SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended March 29, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 1-14262
THERMO BIOANALYSIS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 85-0429899
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
504 Airport Road
Santa Fe, New Mexico 87504-2108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 622-1000
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the Registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of
the issuer's classes of Common Stock, as of the
latest practicable date.
Class Outstanding at April 25, 1997
---------------------------- -----------------------------
Common Stock, $.01 par value 9,771,500
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMO BIOANALYSIS CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
March 29, December 28,
(In thousands) 1997 1996
---------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 59,190 $ 45,476
Accounts receivable, less allowances of
$2,043 and $991 24,828 17,265
Inventories:
Raw materials and supplies 13,918 7,473
Work in process 3,491 1,064
Finished goods 12,196 6,055
Prepaid income taxes 3,549 2,319
Prepaid expenses and other current assets 4,343 618
Due from parent company and affiliates - 965
-------- --------
121,515 81,235
-------- --------
Property, Plant, and Equipment, at Cost 24,134 12,129
Less: Accumulated depreciation and amortization 6,834 6,582
-------- --------
17,300 5,547
-------- --------
Other Assets 2,585 3,098
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 103,978 33,117
-------- --------
$245,378 $122,997
======== ========
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THERMO BIOANALYSIS CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
March 29, December 28,
(In thousands except share amounts) 1997 1996
-------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 8,583 $ 4,282
Accrued payroll and employee benefits 5,540 2,616
Accrued income taxes 5,572 2,775
Accrued acquisition expenses (Note 2) 5,061 1,857
Other accrued expenses 9,285 5,794
Deferred revenue 4,656 4,161
Due to parent company and affiliates (Note 2) 36,568 -
-------- --------
75,265 21,485
-------- --------
Deferred Income Taxes 196 196
-------- --------
Long-term Payable to Parent Company (Note 2) 50,000 -
-------- --------
Subordinated Convertible Note, Due to Parent
Company 50,000 50,000
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 25,000,000
shares authorized; 11,071,500 and 9,771,500
shares issued and outstanding (Note 2) 111 98
Capital in excess of par value 64,737 47,882
Retained earnings 3,165 1,707
Cumulative translation adjustment 1,904 1,629
-------- --------
69,917 51,316
-------- --------
$245,378 $122,997
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO BIOANALYSIS CORPORATION
Consolidated Statement of Operations
(Unaudited)
Three Months Ended
------------------------
March 29, March 30,
(In thousands except per share amounts) 1997 1996
--------------------------------------------------------------------------
Revenues $23,382 $10,911
------- -------
Costs and Operating Expenses:
Cost of revenues 11,899 6,716
Selling, general, and administrative expenses 7,033 2,812
Research and development expenses 2,191 664
Write-off of acquired technology - 3,500
------- -------
21,123 13,692
------- -------
Operating Income (Loss) 2,259 (2,781)
Interest Income 697 172
Interest Expense, Related Party (678) (247)
------- -------
Income (Loss) Before Provision for Income Taxes 2,278 (2,856)
Provision for Income Taxes 820 258
------- -------
Net Income (Loss) $ 1,458 $(3,114)
======= =======
Earnings (Loss) per Share $ .15 $ (.38)
======= =======
Weighted Average Shares 10,029 8,219
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO BIOANALYSIS CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
------------------------
March 29, March 30,
(In thousands) 1997 1996
-------------------------------------------------------------------------
Operating Activities:
Net income (loss) $ 1,458 $ (3,114)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 971 353
Provision for losses on accounts
receivable - 22
Write-off of acquired technology - 3,500
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 327 (859)
Inventories 303 1,134
Other current assets (128) 365
Accounts payable (192) 2,300
Other current liabilities (679) 1,534
Other 148 -
-------- --------
Net cash provided by operating activities 2,208 5,235
-------- --------
Investing Activities:
Acquisitions, net of cash acquired - (42,780)
Cash acquired through acquisition (Note 2) 11,026 -
Adjustment to acquisition purchase price 205 -
Purchases of property, plant, and equipment (457) (83)
Other - (171)
-------- --------
Net cash provided by (used in) investing
activities 10,774 (43,034)
-------- --------
Financing Activities:
Proceeds from issuance of note payable to
Thermo Electron - 30,000
-------- --------
Net cash provided by financing activities $ - $ 30,000
-------- --------
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THERMO BIOANALYSIS CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Three Months Ended
------------------------
March 29, March 30,
(In thousands) 1997 1996
-------------------------------------------------------------------------
Exchange Rate Effect on Cash $ 732 $ 13
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 13,714 (7,786)
Cash and Cash Equivalents at Beginning of
Period 45,476 17,747
-------- --------
Cash and Cash Equivalents at End of Period $ 59,190 $ 9,961
======== ========
Noncash Activities:
Fair value of assets of acquired companies,
including cash acquired of $11,026 in
1997 (Note 2) $121,369 $ 66,694
Cash paid for acquired companies - (51,780)
Issuance of Company common stock (16,868) -
Amount payable to parent company (85,583) -
-------- --------
Liabilities assumed of acquired companies $ 18,918 $ 14,914
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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THERMO BIOANALYSIS CORPORATION
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by Thermo BioAnalysis Corporation (the Company) without audit
and, in the opinion of management, reflect all adjustments of a normal
recurring nature necessary for a fair statement of the financial position
at March 29, 1997, the results of operations for the three-month periods
ended March 29, 1997, and March 30, 1996, and the cash flows for the
three-month periods ended March 29, 1997, and March 30, 1996. Interim
results are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 28, 1996, has
been derived from the consolidated financial statements that have been
audited by the Company's independent public accountants. The consolidated
financial statements and notes are presented as permitted by Form 10-Q
and do not contain certain information included in the annual financial
statements and notes of the Company. The consolidated financial
statements and notes included herein should be read in conjunction with
the financial statements and notes included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 28, 1996, filed
with the Securities and Exchange Commission.
2. Acquisition
In March 1997, Thermo Instrument Systems Inc. (Thermo Instrument)
acquired approximately 95% of the outstanding shares of Life Sciences
International PLC (LSI), a London Stock Exchange-listed company, in
completion of Thermo Instrument's offer to acquire all of the outstanding
shares of LSI. On May 6, 1997, the Company agreed to acquire LSI
Labsystems and Hybaid, which comprised the Biosystems Group of LSI, from
Thermo Instrument. LSI Labsystems, based in Finland, manufactures
microplate-based immunoassay instruments and liquid-handling equipment.
Hybaid, based in the U.K., manufactures thermal cyclers and consumables
for DNA amplification. The combined businesses had 1996 revenues of
approximately $71 million and were profitable. The aggregate purchase
price for LSI Labsystems and Hybaid is approximately $102.5 million,
which consists of: a) approximately $91.5 million for the net operating
assets of the acquired businesses; plus b) $11.0 million for an
equivalent amount of cash held by the acquired businesses. The purchase
price for the net operating assets represents the sum of an estimate of
the net tangible book value, exclusive of cash, of the businesses, plus a
percentage of Thermo Instrument's total goodwill associated with its
acquisition of LSI, based on the aggregate 1996 revenues of LSI
Labsystems and Hybaid relative to LSI's 1996 consolidated revenues. The
purchase price is subject to a post-closing adjustment based on final
determination of the net tangible book value, exclusive of cash, of the
acquired businesses and a final calculation of Thermo Instrument's total
goodwill associated with the acquisition of LSI.
The aggregate purchase price of $102.5 million will be paid through
the issuance of 1,300,000 shares of Company common stock valued at $16.9
million and debt to Thermo Instrument totaling $85.6 million. Issuance of
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THERMO BIOANALYSIS CORPORATION
2. Acquisition (continued)
the common stock component of the purchase price will occur immediately
after the listing upon the American Stock Exchange of the 1,300,000
shares of Company common stock issuable to Thermo Instrument, which will
require approval by the Company's shareholders. Because Thermo Instrument
is the Company's majority shareholder and intends to vote its shares in
favor of such listing, the approval is assured.
Because the Company, LSI Labsystems, and Hybaid were deemed for
accounting purposes to be under control of their common majority owner,
Thermo Instrument, the transaction has been accounted for in a manner
similar to a pooling-of-interests. Accordingly, the accompanying
financial statements include the results of LSI Labsystems and Hybaid
from March 12, 1997, the date these businesses were acquired by Thermo
Instrument, and the shares issuable subject to shareholder vote have been
deemed outstanding from that date. Of the total $85.6 million debt
component of the purchase price, Thermo Instrument has agreed not to seek
repayment of at least $50 million until July 15, 1998, which amount has
been classified as long-term in the accompanying 1997 balance sheet. The
remaining $35.6 million is classified as a current payable to Thermo
Instrument in the accompanying 1997 balance sheet.
