Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
Registration Statement
Under
The Securities Act of 1933
THERMO ELECTRON CORPORATION
(Exact name of registrant as specified in its charter)
__________________
Delaware 3829 04-2209186
(State or other Primary Standard (I.R.S.
jurisdiction of Industrial Employer
incorporation or Classification Identification
organization) Code Number) No.)
81 Wyman Street
P. O. Box 9046
Waltham, Massachusetts 02254-9046
(617) 622-1000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Sandra L. Lambert, Secretary
Thermo Electron Corporation
81 Wyman Street
P. O. Box 9046
Waltham, MA 02254-9046
(617) 622-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Seth H. Hoogasian, Esquire Joseph T. Ritchey, Esquire
General Counsel Sirote & Permutt, P.C.
Thermo Electron Corporation 2222 Arlington Ave. South
81 Wyman Street Birmingham, Alabama 35205
Waltham, Massachusetts 02254-9046
______________________
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable after the
Registration Statement has become effective.
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If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box. [ ]
______________________
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of each Maximum Maximum Amount
class of Amount Offering Aggregate of
securities to to be Price Per Offering Registra-
be registered Registered Share (1) Price (1) tion Fee
------------- ---------- --------- --------- --------
Common Stock, 2,669,158 $6.387 $17,047,443 $5,879.00
$1.00 par
value per
share
____________________
(1) Estimated solely for the purpose of determining the
registration fee in accordance with Rule 457(f)(2) under the
Securities Act of 1933, based upon the book value as of
September 30, 1994, the latest practicable date, of the
securities to be canceled in the exchange.
_________________________
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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Thermo Electron Corporation
Common Stock
Cross Reference Sheet
Between Items of Form S-4 and Prospectus
Item Location in Prospectus
---- ----------------------
A. Information About the Transaction
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus.......... Outside Front Cover
Page; Cross
Reference Sheet
2. Inside Front and Outside Back
Cover Pages of Prospectus......... Inside Front Cover
Page; Table of
Contents; Available
Information
3. Risk Factors and Ratio of
Earnings to Fixed Charges
and Other Inormation............. Summary
4. Terms of the Transaction......... Summary; Special
Meeting; The
Merger; Comparison
of Rights of
Holders of Thermo
Common Stock and CRC
Common Stock;
Description of
Thermo's Capital
Stock; Certain
Federal Income Tax
Consequences
5. Pro Forma Financial
Information....................... Summary
6. Material Contacts with the
Company Being Acquired............ The Merger;
Relationship and
Transactions between
Thermo and CRC
7. Additional Information Required
for Reoffering by Persons Deemed
to be Underwriters................ Not Applicable
8. Interests of Named Experts
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and Counsel....................... Experts; Legal
Opinions
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities................... Not Applicable
B. Information About the Registrant
10. Information with Respect to S-3
Registrants....................... Available
Information;
Incorporation of
Certain Documents by
Reference; Summary;
Special Meeting; The
Merger; Comparison
of Rights of Holders
of Thermo Common
Stock and CRC Common
Stock; Description
of Thermo's Capital
Stock; Relationship
and Transactions
between Thermo and
CRC; Thermo and
CRC Managements;
Ownership of CRC
Common Stock and
Thermo Common Stock
11. Incorporation of Certain
Information by Reference.......... Incorporation of
Certain Documents by
Reference
12. Information with Respect to S-2
or S-3 Registrants................ Not Applicable
13. Incorporation of Certain
Information by Reference.......... Not Applicable
14. Information with Respect to
Registrants other than S-3
or S-2 Registrants................ Not Applicable
C. Information about the Company Being Acquired
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15. Information with Respect to
S-3 Companies..................... Not Applicable
16. Information with Respect to
S-2 or S-3 Companies.............. Not Applicable
17. Information with Respect to
Companies Other than S-3 or S-2
Companies......................... Summary; Special
Meeting; The Merger;
Rights of Dissenting
Shareholders;
Comparison of Rights
of Holders of
Thermo Common Stock
and CRC Common
Stock; Relationship
and Transactions
between Thermo and
CRC; Management's
Discussion and
Analysis of
Financial Condition
and Results of
Operations of CRC;
Thermo and CRC
Managements;
Ownership of CRC
Common Stock and
Thermo Common Stock;
Certain
Relationships and
Related
Transactions; Index
to Financial
Statements
D. Voting and Management Information
18. Information if Proxies,
Consents or Authorizations
are to be Solicited............... Summary; The
Meeting; The Merger;
Ownership of CRC
Common Stock and
Thermo Common Stock;
Approval of Amended
and Restated
Articles of
Incorporation;
Approval of the
Coleman Laboratories
Transaction; Other
Matters
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19. Information if Proxies,
Consents or Authorizations
are not to be Solicited or
in an Exchange Offer.............. Not Applicable
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[CRC LETTERHEAD]
January __, 1995
Dear Fellow Shareholders:
Your are cordially invited to attend a Special Meeting of
the Shareholders of Coleman Research Corporation ("CRC") to vote
on the proposed acquisition of CRC by Thermo Electron Corporation
("Thermo") through the merger (the "Merger") of CRC with a wholly
owned subsidiary of Thermo. Upon consummation of the Merger, you
will receive in exchange for each share of CRC common stock that
you own on the effective date of the Merger .1905695 shares of
Thermo common stock. Based on the closing price of the Thermo
common stock on the New York Stock Exchange on December 15, 1994,
$43.00, the Merger is intended to provide $8.19 in value of
Thermo common stock in exchange for each share of CRC common
stock. However, the closing price of the Thermo common stock on
the effective date of the Merger may be more or less than $43.00.
Ten percent of the shares of Thermo common stock you would be
entitled to receive in the Merger will be held in escrow to
provide indemnification to Thermo against damages incurred as a
result of any misrepresentations, breaches of warranties and
breaches of covenants in connection with the Merger. See "THE
MERGER -- Indemnification of Thermo; Escrow."
At the Special Meeting, shareholders will be asked to
approve and adopt the Agreement and Plan of Merger. In addition,
shareholders will be asked to approve the Amended and Restated
Articles of Incorporation of CRC, which deletes a current
provision in CRC's Articles of Incorporation, as amended, that
limits stock ownership to employees of CRC, and to approve the
assignment by CRC of its 49% interest in Coleman Laboratories,
Ltd., a limited partnership ("Coleman L.P."), to entities related
to Thomas J. Coleman or members of his family and the termination
of CRC's relationship with Dr. Mohammed Katoot and MK Industries
Inc. ("MKI") by assigning and selling to Coleman L.P. CRC's
rights under certain agreements with Dr. Katoot and MKI and
certain equipment currently used by MKI (the "Coleman
Laboratories Transaction").
The Special Meeting will be held at CRC's corporate offices
located at 201 South Orange Avenue, Suite 1300, Orlando, Florida
32801, on Thursday, February 23, 1995, beginning at 11:00 a.m.
Eastern Standard Time.
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Management believes the Merger and the related transactions
are in the best interests of CRC and its shareholders and
recommends that you vote FOR approval of these matters. For
information concerning Management's reasons for making this
recommendation, please read carefully the sections in the
enclosed Proxy Statement/Prospectus entitled "THE MERGER,"
"APPROVAL OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION"
and "APPROVAL OF THE COLEMAN LABORATORIES TRANSACTION."
It is very important that your shares be represented at the
Special Meeting, whether or not you plan to attend personally.
Therefore, you should complete and sign the enclosed proxy card
and return it as soon as possible in the enclosed postage-paid
envelope. This will insure that your shares are represented at
the Special Meeting.
Yours very truly,
James B. Morrison
President
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__________________
COLEMAN RESEARCH CORPORATION
201 South Orange Avenue
Suite 1300
Orlando, Florida, 32801
(407) 244-3700
__________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 23, 1995
__________________
To the Holders of Common Stock of
COLEMAN RESEARCH CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of the
Shareholders (the "Special Meeting") of Coleman Research
Corporation, a Florida corporation ("CRC"), will be held at the
corporate offices of CRC, located at 201 South Orange Avenue,
Suite 1300, Orlando, Florida 32801, on Thursday, February 23,
1995, at 11:00 a.m. Eastern Standard Time for the following
purposes, all of which are more fully described in the
accompanying Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve and
adopt the Agreement and Plan of Merger, dated January
__, 1995 (the "Merger Agreement"), among CRC, Thermo
Electron Corporation, a Delaware corporation
("Thermo"), and CRC Acquisition Corp. ("Acquisition
Corp."), a Delaware corporation which is a wholly owned
subsidiary of Thermo, providing, among other things,
for the merger of Acquisition Corp. with and into CRC
(the "Merger") pursuant to which each share of CRC's
common stock, $.001 par value per share ("CRC Common
Stock") outstanding at the effective time of the Merger
(other than shares with respect to which dissenters'
rights are perfected) will be converted into .1905695
shares of Thermo's common stock, $1.00 par value per
share ("Thermo Common Stock"), and CRC will become a
wholly owned subsidiary of Thermo, all as more fully
described in the accompanying Proxy Statement/
Prospectus. A copy of the Merger Agreement (including
the principal exhibits thereto) is attached as APPENDIX
I to the accompanying Proxy Statement/Prospectus.
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2. To approve the Amended and Restated Articles of
Incorporation of CRC (the "Amended Articles"), which
deletes a current provision in CRC's Articles of
Incorporation, as amended, that limits stock ownership
to employees of CRC. A copy of the Amended Articles is
attached as APPENDIX II to the accompanying Proxy
Statement/Prospectus.
3. To approve the assignment by CRC of its 49% interest in
Coleman Laboratories, Ltd., a limited partnership
("Coleman L.P."), to entities related to Thomas J.
Coleman or members of his family and the termination of
CRC's relationship with Dr. Mohammed Katoot and MK
Industries Inc. ("MKI") by assigning and selling to
Coleman L.P. CRC's rights under certain agreements with
Dr. Katoot and MKI and certain equipment currently used
by MKI (the "Coleman Laboratories Transaction").
4. To transact such other business as may properly come
before the Special Meeting or any adjournments or
postponements thereof.
The record date for the determination of shareholders
entitled to notice of and to vote at the Special Meeting, and any
adjournments or postponements thereof, is January 25, 1995 (the
"Record Date"). Only holders of record of shares of CRC Common
Stock at the close of business on the Record Date are entitled to
notice of and to vote at the Special Meeting. A list of CRC
shareholders entitled to vote at the Special Meeting will
be available, during normal business hours, at CRC's corporate
offices, 201 South Orange Avenue, Suite 1300, Orlando, Florida
32801, for 10 days prior to the Special Meeting for examination
by any CRC shareholder for purposes germane to the Special
Meeting.
Holders of CRC Common Stock have a right to dissent from the
Merger, and if the Merger is consummated, to receive "fair value"
for their shares in cash by complying with the provisions of
Florida law, including Sections 607.1301, 607.1302 and 607.1320
of the Florida Business Corporation Act, the full text of which
is attached as APPENDIX IV to the Proxy Statement/Prospectus
accompanying this Notice of Special Meeting.
Your vote is very important regardless of how many shares of
CRC Common Stock you own. Regardless of whether you plan to
attend the Special Meeting, you are requested to sign, date and
return the enclosed Proxy without delay in the enclosed
postage-paid envelope. You may revoke your Proxy at any time
prior to its exercise. If you are present at the Special Meeting
or any adjournments or postponements thereof, you may revoke your
Proxy and vote personally on the matters properly brought before
the Special Meeting.
By Order of the Board of Directors
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Harriett C. Coleman
Secretary and Treasurer
January __, 1995
__________________
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
__________________
PLEASE DO NOT SEND IN STOCK CERTIFICATES AT THIS TIME
------------------
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SUBJECT TO COMPLETION - DATED DECEMBER 30, 1994
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROXY STATEMENT/PROSPECTUS
__________________
PROXY STATEMENT
COLEMAN RESEARCH CORPORATION
201 South Orange Avenue
Suite 1300
Orlando Florida 32801
(407) 244-3700
__________________
PROSPECTUS
THERMO ELECTRON CORPORATION
81 Wyman Street
P. O. Box 9046
Waltham, Massachusetts 02254-9046
(617) 622-1000
2,669,158 Shares of Common Stock,
$1.00 par value
__________________
This Proxy Statement/Prospectus is being furnished to
shareholders of Coleman Research Corporation, a Florida
corporation ("CRC"), in connection with the proposed merger (the
"Merger") of CRC Acquisition Corp., a Delaware corporation
("Acquisition Corp."), which is a wholly owned subsidiary of
Thermo Electron Corporation, a Delaware corporation ("Thermo"),
with and into CRC, pursuant to an Agreement and Plan of Merger by
and among Thermo, Acquisition Corp. and CRC dated January __,
1995 (the "Merger Agreement").
See "THE MERGER" for a description of the terms and
conditions of the Merger.
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All information in this Proxy Statement/Prospectus
concerning Thermo and Acquisition Corp. has been supplied by
Thermo. All information contained in this Proxy Statement/
Prospectus concerning CRC has been supplied by CRC.
__________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCY
NOR HAS THE COMMISSION OR ANY STATE SECURITIES AGENCY PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
__________________
This Proxy Statement/Prospectus were first furnished to
shareholders of CRC on or about January __, 1995.
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TABLE OF CONTENTS
-----------------
AVAILABLE INFORMATION 6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 7
SUMMARY 9
The Special Meeting 9
The Merger 10
Rights of Dissenting Shareholders 13
Business of Thermo and Acquisition Corp. 13
Business of CRC 13
Market Prices 14
Ownership of Securities 14
Resale of Thermo Common Stock
Received in the Merger; Affiliates 15
Accounting Treatment; Regulatory Approvals 15
Certain Federal Income Tax Consequences 16
Selected Financial Data of Thermo 17
Selected Financial Data of CRC 20
Unaudited Pro Forma Combined Selected
Financial Data 22
SPECIAL MEETING 25
General 25
Purposes; Recommendation of CRC Board of
Directors and Management 25
Record Date 26
Votes Required 26
Voting and Revocation of Proxies 27
Solicitation of Proxies 27
Dissenters' Rights 28
-- PROPOSAL ONE --
THE MERGER 28
Background of the Merger and Related Matters 28
Thermo's Reasons for the Merger 30
CRC's Reasons for the Merger 31
Structure and Terms of the Merger 33
Assumption of CRC Stock Options 33
Indemnification of Thermo; Escrow 34
Procedure for Exchange of Shares;
Fractional Shares 36
Management and Operations of CRC
After the Merger 37
Effective Date 37
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Conditions to Consummation of the Merger 37
Conduct of CRC's Business Pending the Merger 39
Noncompetition Agreement 41
Accounting Treatment 41
Regulatory Approvals 41
Resale of Thermo Common Stock Received
in the Merger; Affiliates 42
Termination, Amendments and Expenses 42
Certain Effects of the Merger 43
Interests of Certain Persons in the Merger 44
Certain Employee Benefit Matters 44
RIGHTS OF DISSENTING SHAREHOLDERS 46
COMPARISON OF RIGHTS OF HOLDERS OF THERMO
COMMON STOCK AND CRC COMMON STOCK 48
DESCRIPTION OF THERMO'S CAPITAL STOCK 62
RELATIONSHIP AND TRANSACTIONS BETWEEN
THERMO AND CRC 63
BUSINESS OF CRC 64
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF CRC 66
THERMO AND CRC MANAGEMENTS 69
Executive Officers and Directors of CRC 69
Thermo Executive Officers and Directors
and Executive Compensation 70
OWNERSHIP OF CRC COMMON STOCK AND THERMO
COMMON STOCK 71
Ownership of CRC Common Stock 71
Ownership of Thermo Common Stock 73
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 74
CERTAIN FEDERAL INCOME TAX CONSEQUENCES 74
EXPERTS 76
LEGAL OPINIONS 76
--PROPOSAL TWO --
APPROVAL OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION 76
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-- PROPOSAL THREE --
APPROVAL OF THE COLEMAN LABORATORIES
TRANSACTION 77
OTHER MATTERS 78
PROPOSALS OF STOCKHOLDERS 78
INDEX TO FINANCIAL STATEMENTS F-1
APPENDIX I - Merger Agreement
Principal Exhibits to Merger Agreement
Exhibit B - Indemnification and Stock Escrow Agreement
Exhibit C - Form of Affiliate Agreement
Exhibit E - Noncompetition Agreement between Thomas J.
Coleman and CRC
APPENDIX II - Form of Amended and Restated Articles of
Incorporation of CRC
APPENDIX III - Form of Assignment Agreement with respect to the
Coleman Laboratories Transaction
APPENDIX IV - Sections 607.1301, 607.1302 and 607.1320 of the
Florida Business Corporation Act
5
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AVAILABLE INFORMATION
Thermo is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information
filed by Thermo with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 or at its
regional offices located at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300,
New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. In addition, Thermo's Common Stock is listed on the New
York Stock Exchange, and the reports, proxy statements and other
information filed by Thermo with the Commission can be inspected
at the office of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
Thermo has filed with the Commission a Registration
Statement of Form S-4 under the Securities Act of 1933, as
amended, with respect to the Thermo Common Stock offered by this
Proxy Statement/Prospectus. This Proxy Statement/Prospectus
omits certain information contained in the Registration
Statement. Reference is hereby made to the Registration
Statement and the exhibits filed as a part thereof for further
information with respect to Thermo and the Thermo Common Stock
offered hereby, and any statement herein concerning any exhibit
is qualified in all respects by the provisions of such exhibit.
No person is authorized to give any information or to make
any representations, other than those contained in this Proxy
Statement/Prospectus, in connection with the offering made
hereby, and, if given or made, such information or
representations must not be relied on as having been authorized.
This Proxy Statement/Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the securities to which
it relates in any jurisdiction in which, or to any person to
whom, it is unlawful to make such an offer or solicitation.
Neither the delivery of this Proxy Statement/Prospectus nor any
offer or sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the
information set forth herein or in the affairs of Thermo,
Acquisition Corp. or CRC since the date hereof.
CRC is not subject to the informational requirements of the
Exchange Act. Copies of CRC's Articles of Incorporation and
By-Laws, each as amended, are available without charge, upon
written or oral request, from Coleman Research Corporation, 201
South Orange Avenue, Suite 1300, Orlando, Florida 32801,
Attention: Secretary; telephone: (407) 244-3700. In order to
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ensure timely delivery of the documents requested, any such
request should be made by February __, 1995.
INCORPORATION OF DOCUMENTS BY REFERENCE
This Proxy Statement/Prospectus incorporates by reference
documents which are not presented herein or delivered herewith.
Copies of any such documents relating to Thermo, other than
exhibits to such documents (unless such exhibits specifically are
incorporated by reference in such documents), are available
without charge, upon written or oral request, from Thermo
Electron Corporation, 81 Wyman Street, P. O. Box 9046, Waltham,
Massachusetts 02254-9046, Attention: Sandra L. Lambert, Esq.,
Secretary; telephone: (617) 622-1000. In order to ensure timely
delivery of the documents requested, any such request should be
made by February __, 1995.
The following documents previously filed by Thermo with the
Commission are incorporated in this Proxy Statement/Prospectus by
reference:
(1) Thermo's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994.
