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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
ONIX Systems Inc.
(Name of Subject Company)
ONIX Systems Inc.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
67088G 10 8
(CUSIP Number of Class of Securities)
David J. Beaubien
Member of the Special Committee
of the Board of Directors
c/o Richard A. Soden, Esq.
James A. Matarese, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
(Name and Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
With copies to:
Richard A. Soden, Esq.
James A. Matarese, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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Item 1. Subject Company Information.
The name of the subject company is ONIX Systems Inc., a Delaware corporation
(the "Company"), and the address of the principal executive offices of the
Company is 22001 North Park Drive, Kingwood, Texas 77339-3804 and its phone
number at its principal executive offices is (781) 622-1000.
The title of the class of equity securities to which this Schedule 14D-9
Solicitation/Recommendation Statement (this "Schedule 14D-9") relates is the
common stock, par value $.01 per share, of the Company (the "Shares" or the
"Common Stock"). As of January 28, 2000 there were 14,357,524 Shares issued and
outstanding and 667,817 Shares reserved for issuance pursuant to options
outstanding on such date under the Company's option plans.
Item 2. Identity and Background of Filing Person.
This Schedule 14D-9 is being filed by the subject company, ONIX Systems Inc.
The contact information for the Company is listed in Item 1 above.
This Schedule 14D-9 relates to the tender offer by ONIX Acquisition Inc.
(the "Purchaser"), a wholly-owned subsidiary of Thermo Instrument Systems Inc.
("Thermo Instrument"), to purchase all of the outstanding Shares which are not
currently owned by Thermo Electron Corporation ("Thermo Electron") or its
direct and indirect subsidiaries, including its majority-owned subsidiary,
Thermo Instrument (the "Publicly Held Shares"), at a purchase price of $9.00
per Share (the "Offer Price"), net to the seller in cash, without interest
thereon, less applicable withholding taxes, if any, and upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated March 13,
2000 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with the Offer to Purchase, constitutes the "Offer"). The
Purchaser filed a Schedule TO Tender Offer Statement (the "Schedule TO") with
the Securities and Exchange Commission (the "Commission") on March 13, 2000,
which includes the Offer to Purchase as an exhibit.
The Schedule TO states that if the tender offer is completed, Thermo
Electron and its subsidiaries will own at least 90% of the Company's
outstanding Shares and will, promptly following the closing of the Offer,
contribute such Shares to the Purchaser. Thermo Electron and Thermo Instrument
would then cause the Purchaser to merge with and into the Company (the
"Merger") making the Company a wholly-owned subsidiary of Thermo Instrument.
The Purchaser's principal executive offices, as set forth on its Schedule
TO, are located at 81 Wyman Street, P.O. Box 9046, Waltham, MA 02454-9046 and
its business phone is (781) 622-1000.
All information contained in this Schedule 14D-9 or incorporated herein by
reference concerning the Purchaser, Thermo Instrument, Thermo Electron or their
affiliates, or actions or events with respect to any of them, was provided for
inclusion herein by the Purchaser, Thermo Instrument, or Thermo Electron or
obtained from reports or statements filed by the Purchaser with the Commission,
including, without limitation, the Schedule TO, and the Company takes no
responsibility for such information.
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
History of the Company. The Company was incorporated as a Delaware
corporation in August 1997. In connection with the Company's incorporation,
Thermo Instrument transferred to the Company certain businesses in exchange for
shares of Common Stock, and in March 1998 the Company conducted an initial
public offering of its Common Stock. Following this offering, Thermo Electron,
through its ownership of Common Stock and the ownership of Common Stock by
Thermo Instrument, maintained a controlling stake in the Company. Thermo
Instrument develops, manufactures and markets measurement instruments used to
monitor, collect and analyze information. Uses include pharmaceutical research
and production and clinical diagnostics, monitoring and measuring environmental
pollutants, industrial inspection, and test and control for quality assurance
and productivity improvement. In addition, Thermo Instrument develops,
manufactures,
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markets, and services equipment for the measurement, preparation, storage, and
automation of sample materials and photonics and vacuum components for original
equipment manufacturers. Thermo Instrument is a majority-owned subsidiary of
Thermo Electron. Thermo Electron is a world leader in monitoring, analytical,
and biomedical instrumentation; biomedical products including heart-assist
devices, respiratory-care equipment, and mammography systems; and paper
recycling and papermaking equipment. Thermo Electron also develops alternative-
energy systems and clean fuels, provides a range of services including
industrial outsourcing and environmental-liability management, and conducts
research and development in advanced imaging, laser, and electronic
information-management technologies.
As described below under Item 4, "The Solicitation or Recommendation," on
January 31, 2000, Thermo Electron announced a restructuring plan pursuant to
which it expects to spin in, spin off and sell various businesses to focus
solely on its core measurement and detection instruments business. In that
announcement, Thermo Electron stated that it planned to take private certain of
its majority-owned subsidiaries, including Thermo Instrument and the Company.
On March 13, 2000, the Purchaser filed the Schedule TO with the Commission and
formally commenced the Offer. The Offer to Purchase also has been filed with
the Commission as an exhibit to the Schedule TO and as Exhibit 6 hereto.
Based on the Schedule TO, as of January 28, 2000, Thermo Instrument and
Thermo Electron beneficially owned 11,524,867 and 294,300 Shares, respectively,
representing approximately 80.3% and 2.0%, respectively, of the then issued and
outstanding Shares.
Composition of the Company's Board of Directors. The Company's Board of
Directors currently consists of the following four members:
David J. Beaubien Mr. Beaubien is the sole member of the Special
Committee of the Board of Directors of the Company,
which was established to consider the Offer (the
"Special Committee") (See Item 4--The Solicitation
or Recommendation). He has been a director of the
Company since June 1998. He has been the chairman
of Yankee Environmental Systems Inc., a
manufacturer of solar radiation monitoring
instruments, since 1990. He also served as a
director of the Kidder Peabody Family of Mutual
Funds from 1983 to 1995 and of Oriel Instruments
Corporation from 1990 to 1996. Mr. Beaubien is also
a director of IEC Electronics, Inc. and Paine
Webber Pace Mutual Funds.
Frank Jungers Mr. Jungers has been a director of the Company
since June 1998. Mr. Jungers has been a consultant
on business and energy matters since 1977. Mr.
Jungers is also a director of The AES Corporation,
Donaldson, Lufkin & Jenrette Securities
Corporation, Georgia-Pacific Corporation, Statia
Terminals Group N.V., Thermo Ecotek Corporation,
Thermo Electron and ThermoQuest Corporation.
Earl R. Lewis Mr. Lewis has been chairman of the board and a
director of the Company since August 1997. Mr.
Lewis has been president and chief executive
officer of Thermo Instrument since March 1997 and
January 1998, respectively, and was chief operating
officer of Thermo Instrument from January 1996 to
January 1998. Prior to that time, he was executive
vice president of Thermo Instrument from January
1996 to March 1997, senior vice president of Thermo
Instrument from January 1994 to January 1996, and
vice president of Thermo Instrument from March 1992
to January 1994. Mr. Lewis has been chief operating
officer, measurement and detection, of Thermo
Electron since September 1998. Prior to his
appointment as chief operating officer, Mr. Lewis
served as senior vice president of Thermo Electron
from June 1998 to September
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1998 and vice president from September 1996 to June
1998. Mr. Lewis served as chief executive officer
of Thermo Optek Corporation, a majority-owned
subsidiary of Thermo Instrument from its inception
in August 1995 to January 1998, and served as
president of its predecessor, Thermo Jarrell Ash
Corporation, for more than five years prior to
1995. Mr. Lewis is also a director of FLIR Systems
Inc., Metrika Systems Corporation, SpectRx Inc.,
Spectra-Physics Lasers, Inc., Thermedics Detection
Inc., Thermo Instrument, Thermo BioAnalysis
Corporation, Thermo Optek Corporation and
ThermoQuest Corporation.
William J. Zolner III Dr. Zolner has been the president, chief executive
officer and a director of the Company since August
1997. From 1995 to 1997, Dr. Zolner served as
president of CAC Inc., formerly known as Thermo
Instrument Controls, a wholly owned subsidiary of
Thermo Instrument and one of the predecessor
businesses comprising the Company.
Executive Officers of the Company. The following persons are currently
executive officers of the Company:
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
Dr. William J. Zolner III........... President and Chief Executive Officer
Theo Melas-Kyriazi.................. Chief Financial Officer
C.R. "Neil" Duarte.................. Vice President
B.C. Holstead....................... Vice President
Mark Whitman........................ Vice President
Paul F. Kelleher.................... Chief Accounting Officer
</TABLE>
According to the Offer to Purchase, following consummation of the Offer and
Merger, Thermo Instrument anticipates that the Board of Directors of the
Company will be comprised solely of members of the Company's and Thermo
Instrument's management.
Conflicts of Interest. Certain directors and the executive officers of the
Company have interests in connection with the Offer that present them with
actual or potential conflicts of interest, as summarized herein.
Mr. Beaubien, the sole member of the Special Committee, owns 1,000 Shares.
As discussed below, Mr. Beaubien does not intend to tender the 1,000 shares
which he owns. In addition, Mr. Beaubien has options to acquire 30,000 Shares
at an exercise price of $12.45 per Share which are currently exerciseable.