In connection with the acquisition of LSI Labsystems and Hybaid, the
Company has recorded approximately $71.0 million of cost in excess of net
assets of acquired companies, which is being amortized over 40 years.
Based on unaudited data, the following table presents selected
financial information of the Company, LSI Labsystems, and Hybaid on a pro
forma basis, assuming the companies had been combined since the beginning
of 1996:
Three Months Ended
------------------------
March 29, March 30,
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
Revenues $34,518 $26,676
Net loss (1,765) (4,360)
Loss per share (.16) (.46)
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisitions of LSI Labsystems and Hybaid been made at the beginning of
1996.
In connection with the acquisition of LSI Labsystems and Hybaid, the
Company is in the process of restructuring the acquired businesses. This
restructuring is expected to include reductions in staffing levels,
abandonment of excess facilities, and possible other costs associated
with exiting certain activities of the acquired businesses. In accordance
with the requirements of Emerging Issues Task Force Pronouncement (EITF)
95-3, as part of the cost of the acquisition, the Company has established
reserves totaling $3.2 million for estimated severance, excess
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THERMO BIOANALYSIS CORPORATION
2. Acquisition (continued)
facilities, and other exit costs, none of which was expended during the
first quarter of 1997. Unresolved matters at March 29, 1997, included
identifying specific employees for termination and locations to be
abandoned or consolidated, among other decisions concerning the
integration of the acquired businesses into the Company. In accordance
with EITF 95-3, finalization of the Company's plan for restructuring the
acquired businesses will not occur beyond one year from the date of the
acquisition. Any changes in estimates of these costs prior to such
finalization will be recorded as adjustments to cost in excess of net
assets of acquired companies.
In addition to the restructuring activities described above, during
1996 the Company had undertaken a restructuring in connection with its
February 1996 acquisition of DYNEX Technologies (DYNEX). The Company
finalized its restructuring plan for DYNEX in 1996 and, as of March 29,
1997, had a remaining reserve for the restructuring of DYNEX of $1.2
million, which represents ongoing severance and abandoned facility
payments. Amounts expended for these matters during the first quarter of
1997 were not material. As of March 29, 1997, the Company had total
restructuring reserves of $5.1 million for all its acquisitions.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operation.
For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," "estimates," and similar expressions are
intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such "Forward-looking Statements" in
Exhibit 13 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 28, 1996, filed with the Securities and Exchange
Commission.
Overview
The Company has three principal product lines: life sciences
instrumentation, information management systems, and health physics
instrumentation. The Company's life sciences instrumentation group
produces a broad range of instruments and consumables based on
proprietary immunoassay, optical biosensor, polymerase chain reaction
(PCR), liquid-handling, mass spectrometry, and CE technologies. These
products are designed, manufactured, and marketed by the Company's DYNEX
Technologies (DYNEX), Affinity Sensors, LSI Labsystems, Hybaid, and
MALDI-TOF mass spectrometer subsidiaries and its capillary
electrophoresis (CE) division. The Company's LabSystems subsidiary
designs, implements, and supports laboratory information management
systems (LIMS) and chromatography data systems. The Company's Eberline
health physics division supplies radiation detection and counting
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THERMO BIOANALYSIS CORPORATION
Overview (continued)
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 the acquisition of complementary businesses and
technologies and through research and development of innovative products.
The Company was incorporated in February 1995. Since then, it acquired
DYNEX in February 1996, acquired Affinity Sensors and LabSystems
effective March 29, 1996, and agreed to acquire the Biosystems Group of
Life Sciences International (LSI) effective March 12, 1997 (Note 2).
The Company sells its products on a worldwide basis. Although the
Company generally seeks to charge its customers in the same currency as
its operating costs, the Company's financial performance and competitive
position can be affected by currency exchange rate fluctuations. Where
appropriate, the Company uses forward contracts to reduce its exposure to
currency fluctuations.
Results of Operations
First Quarter 1997 Compared With First Quarter 1996
Revenues increased to $23.4 million in the first quarter of 1997 from
$10.9 million in the first quarter of 1996, primarily due to the
inclusion of $12.9 million of revenues from LabSystems and Affinity
Sensors, which were acquired effective March 29, 1996, the Biosystems
Group of LSI, which was acquired effective March 12, 1997, and a full
quarter of revenues from DYNEX, acquired in February 1996.
The gross profit margin increased to 49% in the first quarter of 1997
from 38% in the first quarter of 1996, primarily due to the inclusion of
higher-margin revenues at LabSystems and the Biosystems Group of LSI and,
to a lesser extent, at Affinity Sensors and DYNEX.
Selling, general, and administrative expenses as a percentage of
revenues increased to 30% in the first quarter of 1997 from 26% in the
first quarter of 1996, primarily due to higher costs as a percentage of
revenues at DYNEX and, to a lesser extent, at Affinity Sensors and
LabSystems. This increase was offset in part by lower costs as a
percentage of revenues at the Biosystems Group of LSI.
Research and development expenses increased to $2.2 million in the
first quarter of 1997 from $0.7 million in the first quarter of 1996,
primarily due to the inclusion of research and development expenses at
acquired businesses.
During the first quarter of 1996, the Company wrote off $3.5 million
of acquired technology in connection with the acquisitions of Affinity
Sensors and LabSystems.
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THERMO BIOANALYSIS CORPORATION
First Quarter 1997 Compared With First Quarter 1996 (continued)
Interest income increased to $0.7 million in the first quarter of
1997 from $0.2 million in the first quarter of 1996, primarily due to
interest income earned on invested proceeds from the Company's initial
public offering of common stock in September and October 1996. Interest
expense, related party, in the first quarter of 1997 represents interest
associated with a $50.0 million principal amount subordinated convertible
note issued to Thermo Instrument in July 1996, and in the first quarter
of 1996 represents interest associated with a $30.0 million promissory
note issued to Thermo Electron Corporation (Thermo Electron) in February
1996, which was repaid in July 1996. The Company anticipates that
interest expense will increase as a result of debt to Thermo Instrument
associated with the acquisition of the Biosystems Group of LSI (Note 2).
The effective tax rate was 36% in the first quarter of 1997, compared
with 40% in the first quarter of 1996, excluding the effect of the 1996
write-off of acquired technology associated with the acquisitions of
U.K.-based Affinity Sensors and LabSystems, for which no tax benefit was
recorded. These rates exceed the statutory federal income tax rate
primarily due to the impact of state income taxes. The effective tax rate
decreased in the first quarter of 1997 primarily due to income from
certain newly acquired foreign companies, which are subject to lower tax
rates.
Liquidity and Capital Resources
Consolidated working capital was $46.3 million as of March 29, 1997,
compared with $59.8 million as of December 28, 1996. The decrease in
working capital primarily relates to the effect of the acquisition of the
Biosystems Group of LSI (Note 2). Included in working capital are cash
and cash equivalents of $59.2 million as of March 29, 1997, compared with
$45.5 million as of December 28, 1996. During the first quarter of 1997,
$2.2 million of cash was provided by operating activities.
Investing activities provided $10.8 million in cash during the first
quarter of 1997. In May 1997, the Company agreed to purchase the
Biosystems Group of LSI from Thermo Instrument for approximately $102.5
million, which consists of: a) approximately $91.5 million for the net
operating assets of the acquired businesses; plus b) $11.0 million for an
equivalent amount of cash held by the acquired businesses (Note 2). The
Company expended $0.5 million for purchases of property, plant, and
equipment, and expects to make additional capital expenditures of
approximately $3.8 million during the remainder of 1997.
Although the Company expects to have positive cash flow from its
existing operations, the Company anticipates it will require significant
amounts of cash for the possible acquisition of complementary businesses
and technologies. The Company expects that it will finance these
acquisitions through a combination of internal funds, additional debt or
equity financing, and/or short-term borrowings from Thermo Instrument or
Thermo Electron, although there is no agreement with these companies to
ensure that funds will be available on acceptable terms or at all. The
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THERMO BIOANALYSIS CORPORATION
Liquidity and Capital Resources (continued)
Company believes that its existing resources are sufficient to meet the
capital requirements of its existing businesses for the foreseeable
future.
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
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THERMO BIOANALYSIS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized as of the 6th day of May 1997.
THERMO BIOANALYSIS CORPORATION
Paul F. Kelleher
---------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
---------------------------
John N. Hatsopoulos
Vice President and Chief
Financial Officer
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THERMO BIOANALYSIS CORPORATION
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
2 Share Purchase Agreement dated as of May 6, 1997, among the
Company, Thermo Instrument Systems Inc., and Life Sciences
International PLC.