(2) Thermo's Quarterly Report on Form 10-Q for the fiscal
quarter ended April 2, 1994.
(3) Thermo's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 2, 1994.
(4) Thermo's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 1, 1994.
(5) Thermo's Registration Statement on Form 8-A, relating
to Thermo's Common Stock, as amended.
(6) Thermo's Registration Statement on Form 8-A, relating
to Thermo's Preferred Stock Purchase Rights, as
amended.
All reports and other documents subsequently filed by Thermo
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act after the date of this Proxy Statement/Prospectus and prior
to the date of the Special Meeting of Shareholders of CRC shall
be deemed to be incorporated by reference herein and to be part
hereof from the date of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Proxy Statement/
Prospectus to the extent that a statement contained herein, or in
any other subsequently filed document that also is or is deemed
to be incorporated by reference herein, modifies or supersedes
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such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute part of this Proxy Statement/Prospectus.
__________________
This Proxy Statement, which is being furnished to the
shareholders of CRC, also constitutes the Prospectus of Thermo
for the issuance of Thermo Common Stock. Each person who
controls or who is under common control with CRC at the time the
Merger is submitted for a vote of the CRC shareholders may, in
connection with any distribution of the Thermo Common Stock
received in the Merger, be deemed to be an "underwriter" within
the meaning of the Securities Act of 1933, as amended, unless
such stock is sold pursuant to paragraph (d) of Rule 145
promulgated under such Act, pursuant to an effective registration
statement filed under such Act with respect to such sales or
pursuant to another applicable exemption therefrom. This Proxy
Statement/Prospectus does not cover any resales of the Thermo
Common Stock received by such CRC shareholders upon consummation
of the Merger, and no person is authorized to make any use of the
Proxy Statment/Prospectus in connection with any such resale.
See "THE MERGER -- Resale of Thermo Common Stock Received in the
Merger; Affiliates."
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SUMMARY
The following is a summary of certain information contained
in this Proxy Statement/Prospectus concerning the proposed merger
(the "Merger") of CRC Acquisition Corp., a Delaware corporation
("Acquisition Corp.") which is a wholly owned subsidiary of
Thermo Electron Corporation, a Delaware corporation ("Thermo"),
with and into Coleman Research Corporation, a Florida corporation
("CRC"). Acquisition Corp. has been formed specifically for the
purpose of carrying out the Merger. It is anticipated that the
Merger will be consummated on or about February 23, 1995 (the
"Effective Date"). This summary should be read in conjunction
with, and is qualified in its entirety by reference to, the full
text of this Proxy Statement/Prospectus, including the exhibits
hereto. Each shareholder is, therefore, urged to read the entire
Proxy Statement/Prospectus with care.
The Special Meeting
The Special Meeting. A Special Meeting of Shareholders of
CRC will be held on Thursday, February 23, 1995, at 11:00 a.m.
Eastern Standard Time at the corporate offices of Coleman
Research Corporation, 201 South Orange Avenue, Suite 1300,
Orlando, Florida 32801 (the "Special Meeting"). Shareholders of
record at the close of business on January 25, 1995 (the "Record
Date") will be entitled to notice of and to vote at the Special
Meeting. The date of the mailing of this Proxy Statement/
Prospectus to shareholders of CRC will be on or about January 25,
1995. At the close of business on the Record Date, there were
outstanding and entitled to vote 13,074,427 shares of common
stock, $.001 par value, of CRC (the "CRC Common Stock").
The purpose of the Special Meeting is (i) to vote upon a
proposal to approve an Agreement and Plan of Merger dated January
__, 1995 (the "Merger Agreement"), entered into by and among
Thermo, Acquisition Corp. and CRC, pursuant to which Acquisition
Corp. will merge with and into CRC, and Thermo will become the
owner of all the issued and outstanding shares of CRC Common
Stock (see "THE MERGER"); (ii) to approve the Amended and
Restated Articles of Incorporation of CRC (the "Amended
Articles"), which deletes a current provision in CRC's Articles
of Incorporation, as amended, that limits stock ownership to
employees of CRC (see "APPROVAL OF AMENDED AND RESTATED ARTICLES
OF INCORPORATION"); and (iii) to approve the assignment by CRC of
its 49% interest in Coleman Laboratories, Ltd., a limited
partnership ("Coleman L.P."), to entities related to Thomas J.
Coleman or members of his family and the termination of CRC's
relationship with Dr. Mohammed Katoot and MK Industries Inc.
("MKI") by assigning and selling to Coleman L.P. CRC's rights
under certain agreements with Dr. Katoot and MKI and certain
equipment currently used by MKI (the "Coleman Laboratories
Transaction") (see "APPROVAL OF THE COLEMAN LABORATORIES
TRANSACTION"). The Merger Agreement (including the principal
exhibits thereto), the Amended Articles and the Form of
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Assignment Agreement with respect to the Coleman Laboratories
Transaction are attached to this Proxy Statement/Prospectus as
APPENDIX I, APPENDIX II and APPENDIX III, respectively.
Required Vote. Approval of both the Merger Agreement and
the Amended Articles requires the affirmative vote of the holders
of a majority of the outstanding shares of CRC Common Stock.
Approval of the Coleman Laboratories Transaction requires the
affirmative vote of the holders of a majority of the shares
entitled to vote at the Special Meeting, excluding the shares
beneficially owned by Thomas J. Coleman and members of his
family. Certain CRC shareholders, who own an aggregate of
8,026,330 shares of CRC Common Stock, constituting approximately
61% of such shares outstanding, have agreed to vote all shares of
CRC Common Stock held by them in favor of the Merger Agreement
and the Amended Articles. Certain CRC shareholders, who own an
aggregate of 2,456,533 shares of CRC Common Stock, constituting
approximately 33% of the shares of CRC Common Stock outstanding
(excluding shares beneficially owned by Thomas J. Coleman and
members of his family), have agreed to vote all shares of CRC
Common Stock held by them in favor of the Coleman Laboratories
Transaction. The approval of the Coleman Laboratories
Transaction is a condition of Thermo's obligation to consummate
the Merger. Accordingly, Thermo reserves the right to terminate
the Merger Agreement and to decline to consummate the Merger in
the event that the Coleman Laboratories Transaction is not
approved by CRC shareholders. See "SPECIAL MEETING -- Votes
Required" and "THE MERGER -- Interests of Certain Persons in the
Merger."
The Merger
Effective Date. The Merger shall become effective upon the
later of the date of filing of a Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to Section
252 of the Delaware General Corporation Law and the date of
filing of Articles of Merger with the Secretary of State of the
State of Florida pursuant to Section 607.1107 of the Florida
Business Corporation Act (the "Effective Date"). It is
anticipated that the Effective Date will be on or about February
23, 1995.
Exchange of Shares; Fractional Shares. Upon consummation of
the Merger, each outstanding share of CRC Common Stock (other
than shares held in CRC's treasury and shares with respect to
which statutory dissenters' rights are perfected) will be
converted into the right to receive .1905695 shares of Thermo
common stock, $1.00 par value (the "Thermo Common Stock"), and
Thermo will become the owner of all of the issued and outstanding
shares of CRC Common Stock. No fractional shares of Thermo
Common Stock will be issued in connection with the Merger. Any
CRC shareholder otherwise entitled to a fractional share of
Thermo Common Stock as a result of the Merger shall receive cash
in lieu thereof, without interest, in an amount determined by
10
PAGE
<PAGE>
multiplying such CRC shareholder's fractional interest by the
closing price of Thermo Common Stock as reported on the New York
Stock Exchange on the Effective Date. See "THE MERGER --
Procedure for Exchange of Shares; Fractional Shares."
Based on the number of outstanding shares of CRC Common
Stock as of the Record Date, and assuming that (i) no CRC
shareholders exercise appraisal rights and (ii) no options to
purchase CRC Common Stock are exercised prior to the Merger,
approximately 2,491,588 shares of Thermo Common Stock will be
issued to former CRC shareholders upon the consummation of the
Merger. As a result, a total of approximately 53,349,065 shares
of Thermo Common Stock will then be outstanding, of which
approximately 2,491,588 shares, representing 4.67% of the total,
will be held by former holders of CRC Common Stock.
Assumption of CRC Stock Options. At or prior to the
Effective Date, Thermo and CRC shall take all action necessary to
cause the assumption by Thermo as of the Effective Date of the
options to purchase CRC common stock outstanding as of the
Effective Date (the "CRC Options"). Each of the CRC Options
shall be converted without any action on the part of the holder
thereof into an option to purchase shares of Thermo Common Stock
as of the Effective Date. As of the Record Date, 931,786 shares
of CRC Common Stock were subject to outstanding CRC Options,
which would be equivalent to approximately 177,570 shares of
Thermo Common Stock after conversion. See "THE MERGER --
Assumption of CRC Stock Options."
Indemnification of Thermo; Escrow. Ten percent of the
shares of Thermo Common Stock issued in the Merger, including
shares to be issued to the CRC 401(k) Employee Stock Ownership
Plan, will be delivered into escrow (the "Escrowed Shares") and
held pursuant to the Indemnification and Stock Escrow Agreement
attached as Exhibit B to the Merger Agreement (the "Escrow
Agreement"). The Escrowed Shares will be reserved to provide
indemnification to Thermo against damages incurred as a result of
misrepresentations, breaches of warranties and breaches of
covenants contained in the Merger Agreement, the Escrow Agreement
and the other agreements executed in connection therewith, and to
satisfy claims of Thermo arising as a result of the Merger
Agreement, the Escrow Agreement and such other agreements. See
Article 3 of the Merger Agreement and Section 4 of the Escrow
Agreement for a description of the representations and warranties
that are covered by the Escrow Agreement. In the event Thermo
has an appropriate claim for indemnification, shares of Thermo
Common Stock will be returned to Thermo in satisfaction of the
claim. However, Thermo will be entitled to indemnification only
if and when the total of all Indemnifiable Amounts exceeds
$500,000, at which point Thermo will be entitled to
indemnification for all Indemnifiable Amounts, and not just those
in excess of $500,000. The Escrow Agreement requires the escrow
agent to deliver to the shareholders the Escrowed Shares
remaining in escrow one year after the Effective Date, except
11
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<PAGE>
that if there is a claim by Thermo at or prior to such date, the
Escrow Agent will retain Escrowed Shares in an amount sufficient
to cover such claims until they are resolved. See "THE MERGER --
Indemnification of Thermo; Escrow."
Conditions to the Merger. The consummation of the Merger is
conditioned upon, among other things, (i) approval of the Merger
and the adoption of the Merger Agreement by CRC Shareholders,
(ii) the holders of not more than 3% of the shares of CRC Common
Stock having demanded their right to an appraisal of their CRC
Common Stock, and (iii) the representations and warranties of
each party to the Merger Agreement being true and correct as of
the Effective Date and the satisfaction of certain other
conditions. The Merger Agreement may be terminated by the mutual
consent of the Boards of Directors of Thermo and CRC. If the
Merger is not consummated, CRC intends to operate in
substantially the same manner as it has in the past. Any of the
conditions to the Merger may be waived at any time prior to the
Merger by the party or parties to the Merger Agreement benefiting
from such conditions. However, no assurance can be given that
any of such parties will determine to waive any unfulfilled
conditions. See "THE MERGER -- Conditions to Consummation of the
Merger."
Certain Effects of the Merger. If the Merger is
consummated, the holders of CRC Common Stock (other than holders
of shares with respect to which dissenters' rights are perfected)
will exchange their shares of stock for Thermo Common Stock. The
rights of CRC shareholders, which are presently governed by
Florida law and by the Articles of Incorporation and the By-laws
of CRC, each as amended, will be governed by Delaware law and the
Amended and Restated Certificate of Incorporation and By-laws of
Thermo. Certain differences in the rights of CRC shareholders
will arise as a result of this change in governing law as well as
from distinctions between the Articles of Incorporation and
By-laws of CRC, as amended, and the Amended and Restated
Certificate of Incorporation and By-laws of Thermo. See "THE
MERGER -- Certain Effects of the Merger" and "COMPARISON OF
RIGHTS OF HOLDERS OF THERMO COMMON STOCK AND CRC COMMON STOCK."
Interests of Certain Persons in the Merger. Upon
consummation of the Merger, Mr. Thomas J. Coleman, the sole
member of CRC's Board of Directors, will resign, and Thermo will
name certain senior employees of Thermo and of CRC to CRC's
Board. Thermo intends that certain of the existing officers of
CRC will retain their offices after the Effective Date, but may
also appoint additional officers of CRC. See "THE MERGER --
Interests of Certain Persons in the Merger," THERMO AND CRC
MANAGEMENTS -- CRC Executive Officer and Director Compensation"
and "APPROVAL OF THE COLEMAN LABORATORIES TRANSACTION."
Rights of Dissenting Shareholders
12
PAGE
<PAGE>
Under Florida law, shareholders who have not voted for the
Merger Agreement (collectively, "Dissenting Shareholders"), may,
under varying circumstances, receive cash in the amount of the
fair market value (as determined by agreement with CRC or by
court) of their shares in lieu of the shares of Thermo Common
Stock they would otherwise receive in the Merger. Such
Dissenting Shareholders must (i) deliver to CRC, before the vote
on the Merger Agreement is taken at the Special Meeting, written
notice of such Dissenting Shareholders' intent to demand payment
for their shares of CRC Common Stock and (ii) not vote such
shares of CRC Common Stock in favor of the Merger Agreement.
Dissenting Shareholders must also comply with the other
requirements of Section 607.1320 of the Florida Business
Corporation Act, the full text of which is attached to this Proxy
Statement/Prospectus as APPENDIX IV. Any deviation from or
failure to comply with all such requirements may result in the
forfeiture of the rights of Dissenting Shareholders. See "RIGHTS
OF DISSENTING SHAREHOLDERS."
Business of Thermo and Acquisition Corp.
Thermo and its subsidiaries develop, manufacture and market
analytical and environmental-monitoring instruments,
alternative-energy systems, industrial process equipment,
biomedical products and various devices based on advanced
technologies. Thermo and its subsidiaries also provide
environmental engineering and analytical laboratory services.
Acquisition Corp. was formed specifically for the purpose of
effecting the transactions contemplated by the Merger Agreement.
It is not anticipated that prior to the Merger, Acquisition Corp.
will have any significant assets or liabilities other than its
rights and obligations under the Merger Agreement, or that
Acquisition Corp. will engage in any activities other than those
incidental to its formation and the transactions contemplated by
the Merger Agreement.
The principal executive offices of Thermo and Acquisition
Corp. are located at 81 Wyman Street, P. O. Box 9046, Waltham,
Massachusetts 02254-9046 (telephone number: (617) 622-1000). See
"AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE."
Business of CRC
CRC was formed in October 1980 to provide systems
integration, systems engineering and analytical services to both
government and industry. From its inception, with a core
expertise in systems engineering, simulation and modeling, and
analysis, CRC has built a broad-based expertise in defense and
environmental systems engineering disciplines and in other
research areas such as pharmaceutical studies and information
systems. CRC is headquartered in Orlando, Florida, and has
technical operations in Orlando, Florida; the Washington DC area;
13
PAGE
<PAGE>
Huntsville, Alabama; Idaho Falls, Idaho; and Charleston, South
Carolina; as well as other locations throughout the United
States.
The principal executive offices of CRC are located at 201
South Orange Avenue, Suite 1300, Orlando, Florida 32801
(telephone number: (407) 244-3700). See "BUSINESS OF CRC" and
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
Market Prices
The high, low and closing prices of Thermo's Common Stock on
the New York Stock Exchange Composite Transactions Tape on August
9, 1994, the date preceding the public announcement of the
proposed Merger, were $41 1/4, $41 and $41 1/8, respectively.
The high, low and closing prices of Thermo's Common Stock on the
New York Stock Exchange Composite Transactions Tape on December
15, 1994 were $43.75, $42.625 and $43.00, respectively.
Shareholders of CRC are urged to obtain current quotations for
the Thermo Common Stock.
The CRC Common Stock is not currently, and has never
previously been, traded on any established public market. Price
quotations for CRC Common Stock are, therefore, not available.
CRC's Articles of Incorporation, as amended, require CRC to
obtain an annual appraisal of the CRC Common Stock as of December
31 of each year. The appraised value of the CRC Common Stock is
deemed to be effective as of July 1 of the subsequent year. The
appraised values of the CRC Common Stock as of December 31, 1992
and December 31, 1993 were $3.00 and $5.11 per share,
respectively ($15.74 and $26.81 on an equivalent per share basis
assuming an exchange ratio of .1905695 shares of Thermo Common
Stock for each share of CRC Common Stock).
As of December 15, 1994, there were 6,242 record holders of
Thermo Common Stock and 432 record holders of CRC Common Stock.
Ownership of Securities
At the Record Date, there were a total of 13,074,427 shares
of CRC Common Stock outstanding. Accordingly, the Merger will be
approved if 6,537,214 shares of CRC Common Stock are voted in
favor of the Merger. As of the Record Date, CRC's sole director,
CRC's executive officers, and their respective affiliates held,
directly or indirectly, 8,026,330 shares of CRC Common Stock, or
approximately 61% of the shares of CRC Common Stock outstanding
as of such date. In addition, options to purchase 931,786 shares
of CRC Common Stock were outstanding on the Record Date, the
average exercise price of which was $2.32 per share. See "THE
MERGER -- Interests of Certain Persons in the Merger" and
"OWNERSHIP OF CRC COMMON STOCK AND THERMO COMMON STOCK."
At the date hereof approximately 5.65% of the shares of
outstanding Thermo Common Stock entitled to vote are held by
14
PAGE
<PAGE>
directors and executive officers of Thermo and their affiliates.
The vote of stockholders of Thermo is not required to approve the
Merger Agreement or to consummate the Merger. See "THE MERGER --
Background of the Merger and Related Matters."
Resale of Thermo Common Stock Received in the Merger; Affiliates
Certain officers, directors and principal shareholders of
CRC have agreed that, until such time as financial results
covering at least thirty days of combined operations of CRC and
Thermo have been published by Thermo, they will not sell,
transfer or otherwise dispose of, or offer or agree to sell,
transfer or otherwise dispose of any shares of Thermo Common
Stock received by them pursuant to the Merger or any securities
which may be paid as a dividend or otherwise distributed thereon
or with respect thereto or issued or delivered in exchange or
substitution therefor. See "THE MERGER -- Resale of Thermo
Common Stock Received in the Merger; Affiliates."
The Registration Statement and this Proxy Statement/
Prospectus do not relate to or cover the resale after the
Effective Date of shares of Thermo Common Stock issued to certain
shareholders of CRC in the Merger who may be deemed to be
"affiliates" of CRC and thus "underwriters" within the meaning of
Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), and no person is authorized to make any use of
this Proxy Statement/Prospectus in connection with any such
resale. Such securities may not be publicly reoffered or resold
by such persons except pursuant to an effective registration
statement under the Securities Act or pursuant to another
applicable exemption therefrom. For this purpose, the term
"affiliate" means any person who, directly, or indirectly through
one or more intermediaries, possesses the power to direct or
cause the direction of the management and policies of CRC,
whether through the ownership of CRC Common Stock, by contract,
or otherwise.