Officers and directors of the Company who own Shares and tender such Shares
will receive the same offer price on the same terms as set forth in the Offer
to Purchase. As of January 28, 2000, the members of the Board of Directors,
excluding Mr. Beaubien, and executive officers of the Company owned, in the
aggregate, 20,800 Shares. Assuming all the members of the Board of Directors,
except Mr. Beaubien, and all executive officers actually tender their Shares as
they have indicated in the Offer to Purchase, they would receive an aggregate
of $187,200 in exchange for their Shares.
In addition, as of January 28, 2000, the directors, including Mr. Beaubien,
and executive officers of the Company held options to acquire an aggregate of
307,332 Shares. Such options were issued under the Company's Equity Incentive
Plan and have exercise prices ranging from $6.93 to $14.25 per Share. Upon the
acquisition of the Shares and the subsequent Merger, Thermo Electron will
assume the options to acquire Shares and will convert such options into options
to acquire Thermo Electron common stock on the same terms or, in the case of
the vested options, at the selection of the option holder, will pay the option
holder cash for each option equal to the Offer Price less the applicable
exercise price.
Certain directors and certain executive officers of the Company are
directors or officers of Thermo Electron and/or Thermo Instrument. Certain of
such directors and executive officers of the Company hold equity interests in
Thermo Electron and Thermo Instrument. Theo Melas-Kyriazi, the Chief Financial
Officer of
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the Company, is also the Chief Financial Officer of Thermo Electron and Thermo
Instrument. Earl R. Lewis, a director of the Company, is Chief Operating
Officer, Biomedical of Thermo Electron and is President and Chief Executive
Officer of Thermo Instrument. Paul F. Kelleher, the Chief Accounting Officer of
the Company, is also the Chief Accounting Officer of Thermo Electron and Thermo
Instrument. Consequently, certain of these directors and officers receive or
have received compensation not only from the Company but also from Thermo
Electron, Thermo Instrument and their affiliates.
The members of the Boards of Directors of Thermo Electron and Thermo
Instrument own common stock of, or hold options to purchase the common stock
of, Thermo Electron, Thermo Instrument and/or the Company. In addition, certain
members of the Boards of Directors of Thermo Electron and Thermo Instrument are
also officers of the Company. These positions and equity interests present
these directors with actual or potential conflicts of interest in determining
the fairness of the Offer and the Merger to the Public Shareholders. See
Schedule I to the Offer to Purchase, which is Exhibit 6 hereto and incorporated
herein by reference, for a listing of the positions that the members of the
Boards of Directors of Thermo Electron and Thermo Instrument hold with Thermo
Electron, Thermo Instrument and/or the Company and their ownership of the
common stock of Thermo Electron, Thermo Instrument and/or the Company.
Thermo Electron has entered into separate indemnification agreements with
each of the Company's executive officers and directors providing for the
indemnification and advancement of expenses to such person directly by Thermo
Electron in the event that such person, by reason of his or her status as a
director or officer of the Company (or service as a director, officer or
fiduciary of another entity at the request of Thermo Electron), is made or is
threatened to be made party to any threatened, pending or completed action,
suit or other proceeding, whether civil, criminal, administrative or
investigative, if such officer or director acted in good faith and in a manner
believed to be in or not opposed to the best interests of Thermo Electron and,
in the case of a criminal action or proceeding, had no reason to believe his or
her conduct was unlawful.
Certain Compensation Matters; Agreements. Certain contracts, agreements,
arrangements and understandings between the Company or its affiliates and
certain of the Company's executive officers, directors or affiliates are
described at pages 10 through 11 of the Company's Proxy Statement dated April
12, 1999 relating to its 1999 Annual Meeting of Stockholders (the "Proxy
Statement") in the section entitled "Executive Retention Agreements." A copy of
such pages of the Proxy Statement is filed as Exhibit 11 hereto and those
portions of the Proxy Statement are incorporated herein by reference.
In addition to the fees he receives for serving as a director of the
Company, David J. Beaubien, Chairman of the Special Committee, received from
the Company a one time fee of $10,000 for serving on the Special Committee. He
will also receive an attendance fee of $1,000 for each in-person Special
Committee meeting, $500 for each telephonic Special Committee meeting, and
reimbursement for out-of-pocket expenses incurred in connection with his
service on the Special Committee.
Transactions Between the Company and Thermo Electron or Thermo
Instrument. Certain contracts, agreements, arrangements and understandings
between the Company or its affiliates and Thermo Instrument or Thermo Electron
are described on page 46 of the Purchaser's Offer to Purchase, which is Exhibit
6 hereto and incorporated herein by reference.
Material Agreements, Arrangements or Understandings Relating to the Company
and the Offer. Certain contracts, agreements, arrangements and understandings
relating to the Company and the Offer are described at pages 23 and 24 and page
46 of the Purchaser's Offer to Purchase, which is Exhibit 6 hereto and
incorporated herein by reference. Other than as a result of being the subject
of the Purchaser's Offer, the Company is not a party to any of such contracts,
agreements, arrangements and understandings relating to the Company and the
Offer.
Intent to Tender. To the Company's knowledge, after reasonable inquiry, all
directors, except Mr. Beaubien, and all executive officers of the Company
currently intend to tender his or her Shares
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pursuant to the Offer. Mr. Beaubien, the sole member of the Special Committee,
will not tender his 1,000 Shares pursuant to the Offer. To the Company's
knowledge, no other director, executive officer, affiliate or subsidiary of the
Company currently intends to tender his, her or its Shares pursuant to the
Offer.
Item 4. The Solicitation or Recommendation.
Position of the Special Committee.
The Special Committee, whose only member consists of the sole independent
director of the Company, David J. Beaubien, is not making a recommendation, is
expressing no opinion and is remaining neutral with respect to the Offer. The
Special Committee has made no determination whether the Offer is fair to and in
the best interests of the holders of Shares other than Thermo Electron and its
affiliates, including Thermo Instrument and the directors and officers of the
Company (the "Public Shareholders"), and is making no recommendation regarding
whether Public Shareholders should accept the Offer and tender their Shares.
Consequently, the Special Committee strongly urges each Public Shareholder to
make its own decision as to the acceptability of the Purchaser's Offer,
including the adequacy of the Offer Price, based on all of the available
information, including the factors considered by the Special Committee and
described below. As a result of the conflict of interest among the members of
the Company's Board of Directors (other than Mr. Beaubien) and Thermo
Instrument and Thermo Electron, the Board of Directors of the Company has
delegated to the Special Committee the sole and exclusive authority to respond
to the Offer and to recommend for, recommend against or remain neutral and
express no opinion with respect to whether Public Shareholders should accept
the Offer and tender their Shares pursuant to the Offer.
Background; Reasons for the Special Committee's Position.
On January 31, 2000, as part of its overall restructuring plan pursuant to
which it expects to spin in, spin off and sell various businesses to focus
solely on its core measurement and detection instruments business, Thermo
Electron announced that it planned to take private certain of its majority-
owned subsidiaries, including Thermo Instrument and the Company. In particular,
Thermo Electron announced that, through the Purchaser, Thermo Instrument would
make a tender offer for all of the outstanding Publicly Held Shares of the
Company at a price of $9.00 per Share. According to the Offer to Purchase, the
Offer is conditioned upon the Purchaser acquiring a sufficient number of
Publicly Held Shares such that Thermo Electron and its subsidiaries, including
Thermo Instrument, will together own at least 90% of the total outstanding
Shares. As stated in the Offer to Purchase, structuring the transaction as a
tender offer to acquire ownership of at least 90% of the outstanding Shares
permits the Purchaser to cause a merger of the Company and the Purchaser
without any vote of the stockholders of the Company pursuant to the "short-
form" merger provisions of the Delaware General Corporation Law. Pursuant to
such a "short-form" merger, the remaining Public Shareholders also would
receive $9.00 per Share.
As the controlling stockholder of the Company, Thermo Instrument could cause
the Company to call a special meeting of stockholders for the purpose of
seeking the approval of a merger of the Company and the Purchaser, pursuant to
which the Public Shareholders would be paid $9.00 per share. At such meeting
Thermo Electron and its affiliates would have sufficient votes by virtue of
their ownership of Shares to approve such a transaction regardless of how
Public Shareholders vote their Shares. Such a transaction is commonly referred
to as a "long-form" merger because approval of the stockholders is required to
consummate the transaction. As set forth in the Offer to Purchase, Thermo
Instrument has chosen to pursue a tender offer followed by a "short- form"
merger rather than a "long-form" merger in an effort to acquire the Publicly
Held Shares in an expeditious manner and provide the Public Shareholders with
an opportunity to receive the Offer Price promptly. Because Thermo Instrument
and Thermo Electron collectively own approximately 82.3% of the total
outstanding Shares, the Purchaser only needs to acquire an additional 7.7% of
the total outstanding Shares, or approximately 43.5% of the total outstanding
Publicly Held Shares, in order for Thermo Electron and its subsidiaries to own
sufficient Shares to effect a "short-form" merger. According to the Offer to
Purchase, if the Offer is not successful, the Purchaser may make open-market or
privately negotiated purchases of Publicly Held Shares to the extent necessary
in order for Thermo Electron and its subsidiaries, including Thermo Instrument,
collectively to own at least 90% of the total outstanding Shares. For
additional information about
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the terms and conditions of the Offer and the Purchaser's reasons for making
the Offer, the Public Shareholders should read the Offer to Purchase, which has
been mailed to stockholders directly by the Purchaser and has been filed as an
exhibit to the Schedule TO.