11 Statement re: Computation of Earnings per Share.
27 Financial Data Schedule.
Exhibit 2
SHARE PURCHASE AGREEMENT
BETWEEN
THERMO BIOANALYSIS CORPORATION
AND
THERMO INSTRUMENT SYSTEMS INC.
_____________________________
Dated as of May 6, 1997
_____________________________
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") dated as of
May 6, 1997 is between Thermo BioAnalysis Corporation ("TBA"), a
Delaware corporation, and Thermo Instrument Systems Inc. ("THI"),
a Delaware corporation.
Preliminary Statement
1. Life Sciences International PLC ("LSI"), which is a
majority-owned subsidiary of THI, owns, directly or through
wholly-owned subsidiaries, all of the issued and outstanding
shares (the "Hybaid Shares") of Hybaid Limited ("Hybaid"), a
private limited company organized under the laws of the United
Kingdom, all of the issued and outstanding shares (the
"Labsystems Shares") of Labsystems OY ("Labsystems"), a company
organized under the laws of Finland; all of the issued and
outstanding shares (the "Benelux Shares") of Life Sciences
International (Benelux) B.V. ("LSI BV"), a company organized
under the laws of the Netherlands; all of the issued and
outstanding shares (the "Sweden Shares") of Labsystems Sweden AB
("AB"), a company organized under the laws of Sweden; and all of
the issued and outstanding shares (the "Spain Shares") of
Labsystems Espana SA ("SA"), a company organized under the laws
of Spain. The Hybaid Shares, Labsystems Shares, Benelux Shares,
Sweden Shares and Spain Shares are referred to collectively as
the "Shares". THI, LSI and those of LSI's wholly-owned
subsidiaries that own Shares are referred to individually as a
"Seller" and collectively as the "Sellers". Hybaid, Labsystems,
LSI BV, AB and SA are referred to collectively as the "Companies"
and individually as a "Company".
2. TBA desires to purchase, or cause its wholly-owned
subsidiaries to purchase, and THI desires to sell, or to cause
its subsidiaries to sell, the Shares for the consideration set
forth below, subject to the terms and conditions of this
Agreement.
NOW THEREFORE, in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereby
agree as follows:
SECTION 1 - PURCHASE AND SALE OF THE SHARES
1.1 Purchase of the Shares from the Sellers. Subject to
and upon the terms and conditions of this Agreement, at the
closing of the transactions contemplated by this Agreement (the
"Closing"), THI shall cause its subsidiaries to sell, transfer,
convey, assign and delivery to TBA , or its wholly-owned
subsidiaries, and TBA or its wholly-owned subsidiaries shall
purchase, acquire and accept the Shares.
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1.2 Further Assurances. At any time and from time to time
after the Closing, at TBA's request and without further
consideration, each Seller shall promptly execute and deliver
such instruments of sale, transfer, conveyance, assignment and
confirmation, and take all such other action as TBA may
reasonably request, more effectively to transfer, convey and
assign to TBA, and to confirm TBA's title to, all of the Shares
owned by such Seller, to put TBA in actual possession and
operating control of the assets, properties and business of the
Companies, to assist in exercising all rights with respect
thereto and to carry out the purpose and intent of this
Agreement.
1.3 Purchase Price for the Shares.
(a) The purchase price to be paid by TBA for the
Shares (the "Purchase Price") shall consist of (i) a promissory
note of TBA in the principal amount of $48,800,000 (the "Note"),
maturing July 15, 1998 and bearing interest at the commercial
paper composite rate plus 25 basis points, and (ii) 1,300,000
shares of common stock, $.01 par value, of TBA (the "TBA
Shares").
(b) TBA and THI acknowledge and agree that the
Purchase Price represents an estimate of the sum of (i) the net
operating assets of the Companies as of the date of THI's
acquisition of LSI, plus (ii) a percentage of the total goodwill
associated with THI's acquisition of LSI equal to the sales of
the Companies for the 1996 fiscal year relative to the total
sales of LSI during such period (the "Goodwill Percentage").
Promptly following the Closing Date, but in any event no later
than September 30, 1997, THI will prepare a draft statement of
the net operating assets of the Companies (the "Companies Net
Asset Statement"), and a draft calculation of THI's total
goodwill associated with the acquisition of LSI (the "THI
Goodwill Statement") in each case as of March 12, 1997, the date
of THI's acquisition of LSI. TBA will review such statements and
provide THI with any objections thereto within 30 days after
TBA's receipt thereof. If TBA does not object within such 30-day
period, then the THI Goodwill Statement and the Companies Net
Asset Statement shall be deemed to be accepted by TBA and shall
become final. If TBA does object to either statement, then the
parties will use best efforts to resolve any such objections
within 30 days. If the parties are unable to resolve such
objections within such 30-day period, then any disputed items
will be resolved by an accounting firm designated jointly by TBA
and THI and the statements shall be finalized in accordance with
the determination of such firm. Upon finalization of the
Companies Net Asset Statement and the THI Goodwill Statement as
provided above, the Purchase Price shall be increased or
decreased, as the case may be, by (A) the amount by which the
net operating assets of the Companies as shown on the Companies
Net Asset Statement are greater than or less than $20,500,000 and
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(B) the amount by which the Goodwill Percentage of THI's total
goodwill as shown on the THI Goodwill Statement is greater than
or less than $71,000,000. Any payment due by TBA or THI to the
other under this section 1.3(b) shall be accompanied by interest
from the date hereof at a rate equal to the Commercial Paper
Composite Rate plus 25 basis points. For purposes of this
section 1.3(b), "goodwill" means cost in excess of net tangible
assets acquired, and does not include any restructuring or
similar costs or reserves accrued in connection with actions
taken by the businesses of LSI after March 12, 1997 to reduce
costs or enhance profitability, and "net operating assets" means
tangible assets, exclusive of cash, minus total liabilities,
exclusive of debt for borrowed money, determined in accordance
with THI's accounting policies.
1.4 Closing. The Closing shall take place at the offices
of THI at 81 Wyman Street, Waltham, Massachusetts. At the
Closing THI shall deliver, or cause its subsidiaries to deliver,
certificates evidencing the Shares duly endorsed in blank or with
stock powers duly executed. At the Closing TBA shall deliver (i)
the Note to THI on behalf of THI and its subsidiaries and (ii)
one or more certificates representing the TBA Shares registered
in the name of THI and/or such of its subsidiaries as THI shall
designate.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF THI
Except as set forth on the disclosure schedule delivered to
TBA on the date hereof (the "Disclosure Schedule"), THI
represents and warrants to TBA as follows. The term "knowledge,"
when used in this Agreement, shall mean actual knowledge after
reasonable investigation.
2.1 Organization and Qualification. Each of the Sellers
and the Companies is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation and has full corporate power and authority to
own, lease and operate its assets and to carry on its business as
now being and as heretofore conducted. Each of the Sellers and
the Companies is qualified or otherwise authorized to transact
business as a foreign corporation in all jurisdictions in which
such qualification or authorization is required by law, except
for jurisdictions in which the failure to be so qualified or
authorized would not have a material adverse effect on the
assets, properties, business, results of operations, condition
(financial or otherwise) or prospects of the Companies taken as a
whole.
2.2 Authority. THI has full right, power, capacity and
authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby and each of the
Sellers has full right, power, capacity and authority to
consummate the transactions contemplated hereby to be performed
by such Seller. The execution, delivery and performance of this
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Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action on the part of THI. This Agreement has been duly
and validly executed and delivered by THI and constitutes the
valid and binding obligation of THI, enforceable against it in
accordance with the terms hereof. Neither the execution,
delivery and performance of this Agreement, nor the consummation
of the transactions contemplated hereby will (i) conflict with or
result in a violation, breach, termination or acceleration of, or
default under (or would result in a violation, breach,
termination, acceleration or default with the giving of notice or
passage of time, or both) any of the terms, conditions or
provisions of the organizational documents of any Seller or
Company, or of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which any of
Seller or Company is a party or by which any Seller or Company or
any of their respective properties or assets may be bound or
affected; (ii) result in the violation of any order, writ,
injunction, decree, statute, rule or regulation applicable to any
Seller or Company or any of their respective properties or
assets; (iii) result in the imposition of any lien, encumbrance,
charge or claim upon any assets of any of the Companies; or (iv)
entitle any employee of any of the Companies to severance or
other payments or create any other obligation to an employee. No
consent or approval by, or notification to or filing with, any
court, governmental authority or third party is required in
connection with the execution, delivery and performance of this
Agreement by any Seller or the consummation of the transactions
contemplated hereby.