Accounting Treatment; Regulatory Approvals
The Merger is expected to meet all of the conditions for
pooling-of-interests accounting. It is a condition to the
obligation of Thermo to consummate the Merger that Thermo shall
have received an opinion from Thomas, Beck & Zurcher, P.A., CRC's
independent accountants, to the effect that Thomas, Beck &
Zurcher, P.A. is not aware of any fact concerning CRC that would
preclude Thermo from accounting for the Merger as a pooling-of-
interests.
The Merger is subject to the requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the
regulations thereunder (the "Antitrust Improvements Act"), which
provide that certain acquisition transactions (including the
Merger) may not be consummated until certain information has been
furnished to the Antitrust Division of the Department of Justice
15
PAGE
<PAGE>
(the "Antitrust Division") and the Federal Trade Commission (the
"FTC"), and certain waiting period requirements have been
satisfied. Thermo and CRC have filed the required information
and material with the Antitrust Division and the FTC and the
applicable waiting period terminated on January __, 1995.
Termination of the waiting period does not preclude the Antitrust
Division, the FTC or any other party from challenging or seeking
to delay or enjoin the Merger on antitrust or other grounds.
There can be no assurance that such a challenge, if made, would
not be successful; however, neither Thermo nor CRC believes that
the Merger will violate the antitrust laws. Any such action
taken or threatened prior to the consummation of the Merger could
relieve Thermo or CRC of their respective obligations to
consummate the Merger. See "THE MERGER."
Except for the Antitrust Improvements Act filings, and
filings with the Secretary of State of the States of Delaware and
Florida, no federal or state regulatory approvals are required in
order to consummate the Merger.
Certain Federal Income Tax Consequences
The Merger is intended to qualify as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"). Neither CRC nor Thermo intend
to request a ruling from the Internal Revenue Service with
respect to the Merger. Assuming that the Merger is a tax-free
reorganization, (i) no gain or loss will be recognized by Thermo
or CRC and (ii) no gain or loss will be recognized by
shareholders of CRC other than shareholders perfecting statutory
dissenters' rights or in connection with the cash settlement of
fractional shares. If the Merger fails to qualify as a
reorganization under Section 368(a) of the Code, on the Effective
Date each shareholder of CRC will recognize gain or loss on the
exchange of his CRC Common Stock for Thermo Common Stock. See
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES." Holders of CRC Common
Stock are urged to consult with their tax advisers to determine
the particular tax consequences of the Merger to them.
16
PAGE
<PAGE>
<TABLE>
Thermo Electron Corporation
Selected Financial Information
The selected financial information presented below as of and for the fiscal years ended December 30,
1989, December 29, 1990, December 28, 1991, January 2, 1993 and January 1, 1994 has been derived from
Thermo's Consolidated Financial Statements, which have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report thereon. This information should be read in conjunction
with Thermo's Consolidated Financial Statements and related notes incorporated by reference herein. The
selected financial information for the nine-month periods ended October 2, 1993 and October 1, 1994 has
not been audited but, in the opinion of Thermo, includes all adjustments (consisting only of normal,
recurring adjustments) necessary to present fairly such information in accordance with generally accepted
accounting principles applied on a consistent basis. The results of operations for the nine-month period
ended October 1, 1994 are not necessarily indicative of results for the entire year.
<CAPTION>
Nine Months Ended
Fiscal Year ---------------------
---------------------------------------------------- Oct. 2, Oct. 1,
1989 1990(a) 1991(b) 1992(c) 1993(d) 1993 1994(f)
-------- -------- ----------- ---------- --------- --------- -----------
(In thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenues $622,989 $720,683 $ 805,484 $ 948,972 $1,249,718 $ 911,592 $1,151,896
-------- -------- ---------- ---------- ---------- ---------- ----------
Costs and Expenses:
Cost of products and
services 424,162 465,325 533,620 608,975 755,493 556,467 676,315
Expenses for research
and development and
new lines of business 46,458 54,010 52,609 62,343 87,027 64,842 75,372
Selling, general and
administrative
expenses 130,041 163,034 177,304 209,392 283,590 204,667 273,683
Costs associated with
divisional and product
restructuring 2,175 1,001 3,709 - 8,261 5,845 650
-------- -------- ---------- ---------- ---------- ---------- ----------
602,836 683,370 767,242 880,710 1,134,371 831,821 1,026,020
-------- -------- ---------- ---------- ---------- ---------- ----------
17PAGE
<PAGE>
Thermo Electron Corporation
Selected Financial Information (continued)
Nine Months Ended
Fiscal Year --------------------
----------------------------------------------------- Oct. 2, Oct. 1,
1989 1990(a) 1991(b) 1992(c) 1993(d) 1993 1994(f)
------- ------- ------- -------- -------- ------- --------
(In thousands except per share amounts)
Gain on Issuance of Stock
by Subsidiaries 16,785 20,337 27,367 30,212 39,863 25,179 21,284
Other Income (Expense), Net 3,331 2,219 13,564 3,496 (24,091) (6,274) 1,285
------- ------- ------- -------- -------- ------- --------
Income Before Income
Taxes, Minority Interest
and Change in Accounting
Principle 40,269 59,869 79,173 101,970 131,119 98,676 148,445
Provision for Income Taxes 10,420 17,759 24,850 27,474 33,400 29,900 50,956
Minority Interest Expense 3,315 7,144 7,269 13,902 21,086 14,799 23,054
------- ------- ------- -------- -------- ------- --------
Income Before Change in
Accounting Principle 26,534 34,966 47,054 60,594 76,633 53,977 74,435
Change in Accounting
Principle, Net of Tax (e) - - - 1,438 - - -
------- ------- ------- -------- -------- ------- --------
Net Income $26,534 $34,966 $47,054 $ 59,156 $ 76,633 $53,977 $ 74,435
======= ======= ======= ======== ======== ======= ========
Earnings per Share Before
Change in Accounting
Principle:
Primary $ .86 $ 1.09 $ 1.31 $ 1.51 $ 1.75 $ 1.27 $ 1.53
======= ======= ======= ======== ======== ======= ========
Fully Diluted $ .84 $ 1.03 $ 1.23 $ 1.41 $ 1.57 $ 1.14 $ 1.34
======= ======= ======= ======== ======== ======= ========
Earnings Per Share:
Primary $ .86 $ 1.09 $ 1.31 $ 1.48 $ 1.75 $ 1.27 $ 1.53
======= ======= ======= ======== ======== ======= ========
Fully Diluted $ .84 $ 1.03 $ 1.23 $ 1.38 $ 1.57 $ 1.14 $ 1.34
======= ======= ======= ======== ======== ======= ========
Weighted Average Shares:
Primary 30,859 32,017 35,836 40,049 43,779 42,487 48,677
======= ======= ======= ======== ======== ======= ========
Fully Diluted 35,425 36,992 41,711 47,163 55,520 54,283 64,007
======= ======= ======= ======== ======== ======= ========
18PAGE
<PAGE>
Thermo Electron Corporation
Selected Financial Information (concluded)
Nine Months Ended
Fiscal Year ---------------------
------------------------------------------------------ Oct. 2, Oct. 1,
1989 1990(a) 1991(b) 1992(c) 1993(d) 1993 1994(f)
-------- -------- ---------- --------- --------- --------- ----------
(In thousands except per share amounts)
Balance Sheet Data
(at end of period):
Working Capital $275,997 $241,440 $ 463,465 $ 503,364 $ 828,297 $ 795,508 $1,133,107
Total Assets 664,054 904,372 1,199,491 1,818,265 2,473,710 2,284,952 2,975,037
Net Assets Related to
Construction Projects - - 29,379 23,814 9,391 28,870 -
Long-term Obligations 176,912 210,014 254,969 494,152 647,461 527,241 1,066,700
Common Stock of Subsid-
iaries Subject to
Redemption 13,102 8,724 5,486 5,468 14,511 19,906 14,730
Shareholders' Investment 226,376 310,212 480,942 552,901 858,523 834,028 965,065
<FN>
(a) Reflects the May 1990 acquisition of Finnigan Corporation.
(b) Reflects the issuance of $164.0 million principal amount of convertible debentures.
(c) Reflects the August 1992 acquisition of Nicolet Instrument Corporation and the issuance of $260.0
million principal amount of convertible debentures.
(d) Reflects the February 1993 acquisition of Spectra-Physics Analytical and the Company's 1993 public
offering of common stock for net proceeds of $246.0 million.
(e) Reflects the adoption in fiscal 1992 of Statement of Financial Accounting Standards No. 106,
"Accounting for Post-retirement Benefits Other Than Pensions."
(f) Reflects the March 1994 acquisition of several businesses within the EnviroTech Measurements &
Controls group of Baker Hughes Incorporated and the issuance of $345.0 million principal amount of
convertible debentures.
/TABLE> 19<PAGE
<PAGE>
<TABLE>
Coleman Research Corporation
Selected Financial Information
The following selected consolidated financial data for the year ended December 31, 1993 has been
derived from the CRC Consolidated Financial Statements, which have been audited by Thomas, Beck, &
Zurcher, P.A., independent public accountants as indicated in their report included elsewhere in this
Prospectus. The financial data for the four years ended December 31, 1992 has been derived from the
unaudited CRC Consolidated Financial Statements, which have been reviewed by Thomas, Beck, & Zurcher,
P.A. This information should be read in conjunction with the CRC Consolidated Financial Statements and
related notes included elsewhere in this Prospectus. The selected information for the four years ended
December 31, 1992 and for the nine-month periods ended September 30, 1993 and September 30, 1994 has not
been audited but, in the opinion of CRC, includes all adjustments (consisting only of normal, recurring
adjustments) necessary to present fairly such information in accordance with generally accepted
accounting principles applied on a consistent basis. The result of operations for the nine-month period
ended September 30, 1994 are not necessarily indicative of results for the entire year.
<CAPTION>
Fiscal Year Nine Months Ended
----------------------------------------------- ---------------------
Sept. 30, Sept. 30,
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- --------- ---------
(In thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Contract Revenues $ 17,326 $ 23,851 $ 37,054 $ 50,256 $104,790 $ 72,816 $ 107,361
-------- -------- -------- -------- -------- --------- ---------
Costs and Expenses:
Cost of Contract Revenues 14,309 20,484 31,986 45,508 98,676 67,710 97,484
Expenses for Independent
Research and Development - 6 - 213 484 354 638
General and Administrative
Expenses 1,786 1,812 2,721 3,970 5,219 4,100 6,144
-------- -------- -------- -------- -------- --------- ---------
16,095 22,302 34,707 49,691 104,379 72,164 104,266
-------- -------- -------- -------- -------- --------- ---------
Other Income (Expense)
Interest income 140 141 114 104 22 5 6
Interest expense (58) (86) (64) (26) (93) (73) (207)
Other income (expense), net (87) (46) (10) (38) 8 225 138
Loss on uncollectible notes
receivable - (750) - - - - -
-------- -------- -------- -------- -------- --------- ---------
(5) (741) 40 40 (63) 157 (63)
-------- -------- -------- -------- -------- --------- ---------
20PAGE
<PAGE>
Coleman Research Corporation
Selected Financial Information (concluded)
Fiscal Year Nine Months Ended
------------------------------------------------- -------------------
Sept. 30, Sept. 30,
1989 1990 1991 1992 1993 1993 1994
----------- ---------- ------- ------- ------- --------- ---------
(In thousands except per share amounts)
Income Before Income Taxes and
Cumulative Effect of Change
in Accounting Principle 1,226 808 2,387 605 348 809 3,032
Provision for Income Taxes 454 316 915 275 186 353 1,227
----------- ---------- ------- ------- ------- --------- ---------
Income Before Cumulative Effect
of Change in Change in Account-
ing Principle 772 492 1,472 330 162 456 1,805
Cumulative Effect of Change in
Accounting Principle (a) - - - - 73 - -
----------- ---------- ------- ------- ------- --------- ---------
Net Income $ 772 $ 492 $ 1,472 $ 330 $ 235 $ 456 $ 1,805
=========== ========== ======= ======= ======= ========= =========
Earnings per Share Before
Cumulative Effect of Change
in Accounting Principle $ .07 $ .06 $ .16 $ .03 $ .01 $ .04 $ .14
=========== ========== ======= ======= ======= ========= =========
Earnings per Share $ .07 $ .06 $ .16 $ .03 $ .02 $ .04 $ .14
=========== ========== ======= ======= ======= ========= =========
Weighted Average Shares 11,256 7,974 9,269 10,959 12,024 11,876 13,123
=========== ========== ======= ======= ======= ========= =========
Balance Sheet Data
(at end of period):
Working Capital $ 1,625 $ 2,615 $ 4,934 $ 4,588 $ 3,666 $ 4,625 $ 4,834
Total Assets 7,303 9,860 16,394 23,971 39,392 32,797 43,415
Long-term Obligations 90 416 98 - 131 - 113
Shareholder's Investment 2,860 3,901 8,596 10,925 15,197 13,211 16,912
<FN>
(a) Reflects the adoption of Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes"
/TABLE> 21<PAGE
<PAGE>
<TABLE>
Unaudited Pro Forma Combined Selected Financial Data
The following table presents selected pro forma combined financial information for Thermo and
CRC and selected per share data for Thermo Common Stock and CRC Common Stock on a historical and pro
forma combined basis and for CRC Common Stock on a pro forma equivalent basis giving effect to the
acquisition of 100% of the CRC shares by Thermo on a pooling-of-interests accounting basis. The
information is derived from the consolidated historical financial statements of Thermo and CRC,
including the related notes thereto, appearing elsewhere and incorporated by reference herein. The
pro forma statement of income data for each period gives effect to the acquisition as if it had
occurred at the beginning of such period, and the pro forma balance sheet data gives effect to the
acquisition as if it had occurred on the balance sheet date. The pro forma combined information has
been prepared on the assumption that the acquisition will be accounted for on a pooling-of-interests
basis.
Equivalent per share data for CRC Common Stock has been calculated based on the pro forma
combined data for Thermo Common Stock multiplied by .1905695, which is the number of Thermo shares
into which each share of CRC Common Stock would be exchanged pursuant to the Merger, excluding
any affect from the assumption of CRC stock options.
These data are not necessarily indicative of the results of the future operations of the
combined entity or the actual results that would have occurred had the CRC acquisition been
consummated prior to the periods indicated.
<CAPTION>
Nine Months
Fiscal Year Ended
------------------------------------ ------------
1991 1992 1993 Oct. 1, 1994
-------- -------- ---------- ------------
(In thousands except per share amounts)
<S> <C> <C> <C> <C>
Pro Forma Combined:
Statement of Income Data:
Revenues $ 842,538 $ 999,228 $1,354,508 $1,259,257
Net income before cumulative effect of
change in accounting principle 48,526 60,924 76,795 76,240
Balance Sheet Data (at end of
period):
Working capital $ 468,399 $ 507,952 $ 831,963 $1,137,941
Total assets 1,215,885 1,842,236 2,513,102 3,018,452
Long-term obligations 255,067 494,152 647,592 1,066,813
Shareholders' investment 489,538 563,826 873,720 981,977
22PAGE
<PAGE>
Unaudited Pro Forma Combined Selected Financial Data (continued)
Nine Months
Fiscal Year Ended
------------------------------------ ------------
1991 1992 1993 Oct. 1, 1994
-------- -------- ---------- ------------
(In thousands except per share amounts)
Per Share Data:
Thermo Electron (Historical)
Book value per common share $ 17.92 $ 18.98
Cash dividends declared per share - - - -
Earnings per share before cumulative
effect of change in accounting
principle:
Primary $ 1.31 $ 1.51 $ 1.75 $ 1.53
Fully diluted $ 1.23 $ 1.41 $ 1.57 $ 1.34
Coleman (Historical)
Book value per common share $ 1.19 $ 1.30
Cash dividends declared per share - - - -
Earnings per share before cumulative
effect of change in accounting
principle $ .16 $ .03 $ .01 $ .14
Thermo Pro Forma Combined
Book value per common share (1) $ 17.33 $ 18.41
Cash dividends declared per share - - - -
Earnings per share before cumulative
effect of change in accounting
principle (2):
Primary $ 1.27 $ 1.43 $ 1.66 $ 1.49
Fully diluted $ 1.19 $ 1.35 $ 1.50 $ 1.32
CRC Pro Forma Equivalent
Book value per common share $ 3.30 $ 3.51
Cash dividends declared per share - - - -
Earnings per share before cumulative
effect of change in accounting
principle:
Primary $ .24 $ .27 $ .32 $ .28
Fully diluted $ .23 $ .26 $ .29 $ .25
23PAGE
<PAGE>
Unaudited Pro Forma Combined Selected Financial Data (concluded)
<FN>
(1) The pro forma combined book values per share of Thermo Common Stock are based upon the
historical total common equity for Thermo and CRC, divided by total pro forma common shares of
the combined entity. The pro forma equivalent book values per share of CRC Common Stock
represent the pro forma combined amounts multiplied by .1905695, which is the number of shares
of Thermo Common Stock into which each share of CRC Common Stock would be exchanged pursuant to
the Merger.
(2) The pro forma combined earnings per share before cumulative effect of change in accounting
principle is based upon the combined historical income before cumulative effect of change in
accounting principle for Thermo and CRC divided by the average pro forma common shares of the
combined entity. The pro forma equivalent earnings per share before cumulative effect of change
in accounting principle of CRC Common Stock represents the pro forma combined amounts
multiplied by .1905695, which is the number of shares of Thermo Common Stock into which each
share of CRC Common Stock would be exchanged pursuant to the Merger.
</TABLE>
24<PAGE>
SPECIAL MEETING
General
This Proxy Statement/Prospectus is being furnished to
holders of CRC Common Stock in connection with the solicitation
of proxies by the Board of Directors of CRC for use at the CRC
Special Meeting, which will be held at CRC's corporate offices
located at 201 South Orange Avenue, Suite 1300, Orlando, Florida
32801, on Thursday, February 23, 1995, beginning at 11:00 a.m.
Eastern Standard Time, and at any adjournments or postponements
thereof. This Proxy Statement/Prospectus is accompanied by a
form of proxy for use at the Special Meeting.
This Proxy Statement/Prospectus also constitutes the
Prospectus of Thermo with respect to the shares of Thermo Common
Stock to be issued pursuant to the Merger, which Prospectus is
part of a Registration Statement on Form S-4 filed by Thermo with
the Commission under the Securities Act of 1933, as amended (the
"Securities Act").
No vote by the stockholders of Thermo is required to
consummate the Merger.
Purposes; Recommendation of the CRC Board of Directors and
Management
The purposes of the Special Meeting are (i) to consider and
vote upon a proposal to adopt and approve the Merger Agreement
and the transactions contemplated thereby, (ii) to approve the
Amended Articles of CRC, which deletes a current provision in
CRC's Articles of Incorporation, as amended, that limits stock
ownership to employees of CRC, (iii) to approve the assignment by
CRC of its 49% interest in Coleman Laboratories, Ltd., a limited
partnership ("Coleman L.P."), to entities related to Thomas J.
Coleman or members of his family and the termination of CRC's
relationship with Dr. Mohammed Katoot and MK Industries Inc.