As a result of the conflict of interest between the Company and Thermo
Instrument and Thermo Electron by virtue of Thermo Instrument's and Thermo
Electron's control of the Company and its Board of Directors, the Board of
Directors established the Special Committee consisting of the only member of
the Board of Directors having no affiliation with Thermo Instrument or Thermo
Electron. The Special Committee was given the sole and exclusive authority to
respond to the Offer and to either recommend for, recommend against or remain
neutral and express no opinion with respect to whether Public Shareholders
should accept the Offer and tender their Shares pursuant to the Offer. Other
than as described in the preceding sentence, the Special Committee was given no
other authority or responsibilities, and in particular, was not given the
authority to "shop" the Company to prospective third-party purchasers or
explore other strategic alternatives that might enhance or maximize shareholder
value for the Public Shareholders. To assist it in performing its
responsibilities, the Special Committee retained Tucker Anthony Cleary Gull
("Tucker Anthony") as separate independent financial advisor and Goodwin,
Procter & Hoar LLP as separate independent legal counsel. The Special Committee
was familiar with both its legal counsel and financial advisor from a prior
transaction in which such legal counsel and financial advisor had advised the
independent special committee of another of Thermo Instrument's majority-owned
subsidiaries in connection with a similar transaction involving Thermo
Instrument's acquisition of the entire equity ownership of that subsidiary.
Pursuant to the authority granted to it by the Company's Board of Directors,
the Special Committee undertook to determine independently, with the advice of
its legal counsel and financial advisor, the adequacy of the terms of the Offer
and whether to recommend for, recommend against or remain neutral and express
no opinion with respect to the Offer based primarily on the information
furnished to the Special Committee by the Company's management and Thermo
Electron. The Special Committee also reviewed the information concerning the
Offer set forth in the Offer to Purchase and was given access to
representatives of Thermo Electron's and Thermo Instrument's financial
advisors, J.P. Morgan Securities Inc. ("J.P. Morgan") and The Beacon Group
Capital Services, LLC ("The Beacon Group"). After receiving advice from its
legal counsel and financial advisor concerning the adequacy of the Offer, the
Special Committee inquired as to whether Thermo Instrument would consider
increasing the Offer Price, but was informed that Thermo Electron and Thermo
Instrument believed that the terms of the Offer were fair to the Public
Shareholders from a financial point of view and would not engage in any
negotiations concerning the Offer Price. The Special Committee also discussed
with representatives of Thermo Electron the anticipated timing of the Offer and
other administrative matters relating to the Offer. Except as described above,
the Special Committee did not participate in any communications or negotiations
concerning the terms and conditions of the Offer, including the Offer Price,
with the Purchaser, Thermo Instrument or Thermo Electron.
The Special Committee, prior to expressing its neutral position with respect
to the Offer, received advice, opinions, views or presentations from, and
discussed the Offer with the Company's management and Tucker Anthony. As noted
above, the Special Committee also was given access to representatives of J.P.
Morgan and The Beacon Group, with whom Tucker Anthony, after completing its
independent analysis of the fairness from a financial point of view of the
Offer Price, discussed certain matters relating to such analysis. In expressing
its neutral position with respect to the Offer, the Special Committee
considered a number of factors, including, but not limited to, the following:
(i) Business and Prospects. The Special Committee received advice from
Tucker Anthony concerning the Company's historical and current
financial condition and operating results, as well as the future
prospects of the Company, based on discussions with senior management
of the Company. In particular, the Special Committee considered the
following:
. Acquisition-Related Integration Issues. The Special Committee
considered the fact that the Company has acquired a number of
companies during the past three fiscal years. The Special Committee
believes that integrating these companies with the Company's
businesses has required
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substantial management time and resources. The completion of such
integration should permit management to focus its attention on
increasing internal revenue growth and margin improvement. The Special
Committee noted that while historically the Company has achieved
revenue growth principally through acquisitions, management
anticipates, and the Projections provide, that revenue growth in
fiscal years 2000 through 2004 will be generated internally from the
Company's existing businesses. See "Financial Projections" on pages 14
through 17 of this Schedule 14D-9.
. Industry-Related Cyclical Factors. The Special Committee considered
the fact that the Company's products are sold primarily to
participants in process industries, including oil and gas producers,
processors, refiners and distributors. In the last two fiscal years,
customers in the oil and gas industries accounted for well over a
majority of the Company's revenues. Demand for the Company's
products and services within the oil and gas industry is dependent
on the level of capital spending by oil and gas companies for
exploration, production and distribution. The Special Committee
noted that current upward trends in the price of crude oil suggest
that exploration, production and distribution activities by the
Company's oil and gas producing customers are likely to increase,
which may lead to an increased demand for the Company's products and
therefore increased revenues.
. Changes in Operating and Profit Margins. The Special Committee
considered the fact that a decrease in revenues from fiscal 1998 to
fiscal 1999, competitive pressures in several of the Company's
business lines and redundant expenses resulting from businesses
acquired by the Company but not yet fully integrated all contributed
to a lower gross profit margin in fiscal 1999. Recovery from fiscal
1999's lower gross profit margin is dependent on the Company's
ability to reduce expenses, introduce innovative products and
stimulate higher-margin sales within existing business lines.
(ii) Market Information Regarding Publicly Held Shares. The Special
Committee considered historical market prices and trading information
with respect to the Publicly Held Shares and a comparison of these
market prices and trading information with those of selected publicly
held companies operating in industries similar to that of the Company
and the sales, earnings and price to earnings multiples at which the
Publicly Held Shares and the securities of these other companies
trade. See "Opinion of Financial Advisor" below.
(iii) Financial Analysis of Offer Price. The Special Committee considered a
financial analysis of the Offer Price performed by Tucker Anthony
using various methodologies, including a selected comparable public
companies analysis, a selected comparable transactions analysis and a
discounted cash flow analysis. A summary of Tucker Anthony's analysis
appears on pages 9 through 14 of this Schedule 14D-9 under the
section entitled "Opinion of Financial Advisor."
(iv) Market Price Considerations. The Special Committee considered the fact
that the $9.00 per Share Offer Price represents (A) a premium of 16.1%
over $7.75, the closing price of the Publicly Held Shares on the
American Stock Exchange (the "AMEX") one week prior to the public
announcement of the Offer on January 31, 2000, and (B) a premium of
38.5% over $6.50, the closing price of the Publicly Held Shares on the
AMEX four weeks prior to the public announcement of the Offer on
January 31, 2000. The Special Committee also considered the fact that
in its initial public offering in March 1998 the Company sold Shares
to the public at a price of $14.50 per Share. The Company also sold
Shares to certain investors in private placement transactions in
September and October 1997 at a price of $14.25 per share. The Special
Committee noted that the Offer Price represents a discount of 37.9%
and 36.8% to the initial public offering price of $14.50 per Share and
the 1997 private placement price of $14.25 per Share, respectively.
(v) Liquidity and Trading Volume. The Special Committee considered the fact
that historically there has been relatively low trading volume of the
Publicly Held Shares and that tendering Shares in the Offer would
result in immediate liquidity for the Public Shareholders. The Special
Committee believes that the Common Stock is an illiquid security and
that this lack of liquidity has had an
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adverse effect on the trading price of the Publicly Held Shares. In
this regard, the Special Committee noted the limited trading volume of
the Publicly Held Shares on the AMEX, as evidenced by its average
monthly trading volume (approximately 130,000 per month over the twelve
months prior to January 28, 2000, the last trading day prior to the
first public announcement of the Offer) and the limited public float of
such Shares resulting from the majority ownership of the Company by
Thermo Electron and its subsidiaries.
(vi) Fairness Opinion. The Special Committee considered the opinion of
Tucker Anthony, delivered to the Special Committee on March 21, 2000,
that as of such date and based upon and subject to the limitations set
forth therein, the Offer Price of $9.00 per Share to be paid by the
Purchaser to the Public Shareholders was fair, from a financial point
of view, to such holders (a copy of such opinion is attached hereto as
Schedule I to this Schedule 14D-9 and is incorporated herein by
reference).
(vii) Participation in Future Growth. The Special Committee also considered
the fact that Public Shareholders who tender their Shares in the
Offer will be precluded from having the opportunity to participate in
the future growth prospects of the Company. However, the Special
Committee noted that Public Shareholders who tender their shares in
the Offer will not be exposed to the possibility of future declines
in the price at which the Publicly Held Shares trade.
(viii) Inability to Negotiate Offer Price and "Shop" the Company. The
Special Committee considered the fact that Thermo Instrument and
Thermo Electron were not willing to negotiate the Offer Price, did
not "shop" the Company to prospective purchasers and did not
authorize the Special Committee to explore other strategic
alternatives that might enhance or maximize shareholder value for
the Public Shareholders. The Special Committee noted that receiving
actual offers from unaffiliated third parties might have been
another means by which to determine the value of the Publicly Held
Shares. In this regard, the Special Committee also noted that,
according to the Offer to Purchase, in October 1999 Thermo Electron
received a letter from a financial institution expressing an
interest in acquiring 100% of the Company for a per Share price of
$10.00 to $12.00 (which indication of interest was subsequently
reduced to $10.00 per Share).
(ix) Availability of Dissenters' Appraisal Rights. The Special Committee
considered the fact that Public Shareholders who do not tender their
Shares in the Offer will have dissenters' appraisal rights under
Delaware law in connection with the merger of the Company with the
Purchaser. However, Public Shareholders who exercise their appraisal
rights may receive more or less for their Publicly Held Shares than
the Offer Price.
