indirectly owns all of the issued and outstanding capital stock of each other
Buyer.
21
<PAGE> 26
3.3 Authority of the Buyers and Buyers' Parent. Each Buyer and Buyers'
Parent has all necessary authority and power to enter into this Agreement and to
carry out the transactions contemplated hereby. The execution, delivery and
performance by each Buyer and Buyers' Parent of this Agreement and the
consummation by each Buyer and Buyers' Parent of the transactions contemplated
hereby have been duly authorized by all necessary corporate action of each Buyer
and Buyers' Parent, and no other action on the part of each Buyer or Buyers'
Parent is required in connection therewith. This Agreement constitutes, and the
other agreements executed by each Buyer and Buyers' Parent in connection
herewith constitute, the valid and binding obligations of each Buyer and Buyers'
Parent, enforceable against each Buyer and Buyers' Parent in accordance with
their respective terms. The execution, delivery and performance by each Buyer
and Buyers' Parent of this Agreement and the other agreements executed by each
Buyer and Buyers' Parent in connection herewith do not, and the performance by
each Buyer and Buyers' Parent of the transactions contemplated hereby and
thereby, will not:
(i) violate any provision of the Charter or By-laws of such
Buyer or of Buyers' Parent;
(ii) violate any laws of the United States, or any country,
state or other jurisdiction, or any order, judgment or decree,
applicable to such Buyer or to Buyers' Parent or require such Buyer or
Buyers' Parent to obtain any approval, consent or waiver of, or make
any filing with, any person or entity (governmental or otherwise) that
has not been obtained or made; or
(iii) with or without notice or lapse of time or both, result
in a violation or any breach of or constitute a default under, or
require the consent or approval of any third party under, any material
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which such Buyer
or Buyers' Parent is a party.
3.4 Consents and Approvals. The execution and delivery of this
Agreement by each Buyer does not, and the performance of the transactions
contemplated by this Agreement by each Buyer will not, require any filing with
or notification to, or any consent, approval, authorization or permit from, any
Governmental Entity or any other person except (a) filings under the
Hart-Scott-Rodino Act and under the merger control laws of the Federal Republic
of Germany, and (b) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications would not
prevent or delay the consummation of the transactions contemplated by this
Agreement.
3.5 Litigation. There is no litigation or, to the knowledge of the
Buyers, governmental or administrative proceeding or investigation pending
against any Buyer or against Buyers' Parent or, to the knowledge of the Buyers
or of Buyer' Parent, threatened against any Buyer or against
22
<PAGE> 27
Buyers' Parent, which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
3.6 Finder's Fee. Neither the Buyers nor Buyers' Parent have incurred
or become liable for any broker's commission or finder's fee relating to or in
connection with the transactions contemplated by this Agreement.
3.7 No Knowledge of Breach. Neither the Buyers nor Buyers' Parent have
any actual knowledge of a breach (or of any fact or set of facts which
constitute a breach) of any representation or warranty of the Sellers made in
this Agreement or in any Exhibit hereto.
3.8 Sufficient Funds. The Buyers and the Buyers' Parent have and will
have funds sufficient to satisfy the sums due at Closing as set forth in this
Agreement and to perform and discharge the Liabilities.
SECTION 4. CONDITIONS TO OBLIGATIONS
Section 4.1. Conditions to Obligations of the Buyers. The obligations
of the Buyers to consummate the transactions contemplated hereby are subject to
the satisfaction, on or before the Closing, of the following conditions (unless
waived in writing by BioAnalysis in the manner provided in Section 6.2 hereof):
(a) Representations, Warranties and Performance of the Sellers.
The representations and warranties set forth in Section 2 hereof shall be
accurate on and as of the date hereof, and shall be accurate in all material
respects on and as of the Closing Date as though made on and as of the Closing
Date, and the Sellers shall have performed all obligations and complied with all
covenants required to be performed or to be complied with by them under this
Agreement prior to the Closing.
(b) No Material Adverse Changes. There shall have been no material
adverse change in the financial condition, properties, assets, liabilities,
earnings, business, operations or prospects of any of the Dynatech Entities
since the date of this Agreement, whether or not in the ordinary course of
business. For purposes of the preceding sentence, materiality shall be
determined with respect to the Dynatech Entities as a whole.
(c) Authorization. All action necessary to authorize the
execution, delivery and performance hereof by the Sellers and the consummation
of the transactions contemplated hereby shall have been duly and validly taken
by the Sellers. Dynatech shall have furnished BioAnalysis with a copy of all
resolutions adopted by its Board of Directors in connection with such actions,
certified by the Clerk or an Assistant Clerk of Dynatech, together with copies
of such other instruments and documents as BioAnalysis shall have reasonably
requested.
23
<PAGE> 28
(d) Consents. Any governmental authority having jurisdiction over
any Seller or any Dynatech Entity or over any Buyer, to the extent that its
consent or approval is required by applicable law or regulation for the
performance of this Agreement or the consummation of the transactions
contemplated hereby shall have granted any necessary consent or approval.
(e) Permits and Approvals. Any and all consents, permits,
approvals or other actions of any person, jurisdiction or authority required in
the reasonable opinion of BioAnalysis for lawful consummation of the
transactions contemplated hereby shall have been obtained, and shall be in full
force and effect, and no such consent, permit, approval or other action shall
contain any provision that in the reasonable judgment of BioAnalysis is unduly
burdensome.
(f) Good Standing Certificates. Each of Dynatech and Dynatech
Laboratories, Inc. shall have delivered to BioAnalysis a corporate good standing
certificate from its jurisdiction of incorporation.
(g) Matters Related to Indebtedness of Dynatech GmbH. Dynatech
shall have delivered to BioAnalysis evidence of the release of Dynatech GmbH of
from all indebtedness to Bank of Boston and/or any other person or entity.
(h) Officer's Certificate. Dynatech shall have delivered to
BioAnalysis a certificate executed by an officer of Dynatech, dated the Closing
Date, certifying to the fulfillment of the conditions specified in Sections
4.1(a) and 4.1(b).
(i) Documents Satisfactory. The form and substance of all legal
matters contemplated herein and of all papers used or delivered hereunder shall
be reasonably acceptable to BioAnalysis, and BioAnalysis shall have received all
documents that it may have reasonably requested in connection with the
transactions contemplated hereby, in form and substance reasonably satisfactory
to it.
Section 4.2. Conditions to Obligations of the Sellers. The obligations
of the Sellers to consummate the transactions contemplated hereby are subject to
the satisfaction, on or before the Closing, of the following conditions (unless
waived by Dynatech in writing in the manner provided in Section 6.2 hereof):
(a) Representations, Warranties and Performance of the Buyers. The
representations and warranties set forth in Section 3 hereof shall be accurate
on and as of the date hereof, and shall be accurate in all material respects on
and as of the Closing Date as though made on and as of the Closing Date, and the
Buyers shall have performed all obligations and complied with all covenants
required to be performed or to be complied with by them under this Agreement
prior to the Closing.
(b) Authorization. All action necessary to authorize the
execution, delivery and performance hereof by the Buyers and the consummation of
the transactions contemplated
24
<PAGE> 29
hereby shall have been duly and validly taken by the Buyers. BioAnalysis shall
have furnished Dynatech with a copy of all resolutions adopted by its Board of
Directors in connection with such actions, certified by the Secretary or an
Assistant Secretary of BioAnalysis, together with copies of such other
instruments and documents as Dynatech shall have reasonably requested.
(c) Consents. Any governmental authority having jurisdiction over
any Seller or any Dynatech Entity or over any Buyer, to the extent that its
consent or approval is required by applicable law or regulation for the
performance of this Agreement or the consummation of the transactions
contemplated hereby shall have granted any necessary consent or approval.
(d) Permits and Approvals. Any and all consents, permits,
approvals or other actions of any person, jurisdiction or authority required in
the reasonable opinion of Dynatech for lawful consummation of the transactions
contemplated hereby shall have been obtained.
(e) Good Standing Certificates. Each of BioAnalysis, DLW Inc. and
BioAnalysis International Sales Inc. shall have delivered to Dynatech a
corporate good standing certificate from its jurisdiction of incorporation.
(f) Officer's Certificate. BioAnalysis shall have delivered to
Dynatech a certificate executed by an officer of BioAnalysis, dated the Closing
Date, certifying to the fulfillment of the conditions specified in Section
4.2(a).
(g) Documents Satisfactory. The form and substance of all legal
matters contemplated herein and of all papers used or delivered hereunder shall
be reasonably acceptable to Dynatech, and Dynatech shall have received all
documents that it may have reasonably requested in connection with the
transactions contemplated hereby, in form and substance reasonably satisfactory
to it.
SECTION 5. CERTAIN COVENANTS.
5.1 Proprietary Information; Confidentiality.
(a) At all times subsequent to the Closing, each of the Sellers
and each of their affiliates shall hold in confidence all knowledge and
information of a secret or confidential nature with respect to the Business
("Proprietary Business Information") and shall not disclose, publish or make use
of the same without the consent of the Buyers.
(b) At all times subsequent to the Closing, the Sellers, the
Buyers and their respective affiliates shall hold in confidence all knowledge
and information of a secret or confidential nature supplied to them by the other
parties hereto for their respective evaluations of this Agreement (such
information, excluding the Proprietary Business Information, which shall be
governed by Section 5.1(a) the "Evaluation Information").
25
<PAGE> 30
(c) The obligations of the parties under this Section 5.1 shall
not apply to any Proprietary Business Information or Evaluation Information
which:
(i) shall have become public knowledge other than by breach of
this Agreement by the disclosing party;
(ii) is required to be disclosed by legal process or by any
applicable law, rule or regulation of any governmental or regulatory
body or stock exchange;
(iii) becomes available to the disclosing party from a source
other than another party to this Agreement or the representatives or
agents of such other party;
(iv) was known by the disclosing party prior to its receipt
from another party to this Agreement or from the representatives or
agents of such party;
(v) has been or is subsequently developed independently by the
disclosing party; or
(vi) is disclosed more than three years after the date of this
Agreement.
(d) If (i) the employment of an officer, director or other
employee of the Sellers or the Buyers, or of their respective affiliates, to
whom Proprietary Business Information or Evaluation Information has been
disclosed is terminated and (ii) such individual is subject to an obligation to
maintain such knowledge or information in confidence after such termination, the
Buyers or the Sellers (as the case may be) shall, upon request by the other,
take all reasonable steps at their own expense to enforce such confidentiality
obligation in the event of an actual or threatened breach thereof. Any legal
counsel retained by any of the Sellers or the Buyers (as the case may be) in
connection with any such enforcement or attempted enforcement shall be selected
by such party but shall be subject to the approval of the other party, which
approval shall not be unreasonably withheld.
(e) The parties hereto agree that the remedy at law for any breach
of this Section 5.1 would be inadequate and that the other parties hereto shall
be entitled to injunctive relief in addition to any other remedy they may have
upon breach of any provision of this Section 5.1.
5.2 No Solicitation or Hiring of Former Employees. For a period of
three years after the Closing Date, no Seller nor any affiliate thereof shall,
without the prior written consent of BioAnalysis, (a) solicit any Transferred
Employee (as defined in Section 7.1) to terminate his employment with the Buyers
or to become an employee of such Seller or affiliate, or (b) hire any such
Transferred Employee except employees involuntarily terminated by the Buyers.
26
<PAGE> 31
5.3 Noncompetition Agreement.
(a) Undertaking. For a period of three years after the Closing
Date, no Seller nor any affiliate thereof shall directly or indirectly
manufacture, market or sell, anywhere in the world, any product manufactured or
marketed by any Dynatech Entity (except with respect to Dynatech Corporation
Limited, as to which such covenant shall relate only to products manufactured or
marketed by the UK Business) as of the Closing Date.
(b) Interpretation and Remedies. The parties hereto agree that the
duration, geographic scope and ambit of the noncompetition provision set forth
in this Section 5.3 are reasonable. In the event that any court of competent
jurisdiction determines that the duration, the geographic scope, the ambit, or
any of the foregoing, are unreasonable and that such provision is to that extent
unenforceable, the parties hereto agree that the provision shall remain in full
force and effect for the greatest time period, in the greatest area and to the
greatest extent that would not render it unenforceable. The parties intend that
this noncompetition provision shall be deemed to be a series of separate
covenants, one for each and every county of each and every state of the United
States of America and each and every political subdivision of each and every
country outside the United States of America where this provision is intended to
be effective. The Sellers agree that damages are an inadequate remedy for any
breach of this provision and that the Buyers shall, whether or not they are
pursuing any potential remedies at law, be entitled to equitable relief in the
form of preliminary and permanent injunctions without bond or other security
upon any actual or threatened breach of this noncompetition provision.
5.4 Provision of Financial Information. Within 60 days after the
Closing, the Buyers shall provide the Sellers with such financial information
with respect to the Business for the period from April 1, 1995 up to and
including the Closing identified on Exhibit 5.4 for the purpose of allowing each
Seller to prepare financial reporting information required by federal and state
securities and tax laws.
5.5 Product Warranty Matters.
(a) After the Closing Date, the Buyers shall provide warranty
service with respect to all warranties on products sold or services delivered by
the Sellers prior to the Closing Date (the "Pre-Closing Warranties"). In the
event that the Buyers' direct costs of labor, materials and out-of-pocket
expenses (without any overhead allocation except overhead allocation to the cost
of products and materials consistent with the Sellers' practices prior to the
Closing Date) with respect to the Buyers' satisfaction of the Pre-Closing
Warranties ("Warranty Expenses") shall exceed $125,000 in the aggregate (the
"First Warranty Threshold"), the Buyers shall provide notice to Dynatech that
the Buyers' Warranty Expenses have exceeded the First Warranty Threshold and the
Sellers shall, within 30 days after receipt of such notice, reimburse the Buyers
for 25% of such costs in excess of the First Warranty Threshold (up to $150,000
of Warranty Expenses (the "Second Warranty Threshold")). In the event that the
amount of Warranty Expenses exceeds the Second Warranty Threshold, the Buyers
shall provide notice to Dynatech
27
<PAGE> 32
that the Buyers' Warranty Expenses have exceeded the Second Warranty Threshold
and the Sellers shall, within 30 days after receipt of such notice, reimburse
the Buyers for 75% of such costs in excess of the Second Warranty Threshold (up
to $175,000 of Warranty Expenses (the "Third Warranty Threshold")). If the
amount of Warranty Expenses exceeds the Third Warranty Threshold, the Buyers
shall provide notice to Dynatech that the Buyers' Warranty Expenses have
exceeded the Third Warranty Threshold and the Sellers shall, within 30 days
after receipt of such notice, reimburse the Buyers for 100% of such costs in
excess of the Third Warranty Threshold.
(b) Notwithstanding the foregoing, it is understood and agreed
that the Sellers shall not be liable for expenses of the Buyers incurred in
connection with the Buyers' satisfaction of the Pre-Closing Warranties in a
manner which is not materially consistent with the manner employed by the
Sellers prior to the Closing Date with respect to such Pre-Closing Warranties,
nor shall any such expenses be included for purposes of determining whether any
of the First Warranty Threshold, the Second Warranty Threshold or the Third
Warranty Threshold has been exceeded.
(c) Within 30 days after the end of each calendar quarter, the
Buyers shall provide Dynatech with reasonably detailed, written information with
respect to warranty work performed by the Sellers in satisfaction of the
Pre-Closing Warranties, including, but not limited to, (i) the names of the
customers for whom such work was performed, (ii) the product or products on
which such work was performed, (iii) a list of the employees who performed any
such work and the cost for such employees associated with such work, (iv) a list
of the materials required to complete such work and the Sellers' cost for such
materials (exclusive of any overhead costs, except as provided above), (v) the
aggregate cost of all such work performed by the Sellers to date and (vi) such
other information as Dynatech may reasonably request.
5.6 Transitional Use of Dynatech Names.
(a) Effective as of the Closing Date, Dynatech and the Dynatech
Entities hereby grant to the Buyers the fully paid right and license to continue
to (i) conduct business and hold themselves out to the public under the names
"Dynatech Laboratories," "Laboratoires Dynatech" and/or "Dynatech Medical
Products" (the "Marks") and (ii) use the Marks as brand names and service marks
for products sold and services provided by the Business on a transitional basis
during the period beginning on the Closing Date and ending on the date which is
180 days after the Closing Date (the "License Period"), as and to the extent
provided herein, solely to permit the Buyers to establish different trading and
brand name(s) under which to conduct the Business and to market and sell
products and services sold and provided by the Dynatech Entities as of the
Closing Date. The foregoing right and license shall be personal to the Buyers
and the Buyers shall not have any right to transfer, directly or indirectly, by
sublicense, assignment or otherwise, any of the rights conferred hereby to any
other person or entity; provided, however, that the Buyers may transfer such
right and license to one or more entities controlled by, which control or which
are under common control with the Buyers in the event that any such entity or
entities succeeds to all or any substantial portion of the Business.
28
<PAGE> 33
(b) The Buyers may use the Marks only in the combinations of words
set forth herein and the Buyers are not granted any right or license, and the
Buyers shall never use, the name or mark "Dynatech" alone or without the other
words constituting any of the Marks. The Buyers shall not join any name or
names, mark or marks, design or designs with any of the Marks so as to form a
new or confusingly similar trademark; provided, however, that the Buyers may
indicate their legal corporate names and their affiliations with BioAnalysis,
the Buyers' Parent and Thermo Electron Corporation in letterhead, promotional
materials, check stock and other written materials containing the Marks. No
license is granted hereunder for the use of any other trademark, service mark or
trade name owned by Dynatech or any of the Dynatech Entities.
(c) The Buyers may use the Marks solely in connection with the
marketing and sale of products marketed and sold, and services provided by the
Dynatech Entities as of the Closing as part of the Business. The Buyers shall
not, during the License Period, manufacture, market or sell any other products
or services employing the Marks. During the License Period, the Buyers shall
adhere to at least the same quality standards adhered to by the Dynatech
Entities prior to the Closing, and shall not distribute any product under the
Marks if Dynatech reasonably determines that such product does not meet such
quality standards. The Buyers shall ensure that the method and manner of using
and displaying the Marks during the License Period shall be substantially
similar to the method and manner used by the Dynatech Entities prior to the
Closing. The Buyers may continue to use existing supplies of promotional and
sales materials bearing the Marks (and to the extent displayed thereon, the name
and mark "Dynatech Corporation") during the License Period, but shall use
reasonable efforts to ensure that customers are aware that the Buyers and their
products are no longer affiliated with or owned by Dynatech or any of its
affiliates. The Buyers shall ensure that any new brand names adopted during or
subsequent to the termination of the License Period are not similar to or
reasonably capable of confusion with the name and mark "Dynatech." The Buyers
shall provide reasonable prior written notice to Dynatech of any such proposed
brand names and shall permit Dynatech a reasonable opportunity to object to any
such names or marks if Dynatech reasonably believes that any of such names or
marks is reasonably likely to cause confusion in the marketplace.