("MKI") by assigning and selling to Coleman L.P. CRC's rights
under certain agreements with Dr. Katoot and MKI and certain
equipment currently used by MKI (the "Coleman Laboratories
Transaction"), and (iv) to transact such other business as may
properly come before the Special Meeting and any adjournments or
postponements thereof. The Board of Directors of CRC is not
presently aware of any such other business. See "THE MERGER,"
"APPROVAL OF AMENDED AND RESTATED ARTICLES OF INCORPORATION" and
"APPROVAL OF THE COLEMAN LABORATORIES TRANSACTION."
The management of CRC, including Thomas J. Coleman, the sole
member of CRC's Board of Directors, have approved the Merger
Agreement and the transactions contemplated thereby and believe
the Merger and the other transactions contemplated by the Merger
Agreement are fair to and in the best interests of CRC and its
shareholders. THE MANAGEMENT AND BOARD OF DIRECTORS OF CRC
25
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<PAGE>
RECOMMEND THAT CRC SHAREHOLDERS VOTE IN FAVOR OF THE ADOPTION AND
APPROVAL OF THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING WITHOUT LIMITATION THE APPROVAL
OF THE AMENDED ARTICLES AND THE APPROVAL OF THE COLEMAN
LABORATORIES TRANSACTION.
Record Date
Only holders of record of CRC Common Stock as of the close
of business on January 25, 1995 are entitled to receive notice of
and to vote at the Special Meeting and any adjournments or
postponements thereof. As of the close of business on January
25, 1995, 13,074,427 shares of CRC Common Stock were outstanding.
Each share of CRC Common Stock is entitled to one vote upon each
matter properly submitted at the Special Meeting.
Votes Required
Under Florida law and pursuant to CRC's Articles of
Incorporation and the CRC By-laws, each as amended, the
affirmative vote of the holders of at least a majority of the
outstanding shares of CRC Common Stock is required to adopt and
approve the Merger Agreement and the transactions contemplated
thereby, including the approval of the Amended Articles.
Approval of the Coleman Laboratories Transaction requires the
affirmative vote of the holders of a majority of the shares
entitled to vote at the Special Meeting, excluding the shares
beneficially owned by Thomas J. Coleman and members of his
family.
The presence, in person or by proxy, at the Special Meeting
of the holders of at least a majority of the votes entitled to be
cast at the Special Meeting is necessary to constitute a quorum
for the transaction of business. Abstentions will be counted as
present for the purposes of determining whether a quorum is
present but will not be counted as votes cast in favor of the
Merger Agreement or the approvals of the Amended Articles or the
Coleman Laboratories Transaction. Because the votes on the
Merger Agreement, the Amended Articles and the Coleman
Laboratories Transaction require the approval of a majority of
the votes entitled to be cast by the holders of the outstanding
shares of CRC Common Stock, abstentions will have the same effect
as a negative vote on these proposals.
As of the Record Date, the sole director and the executive
officers of CRC, together with their affiliates, beneficially
owned an aggregate of 8,026,330 shares of CRC Common Stock,
constituting approximately 61% of the then outstanding CRC Common
Stock. Each of the directors and executive officers of CRC have
agreed with Thermo to vote their shares of CRC Common Stock in
favor of the proposals to adopt and approve the Merger Agreement
and to approve the Amended Articles, ensuring the adoption and
approval of the Merger Agreement and the Amended Articles by the
CRC shareholders without regard to the votes of any other CRC
26
PAGE
<PAGE>
shareholders. Approval of the Coleman Laboratories Transaction
will require the affirmative vote of the holders of 1,295,783
shares of CRC Common Stock in addition to the shares of CRC
Common Stock held directly or indirectly by the executive
officers of CRC. The approval of the Coleman Laboratories
Transaction is a condition of Thermo's obligation to consummate
the Merger. Accordingly, Thermo reserves the right to terminate
the Merger Agreement and to decline to consummate the Merger in
the event that the Coleman Laboratories Transaction is not
approved by the CRC shareholders.
Voting and Revocation of Proxies
Shares of CRC Common Stock that are entitled to vote and are
represented by a proxy properly signed and received at or prior
to the Special Meeting, unless subsequently properly revoked,
will be voted in accordance with the instructions indicated
thereon. If a proxy is signed and returned without indicating
any voting instructions, shares of CRC Common Stock represented
by such proxy will be voted FOR the proposal to adopt and approve
the Merger Agreement and the transactions contemplated thereby,
including the proposals to approve the Amended Articles and the
Coleman Laboratories Transaction. The Board of Directors of CRC
is not currently aware of any business to be acted upon at the
Special Meeting other than as described herein. If, however,
other matters are properly brought before the Special Meeting or
any adjournments or postponements thereof, the persons appointed
as proxies will have the discretion to vote or act thereon in
accordance with their best judgment.
Any proxy given pursuant to this solicitation may be revoked
by the person giving it at any time before the shares represented
by such proxy are voted at the Special Meeting by (i) filing with
the Secretary of CRC a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a proxy relating
to the same shares bearing a later date and delivering it to the
Secretary of CRC, or (iii) voting in person at the Special
Meeting. Attendance at the Special Meeting will not in and of
itself constitute a revocation of a proxy. All written notices
of revocation and other communications with respect to revocation
of proxies should be addressed as follows: Coleman Research
Corporation, 201 South Orange Avenue, Suite 1300, Orlando,
Florida 32801, Attention: Secretary, and must be received before
the taking of the vote at the Special Meeting.
Solicitation of Proxies
Thermo will bear the costs incurred in preparing this Proxy
Statement/Prospectus (and the related Registration Statement) and
the form of proxy, except that CRC will bear the costs of mailing
proxy materials to CRC shareholders in connection with the
Special Meeting. In addition to solicitation by mail, directors,
officers and employees of CRC, who will not be specifically
compensated for such services, may solicit proxies from CRC
27
PAGE
<PAGE>
shareholders personally or by telephone, telecopy, telegram or
other means of communication.
Dissenters' Rights
Shareholders of CRC who do not vote in favor of the adoption
and approval of the Merger Agreement and the transactions
contemplated thereby (collectively, "Dissenting Shareholders")
have certain rights to demand payment for the "fair value" of
their shares of CRC Common Stock if they timely provide a written
notice of dissent prior to the Special Meeting and strictly
comply with all other applicable requirements under Florida law.
Failure to take any of the steps required on a timely basis will
result in the loss of dissenters' rights. Merely voting against
or failing to vote for the Merger Agreement will not perfect a
Dissenting Shareholder's dissenter's rights. The amount
obtainable upon the valid exercise of dissenters' rights cannot
be predicted. The procedures to be followed by Dissenting
Shareholders are summarized in "RIGHTS OF DISSENTING
SHAREHOLDERS," and a copy of the applicable provisions of the
Florida Business Corporation Act are attached as APPENDIX IV to
this Proxy Statement/Prospectus and incorporated herein by this
reference.
CRC SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH
THEIR PROXY CARDS.
-- PROPOSAL ONE --
THE MERGER
Background of the Merger and Related Matters
Thermo and CRC have worked together on several projects over
the past five years. Beginning in 1990, CRC was a subcontractor
to Thermo's Thermedics Inc. subsidiary ("Thermedics") in the
development of a hand-held mine detection system for the U.S.
Department of Defense. Under this contract, the two companies
were to combine CRC's ground-penetrating radar with Thermedics'
chemical detection technology into a single system.
Beginning in 1993, Thermedics became a subcontractor to CRC
in the development of a robotically controlled vehicle to perform
chemical analysis of potentially contaminated facilities for the
U.S. Department of Energy.
In August 1994, CRC and Thermo, as members of a team led by
Lockheed Corporation, were chosen by the U.S. Department of
Energy to manage the Idaho National Engineering Laboratories
("INEL") in Idaho Falls. A central feature of the contract was a
plan for Thermo's Thermo Technology Ventures Inc. subsidiary
("TTV") to identify potential opportunities to spin out companies
to commercialize technologies originated in INEL.
28
PAGE
<PAGE>
Over the past several years, CRC's senior management had
been engaged in internal discussions with respect to CRC's future
direction. During this period, CRC had considered and then
rejected proposals from several companies to acquire CRC. In
preparing the Lockheed bid, Messrs. Martin R. Adams and Buddy G.
Beck, each a Corporate Vice President of CRC, became aware of
Thermo's capability to commercialize technologies. In late 1993,
Messrs. Robert C. Howard, Executive Vice President of Thermo,
Marshall J. Armstrong, Vice President of Thermo, and Thomas F.
Widmer, President of TTV, met with Messrs. Adams and Beck to
discuss opportunities for Thermo to commercialize CRC's
technologies.
In January 1994, Messrs. Thomas J. Coleman, CRC's principal
stockholder and sole director, James B. Morrison, CRC's
President, and Richard H. Levine, CRC's Chief Financial Officer,
along with Messrs. Adams and Beck, met in Thermo's executive
offices with Dr. George N. Hatsopoulos, President and Chief
Executive Officer of Thermo, Dr. John P. Appleton, a Vice
President of Thermo and the President and Chief Executive Officer
of Thermo's Thermo Process Systems Inc. subsidiary, Mr. Theo
Melas-Kyriazi, then-Treasurer of Thermo, and Messrs. Howard and
Armstrong, to continue discussions with respect to the potential
for Thermo to commercialize CRC technology and to tour one of the
facilities of Thermo's Thermo Power Corporation subsidiary.
Several days subsequent to this meeting, after interim
discussions between Mr. Beck and Mr. Howard, Mr. Morrison and Mr.
Howard discussed the possibility of merging CRC into Thermo. The
two men had general discussions regarding both the structure of
such a transaction and the range of purchase prices at which an
acquisition would be acceptable to both companies. They agreed
that a tax-free exchange of stock would be preferable to a cash
transaction, and considered various methods of determining the
number of shares of Thermo Common Stock to be issued pursuant to
the proposed transaction.
On March 8, 1994, Messrs. Coleman, Morrison, Adams and Beck
met with Mr. Howard in Washington, D.C. to continue their
preliminary discussions with respect to the transaction, the
purchase price, continuity of CRC management and the two
companies' operating philosophies. Based on these satisfactory
discussions, a series of meetings was initiated in which CRC
would present to Thermo an overview of all of its programs and
technologies.
On March 28, 1994, Messrs. Howard, Armstrong and Widmer,
together with Mr. Paul F. Kelleher, Thermo's Chief Accounting
Officer, met in CRC's executive offices to begin the review of
CRC's technologies and to consider how the two companies might be
integrated. In May 1994, Mr. Armstrong again traveled to CRC's
executive offices to continue these discussions.
29
PAGE
<PAGE>
In May, 1994, Messrs. Coleman and Morrison attended the 1994
Annual Meeting of Thermo Shareholders in Hilton Head, South
Carolina. At this meeting, Messrs. Coleman and Morrison received
presentations on Thermo and its public and private subsidiaries
and met additional members of Thermo's management.
On August 8, 1994, Mr. Howard and Mr. Morrison had a
telephone conversation in which Mr. Howard indicated that Thermo
was interested in purchasing CRC in a tax-free exchange of stock
that would qualify as a pooling-of-interests for accounting
purposes in which 2,656,000 shares of Thermo Common Stock would
be issued to the shareholders and optionholders of CRC. On
August 10, 1994, Thermo issued a press release announcing that
it had signed a letter of intent to acquire CRC.
Numerous telephone conversations and meetings among counsel
for Thermo and CRC and among representatives of Thermo and CRC
subsequently ensued. During the months of September through
December 1994, Thermo and CRC negotiated the terms of the Merger
Agreement and related agreements. Simultaneously, Thermo
completed its business review of CRC. On November 18, 1994,
Thermo agreed to increase to 2,669,158 the number of shares of
Thermo Common Stock to be issued to shareholders and
optionholders of CRC. The Merger Agreement was executed on
January __, 1995. The Board of Directors of Thermo approved the
acquisition by Thermo of CRC on January __, 1995. A vote of the
stockholders of Thermo is not required to adopt the Merger
Agreement.
Thermo's Reasons for the Merger
Thermo's purpose for engaging in the transactions
contemplated by the Merger Agreement is to acquire CRC. Thermo
believes that the acquisition of CRC will provide Thermo with an
established, well-recognized provider of systems integration,
systems engineering, and analytical services to both government
and industry. At the same time, Thermo hopes both to identify
opportunities to commercialize CRC's existing technologies and to
combine its research and development activities with those of CRC
with a goal of creating new technologies. The structure of the
Merger was established to achieve the business objectives of
Thermo, in light of relevant financial, legal, tax and other
considerations. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
CRC's Reasons for the Merger
The management of CRC, including Thomas J. Coleman, the sole
member of the Board of Directors of CRC, believe that the terms
of the Merger are fair to, and in the best interests of, CRC and
its shareholders and unanimously approve the Merger Agreement and
the transactions contemplated thereby. CRC believes that a
number of significant strategic benefits will accrue from the
Merger. CRC, through funding received from the government and
through internal research, has developed a number of technologies
30
PAGE
<PAGE>
that it believes have potential commercial applications. Thermo
has demonstrated a long-term record of commercializing
technologies. CRC's management believes that CRC's technology
base, coupled with Thermo's access to capital and expertise in
technology commercialization, will be of significant benefit to
CRC and its employees. There can be no assurances, however, that
the shareholders of CRC will realize all of the benefits expected
from the Merger.
In evaluating the Merger, the Board of Directors and
management of CRC considered and evaluated, among other things,
(i) the consideration offered by Thermo for the outstanding
shares and options to purchase shares of CRC Common Stock; (ii)
information concerning the results of operations, performance,
financial condition and prospects of Thermo; (iii) the technology
and customer base of Thermo's business, (iv) the prospects for
future growth in value of Thermo's Common Stock; (v) current
economic, industry and market conditions affecting both CRC and
Thermo; (vi) the terms of the Merger Agreement; (vii) the
tax-free nature of the Merger; (viii) CRC's graduation from its
present, preferred "small business" status for certain government
business; and (ix) the potential impact of the Merger on CRC's
employees and customers. Based on all of these matters, and such
other matters as CRC deemed relevant, the Board of Directors and
management of CRC unanimously support the Merger Agreement and
recommend that the holders of CRC Common Stock vote for its
approval and adoption.
Diversification. In 1991 CRC's management focused on the
need to pursue its strategy to broaden CRC's business beyond its
traditional core defense businesses. This diversification
strategy was developed in response to uncertainties regarding
future levels of U.S. Government defense budgets and other
possible reductions by customers in CRC's traditional core
businesses. CRC has historically served the government
marketplace and, within that, primarily the Department of
Defense. In recent years, CRC has made major thrusts into
diversification into the energy and environmental, information
technology, and health systems fields. Thermo, through its
public and non-public subsidiaries, has a world-wide business
base in the energy, environmental, and health systems
marketplaces. This business area and market synergy is expected
to result in growth opportunities for CRC. Thermo's size,
contacts and name recognition in the international marketplace is
expected to help CRC to expand outside of its historical U.S.
Government business and to further CRC's strategy of continued
diversification.
Commercialization. As a result of years of contract
research and development funding from the federal government, CRC
currently possesses a number of technologies with commercial
potential. These technologies include, among others, information
and data systems technology, earth penetrating radar, coherent
laser radar, launch systems, data fusion workstation, power plant
31
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<PAGE>
control, synthetic environment training, and communication and
tracking systems. To achieve the full potential value of these
technologies for CRC's shareholders would require significant
amounts of future capital for commercialization and production.
CRC's structure as a privately-held services company is unlikely
to permit the adequate funding of these technologies. Thermo's
demonstrated ability to raise capital is expected to be a
significant benefit in the continued development of these
projects.
Working Relationships. Through the relationships described
above, CRC has become well acquainted with Thermo, its
subsidiaries, its management, its products, and its business
strategy. See "BACKGROUND OF THE MERGER AND RELATED MATTERS."
Compatibility. CRC has been approached by a number of firms
since its founding about potentially acquiring CRC. The offers
that resulted from these discussions were not considered to
represent the fair value of CRC and/or the acquiring corporation
was not viewed as a good fit for the capabilities, markets,
employees and culture of CRC. CRC's management believes that the
proposed Merger overcomes all of the shortcomings of previous
offers. In the opinion of CRC's management, the Merger with
Thermo will provide CRC's shareholders and employees with a fair
value for their CRC Common Stock, and CRC will become an
important part of a growing, well-respected corporation,
providing expanded opportunities for the growth and development
of CRC's employees.
Graduation from "Small Business" Status. CRC believes that
it continued growth at present levels, even absent a merger,
would result in CRC graduating from its principal "small
business" size category in early 1995. CRC's "small business"
status has given it a preferred status with respect to bidding on
certain types of government business. Therefore, CRC believes
that the Merger with Thermo will accelerate the expected change
in CRC's status by only a few months. CRC's management has been
planning for this graduation for more than a year. It is CRC's
management's view that no longer being a "small business" as a
part of Thermo is a stronger position for CRC than no longer
being a "small business" as a stand-alone corporation.
Shareholder Value. CRC shareholders will receive a
significant premium over the current evaluated price of the CRC
Common Stock. Thermo's Common Stock, which is traded on the New
York Stock Exchange, will provide greater liquidity to CRC's
shareholders than may be possible with CRC Common Stock. The CRC
Common Stock is not currently, and has never previously been,
traded on any established public market.
Summary. The Board of Directors and management of CRC has
concluded, in light of the above factors and such other factors
as they have considered appropriate, that the terms of the Merger
Agreement are fair to, and that the Merger is in the best
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PAGE
<PAGE>
interests of, CRC and its shareholders. Thomas J. Coleman, the
sole director of CRC, and members of his family own beneficially
approximately 43% of the CRC Common Stock. For information
concerning the interests of certain members of CRC management in
the Merger, see "THE MERGER -- Interests of Certain Persons in
the Merger."
Structure and Terms of the Merger
If the Merger is consummated, the outstanding shares of
Acquisition Corp. will be converted into new shares of CRC Common
Stock (which will be held by Thermo) and all of the previously
outstanding shares of CRC Common Stock (other than any such
shares held in the treasury of CRC and shares with respect to
which dissenters' rights are perfected) will be converted into
shares of Thermo Common Stock. As a result of the Merger, CRC
will become a wholly owned subsidiary of Thermo, and each person
who previously held shares of CRC Common Stock (other than those
who perfect statutory dissenters' rights) will receive, upon the
surrender of their stock certificates to a designated agent of
Thermo, .1905695 shares of Thermo Common Stock for each share of
CRC Common Stock held. A copy of the Merger Agreement is
attached as APPENDIX I to this Proxy Statement/Prospectus and is
incorporated herein by this reference.
Based on the number of outstanding shares of CRC Common
Stock as of the Record Date, and assuming that (i) no CRC
shareholders exercise appraisal rights and (ii) no options to
purchase CRC Common Stock are exercised prior to the Merger,
approximately 2,491,588 shares of Thermo Common Stock will be
issued to former CRC shareholders upon the consummation of the
Merger. As a result, a total of approximately 53,349,065 shares
of Thermo Common Stock will then be outstanding, of which
approximately 2,491,588 shares, representing approximately 4.67%
of the total, will be held by former holders of CRC Common Stock.