(x) Alternative Squeeze-Out Structures. The Special Committee considered
the fact that Thermo Instrument and Thermo Electron could also have
pursued, and could pursue if the Offer is not successful, a "long-form"
merger pursuant to which they could cause the Company to call a special
meeting of stockholders for the purpose of seeking the approval of a
merger of the Company and the Purchaser, at which meeting Thermo
Electron and its affiliates would have sufficient votes to obtain such
approval. If the Offer is not successful, the Purchaser also may make
open market or privately negotiated purchases of Publicly Held Shares
to the extent necessary in order for Thermo Electron and its
subsidiaries collectively to own at least 90% of the total outstanding
Shares and therefore effect a "short-form" merger.
In view of the variety of factors considered by the Special Committee, the
Special Committee did not find it practicable to and did not assign relative
weights to the factors set forth above. The Special Committee believes that,
based on the particular circumstances of individual Public Shareholders,
certain of the factors described above may have more or less significance than
others. For example, the Special Committee believes
that the Offer presents an opportunity for Public Shareholders to achieve
immediate liquidity for their Shares where there is otherwise a relatively
illiquid trading market. If a Public Shareholder desires immediate liquidity
for its Shares, then such holder should consider accepting the Offer and
tendering its Shares. On the other hand, a Public Shareholder who purchased
Shares in the Company's initial public offering or 1997 private placements may
conclude that the Offer Price is inadequate in view of the Company's future
prospects for growth and the
8
<PAGE>
discount that the Offer Price represents to the initial public offering and
private placement Share prices. As such, the Special Committee urges each
Public Shareholder to make its own decision as to the acceptability of the
Purchaser's Offer, including the adequacy of the Offer Price, based on all of
the available information, including the factors considered by the Special
Committee described above.
In analyzing the Offer, the Special Committee was assisted and advised by
representatives of Tucker Anthony and the Special Committee's legal counsel,
who reviewed various financial, legal and other considerations. The full text
of the written opinion of Tucker Anthony, setting forth the procedures
followed, the matters considered, the scope of the review undertaken and the
assumptions made by Tucker Anthony in arriving at its opinion, is attached as
Schedule I to this Schedule 14D-9 and is incorporated herein by reference.
Public Shareholders are urged to, and should, read such opinion carefully and
in its entirety. The opinion was provided for the information and assistance of
the Special Committee in connection with its consideration of the Offer. Such
opinion addresses only the fairness, from a financial point of view, of the
Offer Price to the Public Shareholders and does not constitute a recommendation
to any such holder as to whether or not to tender Publicly Held Shares in the
Offer.
This Schedule 14D-9 and the documents which are incorporated by reference
herein include certain forward-looking statements. For this purpose, any
statements 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.
Forward-looking statements are based on the intentions, beliefs and current
expectations of the Company and involve risks and uncertainties. Actual results
could vary materially from projections.
Opinion of Financial Advisor.
The Special Committee retained Tucker Anthony to act as its financial
advisor and to render an opinion to the Special Committee as to the fairness,
from a financial point of view, of the Offer Price to be received by the Public
Shareholders who tender their Shares pursuant to the Offer.
The Special Committee selected Tucker Anthony for a number of reasons,
including its knowledge of the instrumentation segment of the technology
industry and its experience and reputation in the area of valuation and
financial advisory work generally, and in relation to transactions of the size
and nature of the proposed transaction specifically. Tucker Anthony is a
nationally recognized investment banking firm and is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings, private placements
and valuations for corporate and other purposes. From time to time, Tucker
Anthony and its affiliates may hold long or short positions in the Common
Stock, the common stock of Thermo Electron or the common stock of Thermo
Instrument.
Tucker Anthony rendered its written opinion to the Special Committee on
March 21, 2000, to the effect that, as of that date, the Offer Price to be
received by the Public Shareholders pursuant to the Offer was fair, from a
financial point of view, to the Public Shareholders. Tucker Anthony has not
been requested to, and will not, update its opinion unless the Special
Committee requests such an update. The Special Committee has advised Tucker
Anthony that it will not seek an update to the fairness opinion unless:
. there is a material modification to the terms of the proposed
consideration or other material amendment to the Offer that the Special
Committee determines would be reasonably likely to impact the overall
fairness of the Offer to the Public Shareholders; or
. a material event occurs that the Special Committee determines would be
reasonably likely to affect Tucker Anthony's opinion if the opinion were
reissued taking into account such event.
The Special Committee has informed Tucker Anthony that, as of the date of
this Schedule 14D-9, there has been no change in the terms of the proposed
consideration and there has been no material event that the Special Committee
believes would be reasonably likely to affect Tucker Anthony's opinion since
Tucker Anthony rendered such opinion.
9
<PAGE>
The full text of the written opinion of Tucker Anthony dated March 21, 2000,
which sets forth the assumptions made, general procedures followed, matters
considered and limitations on the scope of review undertaken by Tucker Anthony
in rendering its opinion, is attached as Schedule I to this Schedule 14D-9 and
is incorporated herein by reference. The Tucker Anthony opinion is directed to
the Special Committee and relates only to the fairness, from a financial point
of view, of the Offer Price to be received by the Public Shareholders pursuant
to the Offer, and does not constitute a recommendation to any of the Public
Shareholders as to whether or not they should accept the Offer and tender their
Shares. The summary of Tucker Anthony's opinion set forth below is qualified in
its entirety by reference to the full text of the written opinion attached
hereto as Schedule I. Public Shareholders are urged to read the entire opinion
carefully.
In conducting its investigation and analysis and in arriving at its opinion,
Tucker Anthony reviewed such information and took into account such financial
and economic factors as it deemed relevant and material under the
circumstances. The material actions Tucker Anthony undertook in its analysis
were as follows:
. reviewed internal financial information (including certain financial
projections, as described below) concerning the business and operations
of the Company that was furnished to Tucker Anthony by the Company's
management for purposes of its analysis, as well as publicly available
information, including but not limited to the Company's recent filings
with the Commission;
. reviewed the Offer to Purchase;
. compared the historical market prices and trading activity of the Common
Stock of the Company with those of other publicly traded companies that
Tucker Anthony deemed relevant;
. compared the financial position and operating results of the Company with
those of other publicly traded companies that Tucker Anthony deemed
relevant;
. compared the proposed financial terms of the Offer with the financial
terms of other merger and acquisition transactions that Tucker Anthony
deemed relevant; and
. held discussions with members of the Company's senior management
concerning the Company's historical and current financial condition and
operating results, as well as the future prospects of the Company.
Tucker Anthony also reviewed relevant industry market research studies,
company research reports and key economic and market indicators, including
interest rates, inflation rates, consumer spending levels, manufacturing
productivity levels, crude oil price levels, unemployment rates and general
stock market performance. Other than as set forth above, Tucker Anthony did not
review any additional information in preparing its opinion that, independently,
was material to its analysis. As a part of its engagement, Tucker Anthony was
not requested to, and did not, solicit third party indications of interest in
acquiring the Company. The Special Committee did not place any limitation upon
Tucker Anthony with respect to the procedures followed or factors considered by
Tucker Anthony in rendering its opinion.
In arriving at its opinion, Tucker Anthony assumed and relied upon the
accuracy and completeness of all of the financial and other information that
was publicly available or provided to Tucker Anthony by, or on behalf of, the
Company and did not independently verify that information. Tucker Anthony
assumed, with the Special Committee's consent, that:
. all material assets and liabilities (contingent or otherwise, known or
unknown) of the Company are as set forth in its financial statements;
. obtaining all regulatory and other approvals and third party consents
required for consummation of the proposed Offer to Purchase would not
have a material effect on the anticipated benefits of the transaction;
and
10
<PAGE>
. the Offer would be consummated in accordance with the terms set forth in
the Offer to Purchase without any amendment thereto and without waiver by
the Purchaser or Thermo Instrument of any of the conditions to their
respective obligations thereunder.
In performing its analysis, Tucker Anthony was given access to and relied
upon financial projections for fiscal 2000, 2001, 2002, 2003 and 2004, as well
as unaudited historical information for fiscal 1999 (the "Projections"). Tucker
Anthony assumed that the Projections were reasonably prepared based upon the
best available estimates and good faith judgments of the Company's senior
management as to the future performance of the Company. For information
concerning the Projections, see "Financial Projections" below on pages 14
through 17.
In conducting its review, Tucker Anthony did not obtain an independent
evaluation or appraisal of any of the assets or liabilities (contingent or
otherwise) of the Company. Tucker Anthony's opinion did not predict or take
into account any possible economic, monetary or other changes that may occur,
or information that may become available, after the date of its written
opinion.
Summary of Analyses. The following is a summary of the material financial
analyses performed by Tucker Anthony in connection with rendering its opinion.
Analysis of Historical Trading Prices. Tucker Anthony reviewed the Company's
historical trading prices for the three months, six months and twelve months
preceding the announcement of the Offer on January 31, 2000, as follows:
<TABLE>
<CAPTION>
Stock Price During
Period
--------------------
Trading Weighted
Period Volume Average Low High
------- ------ -------- ----- -----
<S> <C> <C> <C> <C>
Three Months........................... 660,600 shares $6.07 $5.00 $8.75
Six Months............................. 994,600 shares $5.74 $4.50 $8.75
Twelve Months.......................... 1,518,100 shares $5.93 $4.50 $8.75
</TABLE>
Tucker Anthony compared these historical stock prices to the Offer Price of
$9.00. Tucker Anthony noted for all periods the high price of $8.75 was reached
on January 28, 2000 the last trading day preceding the announcement of the
Offer.