(d) The Buyers acknowledge that the Marks and all rights and
goodwill pertaining thereto belong exclusively Dynatech and the Dynatech
Entities. To the extent any right in and to any of the Marks is deemed to accrue
to the Buyers, the Buyers hereby assign any and all such rights, at such time as
they may be deemed to accrue, including the related goodwill, to Dynatech and
the Dynatech Entities. The Buyers shall never challenge the validity of
Dynatech's and the Dynatech Entities' ownership of the Marks or any application
for registration thereof, or any trademark registration thereof, and never
contest the fact that the Buyers' rights under this Agreement are solely those
of a licensee, and terminate at the end of the License Period or upon the
earlier termination of the license granted hereby. The Buyers shall at any time,
whether during or after the License Period, execute any documents reasonably
requested by Dynatech or the Dynatech Entities to confirm Dynatech's and the
Dynatech Entities' ownership rights in the Marks. All such rights in the Marks
other than those specifically granted herein are reserved by Dynatech
29
<PAGE> 34
and the Dynatech Entities for their own use and benefit. The Buyers agree not to
register or attempt to register any of the Marks in its or their own names or
any other name, anywhere.
(e) Each of Dynatech GmbH and Dynatech sro shall take all actions
necessary to change its respective corporate name to eliminate the name and mark
"Dynatech" therefrom prior to the termination of the License Period.
(f) For a period of six months following the termination of the
License Period, Buyers shall have the further right and license to indicate in
their own promotional materials that the products and services offered thereby
are formerly those offered by the Dynatech Entities, solely by use of the words,
to the right of or beneath any reference to Buyers' own legal names, trade
names, trademarks or service marks, "formerly Dynatech Laboratories," "formerly
Laboratoires Dynatech" and/or "formerly Dynatech Medical Products." Any such
references shall employ a type size no larger than the type in which the Buyers'
legal names, trade names, trademarks or service marks appear, and shall not
employ any distinctive type font or trademark that is associated with the
Dynatech Entities or that is reasonably likely to cause confusion in the
marketplace.
5.7 Subleases; Assignments. As soon as practicable after the Closing,
Dynatech shall cause the respective Dynatech Entities (a) to execute and deliver
sublease agreements with respect to the space occupied by the such Dynatech
Entities in Guernsey, UK, and Saint Quentin en Yvelines, France and (b) to use
commercially reasonable efforts to procure assignments or novations of leases
under which they occupy real property in favor of the relevant Buyer, each on
terms reasonably acceptable to such Buyer.
5.8 Certain Bonuses Payable by Dynatech.
(a) Within 30 days after the Closing Date, Dynatech shall pay, or
shall cause to be paid, all bonuses which may be, or become, payable to any
Transferred Employee as a result of such Transferred Employee's employment by
any of the Dynatech Entities, irrespective of whether the calculation of any
such bonus is based on (i) the performance of the Transferred Employee or of the
Dynatech Entity employing such Transferred Employee or of Dynatech, (ii) the
Purchase Price (as paid at the Closing or as adjusted) or (iii) any other
criteria.
(b) Buyers' sole remedy for the failure by Dynatech to pay the
bonuses as provided in the preceding paragraph is that the 45-day period
provided by Section 1.4(d) hereof during which BioAnalysis may notify Dynatech
of any disagreement with respect to any amount set forth in the Closing Net
Asset Statement shall be extended by one day for each day (in excess of 30 days)
that all such bonuses remain unpaid in full.
(c) BioAnalysis hereby covenants that it shall not establish any
bonus plan, contract or arrangement with or for the benefit of any Transferred
Employee pursuant to which
30
<PAGE> 35
any compensation which may become payable to such Transferred Employee will be
dependent directly on any amount or amounts set forth in the Closing Net Asset
Statement. Dynatech acknowledges and agrees, however, that BioAnalysis may
establish bonus plans and arrangements that may link compensation of one or more
of the Transferred Employees to the performance of the Business over time, that
such performance may be measured commencing as of the Closing, and that,
accordingly, such compensation may be linked indirectly to the Closing Net Asset
Statement.
SECTION 6. MODIFICATION, WAIVER AND TERMINATION
6.1. Modifications and Amendments. The parties may mutually amend any
provision of this Agreement at any time prior to the Closing Date. No amendment
of any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the parties.
6.2. Waivers. The parties hereto may, by a written signed instrument,
extend the time for or waive the performance of any of the obligations of
another party hereto or waive compliance by such other party with any of the
covenants or conditions contained herein.
6.3. Termination. At any time prior to the Closing, this Agreement may
be terminated (a) by mutual consent of BioAnalysis and Dynatech; (b) by
BioAnalysis if (i) there has been a material breach by Dynatech or by any Seller
of a covenant, representation or warranty contained in this Agreement; (ii)
BioAnalysis has notified Dynatech in writing of the existence of such breach;
and (iii) the party in breach has failed to cure such breach within a reasonable
period of time after receiving such notice; (c) by Dynatech if (i) there has
been a material breach by any Buyer of a covenant, representation or warranty
contained in this Agreement; (ii) Dynatech has notified BioAnalysis in writing
of the existence of such breach; and (iii) the party in breach has failed to
cure such breach within a reasonable period of time after receiving such notice;
(d) by BioAnalysis or by Dynatech if (i) there shall be an order of a court in
effect preventing consummation of the transactions contemplated by this
Agreement or (ii) there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated, issued or deemed applicable to this
Agreement, by a governmental authority that would make consummation of such
transactions illegal; or (e) by BioAnalysis or by Dynatech if the Closing does
not occur by March 1, 1996. Any such termination shall be binding upon the
respective affiliates of Dynatech and of BioAnalysis.
6.4. Effect of Termination. If this Agreement shall be terminated as
provided in Section 6.3, this Agreement shall forthwith become void (except as
otherwise provided in Section 10.2); provided, however, that the foregoing shall
not relieve any party from liability for damages actually incurred as a result
of any breach of this Agreement.
31
<PAGE> 36
SECTION 7. EMPLOYEES.
7.1 Offers of Employment of Employees; Benefits. At or prior to the
Closing, the Buyers shall offer employment as of Closing Date (or in the case of
the Hong Kong Employees (as defined in Section 7.6), in accordance with Section
7.6) to all employees of the Dynatech Entities (but in respect of employees of
Dynatech Corporation Limited, only such employees who are engaged in the UK
Business) who are employed on the Closing Date and (except as required by law)
who are not then absent due to serious injury, long-term sickness or disability,
layoff or leave of absence, such employees being listed on Exhibit 7.1 hereto.
Exhibit 7.1 shall also set forth each such employee's salary level, years of
uninterrupted employment and years of service for benefit plan purposes. The
Buyers shall offer employment to each such employee at the same or greater cash
compensation as that provided by the applicable Dynatech Entity to such employee
immediately prior to the Closing Date. Except as set forth in Section 7.4 below,
effective as of the Closing Date, the Buyers shall cause each employee who
accepts such offer of employment or whose employment is transferred
automatically to the Buyers by operation of law (the "Transferred Employees") to
be provided with benefit programs at a level and on a basis consistent with
similarly situated employees of the Buyers or, to the extent required by law,
with benefit programs comparable to those provided by the applicable Dynatech
Entity immediately prior to the Closing Date. For purposes of all such benefit
programs, the Buyers shall, to the extent applicable, recognize each Transferred
Employee's years of service and level of seniority with Dynatech or any of its
subsidiaries. If the employment of any Transferred Employee who is a resident of
the United States of America is terminated by any Buyer during the nine-month
period after the Closing, other than terminations as a result of the voluntary
resignation of any such Transferred Employee or a termination for cause which
relieves the Buyers and the Sellers and their respective affiliates from any
obligation to provide salary continuation benefits, the Buyers shall provide to
such terminated Transferred Employee salary continuation benefits for a minimum
of (i) two weeks plus an additional week for each full year of uninterrupted
employment by the Buyers or the Sellers beyond the first year if such
Transferred Employee is not, at the Closing Date or upon termination, a salaried
employee or (ii) four weeks plus an additional week for each full year of
uninterrupted employment by the Buyers or the Sellers beyond the first year if
such Transferred Employee is, at the Closing Date or upon termination, a
salaried employee. Subject to the preceding sentence, the Buyers may, to the
extent permitted by law, treat the Transferred Employees as at-will employees
and may modify the terms of such Transferred Employees' employment in its sole
discretion.
7.2 Responsibility for Obligations to Non-Transferred Employees;
Constructive Termination. The Sellers shall be responsible for, and hold the
Buyers harmless against, any severance payments or other obligations (including
without limitation any liability for wrongful discharge) that may be due by
reason of termination of employment of any employees of any Dynatech Entity who
are not Transferred Employees whether or not such termination occurred before or
after the Closing Date. Without limiting the generality of the foregoing, the
Sellers shall be responsible for, and hold the Buyers harmless against, any
liabilities, obligations and expenses that may be due in connection with the
employment (or termination thereof) of any employees of
32
<PAGE> 37
any Dynatech Entity who are not Transferred Employees but with respect to whom
any liability transfers to any Buyer by virtue of the UK Transfer of
Undertakings (Protection of Employment) Regulations 1981 (the "Transfer
Regulations") or by virtue of any similar law or regulation in any other country
in connection with this Agreement. The Buyers shall be responsible for, and hold
the Sellers harmless against, any payments or other liabilities, obligations or
expenses arising from or in any way connected with the employment or the
termination of employment of any of the Transferred Employees at any time after
the Closing or by reason of constructive dismissal of any of the Transferred
Employees outside of the United States resulting from differences between any of
the terms and conditions of employment (including, without limitation,
differences in pension benefits and death in service benefits) after the Closing
and those in effect prior to the Closing.
7.3 No Third Party Rights. Except as set forth in Section 7.1, nothing
contained in this Agreement shall, under any circumstances whatsoever, be
construed as, expressly or impliedly, constituting or creating any employment
contract, offer of employment, promise of continuing employment, promise of
employee benefits, or other obligation of any other kind of or by the Buyers,
to, or in favor of, any employees or consultants of any Dynatech Entity, and the
Buyers expressly disclaim any and all liability to any such third party arising
out of this Agreement.
7.4 Certain Transitional Benefit Matters.
(a) Accrued Vacation. Promptly after the Closing, the Sellers
shall pay each employee of each Seller whose employment by such Seller is being
terminated in connection with the transactions contemplated by this Agreement,
irrespective of whether such employees are Transferred Employees, the value of
all unused vacation time accrued by such employee in accordance with the
policies of such Dynatech Entities and in accordance with applicable law, and
the Buyers shall have no liability therefor. Transferred Employees shall begin
to accrue additional vacation time after the Closing in accordance with the
Buyers' policies.
(b) Thrift Plans. Effective as of the Closing Date, Dynatech
Laboratories, Inc. shall cause each of its Transferred Employees to have a fully
nonforfeitable right to such Transferred Employee's account balance under the
Dynatech Corporation Profit-Sharing and 401(k) Savings Plan (the "Seller's
Thrift Plan"). The Buyers shall take all action necessary and appropriate to
extend coverage, effective as of the first day of the third month following the
month in which the Closing occurs, under the Thermo Electron Corporation
MoneyMatch Plus 401(k) Plan (the "Buyers' Thrift Plan") to the Transferred
Employees who have met the eligibility requirements of the Seller's Thrift Plan
or of the Buyers' Thrift Plan as of such date. All Transferred Employees shall
be credited under the Buyers' Thrift Plan, for eligibility and vesting purposes,
with the service credited under the terms of the Seller's Thrift Plan. The
Sellers shall provide the Buyers with all such information as is necessary for
the Buyers to carry out their obligations under the foregoing sentence. The
Sellers shall cause to be made any matching or regular contributions that are
required under the Seller's Thrift Plan for any period prior to the Closing Date
and the Buyers shall have no responsibility therefor. Each such Transferred
33
<PAGE> 38
Employee shall be permitted to make a lump sum withdrawal of his or her account
balance under the Seller's Thrift Plan. The Buyers shall cause the Buyers'
Thrift Plan to accept any direct cash rollovers with respect to such Transferred
Employees from the Seller's Thrift Plan to the Buyers' Thrift Plan. As soon as
practicable after the Closing, the account balances of Transferred Employees
under the Seller's Thrift Plan shall be transferred from the Seller's Thrift
Plan to the Buyers' Thrift Plan or, to the extent permitted under Code Sections
401(k) and 411(d)(6) and regulations thereunder, shall be made available for
distribution from the Seller's Thrift Plan to Transferred Employees at their
election, provided that Transferred Employees with outstanding loans under the
Seller's Thrift Plan must make such election, at their discretion, by February
15, 1996. All transfers of account balances from the Seller's Thrift Plan to the
Buyers' Thrift Plan shall be made in cash and promissory notes representing
loans made to Transferred Employees.
(c) U.S. Medical and Dental Benefits. Dynatech Laboratories, Inc.
shall make such arrangements as may be necessary for its Transferred Employees
who are residents of the United States of America to remain as participants in
its medical and dental plans for a period extending up to the last day of the
second month following the month in which the Closing occurs. The Buyers shall
bear the cost of such coverage for such Transferred Employees during such period
as follows:
(i) The Buyers shall pay the out-of-pocket cost of actual
claims for such Transferred Employees (and their covered dependents)
incurred and paid after the Closing Date under Dynatech Laboratories,
Inc.'s group medical benefits plan and/or group dental plan plus an
administrative fee equal to 6% of actual claims; and
(ii) The Buyers shall pay the premium cost for participation
of such Transferred Employees (and their covered dependents) in a
health maintenance organization.
(d) Life Insurance Benefits. Life insurance coverage for any
Transferred Employee who is absent from work on the Closing Date due to serious
injury, long-term sickness or disability shall not become effective until such
Transferred Employee's return to active employment.
7.5 Effect of Transfer Regulations. The Buyers and the Sellers
acknowledge that the Transfer Regulations apply to the sale and purchase of the
UK Business under this Agreement and anticipate that the contracts of employment
of the employees of the UK Business listed on Exhibit 7.1 will have effect after
the Closing as if originally made with a Buyer.
7.6 Hong Kong Employees.
(a) On the Closing Date, the Buyers shall procure that BioAnalysis
International Sales Inc. shall offer to all employees of Dynatech Hong Kong Ltd.
who are employed on the Closing Date (the "Hong Kong Employees") by a letter
from BioAnalysis
34
<PAGE> 39
International Sales Inc. in terms agreed to by the Sellers, which offers
employment with BioAnalysis International Sales Inc. with effect from the
termination of the notice referred to in Section 7.6(b) below, on terms no less
favorable to the Hong Kong Employees than those enjoyed by the Hong Kong
Employees with Dynatech Hong Kong Ltd. on the Closing Date.
(b) On the Closing Date, the Sellers shall procure that Dynatech
Hong Kong Ltd. shall serve notice on the Hong Kong Employees to terminate in
accordance with the terms of the applicable employment contracts their
employment with Dynatech Hong Kong Ltd.
(c) During the period from the Closing Date until the date on
which the full notice period referred to in Section 7.6(b) expires in respect of
the Hong Kong Employees, the Sellers will procure that Dynatech Hong Kong Ltd.
shall make available to the Buyers the services of the Hong Kong Employees in
order to carry on the Business. In consideration thereof, the Buyers shall
reimburse (and indemnify Dynatech Hong Kong against) the cost of all wages,
pension contributions, holiday pay, employer's liability and third party
insurance premiums and against all claims and demands and liabilities (including
all employer's liability for personal injury or otherwise) in respect of such
Hong Kong Employees accruing during such period (provided, however, that this
sentence shall not relieve Dynatech Hong Kong Ltd. of its obligations under
Section 7.2 with respect to employees other than Transferred Employees).
(d) Unless with the consent of Manufacturers Life Insurance
Company (if required) the policy relating to the Group Retirement Plan for
Salaried Employees of Dynatech Hong Kong Ltd. (the "Plan") is assigned to the
relevant Buyer or the Plan is otherwise novated or arranged as agreed between
Dynatech Hong Kong Ltd. and the relevant Buyer, Dynatech Hong Kong Ltd. shall
issue written instructions to Manufacturers Life Insurance Company to
discontinue the Plan, with the intent that the assets of the Plan shall be
distributed to the Hong Kong Employees pursuant to the provisions and conditions
of the Plan document.
SECTION 8. [INTENTIONALLY OMITTED]
SECTION 9. INDEMNIFICATION.
9.1 Indemnification by the Sellers. The Buyers, upon demand, shall be
indemnified by the Sellers, jointly and severally, for the full amount of all
Damages (as defined in Section 9.7 below) suffered by the Buyers as a direct or
indirect result of:
(i) the breach of any representation or warranty made by the
Sellers in or pursuant to this Agreement (including without limitation
the representations and warranties set forth in Section 2);
35
<PAGE> 40
(ii) any failure by the Sellers to perform any obligation or
comply with any covenant or agreement of the Sellers specified herein
or in any other document executed at the Closing;
(iii) any claim for severance payments or other liabilities with
respect to the termination of any employee (other than a Transferred
Employee) by the Sellers, any claim alleging the wrongful termination
of any employee (other than a Transferred Employee) by the Sellers, any
claim with respect to the termination or modification of any of the
Sellers' employee benefit plans or the benefits provided thereunder and
any claim with respect to injury or death of employees engaged in the
Business arising out of events occurring prior to the Closing, and all
liabilities and expenses in connection with the employment (or
termination thereof) of any person other than a Transferred Employee
for whom liability transfers to any Buyer by virtue of the Transfer
Regulations (or by virtue of any similar law or regulation in any other
country) in connection with this Agreement (provided, however, that the
Buyers agree to notify the Sellers as soon as is reasonably practicable
after any discovery thereof and will, at the request of the Sellers,
terminate the employment of any such person);
(iv) any claim asserted with respect to the Excluded Liabilities;
(v) the failure of the Sellers to obtain the protections afforded
by compliance with the notification and other requirements of the bulk
sales laws, fraudulent conveyance laws or other laws for the protection
of creditors in force in the jurisdictions in which such laws may be
applicable to either the Sellers or the transactions contemplated by
this Agreement;
(vi) any claim (including, without limitation, claims alleging
death or injury to persons or damage to property), whether based in
tort, contract or otherwise resulting from or caused by any product
sold, or service provided, by any Dynatech Entity prior to the Closing
(other than claims with respect to product or service warranties for
products or services of the Business sold or delivered by any of the
Dynatech Entities prior to the Closing, as contemplated by Sections
1.3(c) and 5.5 hereof); and
(vii) any liability of any kind, arising directly or indirectly
out of a default under, or a breach of, any contract or commitment of
any kind by any of the Dynatech Entities prior to the Closing.
9.2 Limitations on Indemnification by the Sellers. Notwithstanding the
foregoing Section 9.1, the right of the Buyers to indemnification under Section
9.1(i) shall be subject to the following provisions:
(a) No indemnification shall be payable to the Buyers by any
Seller pursuant to Section 9.1(i) unless the total of all claims for
indemnification pursuant to Section 9.1(i) shall
36
<PAGE> 41
exceed 1.25% of the Purchase Price (as adjusted in accordance with Section
1.4(b) hereof) in the aggregate, whereupon only the amount of such claims in
excess of the foregoing threshold amount shall be recoverable in accordance with
the terms hereof.
(b) No indemnification shall be payable to the Buyers pursuant to
Section 9.1(i) for amounts in excess of 75% of the Purchase Price (as adjusted
in accordance with Section 1.4(b) hereof) in the aggregate.
(c) No indemnification shall be payable to the Buyers pursuant to
Section 9.1(i) with respect to any claim asserted by the Buyers after August 7,
1997 (the "Indemnification Cut-Off Date"); provided, however, that the foregoing
shall not apply to Claims resulting from any breach of the representations and
warranties contained in (i) the first sentence of Section 2.1; (ii) the second
sentence of Section 2.3; (iii) Section 2.4; or (iv) Section 2.6(c).
