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 June 28, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 1-13876
THERMOSPECTRA CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3242970
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(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 July 25, 1997
---------------------------- ----------------------------
Common Stock, $.01 par value 12,484,655
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THERMOSPECTRA CORPORATION
Consolidated Balance Sheet
(Unaudited)
Assets
June 28, December 28,
(In thousands) 1997 1996
------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 13,554 $ 16,580
Accounts receivable, less allowances of
$1,965 and $1,516 38,700 32,327
Inventories:
Raw materials and supplies 17,400 12,047
Work in process 9,992 6,941
Finished goods 12,194 8,054
Prepaid income taxes 6,834 5,931
Other current assets 1,990 1,722
-------- --------
100,664 83,602
-------- --------
Property, Plant, and Equipment, at Cost 34,019 27,379
Less: Accumulated depreciation and
amortization 9,286 7,210
-------- --------
24,733 20,169
-------- --------
Patents, Trademarks, and Other Assets 6,012 5,556
-------- --------
Equity Investment in Joint Venture 2,452 2,382
-------- --------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 114,732 40,776
-------- --------
$248,593 $152,485
======== ========
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THERMOSPECTRA CORPORATION
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
June 28, December 28,
(In thousands except share amounts) 1997 1996
------------------------------------------------------------------------
Current Liabilities:
Note payable $ 1,044 $ 591
Accounts payable 13,273 11,508
Deferred revenue 3,926 3,453
Accrued payroll and employee benefits 4,557 5,334
Accrued installation and warranty expenses 4,690 3,396
Accrued income taxes 1,484 1,792
Other accrued expenses 12,486 9,586
Due to affiliates 2,378 3,259
-------- --------
43,838 38,919
-------- --------
Deferred Income Taxes and Other Deferred Items 1,577 1,645
-------- --------
Long-term Obligations, Due to Thermo Electron
and Thermo Instrument (Note 2) 77,115 22,300
-------- --------
Shareholders' Investment:
Common stock, $.01 par value, 25,000,000 shares
authorized; 15,351,572 and 12,439,950 shares
issued 154 124
Capital in excess of par value 112,227 77,416
Retained earnings 14,615 12,345
Treasury stock at cost, 423 and 305 shares (7) (5)
Cumulative translation adjustment (926) (259)
-------- --------
126,063 89,621
-------- --------
$248,593 $152,485
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMOSPECTRA CORPORATION
Consolidated Statement of Income
(Unaudited)
Three Months Ended
-----------------------
June 28, June 29,
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
Revenues $49,692 $31,281
------- -------
Costs and Operating Expenses:
Cost of revenues 27,990 16,201
Selling, general, and administrative expenses 13,374 9,255
Research and development expenses 4,352 3,319
Other nonrecurring expense (Note 3) 800 -
------- -------
46,516 28,775
------- -------
Operating Income 3,176 2,506
Interest Income 222 239
Interest Expense (22) -
Interest Expense, Related Party (1,170) (102)
------- -------
Income Before Provision for Income Taxes 2,206 2,643
Provision for Income Taxes 869 1,081
------- -------
Net Income $ 1,337 $ 1,562
======= =======
Earnings per Share $ .09 $ .13
======= =======
Weighted Average Shares 15,331 12,436
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMOSPECTRA CORPORATION
Consolidated Statement of Income
(Unaudited)
Six Months Ended
-----------------------
June 28, June 29,
(In thousands except per share amounts) 1997 1996
------------------------------------------------------------------------
Revenues $86,869 $58,208
------- -------
Costs and Operating Expenses:
Cost of revenues 48,892 30,340
Selling, general, and administrative expenses 23,725 17,076
Research and development expenses 7,784 6,075
Other nonrecurring expense (Note 3) 800 -
------- -------
81,201 53,491
------- -------
Operating Income 5,668 4,717
Interest Income 408 512
Interest Expense (48) -
Interest Expense, Related Party (1,663) (209)
------- -------
Income Before Provision for Income Taxes 4,365 5,020
Provision for Income Taxes 1,840 2,022
------- -------
et Income $ 2,525 $ 2,998
======= =======
Earnings per Share $ .18 $ .24
======= =======
Weighted Average Shares 14,173 12,435
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMOSPECTRA CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
------------------------
June 28, June 29,
(In thousands) 1997 1996
------------------------------------------------------------------------
Operating Activities:
Net income $ 2,525 $ 2,998
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,106 2,158
Other nonrecurring expense (Note 3) 800 -
Provision for losses on accounts
receivable 172 146
Other noncash expenses 499 293
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 3,347 (100)
Inventories (919) 964
Other current assets 643 (307)
Accounts payable (1,555) 939
Due to affiliates (1,941) (1,092)
Other current liabilities (4,377) (2,838)
Other, net 27 -
-------- --------
Net cash provided by operating activities 2,327 3,161
-------- --------
Investing Activities:
Acquisitions, net of cash acquired (Note 2) (13,885) (994)
Purchases of property, plant, and equipment (1,133) (1,940)
Proceeds from sale of property, plant, and
equipment 22 55
Purchases of available-for-sale investments - (3,000)
Other, net (651) (89)
-------- --------
Net cash used in investing activities (15,647) (5,968)
-------- --------
Financing Activities:
Proceeds from issuance of long-term
obligation to Thermo Electron Corporation
(Note 2) 10,000 -
Net proceeds from issuance of Company common
stock 188 51
Increase in short-term borrowings, net 405 -
-------- --------
Net cash provided by financing activities 10,593 51
-------- --------
Exchange Rate Effect on Cash (299) (89)
-------- --------
Decrease in Cash and Cash Equivalents (3,026) (2,845)
Cash and Cash Equivalents at Beginning of Period 16,580 20,306
-------- --------
Cash and Cash Equivalents at End of Period $ 13,554 $ 17,461
======== ========
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THERMOSPECTRA CORPORATION
Consolidated Statement of Cash Flows (continued)
(Unaudited)