Analysis of the Company's Valuation Premium. Tucker Anthony compared the
premium to be received by the Public Shareholders as represented by the Offer
Price of $9.00 per share in cash to the closing price of the Common Stock four
weeks prior to the January 31, 2000 date of the announcement of the Offer.
. Tucker Anthony calculated that the Offer Price of $9.00 per share
represented a premium of 38.5% over the closing price of $6.50 for the
Common Stock on January 3, 2000, four weeks prior to the date of the
announcement of the Offer.
Tucker Anthony reviewed comparable transactions in the following categories:
(i) 31 acquisitions between January 1, 1994 and March 10, 2000 of a minority
interest (ranging from 10.0% to 29.5%) in a public company that remained a
public company following the transaction; and (ii) 14 acquisitions between
January 1, 1994 and March 10, 2000 of a remaining minority interest (ranging
from 8.0% to 35.1%) in a public company that went private as a result of the
transaction. Tucker Anthony noted that the transaction contemplated by the
Offer represents a 17.6% remaining minority interest transaction. Tucker
Anthony further noted that an acquisition of a minority interest or a remaining
minority interest differs from an acquisition of a 100% interest. In a 100%
interest acquisition, the acquiring company purchases control of the subject
company and, therefore, the financial terms of the transaction reflect a
control premium. The acquisition of a minority interest in, or the remaining
minority interest of, a public company does not generally involve a control
premium. However, unlike a transaction involving the acquisition of a minority
interest, in a transaction involving the acquisition of a remaining minority
interest, stockholders do not have the alternative to retain their publicly
traded stock in
11
<PAGE>
the subject company. Accordingly, premiums paid in remaining interest
transactions generally are greater than premiums paid in minority interest
transactions. Tucker Anthony's analysis produced the following adjusted mean
premiums (the adjusted mean excludes the high and low values in calculating the
average) over the four-weeks-prior stock price in the comparable transactions
as compared to the 38.5% premium in the transaction contemplated by the Offer:
. the adjusted mean premium over the stock price four weeks prior to the
announcement of the 31 acquisitions of a minority interest in a public
company was 12.8%, with a range of 1.6% to 30.1%; and
. the adjusted mean premium over the stock price four weeks prior to the
announcement of the 14 remaining minority interest transactions was
21.2%, with a range of 1.1% to 62.0%. Tucker Anthony again noted that
these transactions are most comparable to the transaction contemplated by
the Offer.
Analysis of Selected Publicly Traded Companies Comparable to the
Company. Tucker Anthony reviewed publicly available financial information as of
the most recently reported period and stock market information as of March 10,
2000 for publicly traded companies that Tucker Anthony deemed relevant to the
Company's business. For each comparable, Tucker Anthony calculated multiples of
enterprise value to the latest twelve months ("LTM") earnings before interest
and taxes ("EBIT"), LTM earnings before interest, taxes, depreciation and
amortization ("EBITDA") and LTM Revenues. Tucker Anthony then calculated the
implied gross enterprise value for the Company based on the adjusted mean of
these comparable group multiples combined with data for the Company for the LTM
period ending January 1, 2000; Tucker Anthony compared the financial
characteristics of the Company to the following companies:
1.AMETEK Incorporated 6.NATCO Group Inc.
2.Badger Meter, Inc. 7.Roper Industries
3.Cooper Cameron Corp. 8.Roxboro Group plc
4.Isco, Inc. 9.TSI Incorporated
5.Lufkin Industries, Inc.
The following table sets forth the calculation of implied gross enterprise
values for the Company:
<TABLE>
<CAPTION>
Company Comparable Implied Gross
Financial Data Group Multiples Enterprise Values
-------------- --------------- -----------------
(In thousands) (In thousands)
<S> <C> <C> <C>
LTM EBIT.................... $ 2,663 9.7x $ 25,900
LTM EBITDA.................. $ 6,925 8.2x $ 56,564
LTM Revenues................ $139,969 1.1x $155,018
</TABLE>
Tucker Anthony then calculated the implied equity value per share of the
Company based on the above aggregate implied gross enterprise values by adding
the cash balance ($41,946,000) and subtracting the amount of outstanding debt
($1,444,000) of the Company, each as of January 1, 2000. The resulting amounts
were then divided by the number of outstanding shares of Common Stock as of
January 1, 2000 and shares added as the result of the anticipated exercise of
options. These calculations produced per share values equal to $4.54, $6.63 and
$13.36, based upon multiples of LTM EBIT, LTM EBITDA and LTM Revenues,
respectively. Tucker Anthony compared these amounts to the Company's four-
weeks-prior stock price of $6.50 and the Offer Price of $9.00 per share.
Analysis of Selected Comparable 100% Acquisition Transactions. Tucker
Anthony reviewed 24 transactions that Tucker Anthony deemed relevant. The
transactions were 100% acquisitions and were chosen based on a review of
acquired companies that possessed general business, operating and financial
characteristics representative of companies in the industry in which the
Company operates. Tucker Anthony noted that none of the selected transactions
reviewed were identical to the proposed transaction and that, accordingly, the
analysis of comparable transactions necessarily involves complex consideration
and judgments
12
<PAGE>
concerning differences in financial and operating characteristics of the
Company and other factors that would affect the acquisition value of comparable
transactions including, among others, the general market conditions prevailing
in the equity capital markets at the time of such transactions.
For each comparable transaction, Tucker Anthony calculated multiples of
enterprise value to LTM EBIT, LTM EBITDA and LTM Revenues. Tucker Anthony then
calculated the implied gross enterprise value of the Company based upon the
adjusted mean of these multiples. Tucker Anthony calculated the implied equity
value per share by adding the cash balance ($41,946,000) and subtracting the
amount of outstanding debt ($1,444,000) of the Company, each as of January 1,
2000. The resulting amounts were divided by the number of outstanding shares of
Common Stock as of January 1, 2000 and shares added as the result of the
anticipated exercise of options. These calculations produced per share values
of $4.83, $7.15 and $13.20 based upon the Company's LTM EBIT, LTM EBITDA and
LTM Revenues for the twelve months ending January 1, 2000, respectively. While
Tucker Anthony noted that values associated with 100% acquisitions differed
from those in a remaining minority interest acquisition such as the transaction
contemplated by the Offer, Tucker Anthony compared these per share values to
the Offer Price of $9.00 per share.
Discounted Cash Flow Analysis. Tucker Anthony performed a discounted cash
flow ("DCF") analysis of the Company using the Projections which cover fiscal
years 2000 through 2004 (see "Financial Projections" below for information
concerning the Projections), without taking into account any potential cost
savings and efficiencies that may be realized following the consummation of the
transaction contemplated by the Offer. In such analysis, Tucker Anthony assumed
terminal value multiples of 9.8x to 11.8x EBIT in the year 2004 and discount
rates of 16% to 18%. Selection of an appropriate discount rate is an inherently
subjective process and is affected by numerous factors. The discount rates used
by Tucker Anthony were selected based upon its calculation of the Company's
weighted average cost of capital. This DCF analysis produced present values of
the Common Stock ranging from $11.31 to $13.44 per share.
Tucker Anthony compared the Projections, together with the associated
assumptions, to the Company's actual historical results. Tucker Anthony also
compared the Company's operating budget for 1999 with its actual unaudited
results for 1999. Tucker Anthony noted that the projected internal revenue
growth and profit margins were substantially greater than those actually
realized in historical periods. As a result, Tucker Anthony prepared two
additional analyses (i.e. revised projection cases) taking into account the
possibility that the Company may only be able to attain a revenue growth rate
in future years following 2000 of 4% and 2%, respectively, compared to
historical internal growth rates (excluding acquisitions, since the Projections
assume no revenue growth from acquisitions) of 7.0% in 1997, -1.3% in 1998 and
- -13.0% in 1999, with a mean over the period (1997-1999) of -2.4%. The
management case assumed a mean projected growth rate of 6.5% from 2001 to 2004.
In addition, Tucker Anthony adjusted gross margins by fixing the gross margin
at 39.5% for projected years 2001 to 2004 in both revised projection cases to
conform with historical levels of 39.5% in 1995, 37.4% in 1996, 40.7% in 1997,
39.4% in 1998 and 34.7% in 1999 with a mean over the period (1995-1999) of
38.3%. Tucker Anthony took a similar approach with EBIT and EBITDA margins by
fixing them at 8.5% and 11.0%, respectively, for the projected periods of 2001
to 2004. EBIT margins were 8.5% in 1995 and 1996, 11.9% in 1997, 8.1% in 1998
and 1.9% in 1999 with a mean over the period (1995-1999) of 7.8%. EBITDA
margins were 11.1% in 1995, 11.2% in 1996, 14.5% in 1997, 11.0% in 1998 and
4.9% in 1999 with a mean over the period (1995-1999) of 10.5%. These two
revised projection cases produced present values of the Common Stock ranging
from $8.25 to $9.98.
Tucker Anthony noted that the per share present values in its DCF analysis
represented values attributable to a 100% acquisition. As such, these values
included a control premium that was not comparable to this remaining minority
interest transaction. While Tucker Anthony compared the above present values
per share to the Offer Price ($9.00 per share), it did so only with reference
to this context.