9.3 Indemnification by the Buyers. The Sellers, upon demand, shall be
indemnified by the Buyers, jointly and severally, for the full amount of all
Damages suffered by the Sellers as a direct or indirect result of:
(i) the breach of any representation or warranty made by the
Buyers in or pursuant to this Agreement (including without limitation
the representations and warranties set forth in Section 3);
(ii) any failure by the Buyers to perform any obligation or comply
with any covenant or agreement of the Buyers specified herein or in any
other document executed at the Closing;
(iii) any claim for payments or other liabilities with respect to
the employment (or the termination thereof) of any Transferred
Employee, any claim alleging the wrongful termination of any
Transferred Employee by the Buyers (including, without limitation,
constructive dismissal of any Transferred Employee outside of the
United States resulting from a difference between the terms and
conditions of employment (including, without limitation, differences in
pension benefits and death in service benefits) after the Closing and
those in effect prior to the Closing), any claim with respect to the
termination or modification of any of the Buyers' employee benefit
plans or the benefits provided thereunder and any claim with respect to
the injury or death of any Transferred Employee arising out of events
occurring after the Closing;
(iv) any claim asserted with respect to the Liabilities;
(v) any claim (including, without limitation, claims alleging
death or injury to persons or damage to property), whether based in
tort, contract or otherwise resulting from or caused by any product
sold, or service provided, by the Buyers subsequent to the Closing; and
37
<PAGE> 42
(vi) any activities of the Buyers after the Closing, whether
arising out of the operation of the Business or the ownership or use of
the Subject Assets after the Closing, including without limitation any
violation of any Environmental Law resulting from the conduct of the
Business by any Buyer after the Closing Date (provided, however, that
nothing in this clause (vi) shall be construed to limit the scope of
any representation, warranty or covenant of the Sellers made herein or
to otherwise limit or affect the Sellers' obligation to indemnify the
Buyers pursuant to Section 9.1 hereof).
9.4 Limitations on Indemnification by the Buyers. Notwithstanding the
foregoing Section 9.3, the rights of the Sellers to indemnification under
Section 9.3(i) shall be subject to the following provision:
(a) No indemnification shall be payable to the Sellers by any
Buyer pursuant to Section 9.3(i) unless the total of all claims for
indemnification pursuant to Section 9.3(i) shall exceed 1.25% of the Purchase
Price (as adjusted in accordance with Section 1.4(b) hereof) in the aggregate,
whereupon only the amount of such claims in excess of the foregoing threshold
amount shall be recoverable in accordance with the terms hereof.
(b) No indemnification shall be payable to the Sellers pursuant to
Section 9.3(i) for amounts in excess of 75% of the Purchase Price (as adjusted
in accordance with Section 1.4(b) hereof) in the aggregate.
(c) No indemnification shall be payable to the Sellers pursuant to
Section 9.3(i) with respect to any claim asserted by the Sellers after the
Indemnification Cut-Off Date; provided, however, that the foregoing shall not
apply to Claims resulting from any breach of the representations and warranties
contained in (i) Section 3.1; (ii) Section 3.2; or (iii) Section 3.3.
9.5 Notice; Defense of Claims.
(a) Promptly after receipt by any indemnified party of notice of
any claim, liability or expense to which the indemnification obligations
hereunder are reasonably likely to apply, such party shall give notice thereof
in writing to (i) Dynatech, in the case of an indemnification demand by the
Buyers, or (ii) BioAnalysis, in the case of an indemnification demand by the
Sellers (as the case may be, the "Indemnifying Party"). Such notice shall state
the information then available regarding the amount and nature of such claim,
liability or expense.
(b) The Indemnifying Party shall have the right, exercisable upon
written notice to the party demanding indemnification (the "Indemnified Party")
within 20 days after receiving the notice referred to in Section 9.5(a), at its
expense, to defend, contest, protest, settle and otherwise control the
resolution of any such claim, action or proceeding. The Indemnifying Party shall
keep the Indemnified Party apprised of developments with respect to any such
claim, action
38
<PAGE> 43
or proceeding, and the Indemnified Party shall have the right to consult with
the Indemnifying Party, and to participate therein, subject to the Indemnifying
Party's right of control thereof, at the Indemnified Party's expense and with
counsel selected by the Indemnified Party. If the Indemnifying Party shall
notify the Indemnified Party that the Indemnifying Party has elected to assume
any such defense, contest or protest, then the Indemnifying Party shall not be
liable to the Indemnified Party hereunder for any legal or other expense
subsequently incurred by the Indemnified Party in connection therewith.
(c) If the Indemnifying Party does not notify the Indemnified
Party of its election to defend any claim as provided in Section 9.5(b), then
the Indemnified Party may defend, contest, protest, settle and otherwise control
the resolution of such claim, action or proceeding. The Indemnified Party shall
keep the Indemnifying Party apprised of developments with respect to any such
claim, action or proceeding, and the Indemnifying Party shall have the right to
consult with the Indemnified Party, and to participate therein, subject to the
Indemnified Party's right of control thereof, at the Indemnifying Party's
expense and with counsel selected by the Indemnifying Party. If such event, then
the Indemnified Party shall not be liable to the Indemnifying Party hereunder
for any legal or other expense subsequently incurred by the Indemnifying Party
in connection therewith.
9.6 Payment of Claims; Arbitration. All claims (other than claims made
by third parties which are the subject of a good faith dispute between the
Indemnified Party (or the Indemnifying Party) and any such third party) shall be
paid or otherwise satisfied by the Indemnifying Party within 60 days after
notice thereof is given by the Indemnified Party. If within said 60-day period,
the Indemnifying Party indicates in a writing delivered to the Indemnified Party
that it disputes the nature or amount of the claim, the dispute upon the
election of any party hereto after said 60-day period shall be referred to
Endispute to be settled by arbitration in Boston, Massachusetts in accordance
with the commercial arbitration rules of said organization. The fees and
expenses of the arbitrator shall be borne by the parties in such proportions as
shall be determined by the arbitration, or if there is no such determination
then such fees and expenses shall be borne equally by (a) the Indemnifying Party
and (b) the Indemnified Party. The determination of the arbitrator as to the
amount, if any, of the indemnification claim which is properly allowable shall
be conclusive and binding upon the parties hereto and judgment may be entered
thereon in any court having jurisdiction thereof.
9.7 Definition of Damages. An Indemnified Party shall be entitled to
recover the full amount of any liabilities, expenses, costs or loss incurred due
to the matter for which indemnification is sought, including reasonable
attorney's fees incurred in connection therewith, but any recovery shall be net
of any economic benefit to which the Indemnified Party is entitled due to such
liabilities, expenses, costs or loss, including, without limitation, (i) any tax
refund, reduction or benefit, (ii) any insurance proceeds (excluding
self-insured amounts and deductible amounts) and (iii) any warranty
reimbursements (collectively, "Damages"). Notwithstanding the foregoing,
insurance proceeds to which the Indemnified Party may be entitled shall not
reduce the Damages recoverable from the Indemnifying Party if the Indemnified
Party shall determine, in
39
<PAGE> 44
good faith, that filing a claim therefor would be likely either to result in (i)
a significant increase in the premiums payable with respect to the continuation
of such insurance coverage or (ii) the cancellation of the applicable policy. In
no event shall any Indemnified Party be awarded punitive or multiple damages.
9.8 Limitation on Remedies. It is specifically understood and agreed
that, in the absence of knowing and intentional fraud by any party hereto, in
the event a misrepresentation or breach of warranty or covenant is discovered by
any party after the Closing, such party's remedies shall be limited solely to
the indemnification set forth in this Section 9 of this Agreement.
SECTION 10. MISCELLANEOUS.
10.1 Bulk Sales Law. Subject to the Sellers' indemnification
obligations under Section 9.1(v) hereunder, the Buyers waive compliance by the
Sellers with the provisions of any applicable bulk sales, fraudulent conveyance
or other law for the protection of creditors in connection with the transfer of
the Subject Assets under this Agreement.
10.2 Fees and Expenses.
(a) Each of the Sellers, on the one hand, and each of the Buyers,
on the other hand, will bear their own expenses in connection with the
negotiation and the consummation of the transactions contemplated by this
Agreement, including, without limitation, any broker's commission or finder's
fee incurred by any of such parties. Dynatech will pay all of the expenses
incurred by Dynatech GmbH in connection with this Agreement and the consummation
of the transactions contemplated hereby.
(b) Except as provided in Section 1.10 with respect to sales and
transfer taxes on the Subject Assets, the Buyers will pay all costs incurred,
whether at or subsequent to the Closing, in connection with the transfer of the
Subject Assets to the Buyers as contemplated by this Agreement, including
without limitation, all recording charges and fees applicable to the recordation
of deeds and mortgages and other instruments of transfer; and all costs of
obtaining or transferring permits, registrations, applications and other
tangible and intangible properties.
10.3 Governing Law. This Agreement shall be construed under and
governed by the internal laws of the Commonwealth of Massachusetts without
regard to its conflict of laws provisions.
10.4 Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission or overnight courier,
upon receipt, or if sent by registered or certified mail, upon the sooner of the
date on which receipt is acknowledged or the expiration of three days after
deposit in United States post office facilities properly addressed with postage
prepaid.
40
<PAGE> 45
All notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
TO SELLERS: c/o Dynatech Corporation
3 New England Executive Park
Burlington, MA 01803
Attn.: Roger C. Cady, Vice President
Business Development
In each case, with a copy to: Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Attn.: Edward T. O'Dell, Jr., P.C.
TO BUYERS: c/o Thermo BioAnalysis Corporation
27 Forge Parkway
Franklin, MA 02038
Attn.: Barry S. Howe,
Chief Executive Officer
In each case, with a copy to: Thermo Electron Corporation
81 Wyman Street
P.O. Box 9046
Waltham, MA 02254-9046
Attn.: General Counsel
Any notice given hereunder may be given on behalf of any party by counsel to
such party or other authorized representatives.
10.5 Entire Agreement.
(a) This Agreement, including the Disclosure Memorandum and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings; no promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Disclosure Memorandum and
Exhibits or in such other writings, and all inducements to the making of this
Agreement relied upon by either party hereto have been expressed herein or in
such Disclosure Memorandum or Exhibits or in such other writings.
41
<PAGE> 46
(b) The parties acknowledge and agree that the terms of this
Agreement, including the scope and content of the representations and warranties
of the parties in Sections 2 and 4, and the indemnification provisions and the
limitations thereon in Section 9, have been negotiated by the parties and are
intended to be the full statement of the parties' agreement with respect to the
matters set forth therein. The parties therefore agree that, notwithstanding the
terms of any local transfer agreement, instrument of assignment or other
agreement or document intended to effect or supplement the transactions
contemplated hereby in any jurisdiction other than the United States (a "Local
Transfer Agreement"), in the event of any inconsistency between the terms of
this Agreement and any Local Transfer Agreement, the terms of this Agreement
shall govern and control.
(c) The execution and delivery of any Local Transfer Agreement
shall be subject to the consummation of the transactions contemplated hereby and
shall not be effective unless and until the Closing hereunder takes place. If
the Closing hereunder does not take place or if this Agreement is terminated,
any Local Transfer Agreement shall be null and void and of no force or effect.
10.6 Assignability; Binding Effect. This Agreement shall only be
assignable by the Buyers to one or more corporations or partnerships
controlling, controlled by or under common control with the Buyers upon written
notice to Dynatech, provided that such assignment shall not relieve the Buyers
of any of their obligations hereunder. This Agreement may not be assigned by the
Sellers without the prior written consent of BioAnalysis. This Agreement shall
be binding upon and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective successors, and permitted assigns.
10.7 Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter
pronoun, as the context may require.
10.8 Execution in Counterparts. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
10.9 Amendments. This Agreement may not be amended or modified, nor may
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
10.10 Press Releases. The content of any press release of the
consummation of the transactions contemplated by this Agreement by any party
hereto shall be subject to the review and approval of BioAnalysis and Dynatech,
such review to be timely and such approval not to be unreasonably withheld.
42
<PAGE> 47
10.11 Consent to Jurisdiction. Solely for the purpose of allowing a
party to enforce its indemnification and other rights hereunder, each of the
parties hereby consents to personal jurisdiction, service of process and venue
in the federal or state courts of Massachusetts.
[REMAINDER OF PAGE INTENTIONALLY BLANK.]
43
<PAGE> 48
PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF the parties hereto have executed or caused this
Agreement to be executed by their duly authorized representatives as of the date
set forth above.
DYNATECH LABORATORIES, INC.
By: /s/ Robert H. Hertz
--------------------------------
Name: Robert H. Hertz
Title: Duly Authorized
DYNATECH HONG KONG LTD.
By: /s/ Robert H. Hertz
--------------------------------
Name: Robert H. Hertz
Title: Duly Authorized
DYNATECH CORPORATION LIMITED
By: /s/ Robert H. Hertz
--------------------------------
Name: Robert H. Hertz
Title: Duly Authorized
LABORATOIRES DYNATECH, S.A.R.L.
By: /s/ Robert H. Hertz
--------------------------------
Name: Robert H. Hertz
Title: Duly Authorized
44
<PAGE> 49
DYNATECH MEDICAL PRODUCTS LIMITED
By: /s/ Robert H. Hertz
-------------------------------------------------
Name: Robert H. Hertz
Title: Duly Authorized
DYNATECH CORPORATION
By: /s/ Robert H. Hertz
-------------------------------------------------
Name: Robert H. Hertz
Title: Chief Financial Officer & Treasurer
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
-------------------------------------------------
Name: Barry S. Howe
Title: President
THERMO BIOANALYSIS LIMITED
By: /s/ Barry S. Howe
-------------------------------------------------
Name: Barry S. Howe
Title: Director
THERMO BIOANALYSIS (GUERNSEY) LIMITED
By: /s/ John A. Pike
-------------------------------------------------
Name: John Anthony Pike
Title: Director
45
<PAGE> 50
THERMO BIOANALYSIS SA
By: /s/ Pierre Caudy
-------------------------------------------------
Name: Pierre Caudy
Title: President du Conseil d'Administration
DLW INC.
By: /s/ Barry S. Howe
-------------------------------------------------
Name: Barry S. Howe
Title: President
BIOANALYSIS INTERNATIONAL SALES INC.
By: /s/ Barry S. Howe
-------------------------------------------------
Name: Barry S. Howe
Title: President
THERMO INSTRUMENT SYSTEMS INC.
By: /s/ Barry S. Howe
-------------------------------------------------
Name: Barry S. Howe
Title: Vice President
<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> 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 fraction 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 pro 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 ti 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 10.1
CORPORATE SERVICES AGREEMENT
----------------------------
THIS IS AN AGREEMENT dated as of February 27, 1995 between Thermo
Electron Corporation, a Delaware corporation ("Thermo"), and Thermo BioAnalysis
Corporation ("Subsidiary"), a Delaware corporation.
PRELIMINARY STATEMENT
---------------------
Subsidiary desires to obtain administrative and other services from Thermo
and Thermo is willing to furnish or make such services available to Subsidiary.
By this Agreement, Thermo and Subsidiary desire to set forth the basis for
Thermo's providing services of the type referred to herein.
AGREEMENTS
----------
IT IS MUTUALLY agreed by the parties hereto as follows:
1. SERVICES
1.1 Beginning on the date of this Agreement, Thermo, through its corporate
staff, will provide or otherwise make available to Subsidiary certain general
corporate services, including but not limited to accounting, tax, corporate
communications, legal, financial and other administrative staff functions, and
arrange for administration of insurance and employee benefit programs. The
services will include the following:
(a) ACCOUNTING AND SECURITIES COMPLIANCE RELATED SERVICES. Maintenance of
corporate records, assistance, if and when necessary, in preparation of
Securities and Exchange Commission filings, including without limitation
registration statements, Forms 10-K, 10-Q and 8-K, assistance in the preparation
of Proxies and Proxy Statements and the solicitation of Proxies, and assistance
in the preparation of the Annual and Quarterly Reports to Stockholders,
maintenance of internal audit support services and review of compliance with
financial and accounting procedures.
(b) TAX RELATED SERVICES. Preparation of Federal tax returns, preparation
of state and local tax returns (including income tax returns), tax research and
planning and assistance on tax audits (Federal, state and local).
(c) INSURANCE AND EMPLOYEE BENEFIT RELATED SERVICES. Arranging for
liability, property and casualty, and other normal business insurance coverage.
Support for product, worker safety and environmental programs (Subsidiary
acknowledges that principal responsibility for compliance rests with the
Subsidiary). Administration of Subsidiary's employee participation in
1
<PAGE> 2
employee benefit plans sponsored by Thermo and insurance programs such as the
following: 401(k) plan, group medical insurance, group life insurance, employee
stock purchase plan and various stock options plans. Filing of all required
reports under ERISA for employee benefit plans sponsored by Thermo.
(d) CORPORATE RECORD KEEPING SERVICES. Maintenance of corporate records,
including without limitation, maintenance of minutes of meetings of the Boards
of Directors and Stockholders, supervision of transfer agent and registration
functions, coordination of stock repurchase programs, and tracking of stock
issuances and reserved shares.
(e) Services in addition to those enumerated in subsections 1.1(a) through
1.1(d) above including, but not limited to, routine legal and other
administrative activities, Corporate information and treasury and other
financial services as reasonably requested by Subsidiary.
1.2 For performing general services of the types described above in
Paragraph 1.1, Thermo will initially charge Subsidiary an annual fixed fee equal
to 1.2% of the gross revenues of Subsidiary for the fiscal year in which such
services are performed (such amount to be prorated on a daily basis for any
partial year), which fee is intended to compensate Thermo for Subsidiary's pro
rata share of the aggregate costs actually incurred by Thermo in connection with
the provision of such services to all recipients thereof. The fee set forth in
the preceding sentence may be adjusted from time to time by mutual agreement of
Thermo and Subsidiary.
1.3 In addition to the foregoing services, certain specific services are
made available to Subsidiary by Thermo on an as-requested basis. These may
include, but are not limited to, services specifically requested by Subsidiary
or services which, in Thermo's judgment, are not routine administrative services
or create unusual burdens or demands on Thermo's resources, such as litigation
support, acquisition and offering support services (including legal services),
corporate development, tax audit support or public or investor relations
services other than routine shareholder communications. Thermo will charge
Subsidiary the costs actually incurred (including overhead and general
administrative expenses) for such services that are requested by Subsidiary and
supplied by Thermo.
1.4 The charges for services pursuant to Subsections 1.2 and 1.3 above
will be determined and payable no less frequently than on a quarterly basis. The
charges will be due when billed and shall be paid no later than 30 days from the
date of billing.
1.5 When services of the type described above in this Section 1 are
provided by outside providers to Subsidiary or, in connection with the provision
of such services out-of-pocket costs are incurred such as travel, the cost
thereof will be paid by Subsidiary. To the extent that Subsidiary is billed by
the provider directly, Subsidiary shall pay the bill directly. If Thermo is
billed for such services, Thermo may pay the bill and charge Subsidiary the
amount of the bill or forward the bill to Subsidiary for payment by Subsidiary.
2. SUBSIDIARY'S DIRECTORS AND OFFICERS. Nothing contained herein will be
construed to relieve the directors or officers of Subsidiary from the
performance of their respective duties or
2
<PAGE> 3
to limit the exercise of their powers in accordance with the charter or By-Laws
of Subsidiary or in accordance with any applicable statute or regulation.