Six Months Ended
----------------------
June 28, June 29,
(In thousands) 1997 1996
------------------------------------------------------------------------
Noncash Activities:
Fair value of assets of acquired companies $108,820 $ 30,178
Cash paid for acquired companies (17,044) (998)
Stock options issued for acquired company (2,080) -
Stock issued to parent company for acquired
company (32,571) -
Due to parent company for acquired
companies (44,815) (21,527)
-------- --------
Liabilities assumed of acquired companies $ 12,310 $ 7,653
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
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THERMOSPECTRA CORPORATION
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been
prepared by ThermoSpectra 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 June
28, 1997, the results of operations for the three- and six-month periods
ended June 28, 1997, and June 29, 1996, and the cash flows for the
six-month periods ended June 28, 1997, and June 29, 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. Acquisitions
In March 1997, Thermo Instrument Systems Inc. (Thermo Instrument),
the Company's majority shareholder, acquired approximately 95% of the
outstanding shares of Life Sciences International PLC (LSI), a London
Stock Exchange-listed company. Subsequently, Thermo Instrument acquired
the remaining shares of LSI capital stock. In July 1997, the Company
agreed to acquire NESLAB Instruments, Inc. and its related sales and
service entity, NESLAB Instruments Europa BV in the Netherlands,
(NESLAB), a global supplier of temperature-control products and former
LSI subsidiary, from Thermo Instrument for $77.4 million. The purchase
price represents the sum of the net tangible book value of the business
as of June 28, 1997, plus a percentage of Thermo Instrument's total
goodwill associated with its acquisition of LSI, based on the aggregate
1996 revenues of NESLAB 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 of the acquired business and
a final calculation of Thermo Instrument's total goodwill associated with
the acquisition of LSI.
The purchase price will be paid through the issuance of 2,869,717
shares of Company common stock valued at $32.6 million and the assumption
of $44.8 million of debt payable to Thermo Instrument. Issuance of the
common stock component of the purchase price will occur immediately after
its listing upon the American Stock Exchange, 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.
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THERMOSPECTRA CORPORATION
2. Acquisitions (continued)
In connection with the acquisition of NESLAB, Thermo Electron
Corporation (Thermo Electron) intends to lend the Company $45.0 million
pursuant to a promissory note due July 1999 and bearing interest at the
90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter. The Company will use the proceeds from the
long-term note to repay Thermo Instrument for the debt assumed in
connection with the NESLAB acquisition. Accordingly, the debt to Thermo
Instrument has been classified as long-term in the accompanying 1997
balance sheet.
Because the Company and NESLAB 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 NESLAB from March 12, 1997, the date the business was acquired
by Thermo Instrument, and the shares issuable subject to shareholder vote
have been deemed outstanding from that date. The purchase price included
$255,000 for the increase in net book value from the date the business
was acquired by Thermo Instrument to June 28, 1997. This amount was
recorded as a reduction in retained earnings. The cost of this
acquisition exceeded the estimated fair value of the net assets by $59.2
million, which is being amortized over 40 years.
On March 12, 1997, the Company acquired Park Scientific Instruments
Corporation (PSI), a manufacturer of scanning-probe microscopes used in
industry and academia to test and measure the topography and other
surface properties of materials, for $17.0 million in cash, including the
repayment of $1.3 million of bank debt. In addition, the Company assumed
outstanding PSI stock options that are exercisable into 183,940 shares of
Company common stock at a weighted average exercise price of $3.44 per
share, with an aggregate value of $2.1 million as of the date of the
merger agreement. The purchase price is subject to a post-closing
adjustment based on the acquired net assets of PSI. In connection with
the acquisition of PSI, the Company borrowed $10.0 million from Thermo
Electron pursuant to a promissory note due March 1999 and bearing
interest at the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter. The acquisition of PSI has
been accounted for using the purchase method of accounting, and the
results of operations have been included in the accompanying financial
statements from the date of acquisition. The cost of this acquisition
exceeded the estimated fair value of the acquired net assets by $16.1
million, which is being amortized over 40 years.
Allocation of the purchase price for these acquisitions was based on
an estimate of the fair value of the net assets acquired and is subject
to adjustment upon finalization of the purchase price and related
allocation.
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THERMOSPECTRA CORPORATION
2. Acquisitions (continued)
Based on unaudited data, the following table presents selected
financial information for the Company, NESLAB, and PSI on a pro forma
basis, assuming the companies had been combined since the beginning of
1996.
Three Months Ended Six Months Ended
------------------ -------------------
(In thousands except June 29, June 28, June 29,
per share amounts) 1996 1997 1996
----------------------------------------------------------------------
Revenues $51,886 $98,381 $96,648
Net income 1,828 1,972 2,997
Earnings per share .12 .13 .20
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the
acquisitions of NESLAB and PSI been made at the beginning of 1996.
3. Other Nonrecurring Expense
During the second quarter of 1997, the Company's Gould Instrument
Systems, Inc. subsidiary incurred an $800,000 charge related to severance
costs for 33 employees terminated during the quarter. Other accrued
expenses in the accompanying balance sheet includes a remaining reserve
of $462,000 associated with these staff reductions.