Assumption of CRC Stock Options
At or prior to the Effective Date, Thermo and CRC shall take
all action necessary to cause the assumption by Thermo as of the
Effective Date of the options to purchase CRC common stock
outstanding as of the Effective Date (the "CRC Options"). Each
of the CRC Options shall be converted without any action on the
part of the holder thereof into an option to purchase shares of
Thermo Common Stock (the "Thermo Options") as of the Effective
Date. The number of shares of Thermo Common Stock that each
record holder of an option agreement which represents CRC Options
(the "Optionholders") shall be entitled to receive upon the
exercise of such option shall be a number of whole shares
determined by multiplying the number of shares of CRC Common
Stock subject to such option, determined immediately before the
Effective Date, by .1905695. The option price of each share of
Thermo Common Stock subject to an assumed CRC Option shall be the
amount (rounded up to the nearest whole cent) obtained by
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PAGE
<PAGE>
dividing the exercise price per share of CRC Common Stock at
which such option is exercisable immediately before the Effective
Date by .1905695. The assumption and substitution of CRC Options
shall not give the Optionholders additional benefits which they
did not have immediately prior to the Effective Date, result in
any acceleration of any vesting schedule for any CRC Option,
other than as provided for under the CRC Nonqualified Stock
Option Plan, or relieve the Optionholders of any obligations or
restrictions applicable to their options or the shares obtainable
upon exercise of the options. Only whole shares of Thermo Common
Stock shall be issued upon exercise of any former option for CRC
Common Stock, and the holder of such option shall receive in cash
the fair market value of the fractional share, net of the
applicable exercise price of the fractional share and applicable
withholding taxes. As of the Record Date, 931,786 shares of CRC
Common Stock were subject to outstanding CRC Options, which would
be equivalent to approximately 177,570 shares of Thermo Common
Stock after conversion.
Indemnification of Thermo; Escrow
Upon consummation of the Merger, 10% of the shares of Thermo
Common Stock issued in the Merger, including shares to be issued
to the CRC 401(k) Employee Stock Ownership Plan (the "KSOP"),
will be delivered into escrow (the "Escrowed Shares") and held
pursuant to the Indemnification and Stock Escrow Agreement
attached as Exhibit B to the Merger Agreement (the "Escrow
Agreement"). The Escrowed Shares will be reserved to provide
indemnification to Thermo against costs, liabilities or damages
incurred, paid by or imposed upon Thermo, Acquisition Corp. or
CRC after the Effective Date as a result of misrepresentations,
breaches of warranties and breaches of covenants contained in the
Merger Agreement, the Escrow Agreement and the other agreements
executed in connection therewith. See Article 3 of the Merger
Agreement and Section 4 of the Escrow Agreement for a description
of the representations and warranties that are covered by the
Escrow Agreement.
In the event Thermo has an appropriate claim for
indemnification, shares of Thermo Common Stock held in the escrow
account will be returned to Thermo in satisfaction of the claim.
The amount of indemnification to which Thermo would be entitled
with respect to an indemnifiable claim (the "Indemnifiable
Amount") shall be determined and computed by reference to the
actual economic loss to Thermo, Acquisition and/or CRC (and not
just by reference to any effect on the value of the shares of
CRC) and shall be deemed to include all losses, liabilities,
expenses or costs incurred by Thermo and/or Acquisition,
including reasonable attorney's fees. For purposes of
determining the number of shares of Thermo Common Stock which
would be returned to Thermo in satisfaction of a claim, each
share will be valued at the closing price of Thermo Common Stock
on the New York Stock Exchange on the last trading date
immediately preceding the Effective Date. Thus, for purposes of
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<PAGE>
satisfying the indemnification requirements of the Escrow
Agreement, the former CRC shareholders would not have the benefit
of any increase, nor the risk of any decrease, in the market
price of shares of Thermo Common Stock after the Effective Date.
Thermo will be entitled to indemnification only if and when the
total of all Indemnifiable Amounts exceeds $500,000, at which
point Thermo will be entitled to indemnification for all
Indemnifiable Amounts, and not just those in excess of $500,000.
If a claim is made, the escrow agent will deliver to Thermo
an amount of shares with a total value equal to the Indemnifiable
Amount within 20 days of the demand unless written objection to
such demand is received by the escrow agent and Thermo from the
Shareholder Representative (as defined below). If the
Shareholder Representative objects to Thermo's claim, the dispute
may be submitted to a court of competent jurisdiction if not
previously settled.
The Escrow Agreement requires the escrow agent to deliver to
the shareholders the Escrowed Shares remaining in escrow one year
after the Effective Date, except that if there is a claim by
Thermo at or prior to such date, the Escrow Agent will retain
Escrowed Shares in an amount sufficient to cover such claims
until they are resolved. Although CRC is not aware of any claims
threatened or asserted that it expects to give rise to a right of
indemnification under the Escrow Agreement, it should be
understood that claims may arise in amounts which would result in
all of the Escrowed Shares being either distributed to Thermo or
sold by the Shareholder Representative pursuant to the Escrow
Agreement, in which event none of the Escrowed Shares would be
distributed to the shareholders at the end of the escrow period.
Shares held in escrow will be registered in the name of the
Escrow Agent, and the shareholder will be entitled to instruct
the Escrow Agent how to vote his shares with respect to matters
placed before the Thermo shareholders. CRC shareholders will be
entitled to directly receive cash dividends, if any, paid or
declared out of earned surplus on the Escrowed Shares during the
escrow period; however, any additional shares of Thermo Common
Stock or other property that are distributed with respect to the
Escrowed Shares during the escrow period will be held pursuant to
the Escrow Agreement to satisfy any indemnification claims.
In the event that a KSOP participant becomes entitled to a
distribution of benefits from the KSOP, the portion of his KSOP
account represented by Escrowed Shares will be re-registered in
the name of the participant. In the alternative, if a
participant's account balance is transferred directly to a
qualified plan in accordance with Internal Revenue Code Section
401(a) or to an individual retirement account in accordance with
Internal Revenue Code Section 408, the Escrow Agent will issue a
certificate to such individual retirement account rollover or
direct transferred account, evidencing the participant's interest
in such shares. Although physical possession of the shares will
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remain with the Escrow Agent, the Escrow Agent will issue a
certificate to the participant evidencing the fact that the
Escrow Agent is holding the shares in the name of the
participant. Additionally, the Escrow Agreement may be amended
to permit a release of the Escrowed Shares to any KSOP
participant who is about to receive a complete distribution from
the KSOP, provided that the participant substitutes in the escrow
fund an equal number of shares of Thermo Common Stock. Counsel
to Thermo has advised that the existence of the Escrow Agreement
will not be a factor in determining the tax treatment of a
complete distribution to a KSOP participant of the entire balance
to his credit in the KSOP. Thus, a participant who would have
been entitled to lump sum distribution treatment under Internal
Revenue Code Section 402(e)(4)(A) but for the existence of the
Escrow Agreement will be entitled to such lump sum distribution
treatment.
Thomas J. Coleman has agreed to serve as representative of
the CRC shareholders for purposes of the Escrow Agreement (the
"Shareholder Representative"). Any action taken by the
Shareholder Representative with respect to the settlement of a
claim against the Escrowed Shares will be binding on all CRC
shareholders. The Shareholder Representative will have the right
to sell shares of Thermo Common Stock held in escrow in order to
obtain funds to pay any expenses incurred or anticipated to be
incurred in connection with his services.
Procedure for Exchange of Share; Fractional Shares
Promptly following the consummation of the Merger, The First
National Bank of Boston, acting in the capacity of exchange agent
(the "Exchange Agent") will mail to each former shareholder of
CRC a form of letter of transmittal, together with instructions
for the exchange of such holder's certificates representing CRC
Common Stock for certificates representing shares of Thermo
Common Stock. Upon surrender to the Exchange Agent of one or
more certificates for CRC Common Stock together with a properly
completed letter of transmittal, the Exchange Agent will issue
and mail to the former CRC shareholder a certificate representing
a number of shares of Thermo Common Stock that is equal to 90% of
the number of shares of Thermo Common Stock into which such
shares of CRC Common Stock have been converted pursuant to the
Merger, and, where applicable, a check for the amount
representing any fractional share determined in the manner
described in the following paragraph. Under the Merger
Agreement, a certificate representing the remaining 10% percent
of the shares of Thermo Common Stock into which a CRC
shareholder's shares of CRC Common Stock have been converted will
be delivered into escrow and thereafter delivered to the
shareholder or returned to Thermo in accordance with the terms of
the Escrow Agreement. See "THE MERGER -- Indemnification of
Thermo; Escrow."
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Neither certificates nor scrip for fractional shares of
Thermo Common Stock shall be issued to CRC shareholders and no
CRC shareholder shall be entitled to any voting or other rights
of a holder of shares or a fractional share interest. Each CRC
Shareholder who otherwise would have been entitled to receive a
fraction of a share of Thermo Common Stock shall receive cash in
lieu thereof, without interest, in an amount determined by
multiplying such Shareholder's fractional interest by the closing
price of Thermo Common Stock as reported on the New York Stock
Exchange on the Effective Date. All amounts of cash in respect
of fractional interests which have not been claimed at the end of
three years from the Effective Date by surrender of certificates
of CRC Common Stock for shares of Thermo Common Stock shall be
repaid to Acquisition Corp., subject to the provisions of
applicable escheat or similar laws, for the account of the
holders entitled thereto.
CRC SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS FROM
THE EXCHANGE AGENT.
Management and Operations of CRC After the Merger
It is contemplated that after the Merger, CRC will continue
to operate as a separate entity and that Thermo does not
presently intend to change the domicile, name or operations of
CRC. Thermo has advised CRC, however, that James B. Morrison,
Richard H. Levine, Martin R. Adams, Buddy G. Beck and Robert V.
Wells will be named as directors of CRC and that Marshall J.
Armstrong, a Vice President of Thermo, will be named as Chairman
of the Board of CRC. Thermo currently intends that the existing
officers of CRC will retain their offices after the Effective
Date, but may appoint additional officers of CRC from time to
time. See "THERMO AND CRC MANAGEMENTS -- Executive Officers and
Directors of CRC."
Effective Date
The Merger shall become effective upon the later of the date
of filing of a Certificate of Merger with the Secretary of State
of the State of Delaware pursuant to Section 252 of the Delaware
General Corporation Law and the date of filing of Articles of
Merger with the Secretary of State of the State of Florida
pursuant to Section 607.1107 of the Florida Business Corporation
Act (the "Effective Date"). It is currently expected that the
Effective Date will be on or about February 23, 1995.
Conditions to Consummation of the Merger
The respective obligations of Thermo, Acquisition Corp. and
CRC under the Merger Agreement are subject to a number of
conditions specified in the Merger Agreement. Unless all such
conditions to the obligations have been satisfied or waived by
the party to the Merger Agreement benefiting from such
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conditions, such party is not required to consummate the Merger
and the transactions contemplated in connection therewith.
The conditions to the obligations of CRC include the
following: (i) the representations and warranties of Thermo and
Acquisition Corp. contained in the Merger Agreement shall be true
and correct in all material respects as of the Effective Date,
(ii) Thermo and Acquisition Corp. shall have performed in all
material respects their respective agreements contained in the
Merger Agreement, (iii) all necessary consents, permits or
approvals necessary to consummate the Merger by any governmental
authority having jurisdiction over CRC or any other person in any
contractual or other relationship with CRC shall have been
granted, (iv) the CRC shareholders shall have approved the Merger
and the execution, delivery and performance of the Merger
Agreement in accordance with the applicable laws of the State of
Florida, (v) the Registration Statement of which this Proxy
Statement/Prospectus is a part shall be effective and no stop
order suspending the effectiveness of such Registration Statement
shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the Commission, (vi) the New
York Stock Exchange shall have approved the shares of Thermo
Common Stock to be issued in the Merger for listing, subject to
official notice of issuance, (vii) no legal action or other
proceedings to restrain or prohibit the consummation of the
transactions contemplated by the Merger Agreement shall be
pending or threatened, (viii) Thermo, CRC and the CRC
Shareholders shall have received an opinion of Sirote & Permutt,
P.C., in form and substance reasonably satisfactory to CRC to the
effect that when the Merger is consummated in accordance with the
terms of this Agreement, the Merger should be treated for Federal
income tax purposes as a tax-free reorganization with the meaning
of Section 368(a) of the Code, (ix) CRC shall have received an
opinion of Seth H. Hoogasian, Esq., General Counsel of Thermo,
dated the Effective Date and in the form attached to the Merger
Agreement as Exhibit L, and (x) compliance with the filing and
waiting period requirements of the Antitrust Improvements Act.
The conditions to the obligations of Thermo and Acquisition
Corp. include the following: (i) CRC's representations and
warranties contained in the Merger Agreement shall be true and
correct in all material respects as of the Effective Date, (ii)
CRC shall have performed in all material respects all of its
agreements contained in the Merger Agreement, (iii) all necessary
consents, permits or approvals necessary to consummate the Merger
by any governmental authority having jurisdiction over CRC,
Thermo or Acquisition Corp. or any other person in any
contractual or other relationship with CRC, Thermo or Acquisition
Corp. shall have been granted, (iv) CRC shall have filed its
Amended Articles with the Secretary of State of the State of
Delaware, (v) the Registration Statement of which this Proxy
Statement/Prospectus is a part shall be effective and no stop
order suspending the effectiveness of such Registration Statement
shall have been issued and no proceedings for that purpose shall
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have been initiated or threatened by the Commission, (vi) the New
York Stock Exchange shall have approved the shares of Thermo
Common Stock to be issued in the Merger for listing, subject to
official notice of issuance, (vii) the holders of not more than
3% of the shares of CRC Common Stock shall have demanded and
perfected their right to an appraisal of their CRC Common Stock,
(viii) Thermo shall have received from Thomas, Beck & Zurcher,
P.A. an opinion to the effect that Thomas, Beck & Zurcher, P.A.
is not aware of any fact concerning CRC that would preclude
Thermo from accounting for the Merger and the other transactions
contemplated by the Merger Agreement as a "pooling-of-interests"
for accounting purposes, (ix) Thermo shall have received an
opinion of Sirote & Permutt, P.C., counsel for CRC and the CRC
shareholders, dated the Effective Date and in the form attached
to the Merger Agreement as Exhibit J, together with such other
opinions of counsel as Thermo may reasonably require, (x) Thermo,
CRC and the CRC Shareholders shall have received an opinion of
Sirote & Permutt, P.C., in form and substance reasonably
satisfactory to CRC to the effect that when the Merger is
consummated in accordance with the terms of this Agreement, the
Merger should be treated for Federal income tax purposes as a
tax-free reorganization with the meaning of Section 368(a) of the
Code, (xi) all the terms, covenants and conditions of the
Affiliate Agreements to be complied with and performed by CRC and
the CRC Shareholders on or before the Effective Date shall have
been fully complied with and performed in all material respects,
(xii) no legal action or other proceedings to restrain or
prohibit the consummation of the transactions contemplated by the
Merger Agreement shall be pending or threatened, (xiii)
compliance with the filing and waiting period requirements of the
Antitrust Improvements Act, and (xiv) the Coleman Laboratories
Transaction shall have been approved by CRC shareholders.
Conduct of CRC's Business Pending the Merger
CRC has agreed to carry on its business prior to the
Effective Date in substantially the same manner as prior to the
date of the Merger Agreement. CRC has further agreed, prior to
the Effective Date to (i) maintain all of its properties in
customary repair, order and condition, reasonable wear and use
and damage by unavoidable casualty excepted, and take all steps
reasonably necessary to maintain its intangibles, (ii) maintain
insurance upon its properties and insurance in respect of the
kinds of risks currently insured against, in accordance with its
current practice, (iii) pay its taxes as they become due, (iv)
promptly advise Thermo in writing of any material adverse change
in CRC's condition (financial or otherwise), assets, liabilities,
earnings, business or prospects, (v) duly comply in all material
respects with all laws, rules and regulations applicable to CRC
and to the conduct of its business, (vi) except as required by
law or by agreements existing on the date of the Merger
Agreement, preserve and maintain and prevent the disclosure or
publication of any proprietary information or trade secrets
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belonging to CRC, and (vii) promptly advise Thermo of any written
objection to the Merger from a shareholder of CRC.
Subject to certain exceptions, CRC has also agreed that
prior to the Effective Date, it will not engage in certain types
of transactions without the prior written consent of Thermo,
including, among other transactions, (i) making any changes in
its management or granting any increase in compensation or bonus
to any member of management or, except in the ordinary course of
business consistent with past practice, entering into or altering
or amending any employment or consulting contract or similar
agreement, (ii) entering into any transaction or contract with
any of its shareholders, officers, management, directors or
employees or their family members, (iii) creating, incurring,
assuming, guaranteeing, or otherwise becoming liable with respect
to any indebtedness other than in the ordinary course of
business, (iv) except as contemplated herein, amending its
Articles of Incorporation or By-Laws, (v) disposing of or
encumbering any of its properties and assets other than in the
ordinary course of business, (vi) merging or consolidating with
any other corporation, or acquiring any stock, or, except in the
ordinary course of business, any business, property or assets of
any other person, firm, association, corporation or other
business organization, (vii) issuing any shares of capital stock
except pursuant to existing stock option agreements, or entering
into any commitment or agreement, or granting any option, warrant
or right, calling for the issuance of any shares of stock, or
creating or issuing any securities convertible into any such
shares or convertible into securities in turn so convertible,
(viii) declaring any dividends on or in respect of shares of
capital stock; or redeeming, repurchasing or otherwise acquiring
any shares of stock, except pursuant to existing agreements or
commitments and as required by the KSOP, (ix) entering into,
assuming or canceling any material contract, agreement,
obligation, lease, license or commitment except for those in the
ordinary course of business, or doing any act or omitting to do
any act which would cause a material breach of or default under
any contract, commitment or obligation, (x) amending, terminating
or waiving any material right, (xi) making or committing to make
any capital expenditure, capital addition or capital improvement
involving an amount in excess of $100,000 except for capital
leases, (xii) taking any action that would constitute or result
in a breach of any representation or warranty in the Merger
Agreement, either as of the date made or on the Effective Date,
(xiii) taking any action directly or indirectly that would
prevent Thermo from accounting for the Merger and other
transactions contemplated by the Merger Agreement as a pooling-
of-interests for accounting purposes, (xiv) taking any action
which would prevent the Merger from qualifying as a tax-free
reorganization under Section 368(a) of the Code, or (xv) taking
any action that constitutes an offer, offer to sell, offer for
sale, or sale of Thermo Common Stock except for the distribution
of a preliminary or final form of this Proxy Statement/Prospectus
and related proxy materials.
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Noncompetition Agreement
In satisfaction of a condition to Thermo's obligation to
consummate the Merger, Thomas J. Coleman will enter into a
noncompetition agreement, effective upon consummation of the
Merger, providing that for a period of three years after the
Effective Date, Mr. Coleman will not, directly or indirectly,
engage in any activity in the United States relating to the
development, marketing or sale of any product or service which
competes with any product or service currently sold by CRC,
currently under development by CRC, or which CRC may offer or
develop in the future. Subject to certain limitations, Mr.