2.3 Capitalization and Title to Shares.
(a) The authorized share capital of the Companies is
set forth on Exhibit A hereto. With respect to each Company, the
Seller set forth opposite the name of such Company on Exhibit A
is the record and beneficial owner of all of the issued and
outstanding shares of such Company. All of the Shares are duly
authorized and are validly issued, fully paid, nonassessable and
free of preemptive rights.
(b) Except as set forth on Exhibit A, there are not
any other shares of capital stock of any Company authorized or
outstanding or any subscriptions, options, conversion or exchange
rights, warrants, repurchase or redemption agreements, or other
agreements or commitments obligating any Company to issue,
transfer, sell, repurchase or redeem any shares of its capital
stock or other securities of any Company. There are no written
shareholder agreements, voting trusts, proxies or other
agreements, instruments or understandings with respect to the
voting of the capital stock of any Company. The books and
records of each Company, including without limitation the books
of account, minute books, stock certificate books and stock
ledgers, are complete and correct and accurately reflect the
conduct of the business and affairs of such Company.
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2.4 Subsidiaries and Other Affiliates.
(a) The Disclosure Schedule sets forth all
Subsidiaries of the Companies and the jurisdiction in which each
is incorporated. All shares of the capital stock of each
Subsidiary owned by the Companies are owned free and clear of any
charges, liens, encumbrances, security interests or adverse
claims. As used in this Agreement, "Subsidiary" means any
corporation or other legal entity of which a party to this
Agreement owns, directly or indirectly, fifty percent (50%) or
more of the stock or other equity interest entitled to vote for
the election of directors and representations, warranties and
covenants referring to any Company contained herein shall be
deemed to mean such Company and each of its Subsidiaries, both
separately and together as a consolidated whole, unless and
except to the extent expressly indicated otherwise.
(b) There are not any other shares of capital stock of
any Subsidiary of any Company authorized or outstanding or any
subscriptions, options, conversion or exchange rights, warrants,
repurchase or redemption agreements, or other agreements or
commitments obligating any Subsidiary of any Company to issue,
transfer, sell, repurchase or redeem any shares of its capital
stock or other securities. There are no shareholder agreements,
voting trusts, proxies or other agreements, instruments or
understandings with respect to the voting of the capital stock of
any Subsidiary of any Company.
(c) Except for its Subsidiaries, none of the
Companies, directly or indirectly, owns any material equity
interest in any corporation, partnership, joint venture or other
entity.
2.5 Financial Statements. THI has delivered to TBA prior
to the execution of this Agreement true and complete copies of:
the unaudited consolidated balance sheet of the Companies as at
March 29, 1997 (the "Balance Sheet"), and the unaudited
consolidated statements of earnings of the Companies for the
three years ended December 31, 1996 and for the three-month
period ended March 29, 1997 (collectively, the "Financial
Statements"). The Financial Statements have been prepared from,
and are in accordance with, the books and records of LSI and
fairly present the financial condition, results of operations,
and cash flows of the Companies as at the dates and for the
periods indicated, in each case in accordance with U.K. generally
accepted accounting principles applied on a basis consistent with
previous years subject to normal year-end adjustments and
footnote disclosures, which in the aggregate are not material.
2.6 Absence of Undisclosed Liabilities; No Dealings with
Affiliates. As of the date of the Balance Sheet, none of the
Companies had any material liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise and
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whether due or to become due (including without limitation,
liabilities as guarantor or otherwise with respect to obligations
of others or liabilities for taxes due or then accrued or to
become due), required to be reflected or disclosed on the Balance
Sheet that were not adequately reflected or reserved against on
the Balance Sheet. None of the Companies has any liabilities of
the type required to be reflected or disclosed on a balance sheet
in accordance with U.K. generally accepted accounting principles,
other than liabilities (i) adequately reflected or reserved
against on the Balance Sheet, (ii) incurred since the date of the
Balance Sheet in the ordinary course of business and consistent
with past practice, (iii) that would not, in the aggregate, have
a material adverse effect on the Companies taken as a whole, or
(iv) disclosed in this Agreement. None of the Companies has any
contractual arrangement with or commitment to or from any of its
stockholders, officers, management, directors or employees (or
their family members) other than such as may have been entered
into in the normal course of employment, including, without
limiting the generality of the foregoing, being directly or
indirectly a joint investor or coventurer with respect to, or
owner, lessor, lessee, licenser or licensee of, any real or
personal property, tangible or intangible, owned or used by, or a
lender to or debtor of, such Company.
2.7 Taxes. Each of the Companies has accurately prepared
and duly and timely filed all federal, state, local, provincial
or foreign tax and other returns and reports which were required
to be filed, in respect of all income, franchise, excise, sales,
use, property (real and personal), VAT, payroll and other taxes,
levies, imports, duties, license and registration fees, charges
or withholdings of any nature whatsoever (collectively "Taxes"),
and to the extent the liabilities of the Companies for Taxes have
not been fully discharged, adequate reserves have been
established on the Balance Sheet. None of the federal, state,
local, provincial or foreign Tax returns of the Companies has
been audited or examined by the governmental authority having
jurisdiction. No waivers of any statutes of limitation are in
effect in respect of any Taxes. None of the Companies is in
default in the payment of any Taxes due and payable or on any
assessments received in respect thereof, and there are no claims
pending or, to the best knowledge of the Companies and the
Sellers, threatened, against any of the Companies for past due
Taxes. All Taxes incurred but not yet due have been fully accrued
on the books of the Companies or full reserves have been
established therefor; the reserves indicated on the Balance Sheet
are also adequate to cover all Taxes that may become payable by
the Companies in future periods in respect of any transactions or
sales occurring on or prior to the date of the Balance Sheet.
Without limiting the generality of the foregoing, the Companies
have withheld or collected from each payment made to each of
their employees, consultants or non-U.S. payees, the amount of
all Taxes required to be withheld or collected therefrom, and has
paid the same to the proper tax receiving officers or authorized
depositories.
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2.8 Properties. Each Company owns and has good title to
all of the assets and properties reflected as owned by it on the
Balance Sheet or acquired by such Company since the date of the
Balance Sheet (except personal property sold or otherwise
disposed of in the ordinary course of business since the date of
the Balance Sheet), free and clear of any lien, claim or other
encumbrance, except for (i) the liens, claims or other
encumbrances reflected on the Balance Sheet, (ii) assets and
properties disposed of, or subject to purchase or sales orders,
in the ordinary course of business since the date of the Balance
Sheet, (iii) liens, claims or other encumbrances securing the
liens of materialmen, carriers, landlords and like persons, all
of which are not yet due and payable, (iv) liens for taxes not
yet delinquent and (v) liens, claims, other encumbrances or
defects in title that, in the aggregate, are not material to the
Companies taken as a whole. The Companies own or have a valid
leasehold interest in all of the buildings, structures, leasehold
improvements, equipment and other tangible property material to
the Companies taken as a whole, all of which are in good and
sufficient operating condition and repair, ordinary wear and tear
excepted and none of the Companies has received any notice that
any such property is in violation in any material respect of any
existing law or any building, zoning, health, safety or other
ordinance, code or regulation.
2.9 Hazardous Materials.
(a) There has been no generation, use, handling,
storage or disposal of any Hazardous Materials in violation of
common law or any applicable environmental law at any site owned
or premises leased by any of the Companies during the period of
such Company's ownership or lease that could have a material
adverse effect on the Companies taken as a whole. Nor has there
been or is there threatened any release of any Hazardous
Materials on or at any such site or premises during such period
in violation of common law or any applicable environmental law or
which created or will create an obligation to report or remediate
such release, which release or failure to report or remediate
could have a material adverse effect on the Companies taken as a
whole. For purposes of this Agreement, "Hazardous Material"
means any medical waste, flammable, explosive or radioactive
material, or any hazardous or toxic waste, substance or material,
including substances defined as "hazardous substances,"
"hazardous materials," "solid waste" or "toxic substances" under
any applicable laws or ordinances relating to hazardous or toxic
materials and substances, air pollution (including noise and
odors), water pollution, liquid and solid waste, pesticides,
drinking water, community and employee health, environmental land
use management, stormwater, sediment control, nuisances,
radiation, wetlands, endangered species, environmental
permitting, petroleum products, and all rules and regulations
promulgated pursuant to any such laws and ordinances.
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(b) THI has previously made available to TBA copies of
all documents concerning any environmental or health and safety
matter that could have a material adverse effect on the Companies
taken as a whole, if any, and copies of any environmental audits
or risk assessments, site assessments, documentation regarding
off-site disposal of Hazardous Materials, spill control plans and
material correspondence with any governmental authority regarding
the foregoing.