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 and Exchange Act of 1934, are made throughout this
Management's Discussion and Analysis of Financial Condition and Results
of Operations. 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, including those detailed under the caption "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 develops, manufactures, and markets precision imaging,
inspection, temperature control, and test and measurement instruments.
These instruments are generally combined with proprietary operations and
analysis software to provide industrial and research customers with
integrated systems that address their specific needs. The Company's
products include digital signal measurement systems consisting of digital
oscillographic recorders, digital storage oscilloscopes (DSOs), and data
acquisition systems; X-ray microanalyzers; nondestructive X-ray
inspection systems; X-ray fluorescence instruments; specialty X-ray
10PAGE
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THERMOSPECTRA CORPORATION
Overview (continued)
tubes; and confocal laser scanning microscopes. In 1997, the Company
broadened its product offerings through the acquisition of Park
Scientific Instruments Corporation (PSI), a manufacturer of
scanning-probe microscopes, in March 1997; NESLAB Instruments, Inc.
(NESLAB), a supplier of temperature-control products, effective for
accounting purposes in March 1997; and Sierra Research and Technology
Inc. (SRT), a manufacturer of systems used for the rework and repair of
printed circuit boards, in July 1997.
The Company's growth strategy includes acquiring complementary
businesses, developing new applications for its technology to address
related market segments, and strengthening its presence in selected
geographic markets. Certain acquisitions the Company has made have been
businesses with strong technologies and a good reputation and presence in
the markets in which they compete, but relatively poor profitability
because of high manufacturing and operating expenses. The Company's goal
for these acquisitions is to reduce these expenses and thereby improve
the acquired companies' profitability. Businesses the Company may acquire
in the future may have these same financial characteristics. Because the
Company competes primarily on the basis of its technology, it will also
need to continually improve the technology underlying the products of any
company it acquires.
The Company conducts all of its manufacturing operations in the
United States, except for the production of certain DSOs that are
manufactured in England. The Company sells its products on a worldwide
basis. The Company anticipates that a significant portion of its revenues
will be from sales to customers outside the United States. The Company's
business activities outside the United States are conducted through sales
and service subsidiaries and through third-party representatives and
distributors. The results of the Company's international operations are
subject to foreign currency fluctuations, and the exchange rate value of
the dollar may have a significant impact on both revenues and earnings.
The Company may use forward contracts to reduce its exposure to currency
fluctuations.
Results of Operations
Second Quarter 1997 Compared With Second Quarter 1996
Revenues were $49.7 million in the second quarter of 1997, compared
with $31.3 million in the second quarter of 1996, an increase of 59%.
Revenues increased $19.9 million due to the inclusion of revenues from
NESLAB, which was acquired for accounting purposes effective March 12,
1997, and PSI, which was acquired on March 12, 1997 (Note 2). Revenues
from existing operations declined 3% in 1997 compared with 1996.
Increased revenues due to overall higher demand for inspection systems
manufactured by the Company's Nicolet Imaging Systems division were more
than offset by a decline in demand for the Company's digital signal
measurement systems. Revenues were adversely affected by approximately
$0.6 million due to the strengthening in the value of the U.S. dollar
relative to currencies in foreign countries in which the Company
operates.
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THERMOSPECTRA CORPORATION
Second Quarter 1997 Compared With Second Quarter 1996 (continued)
The gross profit margin declined to 43.7% in the second quarter of
1997 from 48.2% in the second quarter of 1996, due primarily to the
inclusion of lower-margin revenues at NESLAB and, to a lesser extent,
lower margins at the Company's existing businesses due to lower revenues.
The gross profit margin for NESLAB was 36% for the second quarter of
1997.
Selling, general, and administrative expenses as a percentage of
revenues decreased to 26.9% in the second quarter of 1997 from 29.6% in
the second quarter of 1996, due principally to the inclusion of lower
selling expenses as a percentage of revenues at NESLAB, offset in part by
the inclusion of higher selling, general, and administrative expenses as
percentage of revenues at PSI. Overall selling, general, and
administrative expense levels at the Company's existing operations were
unchanged in 1997 compared with 1996.
Research and development expenses as a percentage of revenues
decreased to 8.8% in the second quarter of 1997 from 10.6% in the second
quarter of 1996, due principally to the inclusion of NESLAB, and a higher
level of research and development spending at the Company's existing
operations during the 1996 period as a result of development efforts for
new-product introductions at two of the Company's subsidiaries.
During the second quarter of 1997, the Company's Gould Instrument
Systems, Inc. subsidiary incurred an $800,000 charge related to severance
costs for 33 employees terminated during the quarter. Other accrued
expenses in the accompanying balance sheet includes a remaining reserve
of $462,000 associated with these staff reductions.
Interest expense, related party increased to $1.2 million in 1997
from $0.1 million in 1996 due to the assumption of $44.8 million of debt
in connection with the acquisition of NESLAB, the issuance of a $10
million note to Thermo Electron Corporation (Thermo Electron) in
connection with the March 1997 acquisition of PSI, and the issuance of a
$15 million promissory note to Thermo Electron in August 1996 in
connection with the acquisitions of Kevex Instruments and Kevex X-Ray
(the Kevex businesses).
The effective tax rate was 39.4% in the second quarter of 1997,
compared with 40.9% in the second quarter of 1996. The effective tax
rates exceed the statutory federal income tax rate due primarily to the
impact of state income taxes and nondeductible amortization of cost in
excess of net assets of acquired companies for certain of the Company's
acquisitions.
First Six Months 1997 Compared With First Six Months 1996
Revenues were $86.9 million in the first six months of 1997, compared
with $58.2 million in the first six months of 1996, an increase of 49%.