Coleman may establish or participate in a systems engineering
business that, in the opinion of CRC, is not in conflict with the
best interests of CRC during the term of the noncompetition
agreement. The noncompetition agreement further provides that
for a period of three years after the Effective Date, Mr. Coleman
will not, directly or indirectly, hire, solicit, interfere with
or endeavor to entice away any officer or employee of CRC or in
any matter encourage any officer or employee of CRC to leave its
employ; except that he may solicit Harriett C. Coleman, Michael
Coleman, Benjamin Patz and Cynthia Patz to leave the employ of
CRC.
Accounting Treatment
The Merger is expected to meet all of the conditions for
pooling-of-interests accounting. It is a condition to the
obligation of Thermo to consummate the Merger that Thermo shall
have received an opinion from Thomas, Beck & Zurcher, P.A., CRC's
independent accountants, to the effect that Thomas, Beck &
Zurcher, P.A. is not aware of any fact concerning CRC that would
preclude Thermo from accounting for the merger as a
pooling-of-interests.
Regulatory Approvals
The Merger is subject to the requirements of the Antitrust
Improvements Act and the regulations thereunder (the "Antitrust
Improvements Act"), which provide that certain acquisition
transactions (including the Merger) may not be consummated until
certain information has been furnished to the Antitrust Division
of the Department of Justice (the "Antitrust Division") and the
Federal Trade Commission (the "FTC"), and certain waiting period
requirements have been satisfied. Thermo and CRC have filed the
required information and material with the Antitrust Division and
the FTC and the applicable waiting period terminated on January
__, 1995. Termination of the waiting period does not preclude
the Antitrust Division, the FTC or any other party from
challenging or seeking to delay or enjoin the Merger on antitrust
or other grounds. There can be no assurance that such a
challenge, if made, would not be successful; however, neither
Thermo nor CRC believes that the Merger will violate the
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antitrust laws. Any such action taken or threatened prior to the
consummation of the Merger could relieve Thermo or CRC of their
respective obligations to consummate the Merger.
Resale of Thermo Common Stock Received in the Merger; Affiliates
Certain officers, directors and principal shareholders of
CRC have entered into an agreement with CRC and with Thermo, in
the form attached as Exhibit C to the Merger Agreement, pursuant
to which they have agreed that, until such time as financial
results covering at least thirty days of combined operations of
CRC and Thermo have been published by Thermo, they will not sell,
transfer or otherwise dispose of, or offer or agree to sell,
transfer or otherwise dispose of any shares of Thermo Common
Stock received by them pursuant to the Merger or any securities
which may be paid as a dividend or otherwise distributed thereon
or with respect thereto or issued or delivered in exchange or
substitution therefor. Legends restricting the transfer of such
shares of Thermo Common Stock will be placed on all certificates
representing such shares. The purpose of this restrictions is to
comply with conditions necessary for the Merger to be treated as
a "pooling-of-interests" for accounting and financial reporting
purposes.
The shares of Thermo Common Stock to be issued in the Merger
to the CRC shareholders pursuant to the Merger Agreement have
been registered under the Securities Act, thereby allowing such
shares to be freely traded without restriction by persons who are
not deemed to be "affiliates," as that term is defined in the
Securities Act, of Thermo or of CRC. Certain officers, directors
and principal shareholders of CRC may be deemed to be affiliates
of CRC and thus "underwriters" within the meaning of Rule 145
under the Securities Act. Such persons will not be able to
resell the Thermo Common Stock received by them in the Merger
except pursuant to an effective registration statement under the
Securities Act or pursuant to another applicable exemption
therefrom. All persons who may be deemed to be affiliates should
carefully consider the limitations imposed by Rules 144 and 145
under the Securities Act prior to effecting resales of the Thermo
Common Stock. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
Termination, Amendments and Expenses
The Merger Agreement may be terminated and the Merger
contemplated thereby abandoned at any time prior to the
consummation of the Merger by the mutual consent of Thermo and
CRC. The Merger Agreement may be terminated by Thermo or CRC
acting alone if any of the conditions precedent to their
obligations to consummate the Merger have not been met or waived.
The Merger Agreement may also be terminated by Thermo or CRC
acting alone, (i) in the event any litigation, either
administrative or judicial, shall be pending or threatened
against Thermo or CRC which presents a reasonable probability,
supported by an opinion of counsel of the party electing to
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terminate, that the Merger Agreement may be enjoined or (ii) if
through no fault of any party to the Merger Agreement, the Merger
has not been consummated by the close of business on February 28,
1995.
In the event that the Merger is terminated in accordance
with the terms of the Merger Agreement, each party will be
responsible for the costs incurred by it in connection with the
transactions contemplated by the Merger Agreement.
Certain Effects of the Merger
Upon consummation of the Merger the present holders of CRC
Common Stock (other than holders of shares with respect to which
statutory dissenters' rights are perfected) will receive an
equity interest in a large diversified company of which CRC will
be a small part. Thermo will continue to be subject to the
periodic reporting requirements of the Exchange Act and, under
current regulations promulgated thereunder, will continue to
furnish information to the Commission so long as any securities
of Thermo are listed on a national securities exchange or held of
record by at least 300 holders. See "AVAILABLE INFORMATION" AND
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." It is a
condition to CRC's and Thermo's obligations under the Merger
Agreement that the shares of Thermo Common Stock to be issued in
connection with the Merger be listed on the New York Common Stock
Exchange, or approved for listing on the New York Common Stock
Exchange subject to official notice of issuance. See "THE MERGER
-- Conditions to Consummation of the Merger."
The CRC Common Stock is not presently, and will not be after
the Merger, listed or traded in any established market.
It is expected that, following the Merger, the business and
operations of CRC will be continued by Thermo in substantially
the same manner as it has been operating. However, Thermo will
continue to evaluate CRC's business and operations following the
Merger and will make such changes as are deemed appropriate.
If the Merger is consummated, the holders of CRC Common
stock (other than holders of shares with respect to which
statutory dissenters' rights are perfected) will exchange their
shares of CRC Common Stock for Thermo Common Stock. The rights
of CRC shareholders, which are presently governed by Florida law
and by the Articles of Incorporation and By-laws of CRC, will be
governed by Delaware law and the Amended and Restated Certificate
of Incorporation and By-laws of Thermo. Certain differences in
the rights of CRC shareholders will arise as a result of this
change in governing law as well as from distinctions between the
Articles of Incorporation and By-laws of CRC and the Amended and
Restated Certificate of Incorporation and By-laws of Thermo. See
"THE MERGER -- Certain Effects of the Merger" and "COMPARISON OF
RIGHTS OF HOLDERS OF THERMO COMMON STOCK AND CRC COMMON STOCK."
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Interests of Certain Persons in the Merger
Shareholders should be aware that certain officers and
directors of CRC have interests, described below, which may
present them with potential conflicts of interest in connection
with the transaction. Management of CRC, including Thomas J.
Coleman, the sole member of the Board of Directors of CRC, is
aware of the conflicts described below and considered them in
addition to the other matters described under "BACKGROUND OF THE
MERGER AND RELATED MATTERS -- CRC'S Reasons for the Merger."
Upon consummation of the Merger, Mr. Thomas J. Coleman, the
sole member of CRC's Board of Directors, will resign, and Thermo
intends to name James B. Morrison, Richard H. Levine, Martin R.
Adams, Buddy G. Beck and Robert V. Wells to CRC's Board and
Marshall J. Armstrong, a Vice President of Thermo, as Chairman of
the Board. Thermo currently intends that the existing officers
of CRC will retain their offices after the Effective Date, but
may appoint additional officers of CRC from time to time.
Certain members of CRC's management, including Messrs.
Morrison, Levine, Adams, Beck and Wells, have written employment
or compensation agreements with CRC. These agreements will
remain in force through their expiration but will not be renewed;
thereafter, each member of CRC's management will serve CRC as an
employee-at-will. Thermo does not presently intend to change the
base cash compensation of CRC's management. However, Thermo does
intend to amend CRC's management bonus program to award bonuses
to CRC's management and to certain other key employees that are
related to CRC's net income rather than to CRC's revenue.
Certain members of CRC's management, including Messrs. Morrison,
Levine, Adams, Beck and Wells, have the contractual right to
receive grants of options to purchase additional shares of CRC
Common Stock. As a result of the Merger, these rights will be
converted into the right to receive grants of options to purchase
an economically equivalent number of shares of Thermo Common
Stock. As of the date of this Proxy Statement/Prospectus,
whether the changes described above will have the effect of
enhancing or reducing the overall compensation of CRC's
management cannot be determined. See "THERMO AND CRC MANAGEMENTS
-- Executive Officers and Directors of CRC."
It is not anticipated that the directors of CRC will receive
separate compensation for serving in such capacities.
See "APPROVAL OF THE COLEMAN LABORATORIES TRANSACTION."
Certain Employee Benefits Matters
Shares of CRC Common Stock held by the KSOP on the Effective
Date will be automatically converted into shares of Thermo Common
Stock. See "THE MERGER -- Structure and Terms of the Merger" and
"-- Indemnification of Thermo; Escrow." Thermo currently intends
to maintain the KSOP through December 31, 1996. Continuation of
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the plan after that date, however, will depend on the results of
statutory discrimination tests that must be made at that time.
Thermo intends to amend both the 401(k) feature of the KSOP (the
"401(k) Plan") and the employee stock ownership feature of the
KSOP (the "ESOP") shortly after the consummation of the Merger.
As amended, the 401(k) Plan would provide an additional
option to reallocate up to 20% of a participant's account balance
as of the Effective Date in a fund that would purchase shares of
Thermo Common Stock (the "Thermo Stock Fund") and to invest up to
20% of a participant's future contributions in the Thermo Stock
Fund. Subject to the restrictions on resale by certain officers,
directors and principal shareholders of CRC (see "THE MERGER --
Resale of Thermo Common Stock Received in the Merger;
Affiliates"), a participant in the 401(k) Plan may direct the
trustee of the plan to sell shares of Thermo Common Stock held in
such participant's 401(k) Plan account as a result of the Merger
on a quarterly basis and the proceeds of such sales may be
reinvested in accordance with the participant's then-current
investment election.
As amended, the ESOP would provide that participants may
continue to direct the investment of that portion of their
account balances existing on the Effective Date and over which
they have investment discretion in accordance with the current
terms of the ESOP. However, any contributions to the ESOP after
the Effective Date will be made in shares of Thermo Common Stock
and participants generally will not be permitted to direct the
investment of such contributions or to sell shares of Thermo
Common Stock in such participants' accounts as a result of the
Merger. Employees who have achieved age 55 and who have
participated in the ESOP for at least 10 years may, however,
direct the investment of their ESOP balances in accordance with
statutory requirements to allow diversification of retirement
plan holdings.
Thermo also currently intends to maintain the CRC Money
Purchase Plan through December 31, 1996. Again, continuation of
this plan after that date will depend on the results of statutory
discrimination tests that must be made at that time. Thermo
intends to amend the plan shortly after the consummation of the
Merger to provide (i) an additional option to invest up to 10% of
a participant's balances as of the Effective Date and future
employer contributions in the Thermo Stock Fund and (ii) for
investment elections to be made quarterly and separately from
elections made with respect to the KSOP.
Thermo currently intends to maintain all material CRC
employee benefit plans or programs (including CRC's annual bonus
program, tuition reimbursement program and non-interest-bearing
loan program for the purchase of personal computers by employees)
without significant modification after the Effective Date, except
as described above and except that CRC's contract stock options
and CRC's annual stock option bonus program would be amended as
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described on Schedule 4.7 to the Merger Agreement. However,
Thermo has reserved the right to modify or terminate any such
benefit plans or programs, including those described above, at
any time or from time to time after the Effective Date.
All otherwise eligible CRC employees will be entitled to
participate in any employee stock purchase plan adopted from time
to time by Thermo, in accordance with the terms thereof. Except
as may be otherwise required by applicable law, Thermo will give
CRC employees credit for service with CRC when such employees
become eligible for participation in any of Thermo's benefit
plans which have vesting or length of service requirements.
RIGHTS OF DISSENTING SHAREHOLDERS
The rights of holders of shares of CRC Common Stock who
object to the Merger are governed by Section 607.1320 of the
Florida Law ("Section 607.1320"). The following summary of
applicable provisions of Section 607.1320 is not intended to be a
complete statement of such provisions and is qualified in its
entirety by reference to the full text of Section 607.1320, which
is set forth as APPENDIX IV.
If the Merger is consummated, any CRC shareholder complying
with the steps set forth in the provisions of Section 607.1320 is
entitled to have the "fair value" of his or her shares of CRC
Common Stock at the Effective Date (exclusive of any element of
value arising from the accomplishment or expectation of the
Merger) judicially determined and paid to him or her as a
dissenting shareholder under the Florida Law in lieu of receiving
shares of Thermo Common Stock.
In order for any holder of CRC Common Stock to perfect his
or her right to appraisal, such shareholder must satisfy each of
the following conditions:
(i) Such shareholder must deliver to CRC before the
vote on the Merger Agreement is taken at the Special Meeting
written notice of such shareholder's intent to demand
payment for such holder's shares of CRC Common Stock; and
(ii) such shareholder must not vote such shares of CRC
Common Stock in favor of the Merger Agreement. NEITHER
VOTING AGAINST, WHETHER IN PERSON OR BY PROXY, THE MERGER
AGREEMENT NOR FAILING TO VOTE IN FAVOR OF THE MERGER
AGREEMENT WILL CONSTITUTE THE REQUISITE NOTICE OF INTENT TO
DEMAND PAYMENT. Failure to vote on the Merger Agreement
will not constitute a waiver of dissenters' rights, provided
that a written notice is properly and timely filed.
A SHAREHOLDER WHO ELECTS TO EXERCISE DISSENTER RIGHTS SHOULD
MAIL OR DELIVER HIS WRITTEN NOTICE TO COLEMAN RESEARCH
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CORPORATION, 201 SOUTH ORANGE AVENUE, SUITE 1300, ORLANDO,
FLORIDA 32801, ATTENTION: SECRETARY.
If the Merger Agreement is adopted and approved by the
shareholders of CRC at the Special Meeting, then CRC is required,
within ten days after the date of the Special Meeting, to provide
written notice of such adoption and approval to each CRC
shareholder who timely and properly filed a notice of intent to
demand payment for such holder's shares of CRC Common Stock.
Within 20 days after CRC gives such notice, any CRC shareholder
who elects to exercise dissenters' rights must file with CRC a
notice of such election, which notice must include such holder's
name and address, the number and classes of shares as to which
such holder dissents, and a demand for payment of the fair market
value of such holder's shares of CRC Common Stock. A CRC
shareholder who fails to file such an election with such 20-day
period will have waived such holder's dissenter's rights, and
will thereafter only have the right to receive shares of Thermo
Common Stock (and cash in lieu of fractional shares) under the
terms of the Merger Agreement. Any CRC shareholder who elects to
dissent will be required to deposit with CRC the certificates
representing the shares of CRC Common Stock as to which such
holder dissents simultaneously with the filing of the election to
dissent.
Within ten days after the expiration of the period in which
shareholders may file their notices of election to dissent, or
within ten days after the Merger is effected, whichever is later,
CRC will make a written offer to each dissenting shareholder who
followed the procedures set forth in Section 607.1320 to pay an
amount CRC estimates to be the fair value for such shares. If
the shareholder accepts the offer within 30 days of its making,
payment will be made within 90 days after the making of the offer
or the Effective Date, whichever is later.
If CRC fails to make such an offer within the 30-day period,
or if it makes such an offer and any shareholder fails to accept
it within 30 days of its making, then CRC must, within 30 days
after receipt of written notice of election to dissent from any
dissenting shareholder given within 60 days after the Effective
Date, file an action in any court of competent jurisdiction
requesting that the fair value of such shares be determined. If
CRC fails to institute such a proceeding, any dissenting
shareholder may do so in the name of CRC. All dissenting
shareholders, other than those who have agreed with CRC as to the
fair value of their shares, will be made party to such
proceeding, and all such parties will be entitled to judgment
against CRC for the amount of the fair value of their shares of
CRC Common Stock.
CRC shareholders considering seeking appraisal should bear
in mind that the fair value of their shares determined under
Section 607.1320 could be more than, the same as or less than the
value of the consideration they would receive pursuant to the
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Merger if they did not seek appraisal of their shares and that a
significant period of time could elapse before the court
determines such fair value. The cost of the appraisal proceeding
may be charged against CRC or may be determined by the court and
taxed against the parties as the court deems equitable under the
circumstances.
Any CRC shareholder who has duly demanded appraisal in
compliance with Section 607.1320 will not, after the Effective
Date, be entitled to vote, for any purpose, the shares of CRC
Common Stock subject to such demand or to receive payment of
dividends or other distributions payable to shareholders of
record at a date prior to the Effective Date.
COMPARISON OF RIGHTS OF HOLDERS OF THERMO
COMMON STOCK AND CRC COMMON STOCK
The rights of the CRC shareholders are governed by the laws
of the State of Florida, including the Florida Business
Corporation Act (the "Florida Law"), and by CRC's Articles of
Incorporation, as amended (the "CRC Articles"), and CRC's
By-Laws, as amended (the "CRC By-Laws"). Upon consummation of
the Merger, the CRC shareholders will become stockholders of
Thermo and their rights as stockholders and the internal affairs
of Thermo will be governed by the laws of the State of Delaware,
including the General Corporation Law of the State of Delaware
(the "Delaware Law"), and by Thermo's Amended and Restated
Certificate of Incorporation (the "Thermo Certificate"), and
Thermo's By-Laws (the "Thermo By-Laws"), which differ in certain
material respects from Florida Law, the CRC Articles and the CRC
By-Laws. The following is a summary of certain differences
between the rights of CRC shareholders compared with those of
Thermo stockholders.
The following summary does not purport to be a complete
description of the rights of shareholders of CRC or the rights of
stockholders of Thermo or a comprehensive comparison of such
rights, and is qualified in its entirety by reference to the
governing law, to the Thermo Certificate and By-Laws and to the
CRC Articles and By-Laws, to which shareholders are referred.
For more information regarding reviewing or obtaining a copy of
either company's charter documents or by-laws, see "AVAILABLE
INFORMATION."
Amendment of Charter and By-Laws
Section 242 of the Delaware Law provides that stockholders
may amend their corporation's certificate of incorporation if a
majority of the outstanding stock entitled to vote thereon, and a
majority of the outstanding stock of each class entitled to vote
thereon as a class, has been voted in favor of the amendment.
The Delaware Law also provides that after a corporation has
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received any payment for its stock, the power to adopt, amend or
repeal by-laws resides with the stockholders entitled to vote. A
corporation may, however, grant to its board of directors in its
certificate of incorporation concurrent power to adopt, amend or
repeal by-laws.
Under Florida Law, shareholders may amend their articles of
incorporation if the amendment is approved by (i) a majority of
the votes entitled to be cast on the amendment by any voting
group with respect to which the amendment would create dissenter
rights; and (ii) the votes required for voting groups and
multiple voting groups by every other voting group entitled to
vote on the amendment. In addition, a corporation's board of
directors may amend or repeal the corporation's by-laws unless
the articles of incorporation or by-laws provide otherwise.