3. LIABILITIES. In furnishing Subsidiary with management advice and other
services as herein provided, neither Thermo nor any of its officers, directors
or agents shall be liable to Subsidiary or its creditors or shareholders for
errors of judgment or for anything except willful malfeasance, bad faith or
gross negligence in the performance of their duties or reckless disregard of
their obligations and duties under the terms of this Agreement. The provisions
of this Agreement are for the sole benefit of Thermo and Subsidiary and will
not, except to the extent otherwise expressly stated herein, inure to the
benefit of any third party.
4. TERM.
(a) TERM. The initial term of this Agreement shall begin on the date of
this Agreement and continue through the end of the current fiscal year. This
Agreement shall automatically renew at the end of the initial term for
successive one-year terms until terminated in accordance with Subsection (b)
below.
(b) TERMINATION. This Agreement may be terminated by Subsidiary at any time
on thirty days prior notice to Thermo. In addition, this Agreement shall
automatically terminate without any further action by either party on the date
the Subsidiary ceases to be a member of the Thermo Group or a participant in the
Thermo Electron Corporate Charter.
(c) TERMINATION FEE. In the event of a termination of this Agreement,
Subsidiary shall pay to Thermo its pro rata fee pursuant to Section 1.2 for the
year in which the termination takes effect plus a termination fee equal to the
fee payable under Section 1.2 for the most recent nine consecutive months.
(d) POST-TERMINATION SERVICES. Following a termination of this Agreement,
corporate administrative services of the kind provided under the Agreement may
continue to be provided to Subsidiary on an as-requested basis by the Subsidiary
or as required in the event it is not practicable for the Subsidiary to provide
such services or it is otherwise unable to identify another source to provide
such services (as would be the case of administration of employee benefit plans
and insurance programs sponsored by Thermo and in which Subsidiary's employees
participate) or as otherwise required by Thermo acting in its capacity as
majority stockholder of Subsidiary. In the even such services are provided by
Thermo to Subsidiary, Subsidiary shall be charged by Thermo a fee equal to the
market rate for comparable services charged by third-party vendors. Such fee
will be charged monthly and payable by Subsidiary within thirty days. The
obligations of Subsidiary set forth in this Section 4(d) shall survive the
termination of this Agreement.
5. STATUS. Thermo shall be deemed to be an independent contractor and,
except as expressly provided or authorized in this Agreement, shall have no
authority to act for or represent Subsidiary.
3
<PAGE> 4
6. OTHER ACTIVITIES OF THERMO. Subsidiary recognizes that Thermo now
renders and may continue to render management and other services to other
companies that may or may not have policies and conduct activities similar to
those of Subsidiary. Thermo shall be free to render such advice and other
services, and Subsidiary hereby consents thereto. Thermo shall not be required
to devote full time and attention to the performance of its duties under this
Agreement, but shall devote only so much of its time and attention as it deems
reasonable or necessary to perform the services required hereunder.
7. NOTICES. All notices, billings, requests, demands, approvals, consents,
and other communications which are required or may be given under this Agreement
shall be in writing and will be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid to the parties at their respective addresses set forth below:
If to Subsidiary: If to Thermo:
---------------- ------------
Thermo BioAnalysis Corporation Thermo Electron Corporation
504 Airport Road 81 Wyman Street
Santa Fe, New Mexico 87504-2108 Waltham, Massachusetts 02254
Attention: Chief Executive Officer Attention: Chief Executive Officer
8. NO ASSIGNMENT. This Agreement shall not be assignable except with the
prior written consent of the other party to this Agreement.
9. APPLICABLE LAW. This Agreement shall be governed by and construed under
the laws of the Commonwealth of Massachusetts applicable to contracts made and
to be performed therein.
10. PARAGRAPH TITLES. The paragraph titles used in this Agreement are for
convenience of reference only and will not be considered in the interpretation
or construction of any of the provisions thereof.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument by their duly authorized offices as of the date first
above written.
THERMO ELECTRON CORPORATION
By: /s/ George H. Hatsopoulos
---------------------------
Title: Chairman and President
SUBSIDIARY:
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
---------------------------
Title: Chief Executive Officer
5
<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 retur 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 liabili 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 ba 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 t 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
2
<PAGE> 3
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 provisi 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
3
<PAGE> 4
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
4
<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.
2
<PAGE> 3
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
3
<PAGE> 4
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 aggrega 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 o 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
4
<PAGE> 5
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.
5
<PAGE> 6
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 10.5
MASTER GUARANTEE REIMBURSEMENT AGREEMENT
----------------------------------------
This AGREEMENT is entered into as of the 27th day of February, 1995 by and
among Thermo Electron Corporation (the "Parent") and those of its subsidiaries
that join in this Agreement by executing the signature page hereto (the
"Majority Owned Subsidiaries").
WITNESSETH:
WHEREAS, the majority owned subsidiaries in the past have entered into, and
wish to enter into in the future, various financial transactions, such as
convertible or nonconvertible debt, bank loans, and equity offerings, and other
contractual arrangements with third parties (the "Underlying Obligations");
WHEREAS, the Majority Owned Subsidiaries acknowledge that they are unable
to enter into many kinds of Underlying Obligations without a guarantee of their
performance thereunder from the Parent (a "Parent Guarantee");
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier Majority Owned
Subsidiaries ") are themselves majority owned subsidiaries of other Majority
Owned Subsidiaries ("First Tier Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second Tier Majority
Owned Subsidiary's Underlying Obligations are often demanded and given without
the respective First Tier Majority Owned Subsidiary also issuing a guarantee of
such Underlying Obligation;
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If, after the date hereof, the Parent provides a Parent Guarantee of an
Underlying Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under the Parent
Guarantee for any other reason, then the Majority Owned Subsidiary that is
obligated under such Underlying Obligation shall indemnify and save
harmless the Parent from any liability, cost, expense or damage (including
reasonable attorneys' fees) suffered by the Parent as a result of the
Parent Guarantee. If the Underlying Obligation is issued by a Second Tier
Majority Owned Subsidiary, and such Second Tier Majority Owned Subsidiary
is unable to fully indemnify the Parent (because of the poor financial
condition of such Second Tier Majority Owned Subsidiary, or for any other
reason), then the First Tier Majority Owned Subsidiary that owns the
majority of the stock of such Second Tier Majority Owned Subsidiary shall
indemnify and save harmless
<PAGE> 2
the Parent from any remaining liability, cost, expense or damage (including
reasonable attorneys' fees) suffered by the Parent as a result of the
Parent Guarantee.
2. For purposes of this Agreement, the term "guarantee" shall include not only
a formal guarantee of an obligation, but also any other arrangement where
the Parent is liable for the obligations of a Majority Owned Subsidiary.
Such other arrangements include (a) representations, warranties and/or
covenants or other obligations joined in by the Parent, whether on a joint
or joint and several basis, for the benefit of the Majority Owned
Subsidiary and (b) responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary, including controlling
person liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary of a Parent
Guarantee is seeking to enforce such Parent Guarantee, the Parent shall
notify the Majority Owned Subsidiary(s) obligated under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) shall have the
right, at its own expense, to contest the claim of such beneficiary. If a
Majority Owned Subsidiary is contesting the claim of such beneficiary, the
Parent will not perform under the relevant Parent Guarantee unless and
until, in the Parent's reasonable judgment, the Parent is obligated under
the terms of such Parent Guarantee to perform. Subject to the foregoing,
any dispute between a Majority Owned Subsidiary and a beneficiary of a
Parent Guarantee shall not affect such Majority Owned Subsidiary's
obligation to promptly indemnify the Parent hereunder.
4. All payments required to be made by a Majority Owned Subsidiary shall be
made within two days after receipt of notice from the Parent.
5. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts applicable to contracts made and
performed therein.
<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By: /s/ George N. Hatsopoulos
-------------------------------------
Title: Chairman and President
-------------------------------------
THERMO INSTRUMENT SYSTEMS INC.
By: /s/ Arvin H. Smith
-------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
-------------------------------------
Title: Chief Executive Officer
-------------------------------------
<PAGE> 1
Exhibit 10.6
MASTER GUARANTEE REIMBURSEMENT AGREEMENT
----------------------------------------
This AGREEMENT is entered into as of the 27th day of February, 1995 by and
among Thermo Instrument Systems Inc. (the "Parent") and those of its
subsidiaries that join in this Agreement by executing the signature page hereto
(the "Majority Owned Subsidiaries").
WITNESSETH:
WHEREAS, the majority owned subsidiaries wish to enter into in the future
various financial transactions, such as convertible or nonconvertible debt, bank
loans, and equity offerings, and other contractual arrangements with third
parties (the "Underlying Obligations");
WHEREAS, the Majority Owned Subsidiaries acknowledge that they may be
unable to enter into many kinds of Underlying Obligations without a guarantee of
their performance thereunder from the Parent (a "Parent Guarantee");
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier Majority Owned
Subsidiaries ") may themselves be majority owned subsidiaries of other Majority
Owned Subsidiaries ("First Tier Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second Tier Majority
Owned Subsidiary's Underlying Obligations may be demanded and given without the
respective First Tier Majority Owned Subsidiary also issuing a guarantee of such
Underlying Obligation; and
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If, after the date hereof, the Parent provides a Parent Guarantee of an
Underlying Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under the Parent
Guarantee for any other reason, then the Majority Owned Subsidiary that is
obligated under such Underlying Obligation shall indemnify and save
harmless the Parent from any liability, cost, expense or damage (including
reasonable attorneys' fees) suffered by the Parent as a result of the
Parent Guarantee. If the Underlying Obligation is issued by a Second Tier
Majority Owned Subsidiary, and such Second Tier Majority Owned Subsidiary
is unable to fully indemnify the Parent (because of the poor financial
condition of such Second Tier Majority Owned Subsidiary, or for any other
reason), then the First Tier Majority Owned Subsidiary that owns the
majority of the stock of such Second Tier Majority Owned Subsidiary shall
indemnify and save harmless the Parent from any remaining liability, cost,
expense or damage (including reasonable attorneys' fees) suffered by the
Parent as a result of the Parent Guarantee.
<PAGE> 2
2. For purposes of this Agreement, the term "guarantee" shall include not only
a formal guarantee of an obligation, but also any other arrangement where
the Parent is liable for the obligations of a Majority Owned Subsidiary.
Such other arrangements include (a) representations, warranties and/or
covenants or other obligations joined in by the Parent, whether on a joint
or joint and several basis, for the benefit of the Majority Owned
Subsidiary and (b) responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary, including controlling
person liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary of a Parent
Guarantee is seeking to enforce such Parent Guarantee, the Parent shall
notify the Majority Owned Subsidiary(s) obligated under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) shall have the
right, at its own expense, to contest the claim of such beneficiary. If a
Majority Owned Subsidiary is contesting the claim of such beneficiary, the
Parent will not perform under the relevant Parent Guarantee unless and
until, in the Parent's reasonable judgment, the Parent is obligated under
the terms of such Parent Guarantee to perform. Subject to the foregoing,
any dispute between a Majority Owned Subsidiary and a beneficiary of a
Parent Guarantee shall not affect such Majority Owned Subsidiary's
obligation to promptly indemnify the Parent hereunder.
4. All payments required to be made by a Majority Owned Subsidiary shall be
made within two days after receipt of notice from the Parent.
5. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts applicable to contracts made and
performed therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO INSTRUMENT SYSTEMS INC.
By: /s/ Arvin H. Smith
-----------------------
Title: Chief Executive Officer
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
-----------------------
Title: Chief Executive Officer
<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.
<PAGE> 5
5
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
6
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
7
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
8
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
<PAGE> 9
9
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.
<PAGE> 10
10
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
2
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
<PAGE> 3
3
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
4
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 10.9
THERMO BIOANALYSIS CORPORATION
DIRECTORS STOCK OPTION PLAN
---------------------------
1. Purpose
-------
The purpose of this Directors Stock Option Plan (the "Plan") of Thermo
BioAnalysis Corporation (the "Company") is to encourage ownership in the Company
by outside directors of the Company whose services are considered essential to
the Company's growth and progress and to provide them with a further incentive
to become directors and to continue as directors of the Company. The Plan is
intended to be a nonstatutory stock option plan.
2. Administration
--------------
The Board of Directors, or a Committee (the "Committee") consisting of one
or more directors of the Company appointed by the Board of Directors, shall
supervise and administer the Plan. Grants of stock options under the Plan and
the amount and nature of the options to be granted shall be automatic in
accordance with Section 5. However, all questions of interpretation of the Plan
or of any stock options granted under it shall be determined by the Board of
Directors or the Committee and such determination shall be final and binding
upon all persons having an interest in the Plan.
3. Participation in the Plan
-------------------------
Directors of the Company who are not employees of the Company or any
subsidiary or parent of the Company shall be eligible to participate in the
Plan. Directors who receive grants of stock options in accordance with this Plan
are sometimes referred to herein as "Optionees."
4. Stock Subject to the Plan
-------------------------
The maximum number of shares that may be issued under the Plan shall be one
hundred thousand (100,000) shares of the Company's $.01 par value Common Stock
(the "Common Stock"), subject to adjustment as provided in Section 9. Shares to
be issued upon the exercise of options granted under the Plan may be either
authorized but unissued shares or shares held by the Company in its treasury. If
any option expires or terminates for any reason without having been exercised in
full, the unpurchased shares subject thereto shall again be available for
options thereafter to be granted.
5. Terms and Conditions
--------------------
A. Ownership Grants to Outside Directors of the Company.
-----------------------------------------------------
Each Director, who is initially elected or appointed a Director of the
Company on or before December 31, 1999 and who meets the requirements of Section
3, shall be granted an option to purchase shares of Common Stock upon the later
of (i) the date of the adoption of this plan by the Board of Directors and (ii)
the date of such person's initial election or appointment as a Director,
determined as follows:
<PAGE> 2
Date of Initial Appointment No. of Shares Granted
--------------------------- ---------------------
Before December 31, 1996 15,000
After December 31, 1996 and on
or before December 31, 1997 11,250
After December 31, 1997 and on
or before December 31, 1998 7,500
After December 31, 1998 and on
or before December 31, 1999 3,750
After December 31, 1999 0
Notwithstanding any other provision of this plan, options granted under
this Section 5(A) shall vest and be exercisable as to 100% of the shares of
Common Stock subject to the option on the fourth anniversary of the grant date
of the option, unless, prior to such anniversary, the underlying Common Stock
shall have been registered under Section 12 of the Securities and Exchange Act
of 1934, as amended (referred to herein as "Section 12 Registration"). From and
after 90 days after the effective date of Section 12 Registration, options
granted hereunder shall be immediately exercisable as to 100% of the shares
subject to the option, subject to the right of the Company to repurchase the
shares at the exercise price in the event the Optionee ceases to serve as a
director of the Company, or any subsidiary of the Company or Thermo Electron,
during the option term. In such event, the right of the Company to so repurchase
the shares shall lapse in equal installments of 3,750 shares beginning on the
first anniversary of the grant date and each anniversary of the grant date
thereafter, provided the Optionee has remained continuously a director of the
Company, Thermo Electron or any subsidiary of Thermo Electron since the grant
date. In all other respects, the option shall be subject to the general terms
and conditions applicable to all option grants as set forth below in Section
5(C), including the determination of the exercise price of such option.
B. Annual Stock Option Grants
--------------------------
Each Director of the Company who meets the requirements of Section 3 and
who is holding office immediately following the Annual Meeting of Stockholders
shall be granted an option to purchase 1,000 shares of Common Stock at the close
of business on the date of such Annual Meeting, commencing with the Annual
Meeting of Stockholders held in calendar year 2000, provided that the effective
date of Section 12 Registration (as defined in Section 5(A) above) shall have
occurred prior to such meeting. Options granted under this Subsection B shall be
exercisable as to 100% of the shares subject to the option as set forth in
Section 5(C)(1), but shares acquired upon exercise are subject to repurchase by
the Company at the exercise price if an Optionee ceases to serve as a director
of the Company, Thermo Electron Corporation ("Thermo Electron")or any subsidiary
of Thermo Electron, prior to the first anniversary of the grant date, for any
reason other than death.
C. General Terms and Conditions Applicable to All Grants.
------------------------------------------------------
1. Options shall be exercisable at any time from and after the six-month
anniversary of the grant date and prior to the date which is the
earliest of:
(a) three years after the grant date for options granted under Section
5(B) and five years after the grant date for options granted under
Section 5(A), (b) three months after the later of the date (i) the
Optionee either ceases to meet the requirements of Section 3 or (ii)
otherw ceases to serve as a director of the Company, Thermo Electron
or any subsidiary of Thermo Electron (six months in the event the
Optionee ceases to meet the requirements of this Subsection by reason
of his death), or (c) the date of dissolution or liquidation of the
Company.
<PAGE> 3
2. The exercise price at which Options are granted hereunder shall be the
average of the closing prices reported by the national securities
exchange on which the common stock is principally traded for the five
trading days immediately preceding and including the date the option
is granted or, if such security is not traded on an exchange, the
average last reported sale price for the five-day period on the NASDAQ
National Market List, or the average of the closing bid prices for the
five-day period last quoted by an established quotation service for
over-the-counter securities, or if none of the above shall apply, the
last price paid for shares of the Common Stock by independent
investors in a private placement; provided, however, that such
exercise price per share shall not be lower than the par value per
share or less than 50% of the fair market value of the Common Stock
until such time as the Company elects to be subject to Rule 16b-3 as
amended by SEC Rel. No. 33-28869.
3. All options shall be evidenced by a written agreement substantially in
such form as shall be approved by the Board of Directors or Committee,
containing terms and conditions consistent with the provisions of this
Plan.
6. Exercise of Options
-------------------
A. Exercise/Consideration
----------------------
An option may be exercised in accordance with its terms by written notice
of intent to exercise the option, specifying the number of shares of stock with
respect to which the option is then being exercised. The notice shall be
accompanied by payment in the form of cash or shares of Common Stock of the
Company (the shares so tendered referred to herein as "Tendered Shares") with a
then current market value equal to the exercise price of the shares to be
purchased; provided, however, that such Tendered Shares shall have been acquired
by the Optionee more than six months prior to the date of exercise (unless such
requirement is waived in writing by the Company). Against such payment the
Company shall deliver or cause to be delivered to the Optionee a certificate for
the number of shares then being purchased, registered in the name of the
Optionee or other person exercising the option. If any law or applicable
regulation of the Securities and Exchange Commission or other body having
jurisdiction in the premises shall require the Company or the Director to take
any action in connection with shares being purchased upon exercise of the
option, exercise of the option and delivery of the certificate or certificates
for such shares shall be postponed until completion of the necessary action,
which shall be taken at the Company's expense.
B. Tax Withholding
---------------
The Company shall have the right to deduct from payments of any kind
otherwise due to the Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the Optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of Common Stock already
owned by the Optionee. The shares so delivered or withheld shall have a fair
market value equal to such withholding obligation. The fair market value of the
shares used to satisfy such withholding obligation shall be determined by the
Company as of the date that the amount of tax to be withheld is to be
determined. Notwithstanding the foregoing, no election to use shares for the
payment of withholding taxes shall be effective unless made in compliance with
any applicable requirements of Rule 16b-3.
7. Transferability
---------------
Options shall not be transferable, otherwise than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined in the Internal Revenue Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder (a "Qualified Domestic Relations
Order"). Options may
<PAGE> 4
be exercised during the life of the Optionee only by the Optionee or a
transferee pursuant to a Qualified Domestic Relations Order.