Revenues increased $31.1 million due to the inclusion of revenues from
NESLAB and PSI, acquired in 1997, and the inclusion of revenues for the
full six-month period from the Kevex businesses, acquired effective March
29, 1996. Revenues from existing operations declined 2% in 1997 compared
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THERMOSPECTRA CORPORATION
First Six Months 1997 Compared With First Six Months 1996 (continued)
with 1996, due to the reasons described in the results of operations for
the second quarter. Revenues were adversely affected by approximately
$1.3 million due to the strengthening in the value of the U.S. dollar
relative to currencies in foreign countries in which the Company
operates.
The gross profit margin declined to 43.7% in the first six months of
1997 from 47.9% in the first six months of 1996, due to the reasons
discussed in the results of operations for the second quarter.
Selling, general, and administrative expenses as a percentage of
revenues decreased to 27.3% in the first six months of 1997 from 29.3% in
the first six months of 1996, due to the reasons discussed in the results
of operations for the second quarter.
Research and development expenses as a percentage of revenues
decreased to 9.0% in the first six months of 1997 from 10.4% in the first
six months of 1996, due to the reasons discussed in the results of
operations for the second quarter.
Interest income decreased to $408,000 in the first six months of 1997
from $512,000 in the first six months of 1996 due to lower cash balances
as a result of cash used to partially fund the acquisitions of the Kevex
businesses, which was paid to Thermo Instrument in August 1996, and PSI.
Interest expense, related party increased to $1.7 million in 1997 from
$0.2 million in 1996 due to the assumption of $44.8 million of debt in
connection with the acquisition of NESLAB, the issuance of a $10 million
note to Thermo Electron in connection with the March 1997 acquisition of
PSI, and the issuance of a $15 million promissory note to Thermo Electron
in August 1996 in connection with the acquisition of the Kevex
businesses.
The effective tax rate was 42.2% in 1997, compared with 40.3% in
1996. The effective tax rates exceed the statutory federal income tax
rate due primarily to the impact of state income taxes and nondeductible
amortization of cost in excess of net assets of acquired companies for
certain of the Company's acquisitions. The increase in the effective tax
rate in 1997 was due to a higher nondeductible amortization of cost in
excess of net assets of acquired companies as a result of the acquisition
of NESLAB.
Liquidity and Capital Resources
Consolidated working capital was $56.8 million at June 28, 1997,
compared with $44.7 million at December 28, 1996. Included in working
capital are cash and cash equivalents of $13.6 million at June 28, 1997,
compared with $16.6 million at December 28, 1996.
Cash provided by operating activities was $2.3 million in the first
six months of 1997. Excluding the impact of the acquired net assets of
PSI and NESLAB, accounts receivable, accounts payable, and current
liabilities decreased, primarily due to higher revenue levels in the
fourth quarter of 1996 compared with the second quarter of 1997.
Additionally, the Company used cash to reduce intercompany balances at
the acquired NESLAB business.
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THERMOSPECTRA CORPORATION
Liquidity and Capital Resources (continued)
The Company used $15.6 million of cash for investing activities
during the first six months of 1997. The Company's financing activities
provided $10.6 million of cash during the period. In March 1997, the
Company acquired PSI for $17.0 million in cash, including the repayment
of $1.3 million of bank debt, subject to a post-closing adjustment (Note
2). In addition, the Company assumed outstanding PSI stock options that
are exercisable into 183,940 shares of Company common stock at a weighted
average exercise price of $3.44 per share, with an aggregate value of
approximately $2.1 million as of the date of the merger agreement. In
connection with the acquisition of PSI, the Company borrowed $10.0
million from Thermo Electron pursuant to a promissory note due March 1999
and bearing interest at the 90-day Commercial Paper Composite Rate plus
25 basis points, set at the beginning of each quarter.
In July 1997, the Company agreed to purchase NESLAB from Thermo
Instrument for $77.4 million, which will be paid through the issuance of
2,869,717 shares of Company common stock valued at $32.6 million and the
assumption of $44.8 million of debt payable to Thermo Instrument (Note
2). In connection with the acquisition of NESLAB, Thermo Electron intends
to lend the Company $45.0 million pursuant to a promissory note due July
1999 and bearing interest at the 90-day Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter. The Company
will use the proceeds from the note to repay Thermo Instrument for the
debt assumed in connection with the NESLAB acquisition.
In July 1997, the Company acquired SRT for approximately $7.5 million
in cash. In connection with the acquisition of SRT, the Company borrowed
$5.0 million from Thermo Electron pursuant to a promissory note due July
1999 and bearing interest at the 90-day Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter.
The Company expended $1.1 million during the first six months of 1997
for purchases of property, plant, and equipment. The Company plans to
expend an additional $1.7 million for capital expenditures during the
remainder of 1997.
Although the Company expects to generate positive cash flow from its
existing operations, the Company may require significant amounts of cash
to pursue the acquisition of complementary businesses. The Company
expects that it will finance any such acquisitions through a combination
of internal funds, additional equity financing or convertible debt
financing from the capital markets, and/or borrowings from Thermo
Instrument or Thermo Electron, although it has no agreement with these
companies to ensure that funds will be available on acceptable terms or
at all, except as described above. The Company believes that its existing
resources and cash provided by operations are sufficient to meet the
capital requirements of its existing businesses for the foreseeable
future.
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THERMOSPECTRA CORPORATION
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On June 2, 1997, at the Annual Meeting of Stockholders, the
Stockholders elected five incumbent directors to a one-year term expiring
in 1998. The Directors elected at the meeting were: Mr. Robert E.