Thermo. Thermo's Certificate expressly provides that the
board of directors is authorized to adopt, repeal, alter, amend
or rescind Thermo's By-Laws.
CRC. CRC's Articles empower the board of directors to
adopt, alter, amend or repeal CRC's By-Laws.
Certain Actions Requiring Supermajority Votes
Both Delaware Law and Florida Law set certain minimum voting
requirements for selected corporate actions that may be changed
by appropriate provisions contained in a corporation's
certificate of incorporation and/or by-laws.
Thermo. Under Thermo's Certificate, the votes of the
holders of 66-2/3% of the shares of stock then entitled to vote
for the election of directors of the Corporation ("Voting Stock")
are required for the following actions: (i) the merger of Thermo
into another corporation or other business entity, (ii) the
merger of another corporation or other business entity into
Thermo, (iii) the consolidation of Thermo with another
corporation or other business entity, (iv) the sale, exchange,
lease or other transfer all or substantially all of Thermo's
assets to any other person, (v) dissolution, (vi) amendments to
Thermo's Certificate and (vii) amendments to Thermo's By-laws or
ratification of the amendment thereof by Thermo's Board of
Directors.
Thermo's Certificate further provides that, in the event
that any corporation or other business entity, together with all
affiliates thereof, owns beneficially, directly or indirectly,
25% or more of the outstanding Thermo Common Stock (a "Related
Entity"), the vote of the holders of 85% of all shares of the
Voting Stock exclusive of all shares the Voting Stock held by
Related Entities shall be required for any of the following
actions: (i) the merger of Thermo into a Related Entity, (ii) the
merger of a Related Entity into Thermo, (iii) the consolidation
of Thermo with a Related Entity, (iv) the sale, exchange, lease
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or other transfer all or substantially all of Thermo's assets to
a Related Entity, (v) the acquisition of an interest in a Related
Entity through the issuance of Thermo's stock, the exchange of
Thermo's assets or otherwise, (vi) the entering into of any
agreement to take any of the actions contemplated by the
preceding clauses (i) through (v), (vii) the further amendment of
Thermo's Certificate relating to the actions contemplated by the
preceding clauses (i) through (vi) or amendment of Thermo's
By-Laws or the ratification of the amendment thereof by Thermo's
Board of Directors in such regard. For these purposes, Thermo's
Certificate defines an "affiliate" of any entity as any person
which controls, is controlled by or is under common control with
that entity, and any officer or director of that entity or any
other affiliate thereof and any person which owns beneficially,
directly or indirectly, 10% or more of any class of equity
securities of that entity or any other affiliate thereof.
Thermo's Certificate also contains a requirement that if any
person acquires by tender offer more than 50% of the outstanding
Thermo Common Stock and Thermo's Board of Directors does not
recommend that the tender offer be accepted, each remaining
Thermo stockholder will have the right to have his shares
redeemed by Thermo at a price generally equal to the tender offer
price.
CRC. Neither the CRC Articles nor the CRC By-Laws require
the vote of the holders of more than a majority of the CRC Common
Stock to approve any corporate action.
Board of Directors
Under both Delaware Law and Florida Law, a corporation's
board of directors must consist of one or more individuals, with
the number fixed by (or in the manner provided in) the
corporation's by-laws or its certificate of incorporation or
articles, respectively.
Thermo. Under Thermo's By-Laws, Thermo's Board shall
consist of between eight and twelve directors. Thermo's By-Laws
state that the directors will be divided into three classes, as
nearly as equal in number as possible, with each class of
director being elected to serve for three years. Currently,
Thermo's Board has set the number of directors at ten. The
provisions for classification of the Board, which are designed to
provide continuity and longer-term participation on the Board,
would prevent stockholders holding a majority of shares of Thermo
Common Stock outstanding from electing a majority of the
directors of Thermo at any one annual meeting of stockholders.
Such provisions may discourage or render more difficult certain
transactions, whether or not beneficial to public stockholders,
and could discourage certain types of tactics which involve an
actual or threatened change of control of Thermo because at least
two annual meetings of stockholders could be required to replace
a majority of the Board.
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CRC. The CRC By-Laws state that the Board shall consist of
one director and that such director shall serve a term of one
year.
Removal of Directors
Delaware Law permits any director or the entire board of
directors to be removed, with or without cause, by the vote of
the holders of a majority of the shares entitled to vote.
Directors of a corporation with a classified board of directors,
however, such as Thermo, can be removed only for cause unless the
certificate of incorporation provides otherwise.
Under Florida Law, the shareholders may remove one or more
directors with or without cause unless the articles of
incorporation provide otherwise. However, if a director is
elected by a voting group of shareholders, only the shareholders
of that voting group may participate in the vote to remove him.
Thermo. Neither Thermo's Certificate nor its By-Laws
specifically address the requirements for the removal of
directors generally. Therefore, a Thermo director may be removed
by stockholders only for cause. Any vacancy on the board
resulting from any increase in the authorized number of directors
may be filled only by a majority of the directors then in office,
provided that a quorum is present. Any other vacancy on the
board may be filled only by a majority of the directors then in
office, even if less than a quorum, or by a sole remaining
director.
CRC. CRC's By-Laws provide that any director may be removed
from office, either with or without cause, at any time. Any
vacancy occurring in the board of directors may be filled by the
affirmative vote of a majority of the remaining directors then in
office or by the CRC shareholders.
Special Meeting of the Stockholders
Under both Delaware Law and Florida Law, special meetings of
stockholders may be called by the board of directors and by such
other person or persons authorized to do so by the corporation's
certificate or articles of incorporation or by-laws.
Additionally, under Delaware Law, if an annual meeting is not
held within 30 days of the date designated for such a meeting, or
is not held for a period of 13 months after the last annual
meeting, the Delaware Court of Chancery may summarily order a
meeting to be held upon the application of any stockholder or
director.
Under Florida Law, holders of at least 10%, unless a greater
percentage not to exceed 50% is required by the articles of
incorporation, of all the votes entitled to be cast on any issue
proposed to be considered at the proposed special meeting who
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sign, date, and deliver to the corporation one or more written
demands for the meeting describing the purpose or purposes for
which it is to be held may call a special meeting. Additionally,
the circuit court of the county where a corporation's principal
office is located may order (i) an annual meeting on application
of any shareholder entitled to vote in an annual meeting if an
annual meeting has not been held within any 13-month period; or
(ii) a special meeting on application of a shareholder who signed
a demand for a special meeting if (a) notice of the special
meeting was not given within 60 days after the date the demand
was delivered to the corporation's secretary; or (b) the special
meeting was not held in accordance with the notice.
Thermo. Pursuant to Thermo's By-Laws, special meetings of
the stockholders may be called by the President and shall be
called by the President, Secretary or an Assistant Secretary when
directed to do so by the Board.
CRC. Under CRC's By-Laws, special meetings of the
shareholders may be called by the Chairman of the Board, the
Board of Directors, the Chief Executive Officer, the President or
on call signed by one or more shareholders holding an aggregate
of not less than 10% of the outstanding shares entitled to vote
at the meeting.
Actions by Stockholders Without a Meeting
Unless a corporation's certificate of incorporation or
articles provide otherwise, Delaware Law and Florida Law allow
any action required to be taken, or which may be taken, at an
annual or special meeting of stockholders to be taken without
prior notice and without a vote so long as the written consent of
not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted is delivered to
the corporation.
Thermo. Neither Thermo's Certificate nor its By-Laws
address the issue relating to actions by shareholders without a
meeting. However, the rules of the New York Stock Exchange, on
which the Thermo Common Stock is listed for trading, generally
prohibit listed corporations from taking actions by written
consent.
CRC. The CRC By-Laws provide that any action required or
permitted to be taken by the shareholders may be taken without a
meeting if such action is approved by the minimum number of votes
that would be necessary to authorize or take the action at a
meeting at which such shareholders were present and voted. In
order to be effective, such action must be evidenced by one or
more written consents describing the action, dated and signed by
the shareholders, and delivered to CRC within 60 days of the
earliest consent. Shareholders who did not consent to the action
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taken must receive notice of such action within 10 days after the
receipt of the written consent.
Cumulative Voting
Under Delaware Law, cumulative voting in the election of
directors is available only if specifically provided for in a
corporation's certificate of incorporation. Under Florida Law,
the articles of incorporation of a corporation may provide for
cumulative voting in the election of directors. Neither Thermo's
Certificate nor CRC's Articles provide for cumulative voting.
Vote Required for Certain Mergers and Consolidations
Delaware Law insofar as it relates to mergers and other
corporate reorganizations does not differ substantially from
Florida Law. Both Florida Law and Delaware Law provide for a
shareholder vote (except as indicated below) of both the
acquiring and acquired corporation to approve mergers. In
addition, while both Florida Law and Delaware Law require a
shareholder vote of the selling corporation for the sale by a
corporation of all or substantially all of its assets, Florida
Law requires such a vote only if the sale is not in the regular
course of business. Both Florida Law and Delaware Law provide
for a shareholder vote to approve the dissolution of a
corporation. Yet, Florida Law requires the affirmative vote of a
majority of the outstanding shares of both the acquiring and
acquired corporation in share-for-share exchanges while Delaware
Law does not provide this right.
Both Florida Law and Delaware Law do not require a
shareholder vote of the surviving corporation in a merger
provided certain conditions are satisfied. Florida Law requires
that after the merger (i) the articles of incorporation of the
surviving corporation will not differ from its articles before
the merger (except for amendments authorized absent shareholder
approval); and (ii) each shareholder of the surviving corporation
whose shares were outstanding immediately prior to the effective
date of the merger will hold the same number of shares, with
identical designations, preferences, limitations, and relative
rights, immediately after the merger. Delaware Law does not
require a shareholder vote of the surviving corporation in a
merger if (i) the merger agreement does not amend the existing
certificate of incorporation; (ii) each outstanding or treasury
share of the surviving corporation before the merger is unchanged
after the merger; and (iii) the number of shares to be issued by
the surviving corporation in the merger does not exceed 20% of
the shares outstanding immediately prior to such issuance.
Both Florida Law and Delaware Law do not require a
shareholder vote for certain "short-form mergers" between a
parent company and its subsidiary. Florida Law provides that the
subsidiary be 80% owned by the parent while Delaware Law requires
that the subsidiary be 90% owned by the parent.
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Class Vote for Certain Reorganizations
Generally, neither Florida Law nor Delaware Law require
class voting. However, Florida Law provides that class or series
voting as a separate voting group is required (i) on a plan of
merger if the plan contains a provision which, if contained in a
proposed amendment to the articles of incorporation, would
entitle the class or series to vote as a separate voting group on
the proposed amendment; or (ii) on a plan of share exchange if
the shares of such class or series of shares are to be converted
or exchanged under such plan or if the plan contains any
provisions which, if contained in a proposed amendment to
articles of incorporation, would entitle the class or series to
vote as a separate voting group on the proposed amendment.
Delaware Law requires class voting where the transaction involves
an amendment to the certificate of incorporation which would
increase or decrease the aggregate number of authorized shares of
the class, increase or decrease the par value of the shares of
the class, or alter or change the powers, preferences or special
rights of the shares of the class so as to affect them adversely.
Dissenter Rights
Under both Florida Law and Delaware Law, a dissenting
shareholder of a corporation participating in certain
transactions, under varying circumstances, may receive cash in
the amount of the fair value of his or her shares (as determined
by a court) in lieu of the consideration otherwise receivable in
any such transaction. Unless the articles of incorporation
provide otherwise, under both Florida Law and Delaware Law,
dissenter rights are not available with respect to a plan of
merger or share exchange or a proposed sale or exchange of
property to holders of shares of any class or series which, on
the record date fixed to determine the shareholders entitled to
vote at the meeting of shareholders at which such action is to be
acted upon or to consent to any such action without a meeting,
were (i) registered on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities
Dealers, Inc., or (ii) held of record by not fewer than 2,000
shareholders. In addition, under Delaware Law, dissenter rights
are not available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require
shareholder approval of the surviving corporation.
Florida Law also provides dissenter rights in connection
with (i) sales of substantially all of a corporation's assets,
(ii) amendments to the articles of incorporation that may
adversely affect certain rights of preferences of shareholders
and (ii) control-share acquisitions. Delaware Law does not
provide dissenter rights with respect to any sale of assets,
reclassification of stock or amendment to the certificate of
incorporation.
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Anti-Takeover Statutes
Thermo. Thermo is subject to Section 203 of the General
Corporation Law of the State of Delaware ("Section 203"), which
regulates large accumulations of shares, including those made by
tender offers. Section 203 may have the effect of significantly
delaying a purchaser's ability to acquire the entire interest in
Thermo if such acquisition is not approved by Thermo's Board of
Directors. In general, Section 203 prevents an "Interested
Stockholder" (defined generally as a person with 15% or more of a
corporation's outstanding voting stock) from engaging in a
"Business Combination" (defined below) with a Delaware
corporation for three years following the date such person became
an Interested Stockholder. For purposes of Section 203, the term
"Business Combination" includes sales, or other dispositions to
the Interested Stockholder (except proportionately with the
corporation's other shareholders) of assets of the corporation or
a subsidiary equal to 10% or more of the aggregate market value
of the corporation's consolidated assets or its outstanding
stock; the issuance or transfer by the corporation or a
subsidiary of stock of the corporation or such subsidiary to the
Interested Stockholder (except for transfers in a conversion or
exchange or a pro rata distribution or certain other
transactions, none of which increase the Interested Stockholder's
proportionate ownership of any class or series of the
corporation's or such subsidiary's stock); or receipt by the
Interested Stockholder (except proportionately as a stockholder),
directly or indirectly, of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the
corporation or a subsidiary.
The three-year moratorium imposed on Business Combinations
by Section 203 does not apply if: (a) prior to the date on which
such stockholder becomes an Interested Stockholder the Board of
Directors approves either the Business Combination or the
transaction which resulted in the person becoming an Interested
Stockholder; (b) the Interested Stockholder owns 85% of the
corporation's voting stock upon consummation of the transaction
which made him or her an Interested Stockholder (excluding from
the 85% calculation shares owned by directors who are also
officers of the target corporation and shares held by employee
stock plans which do not permit employees to decide
confidentially whether to accept a tender or exchange offer); or
(c) on or after the date such person becomes an Interested
Stockholder, the Board approves the Business Combination and it
is also approved at a stockholder meeting by holders of 66-2/3%
of the voting stock not owned by the Interested Stockholder.
Under Section 203, the restrictions described above do not
apply if, among other things, the corporation's original
certificate of incorporation contains a provision expressly
electing not to be governed by Section 203. Thermo's Certificate
does not contain such a provision. Thermo could, at its option,
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exclude itself from the coverage of Section 203 by amending its
Certificate or By-laws at any time to exempt itself from
coverage; but a By-Law or charter amendment may not become
effective for a period of 12 months after the amendment is
adopted. The restrictions described above do not apply to
certain Business Combinations proposed by an Interested
Stockholder following the announcement or notification of one of
certain extraordinary transactions involving the corporation and
a person who had not been an Interested Stockholder during the
previous three years or who became an Interested Stockholder with
the approval of a majority of the corporation's directors.
Section 203 is currently under challenge in lawsuits arising
out of ongoing takeover disputes, and it is not yet clear whether
and to what extent its constitutionality will be upheld by the
courts. Although the United States District Court of Delaware
has consistently upheld Section 203, the Delaware Supreme Court
has not yet considered the issue. Thermo believes that, so long
as the enforceability of Section 203 is upheld, Section 203 will
encourage any potential acquirer to negotiate with Thermo's Board
of Directors prior to effecting any takeover attempt. Section 203
also should have the effect of limiting the ability of a
potential acquirer to make a two-tiered bid in which all of
Thermo's stockholders would not be treated equally. Section 203
should also discourage certain potential acquirers unwilling to
comply with its provisions. Shareholders should note that the
application of Section 203 to Thermo will confer upon the Board
the power to reject a proposed Business Combination, even though
a potential acquirer may be offering a substantial premium for
Thermo's shares over the then-current market price.
CRC. Section 607.0901 of Florida Law contains a provision
generally similar to Section 203. Section 607.0901 provides
that, in addition to any affirmative vote required by Florida Law
or the articles of incorporation, an affiliated transaction must
be approved by the affirmative vote of the holders of two-thirds
of the voting shares other than the shares beneficially owned by
the interested shareholder (which is defined generally under
Florida Law as a person with 10% or more of a corporation's
outstanding voting shares). The voting requirement does not
apply if (i) the affiliated transaction has been approved by a
majority of the disinterested directors; (ii) the corporation has
not had more than 300 shareholders of record at any time during
the three years preceding the announcement date; (iii) the
interested shareholder has been the beneficial owner of at least
80 percent of the corporation's outstanding voting shares for at
least five years preceding the announcement date; (iv) the
interested shareholder is the beneficial owner of at least 90
percent of the outstanding voting shares of the corporation,
exclusive of shares acquired directly from the corporation in a
transaction not approved by a majority of the disinterested
directors; (v) the corporation is an investment company
registered under the Investment Company Act of 1940; or (vi) in
the affiliated transaction, consideration is paid to the holders
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of each class or series of voting shares pursuant to stringent
valuation standards.
Additionally, this section does not apply (i) to any
corporation whose articles of incorporation, either as originally
adopted or as amended prior to January 1, 1989, contain a
provision expressly electing not to be governed by this section;
(ii) to any corporation which adopts an amendment of its articles
of incorporation or by-laws, approved by affirmative vote of the
holders, other than interested shareholders, of a majority of the
outstanding voting shares of the corporation expressly electing
not to be governed by this section (although the amendment is not
valid for 18 months); or (iii) to any affiliated transaction of
the corporation with an interested shareholder of the corporation
which became an interested shareholder inadvertently, if such
interested shareholder, as soon as practicable, divests itself of
a sufficient amount of the voting shares of the corporation so
that it no longer is the beneficial owner of 10 percent or more
of the outstanding shares of the corporation and would not at any
time within the five-year period preceding the announcement date
with respect to such affiliated transaction have been an
interested shareholder but for such inadvertent acquisition.
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Stockholder Rights Agreement
Thermo has declared a dividend of one right to purchase
1/1,000 of a share of Series A
Junior Participating Preferred Stock for each outstanding share
of Thermo Common Stock, pursuant to the provisions of a Rights
Agreement. These rights, commonly referred to as a "poison
pill," may have certain anti-takeover effects. See "DESCRIPTION
OF THERMO'S CAPITAL STOCK -- Preferred Share Purchase Rights;
Series A Junior Participating Preferred Stock." CRC does not
have a comparable shareholder rights agreement.
Preemptive Rights
Thermo. Delaware Law generally permits a Delaware
corporation to provide its stockholders with the preemptive right
to subscribe to capital stock or securities convertible into
stock in its certificate of incorporation. The Thermo
Certificate does not provide for preemptive rights.
CRC. Florida Law generally provides that shareholders of a
Florida corporation do not have a preemptive right to acquire
unissued shares, except to the extent provided in the articles of
incorporation. The CRC Articles do not provide for preemptive
rights.