2.10 Accounts Receivable. All accounts and notes receivable
of the Companies shown on the Balance Sheet and all accounts and
notes receivable acquired by the Companies subsequent to the date
of the Balance Sheet have arisen in the ordinary course of
business and have been collected, or are in the process of
collection and are collectible in the ordinary course of business
and in any event within nine months from the Closing Date, in the
aggregate recorded amounts thereof, less the applicable
allowances reflected on the Balance Sheet with respect to the
accounts and notes receivable shown thereon, or set up consistent
with past practice on the books of the Companies with respect to
the accounts and notes receivable acquired subsequent to the date
of the Balance Sheet.
2.11 Inventories. All Inventories (as defined below) of the
Companies are of a quality and quantity usable and saleable in
the ordinary course of business, except for obsolete items and
items of below- standard quality, all of which are in the
aggregate immaterial to the Companies taken as a whole. Items
included in such Inventories are carried on the books of the
Companies, and are valued on the Balance Sheet, at the lower of
cost or market. The value of obsolete materials and materials of
below-standard quality or quantity has been written down on the
books of account of the Companies to realizable market value.
The term "Inventories" includes all stock of raw materials,
work-in-process and finished goods, including but not limited to
finished goods purchased for resale, held the Companies for
manufacturing, assembly, processing, finishing, sale or resale to
others, from time to time in the ordinary course of business of
the Companies in the form in which such inventories then are held
or after manufacturing, assembling, finishing, processing,
incorporating with other goods or items, refining or the like.
2.12 Purchase and Sale Commitments. No outstanding purchase
commitments by any of the Companies are in excess of the normal,
ordinary and usual requirements of such Company, and the
aggregate of the contract prices to which the Companies have
agreed in any outstanding purchase commitments is not so
excessive when compared with current market prices for the
relevant commodities or services that a material loss is likely
to result. No outstanding sales commitment by any of the
Companies obligates such Company to sell any product or service
at a price which, because of currently prevailing and projected
costs of materials or labor, is likely to result, when all such
sales commitments are taken in the aggregate, in a material loss
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to the Companies taken as a whole. There are no material
suppliers to any of the Companies of significant goods or
services with respect to which practical alternative sources of
supply, or comparable products, are not available on comparable
terms and conditions.
2.13 Governmental Authorizations. The Companies have all
governmental permits, licenses, franchises, concessions, zoning
variances and other approvals, authorizations and orders
(collectively "Permits") material to the Companies taken as a
whole. All such Permits are presently in full force and effect,
the Companies are in compliance with the requirements thereof, no
suspension or cancellation of any of them is threatened so far as
is known to the Sellers or the Companies, and the sale of the
Shares as contemplated hereby will not adversely affect the
validity or effectiveness of, and will not require, for retention
thereof after such sale, the consent or approval of any party to,
or any other person or governmental authority having jurisdiction
of, any such Permit. None of the Companies or the Sellers has
any knowledge of any fact or circumstance which would prevent,
limit or restrict it from continuing to operate its business in
the present manner, and no new requirements pertaining to the
manner of operating its business have been issued or announced by
any governmental authority during the past year nor are there any
disputes pending between any of the Companies and any
governmental authority relating to such Company's operations as
presently being conducted or actively considered.
2.14 Intellectual Property. Each of the Companies owns, or
is licensed to use, or otherwise has the right to use all
patents, trademarks, service marks, trade names, trade secrets,
franchises, and copyrights, and all applications for any of the
foregoing, and all technology, know-how and processes necessary
for the conduct of its businesses as now conducted (collectively,
the "Proprietary Rights"). A list of all such copyrights,
trademarks, tradenames and patents, and all applications
therefor, has been furnished or made available to TBA. None of
the Companies or the Sellers is aware of any claim by any third
party that the business of any of the Companies as currently
conducted or proposed to be conducted infringes upon the
unlicensed Proprietary Rights of others, nor have any of the
Companies or any of the Sellers received any notice or claim from
any third party of such infringement by any of the Companies.
None of the Companies or the Sellers is aware of any infringement
by any third party on, or any competing claim of right to use or
own any of, the Proprietary Rights of any of the Companies. Each
of the Companies has the right to use, free and clear of claims
or rights of others, all customer lists and computer software
material to its business as presently conducted. To the best
knowledge of the Companies and the Sellers, none of the
activities of the employees of any of the Companies on behalf of
such Company violates any agreements or arrangements which any
such employees have with former employers in a way which is
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materially adverse to the business of the Companies taken as a
whole.
2.15 Insurance. None of the Companies is in default with
respect to any provisions of any policy of general liability,
fire, title or other form of insurance held by it, each of the
Companies is current in the payment of all premiums due on such
insurance and none of the Companies has failed to give any notice
or present any claim thereunder in due and timely fashion, except
for claims that are immaterial in both the nature of the claim
and in the amount of such claim. The Companies maintain
insurance on all of their assets and business (including products
liability insurance) from insurers which are financially sound
and reputable, in amounts and coverages and against the kinds of
risks and losses reasonably prudent to be insured against by
corporations engaged in the same or similar businesses. No basis
exists which would jeopardize the coverage under any such
insurance. No such insurance will be terminated or canceled by
reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated
hereby. THI has previously furnished or made available to TBA
all policies of general liability, fire, title or other forms of
insurance applicable to the Companies and a description of all
claims pending thereunder other than health or dental insurance
claims.
2.16 Employee Benefit Plans.
(a) THI has made available or furnished to TBA true
and complete copies of each pension, profit-sharing, deferred
compensation, incentive compensation, severance pay, retirement,
welfare benefit or other plan or arrangement providing benefits
to employees or retirees, including both those that do and do not
constitute employee benefit plans within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended (the "ERISA"), currently maintained or contributed to by
THI or any of its affiliates for the benefit of the employees or
retirees of the Companies (each, a "Plan").
(b) Except as set forth on the Disclosure Schedule,
(i) each such Plan that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA is being operated and
administered in compliance with Section 401(a) of the Code, a
favorable determination letter has been obtained from the
Internal Revenue Service (the "IRS") for such Plan, and there is
no accumulated funding deficiency, as defined in Section
302(a)(2) of ERISA or Section 412 of the Code, with respect to
such Plan; (ii) there has been no non-exempt "prohibited
transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code involving the assets of any Plan nor any
"reportable event" within the meaning of Section 4043 of ERISA
with respect to any Plan; (iii) all required employer
contributions to such Plan have been made (or, in the case of
contributions not yet due, have been accrued on the Balance
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Sheet); (iv) THI has made available to TBA as to each such Plan a
true and correct copy of (w) the annual report (Form 5500) filed
with the IRS for each of the three most recent plan years, (x)
each plan, trust agreement, group annuity contract and insurance
contract, if any, relating to such Plan, (y) each actuarial
report prepared for each of the last three years for each Plan
and (z) each summary plan description distributed to participants
in each Plan and each summary of material modifications to each
Plan (as defined in ERISA); and (v) each such Plan is, and at all
relevant times has been, in compliance with ERISA, the Code and
the terms of such Plan. None of the Sellers or the Companies or
their respective affiliates has ever participated in a
"multiemployer pension plan" as defined in Section 3(37) of
ERISA.
(c) Except as set forth on the Disclosure Schedule,
none of the Companies has any has no obligation to provide any
welfare benefits to retired or former employees other than
continuation of welfare benefits as required by applicable law.
(d) None of the Companies has any liability under or
with respect to any employee benefit plans or arrangements that
it no longer maintains or in which it no longer participates.
2.17 Agreements and Documents. THI has previously furnished
or made available to TBA true, correct and complete copies of
each document that is referred to or otherwise related to any of
the following items referred to in this Section 2.17:
(a) each document related to interests in real
property owned, leased or otherwise used or claimed by any of the
Companies;
(b) (i) each agreement of any of the Companies made in
the ordinary course of business which involves aggregate future
payments by or to any of the Companies of more than one hundred
fifty thousand dollars ($150,000) or any agreement made in the
ordinary course of business whose term extends beyond one year
after the date hereof; (ii) each agreement containing any
covenant restricting the freedom of any of the Companies to
compete in any line of business or with any person; and (iii)
each agreement of any of the Companies not made in the ordinary
course of business which is or was to be performed after May 6,
1997;
(c) all employment or similar compensation agreements
of any of the Companies which may not be terminated by such
Company without penalty within thirty days after the Closing;
(d) all bonus, incentive compensation, deferred
compensation, profit-sharing, stock option, retirement, pension,
severance, indemnification, insurance, death benefit or other
fringe benefit plans, agreements or arrangements of any of the
Companies (or applying to any of the Companies) in effect, or
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under which any amounts remain unpaid, on the date hereof or to
become effective after the date hereof;
(e) all labor unions or other organizations
representing, purporting to represent or attempting to represent
any employees of any of the Companies, and all collective
bargaining agreements of any of the Companies with any labor
unions or other representatives or employees;
(f) each agreement or other instrument or arrangement
defining the terms on which any indebtedness of any of the
Companies (or a guarantee by any of the Companies of
indebtedness) is or may be issued; and
(g) the names and addresses of all banks in which any
of the Companies has accounts or lines of credit, and with
respect to each such account or line of credit, the names of all
persons authorized to drawn thereon.