Finnigan, Dr. Elias P. Gyftopoulos, Mr. Earl R. Lewis, Mr. Theo
Melas-Kyriazi, and Mr. Arvin H. Smith. Each director received 11,375,058
shares voted in favor of his election and 4,300 shares voted against. No
abstentions or broker nonvotes were recorded on the election of
directors.
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
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THERMOSPECTRA 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 5th day of August
1997.
THERMOSPECTRA 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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THERMOSPECTRA CORPORATION
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------------------------------------------
2.1 Share purchase agreement dated as of July 30, 1997,
among the Company and Thermo Instrument Systems Inc.
10 $5,000,000 Promissory Note dated as of August 1, 1997,
issued by the Company to Thermo Electron Corporation.
27 Financial Data Schedule.
Exhibit 2.1
SHARE PURCHASE AGREEMENT
BETWEEN
THERMOSPECTRA CORPORATION
AND
THERMO INSTRUMENT SYSTEMS INC.
_____________________________
Dated as of July 30, 1997
_____________________________
PAGE
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") dated as of
July 30, 1997 is between ThermoSpectra Corporation ("THS"), a
Delaware corporation, and Thermo Instrument Systems Inc. ("THI"),
a Delaware corporation.
Preliminary Statement
1. Life Sciences International Limited ("LSI"), which is a
majority-owned subsidiary of THI, owns, directly or through
wholly-owned subsidiaries, all of the issued and outstanding
shares (the "Shares") of NESLAB Instruments, Inc. ("NESLAB"), a
New Hampshire corporation, NESLAB Instruments Europa BV, a
Netherlands corporation ("NESLAB BV"), and NESLAB Instruments
Ltd., a United Kingdom private Company ("NESLAB Ltd."). 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". NESLAB, NESLAB BV and NESLAB Ltd. are referred to
herein as the "Company".
2. THS 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 deliver to THS, or its wholly-owned
subsidiaries, and THS or its wholly-owned subsidiaries shall
purchase, acquire and accept the Shares. At the option of THS,
THS may acquire the Shares through the merger of a subsidiary of
THS with and into NESLAB, pursuant to which merger the Sellers'
shares of NESLAB would be canceled in exchange for the
consideration set forth in Section 3.1 below.
1.2 Further Assurances. At any time and from time to time
after the Closing, at THS'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 THS may
reasonably request, more effectively to transfer, convey and
assign to THS, and to confirm THS's title to, all of the Shares
owned by such Seller, to put THS in actual possession and
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operating control of the assets, properties and business of the
Company, 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 THS for the
Shares (the "Purchase Price") shall consist of 2,869,717 shares
of common stock, $.01 par value, of THS (the "THS Shares").
(b) THS and THI acknowledge and agree that the
Purchase Price represents an estimate of the sum of (i) the net
operating assets of the Company as of June 28, 1997, plus (ii) a
percentage of the total goodwill associated with THI's
acquisition of LSI equal to the sales of the Company 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
Company (the "Company Net Asset Statement") as of June 28, 1997,
and a draft calculation of THI's total goodwill associated with
the acquisition of LSI (the "THI Goodwill Statement") as of March
12, 1997, the date of THI's acquisition of LSI. THS will review
such statements and provide THI with any objections thereto
within 30 days after THS's receipt thereof. If THS does not
object within such 30-day period, then the THI Goodwill Statement
and the Company Net Asset Statement shall be deemed to be
accepted by THS and shall become final. If THS 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 THS 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 $18,645,671 and (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 $58,740,441. Any payment
due by THS 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, minus total liabilities,
determined in accordance with THI's accounting policies.
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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 THS shall deliver one
or more certificates representing the THS 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
THS on the date hereof (the "Disclosure Schedule"), THI
represents and warrants to THS 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 Company 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
Company 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 Company 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
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
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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 the 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 Company; or (iv)
entitle any employee of the Company 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 Company is set
forth on Exhibit A hereto. The Seller set forth opposite the
name of the Company on Exhibit A is the record and beneficial
owner of all of the issued and outstanding shares of the Company.
All of the Shares are duly authorized and are validly issued,
fully paid, nonassessable and free of preemptive rights.
(b) There are no 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.
2.4 Subsidiaries and Other Affiliates.
(a) The Disclosure Schedule sets forth all
Subsidiaries of the Company and the jurisdiction in which each is
incorporated. All shares of the capital stock of each Subsidiary
owned by the Company 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 the Company contained herein shall be deemed to mean the
Company and each of its Subsidiaries, both separately and
together as a consolidated whole, unless and except to the extent
expressly indicated otherwise.
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(b) There are no other shares of capital stock of any
Subsidiary of the 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 the 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 the Company.
(c) Except for its Subsidiaries, the Company does not,
directly or indirectly, own any material equity interest in any
corporation, partnership, joint venture or other entity.
2.5 Financial Statements. THI has delivered to THS prior
to the execution of this Agreement true and complete copies of:
the unaudited consolidated balance sheet of the Company as at
June 28, 1997 (the "Balance Sheet"), and the unaudited
consolidated statements of earnings of the Company for the three
years ended December 31, 1996 and for the six-month period ended
June 28, 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 Company as at the dates and for the periods indicated, in
each case in accordance with 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, the Company had
no material liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise and 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. The Company has no liabilities of the type required to be
reflected or disclosed on a balance sheet in accordance with
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 Company taken as a whole, or (iv) disclosed in this
Agreement. The Company has no 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
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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, the
Company.
2.7 Taxes. The Company 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 Company 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 Company 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. The Company is not 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 Company and the Sellers, threatened,
against the Company for past due Taxes. All Taxes incurred but
not yet due have been fully accrued on the books of the Company
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 Company 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 Company has 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.