The foregoing summary does not purport to be a complete description of the
analyses performed by Tucker Anthony. The preparation of a fairness opinion is
a complex process and is not susceptible to partial analysis or summary
description. Tucker Anthony believes that its analyses must be considered as a
whole, and
13
<PAGE>
that selecting portions of such analysis without considering all analyses and
factors, would create an incomplete view of the processes underlying its
opinion. Tucker Anthony did not attempt to assign specific weights to
particular analyses. However, there were no specific factors reviewed by Tucker
Anthony that did not support its opinion. Any estimates contained in Tucker
Anthony's analyses are not necessarily indicative of actual values, which may
be significantly more or less favorable than as set forth therein. Estimates of
values of companies do not purport to be appraisals or necessarily to reflect
the prices at which companies may actually be sold. Because such estimates are
inherently subject to uncertainty, Tucker Anthony does not assume
responsibility for their accuracy.
Pursuant to the terms of Tucker Anthony's engagement letter dated February
16, 2000 with the Special Committee, the Company paid Tucker Anthony a retainer
fee of $75,000 and a fee of $120,000 for the preparation and delivery of its
written fairness opinion dated March 21, 2000 (which fee was payable regardless
of the conclusions expressed therein). In addition, the Company has agreed to
pay Tucker Anthony an additional $25,000 upon delivery of any updated fairness
opinion if required by a material change to the Offer. The Company has also
agreed to reimburse Tucker Anthony up to $15,000 for its out-of-pocket
expenses, including the reasonable fees and disbursements of its counsel,
arising in connection with its engagement, and to indemnify Tucker Anthony, its
affiliates and their respective directors, officers, employees and agents to
the fullest extent permitted by law against certain liabilities, including
liabilities under the federal securities laws, relating to or arising out of
its engagement, except for liabilities found to have resulted from the bad
faith, gross negligence or intentional or reckless misconduct of Tucker
Anthony.
In the past, Tucker Anthony has not performed investment banking services
for the Company or received any compensation from the Company, other than as
provided for in the engagement letter. Additionally, it has been over eight
years since Tucker Anthony has provided any investment banking services to
Thermo Electron. In May 1999, Tucker Anthony rendered an opinion (and was paid
a fee of $225,000 for such opinion) to the Special Committee of the Board of
Directors of ThermoSpectra Corporation as to the fairness from a financial
point of view, of the consideration to be received by the minority shareholders
of ThermoSpectra Corporation pursuant to a proposed merger by and between
ThermoSpectra and Thermo Instrument. Tucker Anthony is also presently engaged
in providing fairness opinions to the Special Committees of both Thermo
BioAnalysis Corporation and Metrika Systems Corporation, both affiliates of
Thermo Instrument, regarding similar transactions as the transaction
contemplated by the Offer. Tucker Anthony will receive a fee similar to that
described in the preceding paragraph for its services in both the proposed
Thermo BioAnalysis Corporation and Metrika Systems Corporation transactions.
Financial Projections.
The Company does not, as a matter of course, make public forecasts or
projections as to future sales, earnings or other income statement data, cash
flows or balance sheet and financial position information. However, the Special
Committee had access to the Projections and made the Projections available to
Tucker Anthony.
The following summary of the Projections is included in this Schedule 14D-9
because the Projections were made available to the Special Committee and Tucker
Anthony. The Projections do not reflect any of the effects of the transaction
contemplated by the Offer or other changes that may in the future affect the
Company and its assets, business, operations, properties, policies, corporate
structure, capitalization and management in light of the circumstances then
existing.
To the Special Committee's knowledge, the Projections were not prepared with
a view toward public disclosure or compliance with published guidelines of the
Commission or the American Institute of Certified Public Accountants regarding
forward-looking information or generally accepted accounting principles. To the
Special Committee's knowledge, neither the Company's independent auditors, nor
any other independent accountants, have compiled, examined or performed any
procedures with respect to the prospective financial information contained in
the Projections nor have they expressed any opinion or given any form of
assurance with respect to such information or its achievability. Furthermore,
the Projections necessarily make numerous
14
<PAGE>
assumptions, many of which are beyond the control of the Company and may prove
not to have been, or may no longer be, accurate. Additionally, this
information, except as otherwise indicated, does not reflect revised prospects
for the Company's businesses, changes in general business and economic
conditions, or any other transaction or event that has occurred or that may
occur and that was not anticipated at the time such information was prepared.
Accordingly, such information is not necessarily indicative of current values
or future performance, which may be significantly more favorable or less
favorable than as set forth below, and should not be regarded as a
representation that they will be achieved.
THE PROJECTIONS ARE NOT GUARANTEES OF PERFORMANCE. THEY INVOLVE RISKS,
UNCERTAINTIES AND ASSUMPTIONS. THE FUTURE FINANCIAL RESULTS AND SHAREHOLDER
VALUE OF THE COMPANY MAY MATERIALLY DIFFER FROM THOSE EXPRESSED IN THE
PROJECTIONS. MANY OF THE FACTORS THAT WILL DETERMINE THESE RESULTS AND VALUES
ARE BEYOND THE COMPANY'S ABILITY TO CONTROL OR PREDICT. SHAREHOLDERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE PROJECTIONS. THERE CAN BE NO
ASSURANCE THAT THE PROJECTIONS WILL BE REALIZED OR THAT THE COMPANY'S FUTURE
FINANCIAL RESULTS WILL NOT MATERIALLY VARY FROM THE PROJECTIONS. THE COMPANY
DOES NOT INTEND TO UPDATE OR REVISE THE PROJECTIONS.
The Projections also include, for comparison purposes, certain selected
historical consolidated financial information with respect to the Company and
its subsidiaries excerpted or derived from the audited historical consolidated
financial statements contained in the Company's Annual Report on Form 10-K for
its fiscal year ended January 2, 1999. The selected historical consolidated
financial information with respect to the fiscal year ended January 1, 2000 was
furnished to the Special Committee by the Company's management and is
unaudited. Certain of the selected historical consolidated financial
information with respect to the fiscal year ended January 1, 2000 was publicly
released by the Company on February 22, 2000. Full financial statements
reflecting such information have not yet been filed with the Commission. More
comprehensive historical financial information is included for fiscal periods
ending on or prior to October 2, 1999 in the Company's Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q (the "Company Reports") and in other
documents filed by the Company with the Commission, and the following
historical financial information for such periods is qualified in its entirety
by reference to the Company Reports and other documents and all of the
financial information (including any related notes) contained therein or
incorporated therein by reference.
15
<PAGE>
Selected Consolidated Historical and Projected Financial Statements
(in thousands)
<TABLE>
<CAPTION>
Historical Projected
---------------------------------------------- ------------------------------------------------
Income Statement Data 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
--------------------- ------- ------- -------- -------- -------- -------- -------- -------- -------- --------
unaudited
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $72,105 $95,316 $121,525 $153,653 $139,969 $140,429 $148,693 $159,613 $169,511 $180,683
Existing Growth %...... NA NA 7.0% (1.3%) (13.0%) 0.3% 5.9% 7.3% 6.2% 6.6%
Acquisition Growth %... NA NA 20.5% 27.7% 4.1% 0.0% 0.0% 0.0% 0.0% 0.0%
% increase in Revenues.. NA 32.2% 27.5% 26.4% (8.9%) 0.3% 5.9% 7.3% 6.2% 6.6%
Cost of Revenues........ 43,636 59,715 72,006 93,082 91,353 85,244 87,734 92,255 96,777 102,377
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Gross Profit............ $28,469 $35,601 $ 49,519 $ 60,571 $ 48,616 $ 55,186 $ 60,960 $ 67,358 $ 72,734 $ 78,305
Gross Profit%........... 39.5% 37.4% 40.7% 39.4% 34.7% 39.3% 41.0% 42.2% 42.9% 43.3%
Operating Expenses:
Research & Development
expenses............... 5,042 5,568 6,830 9,232 9,776 10,049 11,240 12,217 12,360 13,425
Selling, General &
Administrative
Expenses............... 17,310 21,935 28,201 38,870 36,177 35,921 37,223 39,099 40,772 42,861
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total Operating
Expenses.............. $22,352 $27,503 $ 35,031 $ 48,102 $ 45,953 $ 45,970 $ 48,463 $ 51,316 $ 53,132 $ 56,286
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings Before Interest
and Taxes(1)........... 6,117 8,098 14,488 12,469 2,663 9,216 12,497 16,042 19,602 22,019
EBIT Margin............. 8.5% 8.5% 11.9% 8.1% 1.9% 6.6% 8.4% 10.1% 11.6% 12.2%
Interest Income......... -- -- 344 1,990 1,783 2,200 2,700 3,300 4,000 4,750
Interest (Expense)...... -- -- (113) (332) (183) (183) (183) (183) (183) (183)
Other Expense, Net...... -- -- -- -- -- (117) -- -- -- --
Restructuring Costs..... -- -- -- (905) (369) -- -- -- -- --
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total Other Income
(Expense)............. -- -- 231 753 1,231 1,900 2,517 3,117 3,817 4,567
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Income Before Taxes..... 6,117 8,098 14,719 13,222 3,894 11,116 15,014 19,159 23,419 26,586
Provisions (Credit) for
Income Taxes........... 2,490 3,240 5,920 5,222 1,575 4,437 5,930 7,568 9,251 10,501
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Net Income.............. $ 3,627 $ 4,858 $ 8,799 $ 8,000 $ 2,319 $ 6,679 $ 9,083 $ 11,591 $ 14,169 $ 16,085
======= ======= ======== ======== ======== ======== ======== ======== ======== ========
Depreciation and
Amortization........... 1,909 2,530 3,172 4,406 4,262 4,011 3,777 3,789 3,799 3,813
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
EBITDA(2)............... $ 8,026 $10,628 $ 17,660 $ 16,875 $ 6,925 $ 13,227 $ 16,274 $ 19,831 $ 23,401 $ 25,832
======= ======= ======== ======== ======== ======== ======== ======== ======== ========
EBITDA Margin........... 11.1% 11.2% 14.5% 11.0% 4.9% 9.4% 10.9% 12.4% 13.8% 14.3%
</TABLE>
- -------
(1) EBIT represents earnings before interest and taxes and is derived from the
income statement data.