8. Limitation of Rights to Continue as a Director
----------------------------------------------
Neither the Plan, nor the quantity of shares subject to options granted
under the Plan, nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain a Director for any period of time, or at any
particular rate of compensation.
9. Changes in Common Stock
-----------------------
If the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number or kind of shares or other securities, or if
additional shares or new or different shares or other securities are distributed
with respect to such shares of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other distribution with respect to such shares of Common
Stock, or other securities, an appropriate proportionate adjustment may be made
in the maximum number or kind of shares reserved for issuance under the Plan. No
fractional shares will be issued under the Plan on account of any such
adjustments.
10. Limitation of Rights in Option Stock
------------------------------------
The Optionees shall have no rights as stockholders in respect of shares as
to which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan or the written
agreement evidencing options granted hereunder.
11. Stock Reserved
--------------
The Company shall at all times during the term of the options reserve and
keep available such number of shares of the Common Stock as will be sufficient
to permit the exercise in full of all options granted under this Plan and shall
pay all other fees and expenses necessarily incurred by the Company in
connection therewith.
12. Securities Laws Restrictions
----------------------------
A. Investment Representations.
---------------------------
The Company may require any person to whom an option is granted, as a
condition of exercising such option, to give written assurances in substance and
form satisfactory to the Company to the effect that such person is acquiring the
Common Stock subject to the option for his or her own account for investment and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate in order
to comply with federal and applicable state securities laws.
B. Compliance with Securities Laws.
--------------------------------
Each option shall be subject to the requirement that if, at any time,
counsel to the Company shall determine that the listing, registration or
qualification of the shares subject to such option upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition is necessary as a
condition of, or in connection with, the issuance or purchase of shares
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. Nothing herein
<PAGE> 5
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
13. Change in Control
-----------------
A. Impact of Event
---------------
In the event of a "Change in Control" as defined in Section 13(B), the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:
(a) Any stock options awarded under the Plan that were not previously
exercisable and vested shall become fully exercisable and vested.
(b) Shares purchased upon the exercise of options 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 options
shall be free of restrictions.
B. 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 Company, Thermo Instrument or Thermo Electron, as the
case may be, (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
subsidiary of Thermo Electron.
14. Amendment of the Plan
---------------------
The provisions of Sections 3 and 5 of the Plan shall not be amended more
than once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, or the rules thereunder.
Subject to the foregoing, the Board of Directors may at any time, and from time
to time, modify
<PAGE> 6
or amend the Plan in any respect, except that if at any time the approval of the
Stockholders of the Company is required as to such modification or amendment
under Rule 16b-3, the Board of Directors may not effect such modification or
amendment without such approval.
The termination or any modification or amendment of the Plan shall not,
without the consent of an Optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the Optionees affected,
the Board of Directors may amend outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify the terms and provisions of the Plan and of any outstanding option to
the extent necessary to ensure the qualification of the Plan under Rule 16b-3.
15. Effective Date of the Plan
--------------------------
The Plan shall become effective when adopted by the Board of Directors, but
no option granted under the Plan shall become exercisable until six months after
the Plan is approved by the Stockholders of the Company.
16. Notice
------
Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Secretary of the Company and shall become
effective when it is received.
17. Governing Law
-------------
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware.
<PAGE> 1
Exhibit 10.10
THERMO BIOANALYSIS CORPORATION
INDEMNIFICATION AGREEMENT
-------------------------
This Agreement, made and entered into this ___ day of __________, 1995,
("Agreement"), by and between Thermo BioAnalysis Corporation, a Delaware
corporation (the "Company"), and ** ("Indemnitee"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation;
WHEREAS, uncertainties relating to the continued availability of adequate
directors and officers liability insurance ("D&O Insurance") and the
uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons;
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that the difficulty in attracting and retaining such persons is detrimental to
the best interests of the Company's stockholders and that the Company should act
to assure such persons that there will be increased certainty of such protection
in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified;
WHEREAS, Indemnitee is willing to serve, continue to serve and/or to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified and that such indemnification be so guaranteed.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve or continue to serve
as a Director of the Company. This Agreement shall not impose any obligation on
the Indemnitee or the Company to continue the Indemnitee's position with the
Company beyond any period otherwise applicable.
2. INDEMNITY. The Company shall indemnify, and shall advance Expenses (as
hereinafter defined) to, Indemnitee as provided in this Agreement and to the
fullest extent permitted by law.
<PAGE> 2
2
3. GENERAL. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 3 if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to any threatened,
pending, or completed action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or other proceeding whether
civil, criminal, administrative or investigative. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement incurred by him or on his behalf in connection
with such action, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or other proceeding whether civil,
criminal, administrative or investigative or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
4. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. In the case of any action
or suit by or in the right of the Company, indemnification shall be made only
(i) for Expenses or (ii) in respect of any claim, issue or matter as to which
Indemnitee shall have been adjudged to be liable to the Company if such
indemnification is permitted by Delaware law; provided, however, that
indemnification against Expenses shall nevertheless be made by the Company in
such event to the extent that the Court of Chancery of the State of Delaware, or
the court in which such action or suit shall have been brought or is pending,
shall determine to be proper despite the adjudication of liability but in view
of all the circumstances of the case.
5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any action, suit, arbitration,
alternative dispute resolution mechanism, investigation, administrative hearing
or other proceeding whether civil, criminal, administrative or investigative, he
shall be indemnified against all Expenses incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful but is successful,
on the merits or otherwise, as to one or more but less than all claims, issues
or matters in such action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or other proceeding whether
civil, criminal, administrative or investigative, the Company shall indemnify
Indemnitee against all Expenses incurred by him or on his behalf in connection
with each successfully resolved claim, issue or matter. For purposes of this
Section and without limitation, the termination of any claim, issue or matter by
dismissal, or withdrawal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
6. ADVANCE OF EXPENSES. The Company shall advance all Expenses incurred by
or on behalf of Indemnitee in connection with any action, suit, arbitration,
alternative dispute resolution mechanism, investigation, administrative hearing
or any other proceeding whether civil, criminal, administrative or investigative
within twenty (20) days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such action, suit,
arbitration, alternative dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil, criminal,
administrative or investigative. Such statement or statements shall reasonably
evidence
<PAGE> 3
3
the Expenses incurred by Indemnitee and shall include or be preceded or
accompanied by an undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified against such Expenses, which undertaking shall be
accepted by or on behalf of the Company without reference to the financial
ability of Indemnitee to make repayment.
7. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) To obtain indemnification under this Agreement, Indemnitee shall submit
to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
Section 7(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in the specific case:
(i) if a Change in Control (as hereinafter defined) shall have occurred, by
Independent Counsel (as hereinafter defined) in a written opinion to the Board,
a copy of which shall be delivered to Indemnitee (unless Indemnitee shall
request that such determination be made by the Board or the Stockholders, in
which case the determination shall be made in the manner provided below in
clauses (ii) or (iii)); (ii) if a Change of Control shall not have occurred, (A)
by the Board by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board consisting
of Disinterested Directors is not obtainable or, even if obtainable, such quorum
of Disinterested Directors so directs, by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee or (C) by
the Stockholders of the Company; or (iii) as provided in Section 8(b) of this
Agreement; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information that is not
privileged or otherwise protected from disclosure and that is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 7(b) of this Agreement, the
Independent Counsel shall be selected as provided in this Section 7(c). If a
Change of Control shall not have occurred, the Independent Counsel shall be
selected by the Board, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change
of Control shall have occurred, the Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board, in which event the preceding
<PAGE> 4
4
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within 7 days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the case may be, a written objection to such selection.
Such objection may be asserted only on the ground that the Independent Counsel
so selected does not meet the requirements of "Independent Counsel" as defined
in Section 14 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, the Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such objection is without merit.
If, within twenty (20) days after submission by Indemnitee of a written request
for indemnification pursuant to Section 7(a) hereof, no Independent Counsel
shall have been selected or if selected, shall have been objected to, in
accordance with this Section 7(c), either the Company or Indemnitee may petition
the Court of Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have been made by the
Company or Indemnitee to the other's selection of independent counsel and/or for
the appointment as independent counsel of a person selected by the Court or by
such other person as the Court shall designate, and the person with respect to
whom an objection is favorably resolved or the person so appointed shall act as
Independent Counsel under Section 7(b) hereof. The Company shall pay reasonable
fees and expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 7(b) hereof. The Company shall pay
any and all reasonable fees and expenses incident to the procedures of this
Section 7(c), regardless of the manner in which such Independent Counsel was
selected or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 9(a)(iii) of this Agreement, Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) If a Change of Control shall have occurred, in making a determination
with respect to entitlement to indemnification hereunder, the person, persons or
entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 7(a) of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any determination
contrary to that presumption.
(b) If the person, persons or entity empowered or selected under Section 7
of this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made such determination within sixty (60) days after receipt by
the Company of the request therefor, the requisite determination of entitlement
to indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 60-day period may be extended for a reasonable
time, not to exceed an additional thirty (30) days, if the person, persons
<PAGE> 5
5
or entity making the determination with respect to entitlement to
indemnification in good faith requires such additional time for the obtaining or
evaluating of documentation and/or information relating thereto; and provided,
further, that the foregoing provisions of this Section 8(b) shall not apply (i)
if the determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 7(b) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board has resolved to submit such determination to the
stockholders for their consideration at an annual meeting thereof to be held
within seventy-five (75) days after such receipt and such determination is made
thereat, or (B) a special meeting of stockholders is called within fifteen (15)
days after such receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after having been so
called and such determination is made thereat, or (ii) if the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 7(b) of this Agreement.
(c) The termination of any action, suit, arbitration, alternative dispute
resolution mechanism, investigation, administrative hearing or other proceeding
whether civil, criminal, administrative or investigative or of any claim, issue
or matter therein by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal action or
proceeding, that Indemnitee had reasonable cause to believe that his conduct was
unlawful.
9. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination is made pursuant to Section 7 of
this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 6
of this Agreement, (iii) the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 7(b) of this Agreement and
such determination shall not have been made and delivered in a written opinion
within ninety (90) days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section
5 of this Agreement within ten (10) days after receipt by the Company of a
written request therefor, or (v) payment of indemnification is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 8 of this Agreement, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association. Indemnitee shall commence such
proceeding seeking an adjudication or an award in arbitration within one hundred
eighty (180) days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 9(a). The Company shall not
oppose Indemnitee's right to seek any such adjudication or award in arbitration.
<PAGE> 6
6
(b) In the event that a determination shall have been made pursuant to
Section 7 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 9
shall be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding or arbitration commenced pursuant to this Section 9 the Company shall
have the burden of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 7 or 8 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 9, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 9 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 9, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 14 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in said judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification
or advancement of expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
10. SECURITY. To the extent requested by the Indemnitee and approved by the
Board, the Company may at any time and from time to time provide security to the
Indemnitee for the Company's obligations hereunder through an irrevocable bank
line of credit, funded trust or other collateral. Any such security, once
provided to the Indemnitee, may not be revoked or released without the prior
written consent of Indemnitee.
11. NON-EXCLUSIVITY; DURATION OF AGREEMENT; INSURANCE; SUBROGATION.
(a) The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable law, the Company's
certificate of incorporation or by-laws, any other agreement, a vote of
stockholders or a resolution of directors, or otherwise.
<PAGE> 7
7
This Agreement shall continue until and terminate upon the later of: (a)
ten (10) years after the date that Indemnitee shall have ceased to serve as a
Director of the Company or fiduciary of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which Indemnitee
served at the request of the Company; or (b) the final termination of all
pending actions, suits, arbitrations, alternative dispute resolution mechanisms,
investigations, administrative hearings or other proceedings whether civil,
criminal, administrative or investigative in respect of which Indemnitee is
granted rights of indemnification or advancement of expenses hereunder and of
any proceeding commenced by Indemnitee pursuant to Section 9 of this Agreement
relating thereto. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and his
heirs, executors and administrators.
(b) To the extent that the Company maintains D&O Insurance, Indemnitee
shall be covered by such D&O Insurance in accordance with its terms to the
maximum extent of the coverage available for any Director under such policy or
policies.
(c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
12. SEVERABILITY; REFORMATION. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
13. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any action, suit or proceeding, or any claim therein, initiated,
brought or made by him (i) against the Company, unless a Change in Control shall
have occurred, or (ii) against any person other than the Company, unless
approved in advance by the Board.
<PAGE> 8
8
14. DEFINITIONS. For purposes of this Agreement:
(a) "Change in Control" means a change in control of the Company of a
nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act of 1934
(the "Act"), whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if (i) any "person" (as such term is
used in Section 13(d) and 14(d) of the Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Act), directly or indirectly, of securities
of the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage interest; (ii) the Company is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board in office immediately
prior to such transaction or event constitute less than a majority of the Board
thereafter; or (iii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
(b) "Corporate Status" describes the status of a person who is or was or
has agreed to become a director of the Company, or is or was an officer or
fiduciary of the Company or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which such person is
or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who is not and
was not a party to the action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or any other proceeding whether
civil, criminal, administrative or investigative in respect of which
indemnification is sought by Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend or
investigating an action, suit, arbitration, alternative dispute resolution
mechanism, investigation, administrative hearing or any other proceeding whether
civil, criminal, administrative or investigative.
(e) "Independent Counsel" means a law firm, or a member of a law firm, that
is experienced in matters of corporation law and neither currently is, nor in
the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party or (ii) any other party
to the action, suit, arbitration,
<PAGE> 9
9
alternative dispute resolution mechanism, investigation, administrative hearing
or any other proceeding whether civil, criminal, administrative or investigative
giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee's Rights under this Agreement.
15. HEADINGS. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
16. MODIFICATION AND WAIVER. This Agreement may be amended from time to
time to reflect changes in Delaware law or for other reasons. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
17. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the Company
in writing upon being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any matter which may be
subject to indemnification or advancement of Expenses covered hereunder;
provided, however, that the failure to give any such notice shall not disqualify
the indemnitee from indemnification hereunder.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to: The address shown beneath
his or her signature on
the last page hereof
(b) If to the Company, to: Thermo BioAnalysis Corporation
c/o Thermo Electron Corporation
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
Attn: Corporate Secretary
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
<PAGE> 10
10
19. GOVERNING LAW. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
Attest: THERMO BIOANALYSIS CORPORATION
By: _____________________________ By: __________________________
Sandra L. Lambert Barry S. Howe
Secretary Chief Executive Officer
INDEMNITEE
______________________________
Address:
______________________________
<PAGE> 1
Exhibit 10.11
ASSET TRANSFER AGREEMENT
This AGREEMENT is dated as of February 27, 1995 by and between Thermo
Instrument Systems Inc. ("Thermo Instrument"), a Delaware corporation, and
Thermo BioAnalysis Corporation ("TBA"), a Delaware corporation and wholly owned
subsidiary of Thermo Instrument.
WHEREAS, Thermo Instrument desires and intends to divest itself of all of
the property and assets, real, personal and mixed, tangible and intangible, used
exclusively in connection with or related exclusively to its Eberline health
physics instrument business (the "Health Physics Business") by contributing the
Health Physics Business to TBA; and
WHEREAS, TBA desires to continue the Health Physics Business and to assume
its liabilities;
NOW, THEREFORE, in consideration of the premises and mutual promises and
agreements set forth herein, the parties hereto hereby agree as follows:
1. TRANSFER OF ASSETS TO TBA. Thermo Instrument hereby assigns,
transfers, conveys, and delivers to TBA all of the property, assets and rights,
real, personal and mixed, tangible and intangible, which Thermo Instrument owns
or may own, and which are used exclusively in connection with the Health Physics
Business including but not limited to the following:
(i) all trade and other accounts receivable and notes receivable;
(ii) all inventories of raw materials, work in process, finished goods,
supplies, packaging materials, spare parts and similar items;
(iii) all machinery, equipment, tools and tooling, furniture, fixtures,
leasehold improvements and motor vehicles;
(iv) all real property, leaseholds and subleaseholds in real property,
and easements, rights-of-way and other appurtenants thereto;
(v) (a) all patents, patent applications, patent disclosures and all
related continuation, continuation-in-part, divisional, reissue,
re-examination, utility, model, certificate of invention and design
patents, patent application, registrations and applications for
registrations,
(b) all trademarks, service marks, trade dress, logos, trade names
and corporate names and registrations and applications for
registration thereof, and
<PAGE> 2
(c) all copyrights and registrations and applications for
registration thereof, mask works and registrations and applications
for registration thereof, computer software, date and documentation,
trade secrets and confidential business information, whether
patentable or nonpatentable and whether or not reduced to practice,
know-how, manufacturing and product processes and techniques,
research and development information, copyrightable works,
financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier
lists and information, other proprietary rights relating to any of
the foregoing (including without limitation remedies against
infringements thereof and rights of protection of interest therein
under the laws of all jurisdictions) and copies and tangible
embodiments thereof;
(vi) all rights under contracts, agreements or instruments;
(vii) all claims, prepayments, refunds, causes of action, choses in
actions, rights of recovery, rights of setoff and rights of
recoupment, including all rights under warranties;
(viii) all permits, licenses, registrations, certificates, franchises,
variances and other similar rights;
(ix) all books, records, accounts, ledgers, files, documents,
correspondence, lists (customer or otherwise), product and sales
literature, drawings or specifications, employment records,
manufacturing and technical manuals, advertising and promotional
materials, studies, reports and other printed or written materials;
and
(x) all claims and defenses relating to any of the foregoing or to the
liabilities assumed by TBA pursuant to Section 3 below.
All property and assets referred to in this Section 1 are hereinafter
collectively referred to as the "Assets." Thermo Instrument will convey to TBA,
as of the date hereof, the Assets to be conveyed, assigned, transferred and
delivered to TBA in accordance with this Agreement, without further
consideration, by appropriate instruments of transfer, bills of sale and deeds
in such form as may reasonably be requested by counsel to TBA.
2. [Reserved]
3. ASSUMPTION OF LIABILITIES. From and after the date hereof, TBA shall
assume any and all liabilities, commitments and obligations of Thermo Instrument
incurred in connection with the Health Physics Business.
4. CONTINUING AGREEMENTS BY TBA AND THERMO INSTRUMENT. TBA and Thermo
Instrument agree that following the date hereof, they will take the following
action:
2
<PAGE> 3
(a) TRADE SECRETS. Thermo Instrument shall hold in confidence and use
its best efforts to have all employees, officers, directors and personnel
who continue to have a business relationship with Thermo Instrument after
the date hereof, for so long as they continue to have such a relationship,
hold in confidence all knowledge or information of a secret or confidential
nature with respect to the Health Physics Business and not disclose,
publish or make use of same without the consent of TBA, except to the
extent that the same shall have become public knowledge other than by
breach of this Agreement by Thermo Instrument. Thermo Instrument agrees
that the remedy at law for any breach of this provision shall be inadequate
and that TBA shall be entitled to injunctive relief in addition to any
other remedy it might have.
(b) CONSENT TO ASSIGNMENT. Thermo Instrument will use its best efforts
to obtain (i) any required consent of other parties to the assignment of
any material contract assigned to TBA hereunder, and (ii) the consent of
the lessor to any assignment requested by TBA of any material equipment
currently leased and used in connection with the Health Physics Business.
(c) FURTHER ASSURANCES. Each party hereby agrees that at any time, and
from time to time after the date hereof, upon the reasonable request of the
other party, it will perform, execute, acknowledge and deliver all such
further acts, deeds, assignments, conveyances, instruments or powers of
attorney as may be necessary or appropriate to carry out the provisions of
this Agreement.