None of the Companies is a party to any oral contract
or agreement which would be required to have been furnished or
made available to TBA under this Section 2.17 had such contract
or agreement been committed to writing.
2.18 Validity. There is no default or claimed or purported
or alleged default, or basis on which with notice or lapse of
time or both (including notice of this Agreement), a default
would exist, in any obligation on the part of any party
(including any of the Companies) to be performed under any lease,
contract, plan, policy or other instrument or arrangement
referred to in Section 2.17 or otherwise in this Agreement.
2.19 No Changes. Since the date of the Balance Sheet there
has not been:
(a) any material adverse change in the business of the
Companies taken as a whole;
(b) any material damage, destruction or loss (whether
or not covered by insurance) adversely affecting the business of
the Companies taken as a whole;
(c) any declaration, setting aside or payment of any
dividend, or other distribution, in respect of any capital stock
of any of the Companies or any direct or indirect redemption,
purchase or other acquisition of such stock;
(d) any option to purchase any capital stock of any of
the Companies granted to any person, or any employment or
deferred compensation agreement entered into between any Company
and any of its stockholders, officers, directors, employees or
consultants;
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(e) any issuance or sale by any of the Companies of
any stock, bonds or other corporate securities, or any partial or
complete formation, acquisition, disposition or liquidation of
any of the Companies;
(f) any labor union activity (including without
limitation any negotiation, or request for negotiation, with
respect to any union representation or any labor contract)
respecting any of the Companies;
(g) any statute, rule or regulation, or, to the best
knowledge of the Companies and the Sellers, any government
policy, adopted which may materially and adversely affect the
business of any of the Companies;
(h) any mortgage, lien, attachment, pledge,
encumbrance or security interest created on any asset, tangible
or intangible, of any of the Companies, or assumed, either by any
Company or by others, with respect to any such assets, except for
liens permitted under Section 2.8;
(i) any indebtedness or other liability or obligation
(whether absolute, accrued, contingent or otherwise) incurred, or
other transaction (except that reflected in this Agreement)
engaged in, by any of the Companies, except those in the ordinary
course of business that are individually, or in the aggregate to
one group of related parties, less than fifty thousand dollars
($50,000);
(j) any obligation or liability discharged or
satisfied by any of the Companies, except items included in
current liabilities shown on the Balance Sheet and current
liabilities incurred since the date of the Balance Sheet in the
ordinary course of business which are individually, or in the
aggregate to one group of related parties, less than twenty five
thousand dollars ($25,000) in amount;
(k) any sale, assignment, lease, transfer or other
disposition of any tangible asset of any of the Companies, except
in the ordinary course of business, or any sale, assignment,
lease, transfer or other disposition of any of its patents,
trademarks, trade names, brand names, copyrights, licenses or
other intangible assets;
(l) any amendment, termination or waiver of any
material right belonging to any of the Companies;
(m) any increase in the compensation or benefits
payable or to become payable by any of the Companies to any of
its officers or employees;
(n) any other action or omission by any of the
Companies, or the passage of any resolution, other than in the
ordinary course of business.
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2.20 Litigation or Proceedings. None of the Companies is
engaged in, or a party to, or, to the best of the Sellers' and
the Companies' knowledge, threatened with, any claim or legal
action or other proceeding before any court, any arbitrator of
any kind or any governmental authority, nor does any basis for
any claim or legal action or other proceeding or governmental
investigation exist. There are no orders, rulings, decrees,
judgments or stipulations to which any of the Companies is a
party by or with any court, arbitrator or governmental authority
affecting the Companies.
2.21 Compliance with Laws. Each Company (i) has not been
and is not in violation of any applicable building, zoning,
occupational safety and health, pension, export control,
environmental or other federal, state, local or foreign law,
ordinance, regulation, rule, order or governmental policy
applicable to it; (ii) has not received any complaint from any
governmental authority, and to the best knowledge of the Sellers
and the Companies, none is threatened, alleging that such Company
has violated any such law, ordinance, regulation, rule, order or
governmental policy; (iii) has not received any notice from any
governmental authority of any pending proceedings to take all or
any part of the properties of such Company (whether leased or
owned) by condemnation or right of eminent domain and, to the
best knowledge of the Sellers and the Companies, no such
proceeding is threatened; and (iv) is not a party to any
agreement or instrument, or subject to any charter or other
corporate restriction or judgment, order, writ, injunction, rule,
regulation, code or ordinance, which materially and adversely
affects, or might reasonably be expected materially and adversely
to affect the business of the Companies taken as a whole.
2.22 Labor Matters. There are no labor organizing
activities, election petitions or proceedings, labor strikes,
disputes, slowdowns, work stoppages or unfair labor practice
complaints pending or, to the best knowledge of the Sellers and
the Companies, threatened against any of the Companies or between
any of the Companies and any of its employees.
2.23 Recalls. There is no basis for the recall, withdrawal
or suspension of any approval by any governmental authority with
respect to any product sold or proposed to be sold by any of the
Companies. None of the products of any of the Companies is
subject to any recall proceedings and to the best of its
knowledge no such proceedings have been threatened.
2.24 Brokers and Finders. None of the Sellers or the
Companies has employed any broker, agent or finder or incurred
any liability on behalf of any of the Sellers or the Companies or
for any brokerage fees, agents' commissions or finders' fees in
connection with the transactions contemplated hereby.
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2.25 Powers of Attorney. None of the Companies has any
powers of attorney or similar authorizations outstanding.
2.26 No Termination of Relationship. As of the date hereof,
none of the Sellers or the Companies has any reason to expect
that any relationship between any Company and a material
distributor, customer, supplier, lender, employee or other person
will be terminated or adversely affected as a result of the
transactions contemplated by this Agreement.
2.27 All Information. TBA has been furnished in writing
prior to the execution of this Agreement all information as to
the business of the Companies material to a reasonable buyer's
determination to enter into this Agreement and to consummate the
transactions contemplated hereby.
2.28 Statements True and Correct. The statements contained
herein or in any written documents prepared and delivered by or
on behalf of THI pursuant to the terms hereof are true, complete
and correct in all material respects, and such documents do not
omit any material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein not
misleading.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF TBA
TBA represents and warrants to THI as follows.
3.1 Organization. TBA is a corporation duly organized,
validly existing and in good standing under the laws of the state
of Delaware and has full corporate power and authority to own,
lease and operate its assets and to carry on its business as now
being and as heretofore conducted.
3.2 Authority. TBA has full right, power, capacity and
authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part
of TBA, except that approval of the TBA shareholders is required
to list the TBA Shares on the AMEX. This Agreement has been duly
and validly executed and delivered by TBA and constitutes the
valid and binding obligation of TBA, enforceable against it in
accordance with the terms hereof. Neither the execution,
delivery and performance of this Agreement nor the consummation
of the transactions contemplated hereby will (i) conflict with or
result in a violation, breach, termination or acceleration of, or
default under (or would result in a violation, breach,
termination, acceleration or default with the giving of notice or
passage of time, or both) any of the terms, conditions or
provisions of the Certificate of Incorporation or By-laws of TBA,
as amended, or of any note, bond, mortgage, indenture, license,
15PAGE
<PAGE>
agreement or other instrument or obligation to which TBA is a
party or by which TBA or any of its properties or assets may be
bound or affected; (ii) result in the violation of any order,
writ, injunction, decree, statute, rule or regulation applicable
to TBA or any of its properties or assets; or (iii) result in the
imposition of any lien, encumbrance, charge or claim upon any of
its assets. Except for the listing of the TBA Shares for trading
on the AMEX, no consent or approval by, or notification to or
filing with, any court, governmental authority or third party is
required in connection with the execution, delivery and
performance of this Agreement by TBA or the consummation of the
transactions contemplated hereby. The TBA Shares will be, when
issued in accordance with this Agreement, duly authorized,
validly issued, fully paid, nonassessable and free of pre-emptive
rights.