(2) EBITDA represents earnings before interest, taxes, depreciation and
amortization. EBITDA is presented because it is frequently used by
securities analysts, investors and other interested parties in the
evaluation of companies. Other companies may calculate EBITDA differently
than the Company. EBITDA is not a measurement of financial performance
under generally accepted accounting principles and should not be considered
as an alternative to cash flow from operating activities or as a measure of
liquidity or as an alternative to net income as indicators of the Company's
operating performance or any other measure of performance derived in
accordance with generally accepted accounting principles.
16
<PAGE>
<TABLE>
<CAPTION>
Historical Projected
----------------------------------- ------------------------------------------------
Balance Sheet Data 1996 1997 1998 1999 2000 2001 2002 2003 2004
------------------ ------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and Cash
Equivalents........... $ 2,386 $ 24,960 $ 33,373 $ 6,067 $ 50,858 $ 59,615 $ 70,114 $ 83,424 $ 98,063
Due from affiliated
companies............. 342 -- -- 35,879 -- -- -- -- --
Accounts receivable.... 26,862 32,583 34,476 33,761 33,872 35,865 38,499 40,887 43,581
Inventories............ 20,130 32,932 32,000 28,782 26,857 27,641 29,066 30,490 32,255
Prepaid expenses....... 778 1,032 1,241 1,124 1,127 1,194 1,281 1,361 1,450
Deferred tax asset..... 2,047 3,531 4,772 4,623 4,638 4,911 5,272 5,599 5,968
------- -------- -------- -------- -------- -------- -------- -------- --------
52,545 95,038 105,862 110,235 117,352 129,226 144,232 161,761 181,317
Property and equipment,
at Cost, Net.......... 6,425 9,145 10,136 11,080 10,980 10,880 10,780 10,680 10,580
Other Assets........... 185 87 302 284 266 248 230 212 194
Cost in Excess of Net
Assets of Acquired
Companies............. 37,855 55,439 64,278 61,441 60,441 59,441 58,441 57,441 56,441
------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL ASSETS........... $97,010 $159,709 $180,578 $183,041 $189,040 $199,796 $213,684 $230,094 $248,533
======= ======== ======== ======== ======== ======== ======== ======== ========
CURRENT LIABILITIES
Revolver............... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Payable to affiliated
companies............. -- 19,508 1,281 1,031 -- -- -- -- --
Accounts payable....... 9,497 12,775 10,425 15,188 14,172 14,586 15,338 16,090 17,021
Accrued payroll and
employee benefits..... 3,861 3,811 3,981 3,995 3,967 4,111 4,318 4,502 4,733
Accrued income taxes... 800 3,455 1,262 1,430 2,196 2,936 3,746 4,579 5,198
Accrued installation
and warranty
expenses.............. 1,093 1,583 1,294 1,055 1,219 1,291 1,386 1,472 1,569
Deferred revenue....... 597 3,624 5,429 900 903 956 1,026 1,090 1,162
Other accrued
expenses.............. 6,824 8,335 7,347 6,984 6,935 7,186 7,548 7,871 8,274
------- -------- -------- -------- -------- -------- -------- -------- --------
22,672 53,091 31,019 30,583 29,392 31,065 33,362 35,604 37,957
Long Term Obligations
Notes Payable to Bank.. -- -- -- 1,444 1,444 1,444 1,444 1,444 1,444
Deferred income taxes
and other deferred
items.................. 1,228 1,680 3,012 3,093 3,093 3,093 3,093 3,093 3,093
Total Liabilities...... 23,900 54,771 34,031 35,121 33,930 35,603 37,900 40,142 42,495
STOCKHOLDERS' EQUITY
Common Stock........... -- 123 156 156 156 156 156 156 156
Capital in excess of
par value............. -- 100,966 144,752 144,800 144,800 144,800 144,800 144,800 144,800
Retained earnings...... -- 3,150 11,150 13,469 20,147 29,231 40,821 54,990 71,075
Net parent company
investments........... 72,437 -- -- -- -- -- -- -- --
Treasury stock at cost,
1,255,783 shares in
1998.................. -- -- (9,995) (9,993) (9,993) (9,993) (9,993) (9,993) (9,993)
Cumulative translation
adjustment............ 673 699 484 (511) -- -- -- -- --
------- -------- -------- -------- -------- -------- -------- -------- --------
Total Stockholders'
equity................ 73,110 104,938 146,547 147,920 155,110 164,193 175,784 189,952 206,038
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY.. $97,010 $159,709 $180,578 $183,041 $189,040 $199,796 $213,684 $230,094 $248,533
======= ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
Item 5. Persons/Assets Retained, Employed, Compensated or Used.
The Special Committee entered into a letter agreement with Tucker Anthony
dated as of February 16, 2000 (the "Engagement Letter"), pursuant to which the
Special Committee engaged Tucker Anthony to act as its financial advisor in
connection with the Offer. Subject to the terms and conditions of the
Engagement Letter, Tucker Anthony agreed to act as a financial advisor to the
Special Committee and render an opinion to the Special Committee with regard to
the fairness, from a financial point of view, to the Public Shareholders of the
Offer Price. In connection with the Engagement Letter, the Company agreed to
pay Tucker Anthony an aggregate fee of $195,000, $75,000 of which was paid upon
the execution of the Engagement Letter and the balance of which was paid upon
the delivery by
17
<PAGE>
Tucker Anthony of the fairness opinion. In addition, the Company has agreed to
reimburse Tucker Anthony up to $15,000 for its reasonable out-of-pocket
expenses incurred in connection with its engagement and to indemnify Tucker
Anthony against certain liabilities incurred in connection with its
engagement, including liabilities under federal securities laws.
The Special Committee also retained Goodwin, Procter & Hoar LLP to act as
the legal advisor to the Special Committee in connection with the Offer.
Except as disclosed herein, neither the Company nor any person acting on
its behalf currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to holders of Shares on the Company's
behalf concerning the Offer.
Item 6. Interest in Securities of the Subject Company.
During the past 60 days no transaction in the Shares has been effected by
the Company, or to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company.
Item 7. Purposes of the Transaction and Plans or Proposals.
(a) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by the Company in response to the Offer which
relate to a tender offer or other acquisition of the Company's securities by
the Company, any subsidiary of the Company or any other person.
(b) Except as set forth in Items 3 and 4 above, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result
in (i) an extraordinary transaction such as a merger or reorganization
involving the Company or any subsidiary of the Company; (ii) a purchase, sale
or transfer of a material amount of assets by the Company or any subsidiary of
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present capitalization,
indebtedness or dividend rate or policy of the Company.
(c) Except as set forth in Items 3 and 4 above, there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Offer which relate to or would result in one or more of the events
referred to in this Item 7.
Item 8. Additional Information.
The information contained in the Exhibits referred to in Item 9 below is
incorporated herein by reference.
18
<PAGE>
Item 9. Exhibits.
<TABLE>
<C> <S>
Exhibit 1 Press release issued by Thermo Instrument on January 31, 2000
(incorporated by reference to Exhibit 99 to the Current Report on
Form 8-K of Thermo Instrument filed with the Commission on February
1, 2000)
Exhibit 2 Press release issued by the Company on January 31, 2000 (previously
filed)
Exhibit 3 Press release of Thermo Electron issued on March 6, 2000
(incorporated by reference to Exhibit 12(a)(1) to the Purchaser's
Schedule TO dated March 13, 2000)
Exhibit 4 Press release of Thermo Instrument issued on March 13, 2000
(incorporated by reference to Exhibit 12(a)(11) to the Purchaser's
Schedule TO dated March 13, 2000)
Exhibit 5 Press release issued by the Company on March 24, 2000
Exhibit 6 Offer to Purchase by the Purchaser filed with the Commission on
March 13, 2000 (incorporated by reference to Exhibit 12(a)(1) to
the Purchaser's Schedule TO dated March 13, 2000)
Exhibit 7 Letter to Stockholders dated March 24, 2000*
Exhibit 8 Opinion of Tucker Anthony Cleary Gull (included as Schedule I to
this Schedule 14D-9)*
Exhibit 9 Form of Indemnification Agreement by and between the Company and
directors of the Company (incorporated by reference to Exhibit
10.10 of the Company's Registration Statement on Form S-1 (File No.
333-45333))
Exhibit 10 Form of Indemnification Agreement by and between Thermo Electron
and directors of the Company (incorporated by reference to Exhibit
10.8 of the Company's Registration Statement on Form S-1 (File No.
333-45333))
Exhibit 11 Selected Sections of the Company's Proxy Statement Relating to its
1999 Annual Meeting of Stockholders
</TABLE>
- --------
* Included in materials being distributed by the Company to stockholders of the
Company.
19
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 24, 2000
ONIX SYSTEMS INC.