5. THERMO INSTRUMENT'S REPRESENTATIONS AND WARRANTIES. Thermo Instrument
represents and warrants that:
(a) ORGANIZATION AND STANDING. Thermo Instrument is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) APPROVAL OF TRANSACTIONS. Thermo Instrument has obtained all
necessary corporate authorizations and approvals, and has taken all actions
required for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(c) TITLE TO THE ASSETS. Thermo Instrument is the true and lawful
owner of, and has good and marketable title to, the Assets free and clear
of all liens, mortgages, leases, conditional sales agreements, title
retention agreements, restrictions against transfer or assignment or any
other encumbrance. Upon consummation of the transfer of the Assets by
Thermo Instrument to TBA, TBA will be the lawful owner of, and have
marketable title to, the Assets, free and clear of all liens, mortgages, or
other encumbrances.
(d) NO LITIGATION. Thermo Instrument is not engaged in, or to the
knowledge of Thermo Instrument's management, threatened with any material
legal action or other
3
<PAGE> 4
proceeding relating to the Health Physics Business before any court,
administrative agency, governmental department or arbitrator.
(e) COMPLIANCE WITH CONTRACTS. To the best knowledge of Thermo
Instrument's management, Thermo Instrument is in compliance in all material
respects with all unwaived terms and provisions of all material contracts,
commitments and engagements in connection with the Health Physics Business
entered into in the ordinary course of business prior to or on the date
hereof; and the same are in full force and effect and constitute legal,
valid and binding obligations of the respective parties thereto,
enforceable in accordance with their terms except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting generally the enforcement of creditors' rights, and have not been
assigned or encumbered by Thermo Instrument. Thermo Instrument has
performed, in all material respects, obligations required to be performed
by it in connection with the businesses of the Health Physics Business
under all such material contracts, commitments and engagements to date and
is not in default in any material respect under any of said contracts,
commitments and engagements.
(f) NO CONFLICT. Neither the execution nor delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor the
fulfillment of or compliance with the terms and provisions hereof will, to
the best of Thermo Instrument's knowledge, (i) violate any current
provisions of law, administrative regulation, or court decree applicable to
Thermo Instrument or the Health Physics Business or (ii) conflict with or
result in a breach of any of the terms, conditions or provisions of or
constitute default under any agreement or instrument to which Thermo
Instrument is a party or by which it is bound.
6. TBA'S REPRESENTATIONS AND WARRANTIES.
(a) ORGANIZATION AND STANDING. TBA is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(b) APPROVAL OF TRANSACTIONS. TBA has obtained all necessary corporate
authorizations and approvals, and has taken all actions required for the
executions and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
7. TRANSFER AND SALES TAX. Notwithstanding any provisions of law to the
contrary, TBA shall be responsible for and shall pay (a) all sales and transfer
taxes, and (b) all governmental charges, if any, upon the sale or transfer of
any of the Assets.
8. EFFECTIVE DATE. The transfer of the Health Physics Business Thermo
Instrument to TBA shall be deemed to be effective as of the date first above
written, for all purposes, including federal income taxes and accounting.
4
<PAGE> 5
9. CAPTIONS. The captions and headings to the various sections,
paragraphs and exhibits of this Agreement are for convenience of reference only
and shall not affect or control the meaning or interpretation of any of the
provisions of this Agreement.
10. INTEGRATION. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter contained herein.
11. 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 Thermo Instrument:
Thermo Instrument Systems Inc.
504 Airport Road
Santa Fe, New Mexico 87504-2108
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to TBA:
Thermo BioAnalysis Corporation
504 Airport Road
Santa Fe, New Mexico 87504-2108
Attention: President
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.
5
<PAGE> 6
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Thermo Instrument or TBA in this Agreement shall survive the
execution and delivery of this Agreement.
13. GOVERNING LAW; ASSIGNMENT. This Agreement is to be construed,
interpreted, applied and governed in all respects in accordance with the laws of
the State of Delaware, without regard to its conflict of laws provisions, is to
take effect as a sealed instrument, is binding upon and inures to the benefit of
the parties hereto and their respect successors and assigns and may be canceled,
modified or amended only by a written instrument executed by Thermo Instrument
and TBA. No party hereto may assign its rights hereunder without prior written
consent of the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THERMO INSTRUMENT SYSTEMS INC.
By: /s/ Barry S. Howe
--------------------------
Title: Vice President
THERMO BIOANALYSIS CORPORATION
By: /s/ Barry S. Howe
--------------------------
Title: President
6
<PAGE> 1
Exhibit 10.12
ASSET TRANSFER AGREEMENT
This AGREEMENT is dated as of February 27, 1995 by and between Thermo
Separation Products Inc. ("TSP"), a Delaware corporation, and Thermo BioAnalysis
Corporation ("TBA"), a Delaware corporation.
WHEREAS, TSP desires and intends to divest itself of certain personal
property and assets, tangible and intangible, used exclusively in connection
with or related exclusively to its capillary electrophoresis product line (the
"CE Business") by contributing the CE Business to TBA; and
WHEREAS, TBA desires to continue the CE Business and to assume its
liabilities;
NOW, THEREFORE, in consideration of the premises and mutual promises and
agreements set forth herein, the parties hereto hereby agree as follows:
1. TRANSFER OF ASSETS TO TBA. TSP hereby assigns, transfers, conveys, and
delivers to TBA property, assets and rights identified on Schedule A hereto (the
"Assets"). TSP will convey to TBA, as of the date hereof, the Assets to be
conveyed, assigned, transferred and delivered to TBA in accordance with this
Agreement, without further consideration, by appropriate instruments of
transfer, bills of sale and deeds in such form as may reasonably be requested by
counsel to TBA.
2. RETENTION OF CERTAIN ASSETS. Notwithstanding any provision of this
Agreement to the contrary, TSP does not assign, transfer or convey to TBA any
right, title or interest in or to any of the assets identified on Schedule B
hereto.
3. ASSUMPTION OF LIABILITIES. From and after the date hereof, TBA shall
assume any and all liabilities, commitments and obligations of TSP incurred in
connection with the CE Business.
4. CONTINUING AGREEMENTS BY TBA AND TSP. TBA and TSP agree that following
the date hereof, they will take the following action:
(a) TRADE SECRETS. TSP shall hold in confidence and use its best
efforts to have all employees, officers, directors and personnel who
continue to have a business relationship with TSP after the date hereof,
for so long as they continue to have such a relationship, hold in
confidence all knowledge or information of a secret or confidential nature
with respect to the CE Business and not disclose, publish or make use of
same without the consent of TBA, except to the extent that the same shall
have become public knowledge other than by breach of this Agreement by TSP.
TSP agrees that the remedy
<PAGE> 2
at law for any breach of this provision shall be inadequate and that TBA
shall be entitled to injunctive relief in addition to any other remedy it
might have.
(b) CONSENT TO ASSIGNMENT. TSP will use its best efforts to obtain
(i) any required consent of other parties to the assignment of any material
contract assigned to TBA hereunder, and (ii) the consent of the lessor to
any assignment requested by TBA of any material equipment currently leased
and used in connection with the CE Business.
(c) FURTHER ASSURANCES. Each party hereby agrees that at any time,
and from time to time after the date hereof, upon the reasonable request
of the other party, it will perform, execute, acknowledge and deliver all
such further acts, deeds, assignments, conveyances, instruments or powers
of attorney as may be necessary or appropriate to carry out the provisions
of this Agreement.
5. TSP'S REPRESENTATIONS AND WARRANTIES. TSP represents and warrants
that:
(a) ORGANIZATION AND STANDING. TSP is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(b) APPROVAL OF TRANSACTIONS. TSP has obtained all necessary
corporate authorizations and approvals, and has taken all actions required
for the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
(c) TITLE TO THE ASSETS. TSP is the true and lawful owner of, and
has good and marketable title to, the Assets free and clear of all liens,
mortgages, leases, conditional sales agreements, title retention
agreements, restrictions against transfer or assignment or any other
encumbrance. Upon consummation of the transfer of the Assets by TSP to TBA,
TBA will be the lawful owner of, and have marketable title to, the Assets,
free and clear of all liens, mortgages, or other encumbrances.
(d) NO LITIGATION. TSP is not engaged in, or to the knowledge of
TSP's management, threatened with any material legal action or other
proceeding relating to the CE Business before any court, administrative
agency, governmental department or arbitrator.
(e) COMPLIANCE WITH CONTRACTS. To the best knowledge of TSP's
management, TSP is in compliance in all material respects with all unwaived
terms and provisions of all material contracts, commitments and engagements
in connection with the CE Business entered into in the ordinary course of
business prior to or on the date hereof; and the same are in full force and
effect and constitute legal, valid and binding obligations of the
respective parties thereto, enforceable in accordance with their terms
except as limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting generally the enforcement of
creditors' rights, and have not been assigned or encumbered by TSP. TSP has
performed, in all material respects, obligations required to be performed
2
<PAGE> 3
by it in connection with the businesses of the CE Business under all such
material contracts, commitments and engagements to date and is not in
default in any material respect under any of said contracts, commitments
and engagements.
(f) NO CONFLICT. Neither the execution nor delivery of this
Agreement, nor the consummation of the transactions herein contemplated,
nor the fulfillment of or compliance with the terms and provisions hereof
will, to the best of TSP's knowledge, (i) violate any current provisions of
law, administrative regulation, or court decree applicable to TSP or the CE
Business or (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of or constitute default under any agreement or
instrument to which TSP is a party or by which it is bound.
6. TBA'S REPRESENTATIONS AND WARRANTIES.
(a) ORGANIZATION AND STANDING. TBA is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(b) APPROVAL OF TRANSACTIONS. TBA has obtained all necessary
corporate authorizations and approvals, and has taken all actions required
for the executions and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
7. TRANSFER AND SALES TAX. Notwithstanding any provisions of law to the
contrary, TBA shall be responsible for and shall pay (a) all sales and transfer
taxes, and (b) all governmental charges, if any, upon the sale or transfer of
any of the Assets.
8. EFFECTIVE DATE. The transfer of the CE Business TSP to TBA shall be
deemed to be effective as of the date first above written, for all purposes,
including federal income taxes and accounting.
9. CAPTIONS. The captions and headings to the various sections,
paragraphs and exhibits of this Agreement are for convenience of reference only
and shall not affect or control the meaning or interpretation of any of the
provisions of this Agreement.
10. INTEGRATION. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter contained herein.
11. 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 TSP:
3
<PAGE> 4
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 TBA:
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.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by TSP or TBA in this Agreement shall survive the execution and
delivery of this Agreement.
13. GOVERNING LAW; ASSIGNMENT. This Agreement is to be construed,
interpreted, applied and governed in all respects in accordance with the laws of
the State of Delaware, without regard to its conflict of laws provisions, is to
take effect as a sealed instrument, is binding upon and inures to the benefit of
the parties hereto and their respect successors and assigns and may be canceled,
modified or amended only by a written instrument executed by TSP and TBA. No
party hereto may assign its rights hereunder without prior written consent of
the other party.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written
THERMO BIOANALYSIS CORPORATION THERMO SEPARATION PRODUCTS INC.
By: /s/ Barry S. Howe By: /s/ Barry S. Howe
------------------------- -------------------------
Title: President Title: President
Address: 504 Airport Road Address: 3661 Interstate Park Road,
Santa Fe, NM 87504-2108 North
P.O. Box 10235
Riviera Beach
Florida 33419-0235
5
<PAGE> 6
Schedule A
Transferred Assets
------------------
I. The following patents, patent applications, patent disclosures and all
related continuation, continuation-in-part, divisional, reissue,
re-examination, utility, model, certificate of invention and design
patents, patent application, registrations and applications for
registrations:
<TABLE>
<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>
II. All trademarks, service marks, trade dress, logos, trade names and
corporate names and registrations and applications for registration thereof
used exclusively in the CE Business, including without limitation, the
trademark "SpectraPHORESIS"
III. All copyrights and registrations and applications for registration thereof,
mask works and registrations and applications for registration thereof,
computer software, date and documentation, trade secrets and confidential
business information, whether patentable or nonpatentable and whether or
not reduced to practice, know-how, manufacturing and product processes and
techniques, research and development information, copyrightable works,
financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and
information, other proprietary rights relating to any of the foregoing
(including without limitation remedies against infringements thereof and
rights of protection of interest therein under the laws of all
jurisdictions) and copies and tangible embodiments thereof that, in each
case, pertain exclusively to, or which are related exclusively to, the CE
Business
IV. All books, records, accounts, ledgers, files, documents, correspondence,
lists (customer or otherwise), product and sales literature, drawings or
specifications, employment records, manufacturing and technical manuals,
advertising and promotional materials, studies, reports and other printed
or written materials that, in each case, pertain exclusively to, or which
are related exclusively to, the CE Business
V. All claims and defenses relating to any of the foregoing or to the
liabilities assumed by TBA pursuant to Section 3 of the Agreement.
6
<PAGE> 7
Schedule B
Retained Assets
---------------
I. The following patents, patent applications, patent disclosures and all
related continuation, continuation-in-part, divisional, reissue,
re-examination, utility, model, certificate of invention and design
patents, patent application, registrations and applications for
registrations:
Number Title
------ -----
4,989,965 Collet Mounting for an Optical Element
5,037,199 Ball Lens Micro-Cell
II. All cash and all trade and other accounts receivable and notes receivable,
whether or not related to the CE Business
III. All inventories of raw materials, work in process, finished goods,
supplies, packaging materials, spare parts and similar items, whether or
not related to the CE Business
IV. All machinery, equipment, tools and tooling, furniture, fixtures,
leasehold improvements and motor vehicles, whether or not related to the
CE Business
V. All real property, leaseholds and subleaseholds in real property, and
easements, rights-of-way and other appurtenants thereto, whether or not
related to the CE Business
VI. All rights under contracts, agreements or instruments, whether or not
related to the CE Business
VII. All claims, prepayments, refunds, causes of action, choses in actions,
rights of recovery, rights of setoff and rights of recoupment, including
all rights under warranties, whether or not related to the CE Business
VIII. All permits, licenses, registrations, certificates, franchises, variances
and other similar rights, whether or not related to the CE Business
7
<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.
2
<PAGE> 3
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 th 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
3
<PAGE> 4
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 i 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.
4
<PAGE> 5
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 reque 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
5
<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
6
<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; (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.
7
<PAGE> 8
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:
8
<PAGE> 9
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.
9
<PAGE> 10
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.
10
<PAGE> 11
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
11
<PAGE> 12
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.
2
<PAGE> 3
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 outsi 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 outsie 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
3
<PAGE> 4
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.
4
<PAGE> 5
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 reque 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
5
<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
6
<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.
7
<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
9
<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.
10
<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 10.15
MANUFACTURING AGREEMENT
This AGREEMENT is dated as of February 27, 1995 by and between Thermo
Separation Products Inc., a Delaware corporation ("TSP"), and Thermo BioAnalysis
Corporation, a Delaware corporation ("TBA").
WHEREAS, TSP has contributed to TBA all of the property, assets, benefits
and liabilities, wherever located, related to TSP's capillary electrophoresis
products ("Products");
WHEREAS, TBA desires that TSP continue performing manufacturing assembly
services with respect to such Products (the "Assembly Services"); and
WHEREAS, TSP is willing to perform the Assembly Services pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants expressed herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto hereby agree as follows:
1. Services.
--------
TSP hereby agrees to perform the Assembly Services for TBA when and as
reasonably requested by TBA for the term of this Agreement or, if earlier, until
TBA shall notify TSP that it no longer requires such Assembly Services. In
performing the Assembly Services, TSP will use the same degree of skill and care
that it uses in connection with its own work. For purposes of allocating time
and materials to the performance of the Assembly Services, TSP shall not
discriminate between the Assembly Services, on the one hand, and the business of
TSP on the other hand. TSP shall make all decisions with respect to such
allocation as if it was performing the Assembly Services for its own benefit.
TSP agrees that any Products assembled for TBA pursuant to this Agreement shall
be assembled in accordance with the specifications provided by TBA; provided,
however, that TSP must approve any Product specifications that differ materially
from the product specifications used by TSP immediately prior to the
contribution of the line of Products to TBA, which approval shall not be
unreasonably be withheld.
2. Fees; Payment for Services.
--------------------------
TSP shall charge a fee for its Assembly Services in the amount of its
"Factory Cost" plus 1.0%. For purposes of this Agreement, TSP's Factory Cost
shall equal (i) TSP's actual cost of materials used or consumed in providing the
Assembly Services plus (ii) a portion of TSP's labor, overhead and other
indirect expenses, such expenses to be calculated and allocated in accordance
with TSP's standard accounting policies and manufacturing practices. Such fees
may be changed from time to time in TSP's sole discretion, provided that no
change shall be effective until 30 days
<PAGE> 2
after TBA shall have received written notice thereof. TSP shall submit to TBA
monthly statements that shall specify the type and quantity of Products the
assembly of which was completed during the preceding month. TBA shall pay to TSP
the amount of such statements within 30 days after receipt of thereof.
3. Term and Termination.
--------------------
(a) This Agreement shall have an initial term of one year, unless
sooner terminated in accordance with Section 3(b) below. The Agreement shall
automatically renew for successive additional terms of one year, unless either
party shall have provided a termination notice to the ot party 30 days in
advance of the end of the then-current term. In the event that TSP shall notify
TBA that it wishes to terminate this Agreement in accordance with the preceding
sentence, this Agreement shall automatically, and without action on the part of
either party, continue in full force and effect for such period, not to exceed
six months from the end of the then-current term, reasonably required to permit
TBA to commence the manufacturing of Products for which TSP had been providing
Assembly Services. TSP further agrees to provide such technical and other
assistance as TBA may reasonably request during such period to enable TBA to
commence such manufacturing.
(b) Either party may, in its discretion, terminate this Agreement in
the event that (i) the other party breaches any material obligation hereunder,
which breach continues for a period of 15 days after written notice thereof is
delivered by the non-breaching party, (ii) the other party enters into any
voluntary proceeding in bankruptcy, reorganization or arrangement for the
appointment of a receiver or trustee to take possession of such party's assets
or any other voluntary proceeding under any law for the relief of creditors, or
(iii) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (A) relief in
respect of the other party, or of a substantial part of the property or assets
of the other party, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (B) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the other party or
for a substantial part of the property or assets of the other party or (C) the
winding-up or liquidation of the other party; and such proceeding or petition
shall continue undismissed for 30 days (exclusive of any period during which a
stay is in effect) or an order or decree approving or ordering any of the
foregoing shall be entered.
4. Subcontractors.
--------------
Subject to TBA's prior written consent, which shall not be unreasonably
withheld, TSP may subcontract all or any portion of its duties hereunder to
third parties; provided, that any such subcontractor shall be bound by the terms
of this Agreement; and provided, further, that for those Assembly Services
usually performed for TSP by third parties, no such consent shall be required.
2
<PAGE> 3
5. Indemnification.
---------------
(a) TBA shall indemnify and hold harmless TSP from and against any
and all losses, costs, damages, liabilities or expenses (collectively,
"Damages") incurred by TSP as a result of (i) any breach by TBA of this
Agreement or (ii) the actual or alleged negligence of any employee, consultant,
agent or representative of TBA.
(b) TSP shall indemnify and hold harmless TBA from and against any
and all Damages incurred by TBA as a result of (i) any breach by TSP of this
Agreement or (ii) the actual or alleged negligence of any employee, consultant,
agent or representative of TSP.