2.8 Properties. The 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 the 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
Company taken as a whole. The Company owns or has a valid
leasehold interest in all of the buildings, structures, leasehold
improvements, equipment and other tangible property material to
the Company taken as a whole, all of which are in good and
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sufficient operating condition and repair, ordinary wear and tear
excepted and the Company has not 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 the Company during the period of the
Company's ownership or lease that could have a material adverse
effect on the Company 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 Company 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.
(b) THI has previously made available to THS copies of
all documents concerning any environmental or health and safety
matter that could have a material adverse effect on the Company
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 Company shown on the Balance Sheet and all accounts and
notes receivable acquired by the Company 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 Company with respect to
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the accounts and notes receivable acquired subsequent to the date
of the Balance Sheet.
2.11 Inventories. All Inventories (as defined below) of the
Company 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 Company taken as a whole. Items included in
such Inventories are carried on the books of the Company, 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 Company 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 by the Company for
manufacturing, assembly, processing, finishing, sale or resale to
others, from time to time in the ordinary course of business of
the Company 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 the Company are in excess of the normal, ordinary
and usual requirements of the Company, and the aggregate of the
contract prices to which the Company has 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 the Company obligates the 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 to the Company taken as a
whole. There are no material suppliers to the Company 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 Company has all
governmental permits, licenses, franchises, concessions, zoning
variances and other approvals, authorizations and orders
(collectively "Permits") material to the Company taken as a
whole. All such Permits are presently in full force and effect,
the Company is 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 Company, 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 Company 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
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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 the Company and any governmental
authority relating to the Company's operations as presently being
conducted or actively considered.
2.14 Intellectual Property. The Company 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 THS. None of
the Company or the Sellers is aware of any claim by any third
party that the business of the Company as currently conducted or
proposed to be conducted infringes upon the unlicensed
Proprietary Rights of others, nor has the Company or any of the
Sellers received any notice or claim from any third party of such
infringement by the Company. None of the Company 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 the Company. The Company 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 Company and the Sellers,
none of the activities of the employees of the Company on behalf
of the Company violates any agreements or arrangements which any
such employees have with former employers in a way which is
materially adverse to the business of the Company taken as a
whole.
2.15 Insurance. The Company is not in default with respect
to any provisions of any policy of general liability, fire, title
or other form of insurance held by it, the Company is current in
the payment of all premiums due on such insurance and the Company
has not 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 Company maintains 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 THS all policies of general liability, fire,
title or other forms of insurance applicable to the Company and a
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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 THS 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 Company (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
Sheet); (iv) THI has made available to THS 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 Company 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,
the Company 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) The Company has no liability under or with respect
to any employee benefit plans or arrangements that it no longer
maintains or in which it no longer participates.
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2.17 Agreements and Documents. THI has previously furnished
or made available to THS 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 the
Company;
(b) (i) each agreement of the Company made in the
ordinary course of business which involves aggregate future
payments by or to the Company 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 the Company to compete in any line of
business or with any person; and (iii) each agreement of the
Company not made in the ordinary course of business which is or
was to be performed after July 30, 1997;
(c) all employment or similar compensation agreements
of the Company which may not be terminated by the 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
Company (or applying to the Company) in effect, or 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 the Company, and all collective bargaining
agreements of the Company 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 the Company (or a
guarantee by the Company of indebtedness) is or may be issued;
and
(g) the names and addresses of all banks in which the
Company has accounts or lines of credit, and with respect to each
such account or line of credit, the names of all persons
authorized to draw thereon.
The Company is not a party to any oral contract or
agreement which would be required to have been furnished or made
available to THS under this Section 2.17 had such contract or
agreement been committed to writing.
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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 the Company) 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
Company taken as a whole;
(b) any material damage, destruction or loss (whether
or not covered by insurance) adversely affecting the business of
the Company taken as a whole;
(c) any declaration, setting aside or payment of any
dividend, or other distribution, in respect of any capital stock
of the Company or any direct or indirect redemption, purchase or
other acquisition of such stock;
(d) any option to purchase any capital stock of the
Company granted to any person, or any employment or deferred
compensation agreement entered into between the Company and any
of its stockholders, officers, directors, employees or
consultants;
(e) any issuance or sale by the Company of any stock,
bonds or other corporate securities, or any partial or complete
formation, acquisition, disposition or liquidation of the
Company;
(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 the Company;
(g) any statute, rule or regulation, or, to the best
knowledge of the Company and the Sellers, any government policy,
adopted which may materially and adversely affect the business of
the Company;
(h) any mortgage, lien, attachment, pledge,
encumbrance or security interest created on any asset, tangible
or intangible, of the Company, or assumed, either by the 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 is reflected in this Agreement)
engaged in, by the Company, except those in the ordinary course
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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 the Company, 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 the Company, except in the
ordinary course of business, or any sale, assignment, lease,
transfer or other disposition 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 the Company;
(m) any increase in the compensation or benefits
payable or to become payable by the Company to any of its
officers or employees;
(n) any other action or omission by the Company, or
the passage of any resolution, other than in the ordinary course
of business.
2.20 Litigation or Proceedings. The Company is not engaged
in, or a party to, or, to the best of the Sellers' and the
Company's 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 the Company is a party by or with any
court, arbitrator or governmental authority affecting the
Company.
2.21 Compliance with Laws. The 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 Company, none is threatened, alleging that the 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 the Company (whether leased or
owned) by condemnation or right of eminent domain and, to the
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best knowledge of the Sellers and the Company, 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 Company.