By: /s/ David J. Beaubien
----------------------------------
Name: David J. Beaubien
Title: Sole Member of the Special
Committee of the Board of
Directors
20
<PAGE>
SCHEDULE I
[LETTERHEAD OF TUCKER ANTHONY CLEARY GULL]
March 21, 2000
Special Committee of the Board of Directors
ONIX Systems Inc.
22001 North Park Drive
Kingwood, TX 77339
Gentlemen:
We understand that ONIX Acquisition Inc., a Delaware corporation and wholly-
owned subsidiary of Thermo Instrument Systems Inc., a Delaware corporation
("Thermo Instrument"), has offered to purchase (the "Offer") all of the
outstanding shares of common stock, par value $.01 per share (the "Common
Stock"), of ONIX Systems Inc., a Delaware corporation (the "Company"), that
Thermo Electron Corporation, a Delaware corporation ("Thermo Electron") and the
majority owner of Thermo Instrument, and its affiliates, including Thermo
Instrument, do not currently own. At the consummation of the Offer, each share
of Common Stock validly tendered, other than shares held by dissenting
shareholders, if any, will be converted into the right to receive $9.00 per
share net in cash (the "Offer Price").
You have requested our opinion (the "Opinion") as investment bankers as to
whether the Offer Price to be received by the holders of Common Stock other
than Thermo Electron and its affiliates, including Thermo Instrument and the
officers and directors of the Company (the "Public Shareholders"), is fair from
a financial point of view to the Public Shareholders.
Tucker Anthony Cleary Gull ("Tucker Anthony"), as part of its investment
banking business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for corporate and other
purposes. In the course of our ordinary business, we may trade the securities
of either Thermo Instrument or the Company for our own account or for the
accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities. In connection with the procedures outlined
herein and in the preparation of this Opinion, Tucker Anthony was not
authorized by the Company to solicit, nor have we solicited, third party
indications of interest for the Company other than the Offer. Tucker Anthony
will receive fees for the rendering of this Opinion and any subsequent opinions
in connection with the Offer.
In arriving at our Opinion, we have among other things:
(i) Reviewed certain historical financial and other information concerning
the Company for the five fiscal years ended January 1, 2000;
(ii) Reviewed the Offer to Purchase by ONIX Acquisition Inc., dated March
13, 2000;
(iii) Held discussions with the senior management of the Company with
respect to the Company's past and current financial performance,
financial condition and future prospects;
(iv) Reviewed certain internal financial data and other information of the
Company, including financial projections prepared by management;
(v) Reviewed historical trading activity and ownership data of the Common
Stock and considered the prospects for dividends and price movement;
S-1
<PAGE>
(vi) Analyzed certain publicly available information of other companies
that we deemed comparable or otherwise relevant to our inquiry, and
compared the Company, from a financial point of view, with certain of
these companies;
(vii) Compared the Offer Price to be received by the Public Shareholders
pursuant to the Offer with the consideration received by stockholders
in other acquisitions of companies that we deemed comparable or
otherwise relevant to our inquiry; and
(viii) Conducted such other financial studies, analyses and investigations
and reviewed such other information as we deemed appropriate to
enable us to render our opinion.
In our review, we have also taken into account an assessment of general
economic, market and financial conditions and certain industry trends and
related matters. In arriving at the Opinion, we have assumed and relied upon
the accuracy and completeness of all the financial information publicly
available or provided to us by the Company and have not attempted to verify any
of such information. We have assumed that (i) the financial projections of the
Company provided to us have been prepared on a basis reflecting the best
currently available estimates and judgments of the Company's management as to
the future financial performance and results and (ii) that such projections
will be realized in the amounts and time periods currently estimated by
management. We did not make or obtain any independent evaluations or appraisals
of any assets or liabilities of the Company, nor did we verify any of the
Company's books or records. Our Opinion is necessarily based upon market,
economic and other conditions as they exist and can be evaluated as of the date
of this letter.
This Opinion is being furnished for the use and benefit of the Special
Committee of the Board of Directors of the Company and is not a recommendation
to the Public Shareholders. Tucker Anthony has advised the Special Committee
that it does not believe any person other than the Special Committee has the
legal right to rely on the Opinion and, absent any controlling precedent, would
resist any assertion otherwise.
Based upon and subject to the foregoing, it is our Opinion that, as of the
date hereof, the Offer Price to be received by the Public Shareholders pursuant
to the Offer is fair to the Public Shareholders from a financial point of view.
Very truly yours,
/s/ Tucker Anthony Cleary Gull
Tucker Anthony Cleary Gull
S-2
<PAGE>
Exhibit 5
SPECIAL COMMITTEE OF ONIX SYSTEMS BOARD OF DIRECTORS TAKES NEUTRAL POSITION
ON THERMO INSTRUMENT TENDER OFFER
ONIX Systems Inc. (ASE:ONX) today announced that the Special Committee of the
Board of Directors of ONIX, which consists of the sole director of ONIX having
no affiliation with Thermo Instrument Systems Inc. or its parent, Thermo
Electron Corporation, is expressing no opinion and is remaining neutral with
respect to the $9.00 per share cash tender offer made by Thermo Instrument on
March 13, 2000. Consequently, shareholders should make their own decision as to
the acceptability of the Offer, including the adequacy of the $9.00 per share
offer price, based on all of the available information, including the factors
considered by the Special Committee. These factors are described in the
company's Schedule 14D-9, which is being filed today with the Securities and
Exchange Commission and mailed to shareholders. The Special Committee strongly
urges each shareholder to read the factors considered by the Special Committee
in the company's Schedule 14D-9 prior to making any decision whether or not to
tender its shares pursuant to the Offer.
<PAGE>
EXHIBIT 7
ONIX SYSTEMS INC.
22001 North Park Drive
Kingwood, Texas 77339-3804
March 24, 2000
Dear Shareholder:
On March 13, 2000, ONIX Acquisition Inc., a wholly-owned subsidiary of
Thermo Instrument Systems Inc. ("Thermo Instrument"), commenced a tender offer
to acquire for $9.00 per share in cash all of the issued and outstanding shares
of common stock of ONIX Systems Inc. (the "Company") not currently owned by
Thermo Electron Corporation ("Thermo Electron") and its affiliates, including
Thermo Instrument (the "Offer").
Because all of the current members of the Company's Board of Directors,
except the undersigned, are affiliated with Thermo Electron and/or Thermo
Instrument, the Company's Board of Directors appointed the undersigned as a
one-member Special Committee to respond to the Offer. Based on the factors
considered by the Special Committee and set forth in the attached
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which was filed today with the Securities and Exchange Commission, the Special
Committee is not making a recommendation, is expressing no opinion and is
remaining neutral with respect to the Offer.
Because the Special Committee is not making a recommendation with respect to
the Offer, you must make your own decision as to the adequacy and acceptability
of the Offer. The Special Committee strongly urges you to make your decision
based on all of the information available to you, including the factors
considered by the Special Committee and described in the Schedule 14D-9, and,
to that end, strongly urges that you read the enclosed materials carefully and
in their entirety.
Very truly yours,
David J. Beaubien
Sole Member of the Special Committee
of the Board of Directors of ONIX
Systems Inc.
<PAGE>
EXHIBIT 11
SELECTED SECTIONS OF ONIX SYSTEMS INC.'S
PROXY STATEMENT FOR ITS 1999 ANNUAL MEETING OF STOCKHOLDERS
EXECUTIVE RETENTION AGREEMENTS
Thermo Electron has entered into agreements with certain executive
officers and key employees of Thermo Electron and its subsidiaries that provide
severance benefits if there is a change in control of Thermo Electron and their
employment is terminated by Thermo Electron "without cause" or by the individual
for "good reason," as those terms are defined therein, within 18 months
thereafter. For purposes of these agreements, a change in control exists upon
(i) the acquisition by any person of 40% or more of the outstanding common stock
or voting securities of Thermo Electron; (ii) the failure of the Thermo Electron
board of directors to include a majority of directors who are "continuing
directors", which term is defined to include directors who were members of
Thermo Electron's board on the date of the agreement or who subsequent to the
date of the agreement were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior to such transaction and
(b) no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement
with Dr. Zolner. This agreement provides that in the event Dr. Zolner's
employment is terminated under the circumstances described above, he would be
entitled to a lump sum payment equal to the sum of (a) one times his highest
annual base salary in any 12 month period during the prior five-year period,
plus (b) one times his highest annual bonus in any 12 month period during the
prior five-year period. In addition, Dr. Zolner would be provided benefits for
a period of one year after such termination substantially equivalent to the
benefits package he would have been otherwise entitled to receive if he was not
terminated. Further, all repurchase rights of Thermo Electron and its
subsidiaries shall lapse in their entirety with respect to all options that Dr.
Zolner holds in Thermo Electron and its subsidiaries, including the Corporation,
as of the date of the change in control. Finally, Dr. Zolner would be entitled
to a cash payment equal to $15,000, to be used toward outplacement services.
Assuming that the severance benefits would have been payable as of
January 1, 1999, the lump sum salary and bonus payment under such agreement to
Dr. Zolner would have been approximately $265,000. In the event that payments
under these agreements are deemed to be so called "excess parachute payments"
under the applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Dr. Zolner would be entitled to receive a
gross-up payment equal to the amount of any excise tax payable by him with
respect to such payment, plus the amount of all other additional taxes imposed
on him attributable to the receipt of such gross-up payment.