(c) Whenever any claim shall arise for indemnification under this
Section 5, the party seeking indemnification (the "Indemnified Party"), shall
promptly notify the party from whom indemnification is sought (the "Indemnifying
Party") of the claim and, when known, the facts constituting the basis for such
claim. In the event of any such claim for indemnification hereunder resulting
form or in connection with any claim or legal proceedings by a third party, the
notice to the Indemnifying Party shall specify, if known, the amount or any
estimate of the amount of the liability arising therefrom. The Indemnified Party
shall not settle or compromise any claim by a third party for which it is
entitled to indemnification hereunder without the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld, unless suit shall
have been instituted against it and the Indemnifying Party shall not have taken
control of such suit as provided in paragraph (d) below.
(d) In connection with any claim giving rise to indemnity hereunder
resulting from or arising out of any claim or legal proceeding by a person who
is not a party to this Agreement, the Indemnifying Party at its sole cost and
expense may, upon written notice to the Indemnified Party, assume the defense of
any such claim or legal proceeding if (i) the claim is one for money damages
only and (ii) the Indemnifying Party acknowledges to the Indemnified Party in
writing its obligations to indemnify the Indemnified Party with respect to all
elements of such claim. The Indemnified Party shall be entitled to participate
in (but not control) the defense of any such action, with its counsel and at its
own expense. If the Indemnifying Party does not assume the defense of any such
claim or litigation resulting therefrom within 30 days after receiving notice of
such claim, (a) the Indemnified Party may defend against such claim or
litigation, in such manner as it may deem appropriate, including, but not
limited to, settling such claim or litigation, after giving notice of the same
to the Indemnified Party, on such terms as the Indemnifying Party may deem
appropriate, and (b) the Indemnifying Party shall be entitled to participate in
(but not control) the defense of such action, with its counsel and at its own
expense.
(e) The provisions of this Section 5 shall survive the expiration or
earlier termination of this Agreement.
6. Force Majeure.
-------------
Each party shall be excused for any failure or delay in performing any of
its obligations under this Agreement, other than the obligation of TBA to make
certain payments to TSP
3
<PAGE> 4
pursuant to Section 2 hereof or the obligations of either party under Section 5
hereof, if such failure or delay is caused by force majeure.
7. Relationship of the Parties.
---------------------------
Nothing contained in this Agreement is intended, or is to be construed, to
constitute TSP and TBA as partners or joint venturers. Neither party hereto
shall have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other party or to bind the other
party to any contract, agreement or undertaking with any third party.
8. Miscellaneous.
-------------
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that TSP
and TBA may not assign their respective obligations hereunder without the prior
written consent of the other party. Any assignment contravention of this
provision shall be void. Notwithstanding the foregoing, the parties may assign
their respective rights and obligations hereunder to any corporation directly or
indirectly controlled by Thermo Electron Corporation.
(b) This Agreement represents the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof. This
Agreement may be amended or modified only by a written instrument executed by
TSP and TBA.
(c) All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
(i) when delivered in person, or (ii) if mailed, five days after mailing by
United States certified or registered mail, postage prepaid, or (iii) one day
after deposit for overnight delivery with a nationally recognized courier
service such as Federal Express, or (iv) upon receipt of confirmation of
transmission, if sent by telecopy, to the parties at the addresses set forth
below their signatures to this Agreement or at such other address as may be
given in writing by either party to the other in accordance with this Section
8(c).
(d) This Agreement shall be governed and construed in accordance
with the laws of the State of Florida.
(e) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(f) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which shall be one and
the same document.
(g) This Agreement is the joint work product of the parties hereto,
and, therefore, in the case of an ambiguity no inference shall be drawn to the
detriment of either party.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THERMO BIOANALYSIS CORPORATION THERMO SEPARATION PRODUCTS INC.
By: /s/ Barry S. Howe By: /s/ Barry S. Howe
---------------------- ----------------------
Title: President Title: President
Address: 504 Airport Road Address: 3661 Interstate Park Road,
Santa Fe, NM 87504-2108 North
P. O. Box 10235
Riviera Beach
Florida 33419-0235
5
<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.
3
<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
6
<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 1, 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 1, 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> 2
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: /s/ Barry S. Howe
--------------------------
Title: President and Chief Executive Officer
[Corporate Seal]
Attest:
/s/ Seth H. Hoogasian
- ---------------------
Assistant Secretary
<PAGE> 1
Exhibit 10.18
ASSET AND SHARE PURCHASE AGREEMENT
This AGREEMENT is dated as of July 22, 1996 by and among (i) SID
Instruments Inc. ("SID") and HB Instruments Inc. ("HB"), on the one hand, (ii)
Thermo BioAnalysis Corporation, on the other hand (the "Buyer"), and (iii)
Thermo Instrument Systems Inc., a Delaware corporation ("Thermo"). SID and HB
are sometimes referred to herein together as the Sellers.
WHEREAS, Sellers desire to sell all of Sellers' property and assets, real,
personal and mixed, tangible and intangible, primarily used in or primarily
related to Sellers' Affinity Sensors business (the "Affinity Division"),
including without limitation all of the issued and outstanding shares of Thermo
Fast UK Limited, a company organized under the laws of England ("Thermo Fast"),
subject to certain liabilities, to Buyer, and Buyer desires to purchase such
assets, and to assume such liabilities;
NOW, THEREFORE, in consideration of the premises and mutual promises and
agreements set forth herein, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS AND SHARES.
(a) HB hereby sells, assigns, transfers, conveys, and delivers to
Buyer all of HB's property, assets and rights, real, personal and mixed,
tangible and intangible, primarily used in or primarily related to the business
of the Affinity Division (collectively, the "Assets"), and (ii) SID hereby
sells, assigns, transfers, conveys, and delivers to Buyer 100% of the issued and
outstanding share capital (the "Shares") of Thermo Fast. In consideration for
the Assets and the Shares, Buyer shall pay to Sellers an aggregate of $3,500,000
in cash (the "Purchase Price"). The parties acknowledge and agree that such
Purchase Price represents the sum of (i) the net tangible assets of the Affinity
Division (assumed to be $1,053,000) as of the date of Sellers' acquisition of
the business of the Affinity Division, as part of the acquisition on March 29,
1996 by Thermo and its subsidiaries of certain businesses of Fisons plc (the
"Fisons Businesses") pursuant to the Amended and Restated Asset and Stock
Purchase Agreement dated as of March 29, 1996 among Thermo, Thermo Electron
Corporation and Fisons plc (the "Restated Agreement"), plus (ii) a percentage of
the total goodwill associated with Thermo's acquisition of the Fisons Businesses
equal to the sales of the Division for the 1994 and 1995 fiscal years relative
to the total sales of the Fisons Businesses for such years. The parties
acknowledge that the purchase price paid by Thermo for the Fisons Businesses is
subject to a post-closing adjustment based on the difference between the value
of the net tangible assets of the Fisons Businesses as shown on the closing
balance sheet dated as of March 29, 1996 (the "Closing Balance Sheet") and the
target net tangible asset value provided for in the Restated Agreement. In the
event of any such adjustment, the Purchase Price shall be recalculated in
accordance with the third sentence of this paragraph to account for (A) any
adjustment in the net tangible assets of the Affinity Division as shown on the
Closing Balance Sheet from $1,053,000, and (B) any adjustment in the total
goodwill associated with Thermo's acquisition of the Fisons Businesses. If any
such recalculation results in an increase in the Purchase Price, Buyer shall pay
the amount of such increase to Sellers,
<PAGE> 2
and if any such recalculation results in a decrease in the Purchase Price,
Sellers shall pay the amount of such decrease to Buyer. Any payment made
pursuant to the preceding sentence shall be made within ten days after the
Closing Balance Sheet has become final.
(b) The Assets include (but are not limited to), the following,
insofar as they are primarily used in or primarily related to the business of
the Affinity Division:
(i) all trade and other accounts receivable and notes receivable;
(ii) all inventories of raw materials, work in process, finished
goods, supplies, packaging materials, spare parts and similar
items;
(iii) all machinery, equipment, tools and tooling, furniture,
fixtures, leasehold improvements and motor vehicles;
(iv) all real property, leaseholds and subleaseholds in real
property, and easements, rights-of-way and other appurtenants
thereto;
(v) (A) all patents, patent applications, patent disclosures and all
related continuation, continuation-in-part, divisional, reissue,
re-examination, utility, model, certificate of invention and
design patents, patent application, registrations and
applications for registrations;
(B) all trademarks, service marks, trade dress, logos, trade
names and corporate names and registrations and applications for
registration thereof;
(C) all copyrights and registrations and applications for
registration thereof, mask works and registrations and
applications for registration thereof, computer software, source
code, data and documentation, trade secrets and confidential
business information, whether patentable or nonpatentable and
whether or not reduced to practice, know-how, manufacturing and
product processes and techniques, research and development
information, copyrightable works, financial, marketing and
business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information,
other proprietary rights relating to any of the foregoing
(including without limitation remedies against infringements
thereof and rights of protection of interest therein under the
laws of all jurisdictions) and copies and tangible embodiments
thereof;
(vi) all rights under contracts, agreements or instruments;
(vii) all claims, prepayments, refunds, causes of action, choses in
action, rights of recovery, rights of setoff and rights of
recoupment, including all rights under warranties;
2
<PAGE> 3
(viii) all permits, licenses, registrations, certificates, franchises,
variances and other similar rights;
(ix) all books, records, accounts, ledgers, files, documents,
correspondence, lists (customer or otherwise), product and
sales literature, drawings or specifications, employment
records, manufacturing and technical manuals, advertising and
promotional materials, studies, reports and other printed or
written materials;
(x) securities, partnership, joint venture or other equity
interests in any other business entity; and
(xi) all claims and defenses relating to any of the foregoing or to
the liabilities assumed by Buyer pursuant to Section 2 below.
2. ASSUMPTION OF LIABILITIES.
(a) From and after the date hereof, SID shall assume any and all
liabilities, commitments and obligations of Thermo Fast or any of its
subsidiaries that result from any third party claim based upon the acts or
omissions of Thermo Fast or such subsidiaries on or after March 29, 1996 and
prior to the date hereof (the "Retained Liabilities").
(b) From and after the date hereof, Buyer shall assume any and
all liabilities, commitments and obligations of HB of any nature, kind and
description except for the Excluded Liabilities (the "Liabilities"). "Excluded
Liabilities" means (i) any liabilities that do not relate primarily to the
business of the Affinity Division and (ii) all liabilities, commitments and
obligations of HB or any of its subsidiaries that result from any third party
claim based upon the acts or omissions of HB or such subsidiaries on or after
March 29, 1996 and prior to the date hereof.
3. FURTHER ASSURANCES. At the request of Buyer at any time on or after the
date hereof, Sellers will execute and deliver such further instruments of
transfer and conveyance and take such other action as Buyer reasonably may
request effectively to assign and transfer to Buyer any of the Assets and/or the
Shares. At the request of Buyer at any time on or after the date hereof, SID
will execute and deliver such further instruments of assumption and take such
other action as Buyer may reasonably request effectively to assume the Retained
Liabilities. At the request of Sellers at any time on or after the date hereof,
Buyer will execute and deliver such further instruments of assumption and take
such other action as Seller may reasonably request effectively to assume the
Liabilities.
4. REGARDING CERTAIN CONSENTS. Nothing in this Agreement shall be construed
as an attempt to assign any contract, agreement, permit, franchise, or claim
included in the Assets that is, by its term or in law, nonassignable without the
consent of the other party or parties thereto, unless such consent shall have
been given, or as to which all the remedies for the enforcement
3
<PAGE> 4
thereof enjoyed by HB would not, as a matter of law, pass to Buyer as an
incident of the assignments provided for by this Agreement. In order, however,
to provide Buyer the full realization and value of every contract, agreement,
permit, franchise and claim of the character described in the preceding
sentence, HB, on and after the date hereof by itself or by its agents, shall, at
the request and expense and under the direction of Buyer, in the name of HB or
otherwise as Buyer shall specify and as shall be permitted by law, take all such
reasonable action (including without limitation the appointment of Buyer as an
attorneys-in-fact for HB) and do or cause to be done all such things as shall in
the opinion of Buyer be necessary or proper (a) to assure that the rights and
obligations of HB under such contracts, agreements, permits, franchises, and
claims shall be preserved for the benefit of Buyer and (b) to facilitate receipt
of the consideration to be received by HB in and under every such contract,
agreement, permit, franchise, and claim, which consideration HB shall hold for
the benefit of, and upon request of Buyer shall deliver to, Buyer.
5. SELLERS' REPRESENTATIONS AND WARRANTIES. Each Seller represents and
warrants that:
(a) ORGANIZATION AND EXISTENCE. Such Seller is a company organized and
existing under the laws of its respective jurisdiction of organization.
(b) APPROVAL OF TRANSACTIONS. Each Seller has obtained all necessary
corporate authorizations and approvals, and has taken all actions required for
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(c) NO CONFLICT. Neither the execution nor delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor the
fulfillment of or compliance with the terms and provisions hereof will (1)
conflict with charter documents of such Seller, (2) violate any current
provisions of law, administrative regulation, or court decree applicable to such
Seller or (3) conflict with or result in a breach of any of the terms,
conditions or provisions of or constitute default under any material agreement
or instrument to which such Seller is a party or by which it is bound.
(d) OWNERSHIP OF ASSETS AND SHARES; AUTHORITY TO TRANSFER. The
Assets and the Shares are not encumbered and are freely transferable by the
respective Seller. SID holds good and marketable title to the Shares and no
third party is entitled to claim any right thereto or make any claim thereon. HB
holds good and marketable title to the Assets and no third party is entitled to
claim any right thereto or make any claim thereon. The transfer of the Assets
and the Shares to Buyer pursuant to this Agreement will vest in Buyer title to
the Assets and the Shares, free and clear of all liens, claims, equities,
options, calls, voting trusts, agreements, commitments and encumbrances
whatsoever.
6. BUYER'S REPRESENTATIONS AND WARRANTIES.
(a) ORGANIZATION AND EXISTENCE. The Buyer is a company organized and
existing under the laws of its jurisdiction of organization.
4
<PAGE> 5
(b) APPROVAL OF TRANSACTIONS. The Buyer has obtained all necessary
corporate authorizations and approvals, and has taken all actions required for
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(c) NO CONFLICT. Neither the execution nor delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor the
fulfillment of or compliance with the terms and provisions hereof will (1) the
charter documents of the Buyer, (2) violate any current provisions of law,
administrative regulation, or court decree applicable to the Buyer or (3)
conflict with or result in a breach of any of the terms, conditions or
provisions of or constitute default under any material agreement or instrument
to which the Buyer is a party or by which it is bound.
7. INDEMNIFICATION.
(a) Sellers jointly and severally agree to indemnify and hold
harmless Buyer from any and all damages, losses, liabilities, costs and expenses
(including, without limitation, settlement costs and any reasonable legal,
accounting or other expenses for investigating or defending any actions or
threatened actions) incurred by Buyer as a result of (i) the Retained
Liabilities, (ii) the Excluded Liabilities, (iii) the inaccuracy of any
representation or warranty contained in Section 5 hereof or (iv) the breach by
Sellers of any provision hereof.
(b) Buyer agrees to indemnify and hold harmless Sellers from any
and all damages, losses, liabilities, costs and expenses (including, without
limitation, settlement costs and any reasonable legal, accounting or other
expenses for investigating or defending any actions or threatened actions)
incurred by Sellers as a result of (i) the Liabilities, (ii) the inaccuracy of
any representation or warranty contained in Section 6 hereof, or (iii) the
breach by Buyer of any provision hereof.
(b) Whenever any claim shall arise for indemnification hereunder,
the party seeking indemnification (the "Indemnified Party") shall promptly
notify the other party or parties from whom indemnification is sought (as the
case may be, the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim. In the event of any such claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice to the Indemnifying Party shall
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom. The Indemnified Party shall not settle or compromise any
claim by a third party for which the Indemnified Party is entitled to
indemnification hereunder without the prior consent of the Indemnifying Party,
unless suit shall have been instituted against the Indemnified Party and the
Indemnifying Party shall not have taken control of such suit after notification
thereof as provided in Section 7(c) of this Agreement.
(c) In connection with any claim giving rise to indemnity
hereunder resulting from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, the Indemnifying Party at its sole
cost and expense may, upon notice to the Indemnified Party, assume the defense
of any such claim or legal proceeding if it acknowledges to the Indemnified
Party its obligations to indemnify the Indemnified Party with respect to all
5
<PAGE> 6
elements of such claim. The Indemnified Party shall be entitled to participate
in (but not control) the defense of any such action, with its counsel and at its
own expense. If the Indemnifying Party does not assume the defense of any such
claim or litigation resulting therefrom within 30 days after the date the
Indemnifying Party is notified of such claim pursuant to Paragraph 7(b) hereof,
(i) the Indemnified Party may defend against such claim or litigation, after
giving notice of the same to the Indemnifying Party, on such terms as are
appropriate in the Indemnified Party's reasonable judgment, and (ii) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense.
8. RESTATED AGREEMENT. Sellers and Thermo hereby assign to Buyer, and Buyer
hereby accepts and assumes, their respective rights and obligations under the
Restated Agreement, and any agreements or instruments executed by Sellers or
Thermo in connection therewith, but only to the extent such rights and
obligations relate primarily to the business and assets hereby transferred to
Buyer. In furtherance of the foregoing, Buyer may enforce, in its own name and
in the name and on behalf of Sellers or Thermo, any of the rights of Thermo
under Section 11 of the Restated Agreement, and, if requested by Buyer, Sellers
and Thermo shall take such actions, at their own expense, as Buyer shall
reasonably request in order that Buyer shall have the full rights and benefits
granted to it under this Section 8.
9. TRANSFER AND SALES TAX. Notwithstanding any provisions of law to the
contrary, Sellers shall be responsible for and shall pay (a) all sales and
transfer taxes, and (b) all governmental charges, if any, upon the sale or
transfer of any of the Assets and/or the Shares.
10. EFFECTIVE DATE. The transfer of the Assets and the Shares shall be
deemed to be effective as of the close of business on the date hereof, for all
purposes, including federal income taxes and accounting.
11. CAPTIONS. The captions and headings to the various sections, paragraphs
and exhibits of this Agreement are for convenience of reference only and shall
not affect or control the meaning or interpretation of any of the provisions of
this Agreement.
12. INTEGRATION. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter contained herein.
13. NOTICES AND COMMUNICATIONS. 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 Sellers or Thermo Instrument Systems Inc.:
Thermo Instrument Systems Inc.
c/o Thermo Electron Corporation
81 Wyman Street
6
<PAGE> 7
P.O. Box 9046
Waltham, MA 02445-9046
Attn.: General Counsel
If to Buyer:
Thermo BioAnalysis Corporation
c/o Thermo Electron Corporation
81 Wyman Street
P.O. Box 9046
Waltham, MA 02445-9046
Attn.: 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.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Sellers or Buyer in this Agreement shall survive the
execution and delivery of this Agreement.
15. GOVERNING LAW; ASSIGNMENT. This Agreement is to be construed,
interpreted, applied and governed in all respects in accordance with the laws of
the Commonwealth of Massachusetts, without regard to its conflict of laws
provisions, is to take effect as a sealed instrument, is binding upon and inures
to the benefit of the parties hereto and their respect successors and assigns
and may be canceled, modified or amended only by a written instrument executed
by Sellers and Buyer. No party hereto may assign its rights hereunder without
prior written consent of the other party.