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 Company, threatened against the Company or between the
Company 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 the
Company. None of the products of any of the Company 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
Company has employed any broker, agent or finder or incurred any
liability on behalf of any of the Sellers or the Company or for
any brokerage fees, agents' commissions or finders' fees in
connection with the transactions contemplated hereby.
2.25 Powers of Attorney. The Company has no powers of
attorney or similar authorizations outstanding.
2.26 No Termination of Relationship. As of the date hereof,
none of the Sellers or the Company has any reason to expect that
any relationship between the 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. THS has been furnished in writing
prior to the execution of this Agreement all information as to
the business of the Company 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.
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SECTION 3 - REPRESENTATIONS AND WARRANTIES OF THS
THS represents and warrants to THI as follows.
3.1 Organization. THS 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. THS 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 THS, except that approval of the THS shareholders is required
to list the THS Shares on the AMEX. This Agreement has been duly
and validly executed and delivered by THS and constitutes the
valid and binding obligation of THS, 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 THS,
as amended, or of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which THS is a
party or by which THS 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 THS 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 THS 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 THS or the consummation of the
transactions contemplated hereby. The THS 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 THS 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.
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SECTION 4 - COVENANTS AND AGREEMENTS
4.1 Conduct of Business. Except with the prior written
consent of THS, 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 Company to observe the following covenants:
(a) Affirmative Covenants Pending Closing. The
Sellers and the Company shall:
(i) Preservation of Personnel. Use all
reasonable efforts to preserve intact the business organization
of the Company and keep available the services of the present
employees of the 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 Company 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 Company, advertise, promote and
market its products and services in accordance with past
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 Company; and
(v) Ordinary Course of Business. Operate the
business of the Company solely in the ordinary course.
(b) Negative Covenants Pending Closing. THI shall
cause each of the Sellers and the Company 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 the Company 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 the Company 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
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involving payments by the Company 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 the Company, 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 the Company 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 the Company 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 the Company, or declare or pay any dividend or other
distribution with respect to any shares of capital stock of the
Company, or sell or transfer any shares of its capital stock;
(v) Organizational Documents. Amend the
organizational documents of the Company;
(vi) Acquisitions. Make any material acquisition
of property other than in the ordinary course of the business of
the Company;
(vi) License Agreements. Enter into or modify any
license, technology development or technology transfer agreement
between any of the Company and any other person or entity.
4.2 Corporate Examinations and Investigations. Prior to
the Closing Date, THS shall be entitled, through its employees
and representatives, to have such access to the assets,
properties, business and operations of the Company, as is
reasonably necessary or appropriate in connection with its
investigation of the Company 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 THS shall diminish or obviate any of the
representations, warranties, covenants or agreements of THI
contained in this Agreement. In order that THS may have full
opportunity to make such investigation, THI shall furnish the
representatives of THS with all such information and copies of
such documents concerning the affairs of the Company as THS may
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reasonably request and cause its officers, employees,
consultants, agents, accountants and attorneys to cooperate fully
with THS's representatives in connection with such investigation.
4.3 Expenses. THS 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.
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, THS
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 THS Shares for trading
upon AMEX in accordance with Section 712 of AMEX's Listing
Standards, Policies and Requirements. In connection with such
meeting, THS's Board of Directors shall recommend to the THS
shareholders the approval of the listing of the THS Shares
pursuant to this Agreement. THS shall use all reasonable efforts
to obtain all votes and approvals of the THS shareholders
necessary for the listing of the THS 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 THS common stock held by it as of
the record date of any such meeting in favor of the listing of
the THS 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 THS and THI, which approval
shall not be unreasonably withheld, provided that a party shall
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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 Company
will (i) solicit or initiate discussions with any person, other
than THS, relating to the possible acquisition of any of the
Company or all or a material portion of the assets or any of the
capital stock of the Company or any merger or other business
combination with the Company (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 THS 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. THS 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:
(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,
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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 THS
and THI to be indemnified pursuant to Section 4.10 shall survive
the Closing Date for a period of two years.
4.11 Tax-Free Qualification. The Sellers and THS agree that
they will take no actions not contemplated by this Agreement that
would cause the transaction not to qualify as a tax-free
reorganization under Section 368 of the Internal Revenue Code.
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THS
The obligation of THS 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
shall not have been any material adverse change in the business
of the Company 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 THS a certificate, dated the Closing
Date, to the foregoing effect.
5.2 Certificates. THI shall have furnished THS with such
certificates of public officials and of the Sellers' or the
Company' officers as may be reasonably requested by THS.
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 THS 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). THS shall
have performed and complied in all material respects with all
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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 THS shareholders of the listing of the
THS Shares on the AMEX. THS shall have delivered to LSI a
certificate, dated the Closing Date, to the foregoing effect.
6.2 Certificates. THS shall have furnished THI with such
certificates of public officials and of THS's officers as may be
reasonably requested by THI.
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 THS if THS 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 THS upon written notice to THI if THI 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 THS;
(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 THS 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,
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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.
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.
1851 Central Drive
Suite 314
Bedford, TX 76021
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to THS:
ThermoSpectra Corporation
81 Wyman Street
Waltham, Massachusetts 02254
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.
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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.
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 THS
all documents and will do or cause to be done all other things
that THS 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
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be performed wholly within such jurisdiction, without regard to
the conflicts of laws provisions thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
THERMOSPECTRA CORPORATION
[Seal] By:/s/ Theo Melas-Kyriazi
Name: Theo Melas-Kyriazi
Title: President
THERMO INSTRUMENT SYSTEMS INC.