3.3 Statements True and Correct. The statements contained
herein or in any written documents prepared and delivered by or
on behalf of TBA pursuant to the terms hereof are true, complete
and correct in all material respects, and such documents do not
omit any material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein not
misleading.
SECTION 4 - COVENANTS AND AGREEMENTS
4.1 Conduct of Business. Except with the prior written
consent of TBA, which will not be unreasonably withheld or
delayed, and except as otherwise contemplated herein, during the
period from the date hereof to the Closing Date, THI shall cause
the Sellers and the Companies to observe the following covenants:
(a) Affirmative Covenants Pending Closing. The
Sellers and the Companies shall:
(i) Preservation of Personnel. Use all
reasonable efforts to preserve intact the business organization
of each Company and keep available the services of the present
employees of each Company, in each case in accordance with past
practice, it being understood that the termination of employees
with poor performance ratings shall not constitute a violation of
this covenant;
(ii) Insurance. Use all reasonable efforts to
keep in effect casualty, public liability, worker's compensation
and other insurance policies applicable to the Companies in
coverage amounts not less than those in effect at the date of
this Agreement;
(iii) Preservation of the Business;
Maintenance of Properties. Use all reasonable efforts to
preserve the business of the Companies, advertise, promote and
market its products and services in accordance with past
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<PAGE>
practices over the last twelve months, keep their properties
intact, preserve their goodwill, maintain all physical properties
in such operating condition as will permit the conduct of such
business on a basis consistent with past practice;
(iv) Intellectual Property Rights. Use all
reasonable efforts to preserve and protect the Proprietary Rights
of the Companies; and
(v) Ordinary Course of Business. Operate the
business of the Companies solely in the ordinary course.
(b) Negative Covenants Pending Closing. THI shall
cause each of the Sellers and the Companies not to:
(i) Disposition of Assets. Sell or transfer, or
mortgage, pledge or create or permit to be created any lien on,
any of the assets of any of the Companies other than sales or
transfers in the ordinary course of business or the creation of
liens under existing arrangements disclosed hereunder and liens
permitted under Section 2.8;
(ii) Liabilities. Permit any of the Companies to
(A) incur any obligation or liability other than in the ordinary
course of business, (B) incur any indebtedness for borrowed money
in excess of $100,000 or (C) enter into any contracts or
commitments involving payments by any of the Companies of
$100,000 or more other than purchase orders and commitments for
inventory, materials and supplies in the ordinary course of
business;
(iii) Compensation. Except as required by
applicable law or any existing employment or severance agreement,
(A) change the compensation or fringe benefits of any officer,
director, employee or agent of any of the Companies, except for
ordinary merit increases for employees other than officers based
on periodic reviews in accordance with past practices, or (B)
enter into or modify any employment, severance or other agreement
with any officer, director or employee of any of the Companies or
any benefit plan (it being understood that hiring of at will
employees in the ordinary course of business shall not constitute
a violation of this covenant) or (C) enter into or modify any
agreement with any consultant, except for agreements terminable
upon not more than one year's notice that are consistent with
past practices with respect to consulting agreements.
(iv) Capital Stock. Make any change in the number
of shares of capital stock of any of the Companies authorized,
issued or outstanding or grant any option, warrant or other right
to purchase, or to convert any obligation into, shares of capital
stock of any of the Companies, or declare or pay any dividend or
other distribution with respect to any shares of capital stock
of any of the Companies, or sell or transfer any shares of its
capital stock;
17PAGE
<PAGE>
(v) Organizational Documents. Amend the
organizational documents of any of the Companies;
(vi) Acquisitions. Make any material acquisition
of property other than in the ordinary course of the business of
the Companies;
(vi) License Agreements. Enter into or modify any
license, technology development or technology transfer agreement
between any of the Companies and any other person or entity.
4.2 Corporate Examinations and Investigations. Prior to
the Closing Date, TBA shall be entitled, through its employees
and representatives, to have such access to the assets,
properties, business and operations of the Companies, as is
reasonably necessary or appropriate in connection with its
investigation of the Companies with respect to the transaction
contemplated hereby. Any such investigation and examination
shall be conducted at reasonable times and under reasonable
circumstances so as to minimize any disruption to or impairment
of the business and each party shall cooperate fully therein. No
investigation by TBA shall diminish or obviate any of the
representations, warranties, covenants or agreements of THI
contained in this Agreement. In order that TBA may have full
opportunity to make such investigation, THI shall furnish the
representatives of TBA with all such information and copies of
such documents concerning the affairs of the Companies as TBA may
reasonably request and cause its officers, employees,
consultants, agents, accountants and attorneys to cooperate fully
with TBA's representatives in connection with such investigation.
4.3 Expenses. TBA and THI shall bear their respective
expenses incurred in connection with the preparation, execution
and performance of this Agreement and the transactions
contemplated hereby, including without limitation, all fees and
expenses of agents, representatives, counsel and accountants.
4.4 Authorization from Others. Prior to the Closing Date,
the parties shall use all reasonable efforts to obtain all
authorizations, consents and permits of others required to permit
the consummation of the transactions contemplated by this
Agreement.
4.5 Consummation of Agreement. Each party shall use all
reasonable efforts to perform and fulfill all conditions and
obligations to be performed and fulfilled by it under this
Agreement and to ensure that to the extent within its control or
capable of influence by it, no breach of any of its respective
representations, warranties and agreements hereunder occurs or
exists on or prior to the Closing Date, all to the end that the
transactions contemplated by this Agreement shall be fully
carried out in a timely fashion.
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<PAGE>
4.6 Further Assurances. Each of the parties shall execute
such documents, further instruments of transfer and assignment
and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
4.7 Listing of Shares. Promptly after the date hereof, TBA
shall take all action necessary in accordance with applicable law
to convene a meeting of its shareholders to be held for the
purpose of approving the listing of the TBA Shares for trading
upon AMEX in accordance with Section 712 of AMEX's Listing
Standards, Policies and Requirements. In connection with such
meeting, TBA's Board of Directors shall recommend to the TBA
shareholders the approval of the listing of the TBA Shares
pursuant to this Agreement. TBA shall use all reasonable efforts
to obtain all votes and approvals of the TBA shareholders
necessary for the listing of the TBA Shares and all related
matters required under the Delaware Business Corporation Act, and
its Certificate of Incorporation and By-laws. THI hereby agrees
to vote all of the shares of TBA common stock held by it as of
the record date of any such meeting in favor of the listing of
the TBA Shares and all such related matters.
4.8 Public Announcements and Confidentiality. Any press
release or other information to the press or any third party with
respect to this Agreement or the transactions contemplated hereby
shall require the prior approval of TBA and THI, which approval
shall not be unreasonably withheld, provided that a party shall
not be prevented from making such disclosure as it shall be
advised by counsel is required by law.
4.9 No Solicitation. None of the Sellers or the Companies
will (i) solicit or initiate discussions with any person, other
than TBA, relating to the possible acquisition of any of the
Companies or all or a material portion of the assets or any of
the capital stock of any of the Companies or any merger or other
business combination with any of the Companies (an "Acquisition
Transaction") or (ii) except to the extent reasonably required by
fiduciary obligations under applicable law as advised by legal
counsel, participate in any negotiations regarding, or furnish to
any other person information with respect to, any effort or
attempt by any other person to do or to seek any Acquisition
Transaction. THI agrees to inform TBA within one business day of
its receipt of any offer, proposal or inquiry relating to any
Acquisition Transaction.
4.10 Indemnification.
(a) Right to Indemnification. TBA and THI (as the
case may be, the "Indemnitee") shall be indemnified on its
respective demand made to the other (the "Indemnitor") for the
full amount of all damages (as defined below) suffered by it as a
direct or indirect result of:
19PAGE
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(i) the inaccuracy of any representation or
warranty made by the Indemnitor in or pursuant to this Agreement;
and
(ii any failure by the Indemnitor to perform any
obligation or comply with any covenant or agreement specified in
this Agreement.
For the purpose of this Section 4.10, (a) the term "damages"
shall be determined and computed by reference to the effect of
the compensable event on the Indemnitee, and shall be deemed to
include (i) all losses, liabilities, expenses or costs incurred
by the Indemnitee, including reasonable attorneys' fees, and (ii)
interest at a rate per annum equal to that announced from time to
time by First National Bank of Boston as its "base rate" (or the
legal rate of interest, if lower) from the date 30 days after
notice of any such claim for indemnification is given to the
Indemnitor, or if an unliquidated claim, from such later date as
the claim is liquidated, to the date full indemnification is made
therefor; and (b) damages shall not include any amounts for which
the Indemnitee actually receives payment under an insurance
policy, excluding self-insured amounts and deductible amounts.