16. GUARANTY. Thermo hereby unconditionally guarantees all of the
obligations of Sellers under this Agreement.
17. COUNTERPARTS. This Agreement may be executed in counterparts, all of
which together shall for all purposes constitute one Agreement, binding on the
parties hereto notwithstanding that such parties have not signed the same
counterpart.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
SELLERS:
SID INSTRUMENTS INC. HB INSTRUMENTS INC.
By: /s/ Earl R. Lewis By: /s/ Earl R. Lewis
----------------- -----------------
Title: President Title: President
BUYER: THERMO:
THERMO BIOANALYSIS THERMO INSTRUMENT SYSTEMS INC.
CORPORATION
By: /s/ Barry S. Howe By: /s/ Jonathan W. Painter
----------------- -----------------------
Title: President Title: Treasurer
8
<PAGE> 1
EXHIBIT 10.19
ASSET PURCHASE AGREEMENT
This AGREEMENT is dated as of July 22, 1996 by and among (i) Thermo
Labsystems Limited and FI Instruments Inc., on the one hand (together, the
"Sellers"), (ii) Thermo Fast UK Limited and Thermo BioAnalysis Corporation, on
the other hand (together, the "Buyers"), and (iii) Thermo Instrument Systems
Inc. ("Thermo").
WHEREAS, Sellers desire to sell all of Sellers' property and assets, real,
personal and mixed, tangible and intangible, primarily used in or primarily
related to Sellers' laboratory information management systems and chromatography
data systems businesses (the "LabSystems Division"), subject to certain
liabilities, to Buyers, and Buyers desire to purchase such assets, and to assume
such liabilities;
NOW, THEREFORE, in consideration of the premises and mutual promises and
agreements set forth herein, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS.
(a) Sellers hereby sell, assign, transfer, convey, and deliver to
Buyers, as identified on Schedule A, all of Sellers' property, assets and
rights, real, personal and mixed, tangible and intangible, primarily used in or
primarily related to the business of the LabSystems Division (collectively, the
"Assets"). In consideration for the Assets, Buyers shall pay to Sellers an
aggregate of $5,500,000 in cash (the "Purchase Price"). The parties acknowledge
and agree that such Purchase Price represents the sum of (i) the net tangible
assets of the LabSystems Division (assumed to be $1,639,000) as of the date of
Sellers' acquisition of the business of the LabSystems Division, as part of the
acquisition on March 29, 1996 by Thermo and its subsidiaries of certain
businesses of Fisons plc (the "Fisons Businesses") pursuant to the Amended and
Restated Asset and Stock Purchase Agreement dated as of March 29, 1996 among
Thermo, Thermo Electron Corporation and Fisons plc (the "Restated Agreement"),
plus (ii) a percentage of the total goodwill associated with Thermo's
acquisition of the Fisons Businesses equal to the sales of the LabSystems
Division for the 1994 and 1995 fiscal years relative to the total sales of the
Fisons Businesses for such years. The parties acknowledge that the purchase
price paid by Thermo for the Fisons Businesses is subject to a post-closing
adjustment based on the difference between the value of the net tangible assets
of the Fisons Businesses as shown on the closing balance sheet dated as of March
29, 1996 (the "Closing Balance Sheet") and the target net tangible asset value
provided for in the Restated Agreement. In the event of any such adjustment, the
Purchase Price shall be recalculated in accordance with the third sentence of
this paragraph to account for (A) any adjustment in the net tangible assets of
the LabSystems Division as shown on the Closing Balance Sheet from $1,639,000,
and (B) any adjustment in the total goodwill associated with Thermo's
acquisition of the Fisons Businesses. If any such recalculation results in an
increase in the Purchase Price, Buyers shall pay the amount of such increase to
Sellers, and if any such recalculation results in a decrease in the Purchase
Price, Sellers shall pay the amount of
<PAGE> 2
such decrease to Buyers. Any payment made pursuant to the preceding sentence
shall be made within ten days after the Closing Balance Sheet has become final.
(b) The Assets include (but are not limited to), the following,
insofar as they are primarily used in or primarily related to the business of
the LabSystems Division:
(i) all trade and other accounts receivable and notes receivable;
(ii) all inventories of raw materials, work in process, finished
goods, supplies, packaging materials, spare parts and similar
items;
(iii) all machinery, equipment, tools and tooling, furniture,
fixtures, leasehold improvements and motor vehicles;
(iv) all real property, leaseholds and subleaseholds in real
property, and easements, rights-of-way and other appurtenants
thereto;
(v) (A) all patents, patent applications, patent disclosures and all
related continuation, continuation-in-part, divisional, reissue,
re-examination, utility, model, certificate of invention and
design patents, patent application, registrations and
applications for registrations;
(B) all trademarks, service marks, trade dress, logos, trade
names and corporate names and registrations and applications for
registration thereof;
(C) all copyrights and registrations and applications for
registration thereof, mask works and registrations and
applications for registration thereof, computer software, source
code, data and documentation, trade secrets and confidential
business information, whether patentable or nonpatentable and
whether or not reduced to practice, know-how, manufacturing and
product processes and techniques, research and development
information, copyrightable works, financial, marketing and
business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information,
other proprietary rights relating to any of the foregoing
(including without limitation remedies against infringements
thereof and rights of protection of interest therein under the
laws of all jurisdictions) and copies and tangible embodiments
thereof;
(vi) all rights under contracts, agreements or instruments;
(vii) all claims, prepayments, refunds, causes of action, choses in
action, rights of recovery, rights of setoff and rights of
recoupment, including all rights under warranties;
2
<PAGE> 3
(viii) all permits, licenses, registrations, certificates, franchises,
variances and other similar rights;
(ix) all books, records, accounts, ledgers, files, documents,
correspondence, lists (customer or otherwise), product and
sales literature, drawings or specifications, employment
records, manufacturing and technical manuals, advertising and
promotional materials, studies, reports and other printed or
written materials;
(x) securities, partnership, joint venture or other equity
interests in any other business entity; and
(xi) all claims and defenses relating to any of the foregoing or to
the liabilities assumed by Buyers pursuant to Section 2 below.
2. ASSUMPTION OF LIABILITIES. From and after the date hereof, Buyers, as
set forth on Schedule A, shall assume any and all liabilities, commitments and
obligations of Sellers of any nature, kind and description except for the
Excluded Liabilities (the "Liabilities"). "Excluded Liabilities" means (i) any
liabilities that do not relate primarily to the business of the LabSystems
Division and (ii) all liabilities, commitments and obligations of Sellers or any
of their respective subsidiaries that result from any third party claim based
upon the acts or omissions of Sellers or such subsidiaries on or after March 29,
1996 and prior to the date hereof.
3. FURTHER ASSURANCES. At the request of Buyers at any time on or after the
date hereof, Sellers will execute and deliver such further instruments of
transfer and conveyance and take such other action as Buyers reasonably may
request effectively to assign and transfer to Buyers any of the Assets. At the
request of Sellers at any time on or after the date hereof, Buyers will execute
and deliver such further instruments of assumption and take such other action as
Sellers may reasonably request effectively to assume the Liabilities.
4. REGARDING CERTAIN CONSENTS. Nothing in this Agreement shall be construed
as an attempt to assign any contract, agreement, permit, franchise, or claim
included in the Assets that is, by its term or in law, nonassignable without the
consent of the other party or parties thereto, unless such consent shall have
been given, or as to which all the remedies for the enforcement thereof enjoyed
by Sellers would not, as a matter of law, pass to Buyers as an incident of the
assignments provided for by this Agreement. In order, however, to provide Buyers
the full realization and value of every contract, agreement, permit, franchise
and claim of the character described in the preceding sentence, Sellers, on and
after the date hereof by themselves or by their agents, shall, at the request
and expense and under the direction of Buyers, in the name of Sellers or
otherwise as Buyers shall specify and as shall be permitted by law, take all
such reasonable action (including without limitation the appointment of Buyers
as an attorneys-in-fact for Sellers) and do or cause to be done all such things
as shall in the opinion of Buyers be necessary or proper (a) to assure that the
rights and obligations of Sellers under such contracts, agreements, permits,
franchises, and claims shall be preserved for the benefit of Buyers and (b) to
facilitate receipt of the consideration to be received by Sellers in and under
every such contract, agreement, permit,
3
<PAGE> 4
franchise, and claim, which consideration Sellers shall hold for the benefit of,
and upon request of Buyers shall deliver to, Buyers.
5. SELLERS' REPRESENTATIONS AND WARRANTIES. Each Seller represents and
warrants that:
(a) ORGANIZATION AND EXISTENCE. Such Seller is a company organized and
existing under the laws of its respective jurisdiction of organization.
(b) APPROVAL OF TRANSACTIONS. Each Seller has obtained all
necessary corporate authorizations and approvals, and has taken all actions
required for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
(c) NO CONFLICT. Neither the execution nor delivery of this
Agreement, nor the consummation of the transactions herein contemplated, nor the
fulfillment of or compliance with the terms and provisions hereof will (1)
conflict with charter documents of such Seller, (2) violate any current
provisions of law, administrative regulation, or court decree applicable to such
Seller or (3) conflict with or result in a breach of any of the terms,
conditions or provisions of or constitute default under any material agreement
or instrument to which such Seller is a party or by which it is bound.
(d) OWNERSHIP OF ASSETS; AUTHORITY TO TRANSFER. The Assets are not
encumbered and are freely transferable by the respective Seller. The Sellers
hold good and marketable title to the Assets and no third party is entitled to
claim any right thereto or make any claim thereon. The transfer of the Assets to
Buyers pursuant to this Agreement will vest in Buyers title to the Assets, free
and clear of all liens, claims, equities, options, agreements, commitments and
encumbrances whatsoever.
6. BUYERS' REPRESENTATIONS AND WARRANTIES.
(a) ORGANIZATION AND EXISTENCE. Such Buyer is a company organized and
existing under the laws of its respective jurisdiction of organization.
(b) APPROVAL OF TRANSACTIONS. Such Buyer has obtained all
necessary corporate authorizations and approvals, and has taken all actions
required for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
(c) NO CONFLICT. Neither the execution nor delivery of this Agreement,
nor the consummation of the transactions herein contemplated, nor the
fulfillment of or compliance with the terms and provisions hereof will (1) the
charter documents of such Buyer, (2) violate any current provisions of law,
administrative regulation, or court decree applicable to such Buyer or (3)
conflict with or result in a breach of any of the terms, conditions or
provisions of or constitute default under any material agreement or instrument
to which such Buyer is a party or by which it is bound.
7. INDEMNIFICATION.
4
<PAGE> 5
(a) Sellers jointly and severally agree to indemnify and hold
harmless Buyers from any and all damages, losses, liabilities, costs and
expenses (including, without limitation, settlement costs and any reasonable
legal, accounting or other expenses for investigating or defending any actions
or threatened actions) incurred by Buyers as a result of (i) the Excluded
Liabilities, (ii) the inaccuracy of any representation or warranty contained in
Section 5 hereof or (iii) the breach by Sellers of any provision hereof.
(b) Buyers jointly and severally agree to indemnify and hold
harmless Sellers from any and all damages, losses, liabilities, costs and
expenses (including, without limitation, settlement costs and any reasonable
legal, accounting or other expenses for investigating or defending any actions
or threatened actions) incurred by Sellers as a result of (i) the Liabilities,
(ii) the inaccuracy of any representation or warranty contained in Section 6
hereof, or (iii) the breach by Buyers of any provision hereof.
(b) Whenever any claim shall arise for indemnification hereunder,
the party seeking indemnification (the "Indemnified Party") shall promptly
notify the other party or parties from whom indemnification is sought (as the
case may be, the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim. In the event of any such claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice to the Indemnifying Party shall
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom. The Indemnified Party shall not settle or compromise any
claim by a third party for which the Indemnified Party is entitled to
indemnification hereunder without the prior consent of the Indemnifying Party,
unless suit shall have been instituted against the Indemnified Party and the
Indemnifying Party shall not have taken control of such suit after notification
thereof as provided in Section 7(c) of this Agreement.
(c) In connection with any claim giving rise to indemnity
hereunder resulting from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, the Indemnifying Party at its sole
cost and expense may, upon notice to the Indemnified Party, assume the defense
of any such claim or legal proceeding if it acknowledges to the Indemnified
Party its obligations to indemnify the Indemnified Party with respect to all
elements of such claim. The Indemnified Party shall be entitled to participate
in (but not control) the defense of any such action, with its counsel and at its
own expense. If the Indemnifying Party does not assume the defense of any such
claim or litigation resulting therefrom within 30 days after the date the
Indemnifying Party is notified of such claim pursuant to Paragraph 7(b) hereof,
(i) the Indemnified Party may defend against such claim or litigation, after
giving notice of the same to the Indemnifying Party, on such terms as are
appropriate in the Indemnified Party's reasonable judgment, and (ii) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense.
8. RESTATED AGREEMENT. Sellers and Thermo hereby assign to Buyers, and
Buyers hereby accept and assume, their respective rights and obligations under
the Restated Agreement, and any agreements or instruments executed by Sellers or
Thermo in connection therewith, but only to the extent such rights and
obligations relate primarily to the business and assets hereby
5
<PAGE> 6
transferred to Buyers. In furtherance of the foregoing, Buyers may enforce, in
their own names and in the names and on behalf of Sellers or Thermo, any of the
rights of Thermo under Section 11 of the Restated Agreement, and, if requested
by Buyers, Sellers and Thermo shall take such actions, at their own expense, as
Buyers shall reasonably request in order that Buyers shall have the full rights
and benefits granted to them under this Section 8.
9. TRANSFER AND SALES TAX. Notwithstanding any provisions of law to the
contrary, Sellers shall be responsible for and shall pay (a) all sales and
transfer taxes, and (b) all governmental charges, if any, upon the sale or
transfer of any of the Assets.
10. EFFECTIVE DATE. The transfer of the Assets shall be deemed to be
effective as of the close of business on the date hereof, for all purposes,
including federal income taxes and accounting.
11. CAPTIONS. The captions and headings to the various sections, paragraphs
and exhibits of this Agreement are for convenience of reference only and shall
not affect or control the meaning or interpretation of any of the provisions of
this Agreement.
12. INTEGRATION. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter contained herein.
13. NOTICES AND COMMUNICATIONS. 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 Sellers or Thermo Instrument Systems Inc.:
Thermo Instrument Systems Inc.
c/o Thermo Electron Corporation
81 Wyman Street
P.O. Box 9046
Waltham, MA 02445-9046
Attn.: General Counsel
If to Buyers:
Thermo BioAnalysis Corporation
c/o Thermo Electron Corporation
81 Wyman Street
P.O. Box 9046
Waltham, MA 02445-9046
Attn.: General Counsel
6
<PAGE> 7
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.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Sellers or Buyers in this Agreement shall survive the
execution and delivery of this Agreement.
15. GOVERNING LAW; ASSIGNMENT. This Agreement is to be construed,
interpreted, applied and governed in all respects in accordance with the laws of
the Commonwealth of Massachusetts, without regard to its conflict of laws
provisions, is to take effect as a sealed instrument, is binding upon and inures
to the benefit of the parties hereto and their respect successors and assigns
and may be canceled, modified or amended only by a written instrument executed
by Sellers and Buyers. No party hereto may assign its rights hereunder without
prior written consent of the other party.
16. GUARANTY. Thermo hereby unconditionally guarantees all of the
obligations of Sellers under this Agreement.
17. COUNTERPARTS. This Agreement may be executed in counterparts, all of
which together shall for all purposes constitute one Agreement, binding on the
parties hereto notwithstanding that such parties have not signed the same
counterpart.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
SELLERS: BUYERS:
THERMO LABSYSTEMS LIMITED THERMO FAST UK LIMITED
By: /s/ Earl R. Lewis By: /s/ Conan R. Deady
----------------- ------------------
Title: Director Title: Director
FI INSTRUMENTS INC. THERMO BIOANALYSIS
CORPORATION
By: /s/ Earl R. Lewis By: /s/ Barry S. Howe
----------------- -----------------
Title: President Title: President
THERMO:
THERMO INSTRUMENT SYSTEMS INC.
By: /s/ Jonathan W. Painter
-----------------------
Title: Treasurer
8
<PAGE> 9
SCHEDULE A
----------
The following Buyer shall purchase the Assets and assume the Liabilities
indicated below:
(a) Thermo Fast UK Limited shall purchase the Assets and assume the
Liabilities of Thermo Labsystems Limited
(b) Thermo BioAnalysis Corporation shall purchase the Assets and assume
the Liabilities of FI Instruments Inc.
9
<PAGE> 1
EXHIBIT 11
THERMO BIOANALYSIS CORPORATION
<TABLE>
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
-------------------------------------------- --------------------------
JANUARY 1, DECEMBER 31, DECEMBER 30, APRIL 1, MARCH 30,
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 $ 603,000 $(3,114,000)
---------- ---------- ---------- ---------- -----------
Shares:
Weighted average shares
outstanding............................. 6,500,000 6,500,000 7,693,637 6,638,462 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 6,755,912 8,218,950
---------- ---------- ---------- ---------- -----------
Primary Earnings (Loss) per Share (a)/(b)... $ .38 $ .36 $ .32 $ .09 $ (.38)
========== ========== ========== ========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION OF
SUBSIDIARY INCORPORATION % OWNERSHIP
---------- ------------- -----------
<S> <C> <C>
Thermo BioAnalysis Limited England 100%
Thermo BioAnalysis S.A. France 100%
DYNEX Technologies Inc. Virginia 100%
DYNEX Technologies (Asia) Inc. Delaware 100%
DYNEX Deutschland GmbH Germany 100%
DYNEX Technollgies sro Czech Republic 100%
DYNEX Technologies (Guernsey) Ltd. Guernsey 100%
Thermo Fast UK Limited England 100%
</TABLE>
<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
July 22, 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."
COOPERS & LYBRAND
Guernsey, Channel Islands
July 23, 1996
<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
July 22, 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
July 22, 1996
<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> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-30-1995 DEC-28-1996
<PERIOD-END> DEC-30-1995 MAR-30-1996
<CASH> 17,747 9,961
<SECURITIES> 0 0
<RECEIVABLES> 5,636 16,567
<ALLOWANCES> 154 350
<INVENTORY> 5,968 13,033
<CURRENT-ASSETS> 30,638 41,926
<PP&E> 6,317 11,107
<DEPRECIATION> 4,663 4,889
<TOTAL-ASSETS> 32,907 85,133
<CURRENT-LIABILITIES> 3,533 58,860
<BONDS> 0 0
<COMMON> 81 81
0 0
0 0
<OTHER-SE> 29,065 25,964
<TOTAL-LIABILITY-AND-EQUITY> 32,907 85,133
<SALES> 22,534 10,911
<TOTAL-REVENUES> 22,534 10,911
<CGS> 13,036 6,716
<TOTAL-COSTS> 13,036 6,716
<OTHER-EXPENSES> 1,325 4,164
<LOSS-PROVISION> 0 22
<INTEREST-EXPENSE> 0 247
<INCOME-PRETAX> 4,188 (2,856)
<INCOME-TAX> 1,674 258
<INCOME-CONTINUING> 2,514 (3,114)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,514 (3,144)
<EPS-PRIMARY> .32 (.38)
<EPS-DILUTED> 0 0
</TABLE>