[Seal] By:/s/ Earl R. Lewis
Name: Earl R. Lewis
Title: President
AA972030008
Exhibit 10
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, AND NOT WITH A VIEW
TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, PLEDGED,
MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE
SECURITIES OR (2) UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
THERMOSPECTRA CORPORATION
Promissory Note Due July 29, 1999
Waltham, Massachusetts
July 31, 1997
For value received, ThermoSpectra Corporation, a Delaware
corporation (the "Company"), hereby promises to pay to Thermo
Electron Corporation (hereinafter referred to as the "Payee"), or
registered assigns, on a subordinated basis, on July 29, 1999, as
described below, the principal sum of five million dollars
($5,000,000) or such part thereof as then remains unpaid, to pay
interest from the date hereof on the whole amount of said
principal sum remaining from time to time unpaid at a rate per
annum equal to the rate of the Commercial Paper Composite Rate as
reported by Merrill Lynch Capital Markets, as an average of the
last five business days of the fiscal quarter, plus twenty-five
(25) basis points, such interest to be payable in arrears on the
first day of each fiscal quarter of the Company during the term
set forth herein, until the whole amount of the principal hereof
remaining unpaid shall become due and payable, and to pay
interest on all overdue principal and interest at a rate per
annum equal to the rate of interest announced from time to time
by The First National Bank of Boston at its head office in
Boston, Massachusetts as its "base rate" plus one percent (1%).
Principal and all accrued but unpaid interest shall be repaid on
July 29, 1999. Principal and interest shall be payable in lawful
money of the United States of America, in immediately available
funds, at the principal office of the Payee or at such other
place as the legal holder may designate from time to time in
writing to the Company. Interest shall be computed on an actual
360-day basis.
This Note may be prepaid at any time or from time to time,
in whole or in part, without any premium or penalty. All
prepayments shall be applied first to accrued interest and then
to principal.
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The then unpaid principal amount of, and interest
outstanding on, this Note shall be and become immediately due and
payable without notice or demand, at the option of the holder
hereof, upon the occurrence of any of the following events:
(a) the failure of the Company to pay any amount due
hereunder within ten (10) days of the date when due;
(b) any representation, warranty or statement made or
furnished to the Payee by the Company in connection with
this Note or the transaction from which it arises shall
prove to have been false or misleading in any material
respect as of the date when made or furnished;
(c) the failure of the Company to pay its debts as
they become due, the insolvency of the Company, the filing
by or against the Company of any petition under the U.S.
Bankruptcy Code (or the filing of any similar petition under
the insolvency law of any jurisdiction), or the making by
the Company of an assignment or trust mortgage for the
benefit of creditors or the appointment of a receiver,
custodian or similar agent with respect to, or the taking by
any such person of possession of, any property of the
Company;
(d) the sale by the Company of all or substantially
all of its assets;
(e) the merger or consolidation of the Company with or
into any other corporation in a transaction in which the
Company is not the surviving entity;
(f) the issuance of any writ of attachment, by trustee
process or otherwise, or any restraining order or injunction
not removed, repealed or dismissed within thirty (30) days
of issuance, against or affecting the person or property of
the Company or any liability or obligation of the Company to
the holder hereof; and
(g) the suspension of the transaction of the usual
business of the Company.
Upon surrender of this Note for transfer or exchange, a new
Note or new Notes of the same tenor dated the date to which
interest has been paid on the surrendered Note and in an
aggregate principal amount equal to the unpaid principal amount
of the Note so surrendered will be issued to, and registered in
the name of, the transferee or transferees. The Company may
treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all
other purposes.
2PAGE
<PAGE>
In case any payment herein provided for shall not be paid
when due, the Company further promises to pay all cost of
collection, including all reasonable attorneys' fees.
No delay or omission on the part of the Payee in exercising
any right hereunder shall operate as a waiver of such right or of
any other right of the Payee, nor shall any delay, omission or
waiver on any one occasion be deemed a bar to or waiver of the
same or any other right on any future occasion. The Company
hereby waives presentment, demand, notice of prepayment, protest
and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this
Note. The undersigned hereby assents to any indulgence and any
extension of time for payment of any indebtedness evidenced
hereby granted or permitted by the Payee.
This Note shall be governed by and construed in accordance
with, the laws of the Commonwealth of Massachusetts and shall
have the effect of a sealed instrument.
THERMOSPECTRA CORPORATION
By:
__________________________________
Theo Melas-Kyriazi
President and Chief Executive
Officer
[Corporate Seal]
Attest:
____________________________
Sandra L. Lambert
Secretary
cc: Patrice Barnes
Seth Hoogasian
Maureen Jacobs
Sandra Lambert
Karen Levin
Andy Pilla
Gina Silvestri
Chris Vinchesi
3<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THERMOSPECTRA CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
JUNE 28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JUN-28-1997
<CASH> 13,554
<SECURITIES> 0
<RECEIVABLES> 40,665
<ALLOWANCES> 1,965
<INVENTORY> 39,586
<CURRENT-ASSETS> 100,664
<PP&E> 34,019
<DEPRECIATION> 9,286
<TOTAL-ASSETS> 248,593
<CURRENT-LIABILITIES> 43,838
<BONDS> 0
0
0
<COMMON> 154
<OTHER-SE> 125,909
<TOTAL-LIABILITY-AND-EQUITY> 248,593
<SALES> 86,869
<TOTAL-REVENUES> 86,869
<CGS> 48,892
<TOTAL-COSTS> 48,892
<OTHER-EXPENSES> 8,584
<LOSS-PROVISION> 172
<INTEREST-EXPENSE> 1,711
<INCOME-PRETAX> 4,365
<INCOME-TAX> 1,840
<INCOME-CONTINUING> 2,525
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,525
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