(b) Indemnification Procedures. The Indemnitee shall
give the Indemnitor notice of any claim, action or proceeding by
a third party which is reasonably likely to result in a claim for
indemnification under this Section 4.10. The Indemnitor shall
have the right, at its expense, to defend, contest, protest,
settle and otherwise control the resolution of any such claim,
action or proceeding. The Indemnitee shall have the right to
participate in any such legal proceeding, subject to the
Indemnitor's right of control thereof, at the expense of the
Indemnitee and with counsel selected by the Indemnitee.
(c) Limitations on Indemnification. The rights of TBA
and THI to be indemnified pursuant to Section 4.10 shall survive
the Closing Date for a period of two years.
4.11 Repayment of Indebtedness. THI agrees that it shall
not seek repayment of $1,000,000 of the existing indebtedness
from the Companies to LSI earlier than July 15, 1998.
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TBA
The obligation of TBA to acquire the Shares is subject to
the satisfaction or waiver, at or before the Closing Date, of the
following conditions:
5.1 Representations, Warranties and Covenants. The
representations and warranties of THI contained in this Agreement
shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on
and as of the Closing Date (with such exceptions as may be
permitted under or contemplated by this Agreement) and there
20PAGE
<PAGE>
shall not have been any material adverse change in the business
of the Companies taken as a whole since the date hereof. THI
shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date
and shall have obtained all required consents and approvals. THI
shall have delivered to TBA a certificate, dated the Closing
Date, to the foregoing effect.
5.2 Certificates. THI shall have furnished TBA with such
certificates of public officials and of the Sellers' or the
Companies' officers as may be reasonably requested by TBA.
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATION OF THI
The obligation of THI to sell the Shares is subject to the
satisfaction or waiver, at or before the Closing Date, of the
following conditions:
6.1 Representations, Warranties and Covenants. The
representations and warranties of TBA contained in this Agreement
shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on
and as of the Closing Date (with such exceptions as may be
permitted under or contemplated by this Agreement). TBA shall
have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date
and shall have obtained all required consents and approvals,
including approval of the TBA shareholders of the listing of the
TBA Shares on the AMEX. TBA shall have delivered to LSI a
certificate, dated the Closing Date, to the foregoing effect.
6.2 Certificates. TBA shall have furnished THI with such
certificates of public officials and of TBA's officers as may be
reasonably requested by THI.
6.3 De-Listing. The shares of LSI shall have been
de-listed from the London Stock Exchange.
SECTION 7 - TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date as follows:
(a) by THI upon written notice to TBA if TBA has
materially breached any representation, warranty, covenant or
agreement contained herein and has not cured such breach within
ten (10) business days of receipt of written notice from THI;
(b) by TBA upon written notice to THI if THI has
materially breached any representation, warranty, covenant or
21PAGE
<PAGE>
agreement contained herein and has not cured such breach within
ten (10) business days of receipt of written notice from TBA;
(c) by either party if any court of competent
jurisdiction or United States or foreign governmental body shall
have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the sale of any
of the Shares and such order, decree or ruling shall have become
final and nonappealable; or
(d) at any time with the written consent of TBA and
THI.
7.2 Effect of Termination. If this Agreement is terminated
as provided in Section 7.1, this Agreement shall forthwith become
void and have no effect, without liability on the part of any
party, its directors, officers or stockholders, other than the
provisions of this Section 7.2, Section 4.3 relating to expenses
and Section 4.8 relating to publicity and confidentiality to the
extent provided therein. Nothing contained in this Section 7.2
shall relieve any party from liability for any breach of this
Agreement occurring before such termination.
7.3 Amendment. This Agreement may not be amended except by
an instrument signed by each of the parties hereto.
7.4 Waiver. At any time, any party hereto may (a) extend
the time for the performance of any of the obligations or other
acts of any other party hereto or (b) waive compliance with any
of the agreements of any other party or any conditions to its own
obligations, in each case only to the extent such obligations,
agreements and conditions are intended for its benefit; provided
that any such extension or waiver shall be binding upon a party
only if such extension or waiver is set forth in a writing
executed by such party.
22PAGE
<PAGE>
SECTION 8 - MISCELLANEOUS
8.1 Notices. All notices, requests, demands, consents and
other communications which are required or permitted hereunder
shall be in writing, and shall be deemed given when actually
received or if earlier, one day after deposit with a nationally
recognized air courier or express mail, charges prepaid or three
days after deposit in the U.S. mail by certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to THI:
Thermo Instrument Systems Inc.
1275 Hammerwood Avenue
Sunnyvale, CA 94089
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to TBA:
Thermo BioAnalysis Corporation
8 East Forge Parkway
Franklin, MA 02038
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
or to such other address as any party hereto may designate in
writing to the other parties, specifying a change of address for
the purpose of this Agreement.
8.2 Survival and Materiality of Representations. Each of
the representations, warranties and agreements made by the
parties hereto shall be deemed material and shall survive the
Closing Date and the consummation of the transactions
contemplated hereby. All statements contained in any certificates
or other instruments delivered by or on behalf of the parties
pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed material and shall constitute
representations and warranties by the person making such
statement.
23PAGE
<PAGE>
8.3 Entire Agreement. This Agreement, including the
exhibits, the Disclosure Schedule and the other documents
referred to herein, supersedes any and all oral or written
agreements or understandings heretofore made relating to the
subject matter hereof and constitutes the entire agreement of the
parties relating to the subject matter hereof.
8.4 Parties in Interest. All covenants and agreements,
representations and warranties contained in this Agreement made
by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the parties hereto, and their respective
successors, assigns, heirs, executors, administrators and
personal representatives, whether so expressed or not.
8.5 No Implied Rights or Remedies. Except as otherwise
expressly provided herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or to give any
person, firm or corporation, other than the parties hereto, any
rights or remedies under or by reason of this Agreement.
8.6 Headings. The headings in this Agreement are inserted
for convenience of reference only and shall not be a part of or
control or affect the meaning hereof.
8.7 Severability. If any provision of this Agreement shall
be declared void or unenforceable by any judicial or
administrative authority, the validity of any other provision
shall not be affected thereby.
8.8 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
8.9 Further Assurances. THI will execute and furnish to TBA
all documents and will do or cause to be done all other things
that TBA may reasonably request from time to time in order to
give full effect to this Agreement and to effectuate the intent
of the parties.
8.10 Governing Law. This Agreement shall be governed by the
law of the State of Delaware applicable to agreements made and to
be performed wholly within such jurisdiction, without regard to
the conflicts of laws provisions thereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
THERMO BIOANALYSIS CORPORATION
[Seal] By: /s/ Barry S. Howe
---------------------------
Name: Barry S. Howe
Title: President
THERMO INSTRUMENT SYSTEMS INC.
[Seal] By: /s/ Earl R. Lewis
---------------------------
Name: Earl R. Lewis
Title: President
Exhibit 11
THERMO BIOANALYSIS CORPORATION
Computation of Earnings per Share
Three Months Ended
--------------------------
March 29, March 30,
1997 1996
-------------------------------------------------------------------------
Computation of Primary Earnings (Loss)
per Share:
Net Income (Loss) (a) $ 1,458,000 $(3,114,000)
----------- -----------
Shares:
Weighted average shares outstanding 9,771,500 8,101,500
Add: Shares issuable from assumed
acquisition of Biosystems Group
of LSI 257,143 -
Shares issuable from
assumed exercise of options
(as determined by the
application of the treasury
stock method) - 117,450
----------- -----------
Weighted average shares outstanding,
as adjusted (b) 10,028,643 8,218,950
----------- -----------
Primary Earnings (Loss) per Share (a) / (b) $ .15 $ (.38)
=========== ===========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THERMO
BIOANALYSIS CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
MARCH 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> MAR-29-1997
<CASH> 59,190
<SECURITIES> 0
<RECEIVABLES> 26,871
<ALLOWANCES> 2,043
<INVENTORY> 29,605
<CURRENT-ASSETS> 121,515
<PP&E> 24,134
<DEPRECIATION> 6,834
<TOTAL-ASSETS> 245,378
<CURRENT-LIABILITIES> 75,265
<BONDS> 0
0
0
<COMMON> 111
<OTHER-SE> 69,806
<TOTAL-LIABILITY-AND-EQUITY> 245,378
<SALES> 23,382
<TOTAL-REVENUES> 23,382
<CGS> 11,899
<TOTAL-COSTS> 11,899
<OTHER-EXPENSES> 2,191
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 678
<INCOME-PRETAX> 2,278
<INCOME-TAX> 820
<INCOME-CONTINUING> 1,458
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,458
<EPS-PRIMARY> .15
<EPS-DILUTED> 0
</TABLE>