Dividends
Thermo. Delaware Law provides that a corporation, unless
otherwise restricted by its certificate of incorporation, may
declare and pay dividends out of surplus, or if no surplus
exists, out of net profit for the fiscal year in which the
dividend is declared or the preceding fiscal year (provided that
the amount of capital of the corporation following the
declaration and payment of the dividend is not less than the
aggregate amount of the capital represented by the issued and
outstanding shares of all classes having preference upon the
distribution of assets). Additionally, Delaware Law provides
that, in general, a corporation may redeem or repurchase its
shares only out of surplus.
CRC. Florida Law provides that a corporation, unless
otherwise restricted by its articles of incorporation, may
authorize distributions unless after giving the distribution
effect (i) the corporation would not be able to pay its debts as
they become due in the usual course of business; or (ii) the
corporation's total assets would be less than the sum of its
total liabilities plus the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution,
to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those
receiving the distribution.
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Limitation on Director's Liability; Indemnification
In general, Delaware Law contains more extensive
indemnification provisions than does Florida Law. Under Delaware
Law, the corporation may include in its certificate of
incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director
under a broad range of circumstances. Thermo's Certificate
includes a provision which eliminates the directors' liability
for monetary damages for a breach of the directors' duty of care
to Thermo or its stockholders (the "Delaware Duty of Care
Provision"). As a result of the Delaware Duty of Care Provision,
no director of Thermo will be liable for monetary damages for
negligence or gross negligence occurring after the Merger. Each
director will remain personally liable to Thermo for failure to
act in good faith or to comply with his or her duty of loyalty to
Thermo. The directors will continue to be subject to equitable
remedies, although such remedies in some circumstances may not be
available as a practical matter. In addition, under Delaware
Law, each director will remain liable for engaging in a
transaction from which such director derives an improper personal
benefit or for engaging in intentional misconduct or a knowing
violation of law. Moreover, the Delaware Duty of Care Provision
also will not limit directors' liability for violations of the
federal securities laws. With regard to directors who are also
officers of Thermo, these persons would be insulated from
liability only with respect to their conduct as directors and
would not be insulated from liability for acts or omissions in
their capacity as officers.
Florida Law contains a provision similar to the Delaware
Duty of Care Provision. Under Section 607.0831 of Florida Law,
directors are not personally liable to monetary damages to the
corporation or any other person, unless: (i) the director
breached or failed to perform his duties as a director; and (ii)
the director's breach of or failure to perform those duties
constitutes: (a) a violation of the criminal law (unless the
director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful);
(b) a transaction from which the director derived an improper
personal benefit; (c) a circumstance under which the director
would be liable for authorizing an unlawful distribution; (d) in
a proceeding by or in the right of the corporation to procure a
judgment in its favor or by or in the right of a shareholder,
conscious disregard for the best interests of the corporation, or
willful misconduct; or (e) in a proceeding by or in the right of
someone other than the corporation or a shareholder, recklessness
or an act or omission which was committed in bad faith or with
malicious purpose or in a manner exhibiting wanton and willful
disregard of human rights, safety or property.
Delaware Law authorizes the corporation to indemnify any
person or party to any threatened, pending or completed action,
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suit or proceeding, other than an action by or in the right of
the corporation, by reason of the fact that he or she was serving
as a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation at a like
position of another corporation (the "Indemnitee") against
expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action
if the Indemnitee acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best
interests of the corporation (or, with respect to a criminal
action, had no reasonable cause to believe his or her conduct was
unlawful). Florida Law contains a similar provision which
authorizes the corporation to indemnify such person against
liability incurred in connection with such action if he or she
acted with the same requisite conduct.
Delaware Law also authorizes the corporation to indemnify
such person in connection with any threatened, pending or
completed action by or in the right of the corporation to procure
a judgment in its favor against expenses actually and reasonably
incurred by him or her in connection with the defense or
settlement of such action if he or she acted with the requisite
conduct. Florida Law authorizes the corporation to indemnify such
person against expenses and amounts paid in settlement not
exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion,
actually and reasonably incurred in connection with the defense
or settlement of such proceeding. However, under Florida Law, to
the extent an Indemnitee is successful on the merits or otherwise
in defense of any proceeding (whether or not by or in the right
of the corporation), or in defense of any claim, issue or matter
therein, such Indemnitee shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith.
Under both Florida Law and Delaware Law, the corporation
must provide for indemnification on a case by case basis after a
determination that the Indemnitee met the applicable standard of
conduct. Similarly, both laws provide that the determination is
made in the first instance by the Board of Directors by a
majority vote of a quorum consisting of directors who were not
parties to such proceeding. However, under Florida Law, if such
a quorum is not obtainable, or, even if obtainable if the board
of directors (including directors who are parties) so directs,
the determination must be made by majority vote of a committee
duly designated by the board of directors consisting solely of
two or more directors not at the time parties to the proceeding,
by independent legal counsel or finally by the shareholders.
Under Delaware Law, if a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, the
determination must be made by independent legal counsel in a
written opinion or by the stockholders.
Furthermore, both Florida Law and Delaware Law provide that
a corporation may make other or further indemnification or
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advancement of expenses of any of its directors, officers,
employees or agents under any by-law, agreement, vote of
shareholders or disinterested directors, or otherwise both as to
action in an official capacity and as to action in another
capacity while holding such office. Thermo has indemnification
agreements with its directors and officers that provide for the
maximum indemnification allowed by law.
Thermo's Certificate takes advantage of the permissive
Delaware indemnification laws and provides that: (i) Thermo is
required to indemnify its officers and directors to the full
extent permitted by law; and (ii) expenses incurred in defending
a civil or criminal action, suit or proceeding may be paid by
Thermo in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by Thermo.
CRC's Articles provide that the Board of Directors may
indemnify current or former directors, officers, employees or
agents of CRC, and any person serving, or who has served, at the
request of CRC as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise to the full extent permitted by the laws of the State
of Florida.
Loans to Officers and Employees
Both Florida Law and Delaware Law provide that a corporation
may make loans to, or guarantee the obligations of, or otherwise
assist, its officers and other employees and those of its
subsidiaries when such action, in the judgment of the
corporation's board of directors, may reasonably be expected to
benefit the corporation. However, while Florida Law authorizes
the corporation to make a loan to, or guarantee the obligations
of, or otherwise assist a director as well, Delaware Law applies
only to those directors who also are officers or employees of the
corporation or subsidiary.
Voting By Ballot
Under Delaware Law, each shareholder has the right to
require a vote by written ballot for the election of directors at
a shareholder meeting unless otherwise restricted as provided in
the certificate of incorporation.
There is no similar voting provision in the Florida Law.
Inspection of Shareholder Lists
Florida Law provides that a shareholder may inspect the
shareholders' list if (i) his demand is made in good faith and
for a proper purpose; (ii) he describes with reasonable
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particularity his purpose; and (iii) the shareholders' list is
directly connected with his purpose. Additionally, Florida Law
provides to any shareholder an absolute right of inspection of
the shareholders' list for a ten-day period preceding a
shareholder meeting. Delaware Law provides to any shareholder of
record the right to inspect the shareholder list of the
corporation for any purpose germane to the meeting for a ten-day
period preceding a shareholder meeting.
DESCRIPTION OF THERMO'S CAPITAL STOCK
The authorized capital stock of Thermo consists of
175,000,000 shares of common stock, $1.00 par value per share
(the "Thermo Common Stock"), 10,000 shares of Preferred Stock,
$100.00 par value per share (the "Thermo Preferred Stock"), and
40,000 shares of Series A Junior Participating Preferred Stock
("Series A Preferred Stock").
Common Stock
Holders of Thermo Common Stock are entitled to one vote per
share on all matters to be voted upon by the stockholders. There
are no cumulative voting rights. The holders of Thermo Common
Stock have no preemptive rights or rights to convert their Thermo
Common Stock into any other securities. The Thermo Common Stock
is not subject to redemption. Upon any liquidation, distribution
or sale of assets, dissolution or winding up of Thermo, the
holders of Thermo Common Stock are entitled to share pro rata in
the assets of Thermo available for distribution after provision
for the payment of creditors and subject to the preferential
rights of any then outstanding Thermo Preferred Stock. The
outstanding shares of Thermo Common Stock are fully paid and
nonassessable. There are no restrictions on transferability
contained in Thermo's Certificate or Thermo's By-Laws. Subject
to preferences that may be applicable to any outstanding shares
of Thermo Preferred Stock, holders of Thermo Common Stock are
entitled to receive ratably such dividends as may be declared by
the Board of Directors out of funds legally available therefor.
The Thermo Common Stock is listed on the New York Stock Exchange.
As of December 15, 1994, there were outstanding 50,857,477
shares of Thermo Common Stock. Additional information concerning
the rights of holders of Thermo Common Stock, including
information with respect to the division of the Thermo Board of
Directors into three classes, is set forth under "COMPARISON OF
RIGHTS OF HOLDERS OF THERMO COMMON STOCK AND CRC COMMON STOCK."
Preferred Stock
The Board of Directors of Thermo may, without further action
of Thermo's stockholders, issue up to 10,000 shares of Thermo
Preferred Stock, in one or more classes and one or more series
and fix the number of shares constituting any such class or
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series. The Board may similarly fix the rights and preferences
of any class or series of Thermo Preferred Stock, including the
dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption (including sinking fund provisions),
maturity dates, redemption prices and liquidation preferences.
The rights of the holders Thermo Common Stock will be subject to,
and may be adversely affected by, the rights of holders of any
Thermo Preferred Stock that may be issued in the future.
Issuance of Thermo Preferred Stock could have the effect of
making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of the
outstanding voting stock of Thermo.
Preferred Share Purchase Rights; Series A Junior Participating
Preferred Stock
On May 4, 1988, Thermo's Board of Directors declared a
dividend distribution of one right (a "Right") for each
outstanding share of Thermo Common Stock to stockholders of
record at the close of business on May 26, 1988. The Board of
Directors of Thermo has previously designated 40,000 shares of
Preferred Stock for issuance upon the exercise of such Rights.
The description and terms of the Rights and the Series A
Preferred Stock are set forth under Item 1 to Thermo's
Registration Statement on Form 8-A, declared effective by the
Commission on June 25, 1988, as amended, and in a Rights
Agreement between Thermo and The First National Bank of Boston,
as Rights Agent. See "AVAILABLE INFORMATION," "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE" and "COMPARISON OF RIGHTS OF
HOLDERS OF THERMO COMMON STOCK AND CRC COMMON STOCK."
RELATIONSHIP AND TRANSACTIONS BETWEEN
THERMO AND CRC
CRC and one of Thermo's subsidiaries, Thermedics Inc., have
worked together since 1990. CRC was a subcontractor to
Thermedics in the development of a hand-held mine detection
system for the U.S. Government, CRC providing the
ground-penetrating radar and Thermedics providing the chemical
detection systems. Thermedics is currently a subcontractor to
CRC in the development of a robotically controlled vehicle to
allow remote chemical analysis of potentially contaminated
facilities for the U.S. Department of Energy. CRC and another
Thermo subsidiary, Thermo Technology Ventures Inc., are teammates
in support of Lockheed in the execution of the management and
operations contract at Idaho National Engineering Laboratories.
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BUSINESS OF CRC
CRC was formed in October 1980 to provide systems
integration, systems engineering, and analytical services to both
government and industry. CRC currently has approximately 1,200
employees. CRC, headquartered in Orlando, Florida, has technical
operations in Orlando, Florida; the Washington DC area;
Huntsville, Alabama; Idaho Falls, Idaho; Charleston, South
Carolina; and other locations throughout the United States.
From its inception, with a core expertise in systems
engineering, simulation and modeling, and analysis, CRC has built
a broad-based expertise in defense and environmental systems
engineering disciplines and in a growing number of other research
areas. CRC is currently providing, under a $218 million contract
with the U.S. Army Space and Strategic Defense Command ("SSDC"),
the assembly, integration and launch of 75 Department of Defense
(DOD) payloads into suborbital flight. These payloads are
intended to serve as targets for Theater Missile Defense flight
experiments. Under this contract, CRC is responsible for the
development and analysis of precision guidance and control
systems, missile and ground support equipment design and
integration, simulation, ground testing, flight testing, and
launch services (the "TMD Targets Project").
CRC has developed a hand-held mine detection system for the
detection of a wide variety of non-metallic anti-personnel and
anti-vehicular mines. This system is currently completing the
prototype stage and extensive testing is expected to begin in the
near future. CRC has also integrated the electronics for a
cellular telephone with a Global Positioning System (GPS)
satellite receiver and a microprocessor to develop a mobile
position locating device for the real-time tracking of vehicles.
CRC performs Systems Engineering and Technical Assistance
(SETA) contracts for DOD and other government agencies. CRC's
SETA contracts include those with the SSDC in Huntsville, Alabama
to support the Theater High Altitude Area Defense (THAAD) Theater
Missile Defense System (the "THAAD SETA Project"); the Naval
Training Systems Center in Orlando, Florida to support Army and
Navy training systems; and the Ballistic Missile Defense
Organization (BMDO) in Washington DC to support strategic defense
analysis.
CRC provides systems engineering and systems integration
support to the United States intelligence community. CRC is
actively involved in the design of signals collection
architectures, as well as the development of mission management
and message dissemination systems. CRC is also developing
signals identification analysis techniques for applications on
workstations and super computers.
CRC has a strong, multi-disciplinary capability in
information technology, including local area and wide area
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network and data base requirements analysis, design, and
implementation. CRC is developing virtual prototype environments
for the "virtual" integration of large, complex systems in a
laboratory environment. CRC has significant involvement in
Distributed Interactive Simulation technologies, whereby remote
disparate elements can be linked in a real-time environment for
enhanced training and strategy development. CRC's simulation and
modeling expertise covers virtually all contemporary software
languages, including a significant capability in Ada. In
addition, CRC performs software engineering and analysis for the
Drone Formation Control System at White Sands Missile range,
controlling multiple aircraft and ground target commanded drones
autonomously.
Coleman Energy and Environmental Systems (CEES) was formed
in 1991 as a division of CRC to provide scientific engineering
and management support for energy and environmental programs.
Many innovative technical and management ideas successfully used
by CRC to support other clients have proven directly applicable
to energy and environmental problems. Technologies developed by
CRC include an eye-safe Coherent Laser Radar 3-D mapper and
precision measurement system; a robotically operated Facility
Characterization System with both optical and chemical sensors;
Data Fusion, whereby complex dissimilar data generating systems
can be combined to provide 3-D subsurface imaging; and improved
ground penetrating radar for greater exploration depths and
sophisticated 3-D subsurface imaging.
In support of the Office of Environmental Restoration and
Waste Management at the Headquarters of the Department of Energy
(DOE), CRC provides engineering and technical analysis,
administrative and financial management support services, quality
assurance and assessment support services, task force support and
education, training and logistical support for outreach
activities (the "EM-10 Project").
In October 1994, CRC, as a member of the Lockheed team, won
a five-year cost plus award fee contract with a present value of
approximately $100,000,000 to support the management and
operations of the Idaho National Engineering Laboratory near
Idaho Falls, Idaho (the "INEL Project"). Under this contract,
CRC will provide centralized training to augment and develop
technical training programs for the conduct of operations,
compliance training, criticality training, environmental safety
and health training, and other training skills. In addition, CRC
will provide data base design architecture definition and other
related data base support.
To continue its diversification, in early 1993, CRC
initiated a Health Systems Engineering Operation to bring its
successful systems engineering methodology and technology
developments to the health systems area. CRC recently won a
contract with the State of South Carolina to provide facilities
management to the Center for Computing and Information Technology
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at the Medical University of South Carolina. CRC will provide
services in the areas of health care systems, academic and
research computing, University financial systems, University
business systems, infrastructure systems, customer service teams,
enterprises support services, and financial analysis systems. As
part of this effort, CRC will evaluate technologies developed for
federal government applications for their applicability to health
care and medical information systems. CRC is also supporting the
Medical University of South Carolina in a number of other high
technology initiatives and is conducting investigative and
therapeutic clinical trials for pharmaceutical manufacturers.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF CRC
General
CRC was formed in October 1980 to provide systems
integration, systems engineering, and analytical services to both
government and industry.
CRC's revenues are derived primarily from contract services
provided by it to the U.S. Department of Defense and the U.S.
Department of Energy. These services are generally provided
either under cost-reimbursement contracts, which provide for the
reimbursement of direct costs and allowable indirect costs, plus
a fee or profit component, or under firm fixed-price contracts,
which provide a fixed price for stipulated systems or services to
be provided by CRC. Cost-reimbursement contracts are typically
billable monthly or bi-monthly while fixed-price contracts
generally provide for progress payments based on the attainment
of specified milestones.
CRC's recent growth can be primarily attributed to its
success in attracting larger contracts than in the past and to
certain acquisitions made by CRC in its efforts to diversify the
areas in which it provides services.
In October of 1992, the TMD Targets Program was awarded to
CRC as a four-year cost plus fixed fee procurement with the U.S.
Army Space and Strategic Defense Command in Huntsville, Alabama
with a present value of approximately $197,000,000, including all
options. In January 1993, the EM-10 Program was awarded to CRC
as a five-year cost plus fixed fee level of effort procurement
with the Department of Energy Headquarters in Washington D.C.
with a present value of approximately $53,000,000, including all
options. In December 1992, the THAAD SETA Program was awarded to
CRC as a five-year cost plus award fee task assignment program
with the U.S. Army Space and Strategic Defense Command in
Huntsville, Alabama with a present value of approximately
$57,000,000, including all options.
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CRC's acquisitions include the acquisition in 1990 of two
businesses providing military sciences and software and controls,
in 1992 and 1993 of two businesses providing environmental
services and in 1992 of a business providing intelligence and
information technology services.
Revenues
Contract revenues for the 9-month period ended September 30,
1994 increased 47% to $107,361,000 from $72,816,000 for the same
period in the prior year. The increase for the 9-month period
resulted primarily from the maturing of the EM-10, TMD Targets
and THAAD SETA Programs awarded to CRC during late 1992 and early
1993.
Contract revenues increased to $104,790,000 in 1993 from
$50,256,000 in 1992, a 109% increase. Contract revenues
increased to $50,256,000 in 1992, a 36% increase over 1991
contract revenues of $37,054,000. The increase in contract
revenues for 1993 from 1992 was primarily due to initial revenues
from new contracts awarded to CRC from October of 1992 through
January of 1993. The increase in contract revenues in 1992 from
1991 was primarily due to the continued growth of ongoing
business, the acquisition of an intelligence and information
technology services business in 1992 and CRC's initial entry into
the Department of Energy Headquarters support and the awards of
the TMD Targets Program in October 1992.
Costs and Expenses
Cost of contract revenues as a percentage of contract
revenues during the 9-month period ended September 30, 1994
decreased to 90.8 % from 93.0 % for the same period in the prior
year. This decrease was the result of higher than normal
start-up expenses incurred during the 1993 period in connection
with new contracts.
The cost of contract revenues as a percentage of contract
revenues increased to 94.2% in 1993 from 90.6% in 1992 and from
86.3% in 1991. These increases were the result of CRC's trend
towards larger contract awards than in the past with smaller
profit margins being available in the larger contracts, as
compared to smaller contracts, due to competitive conditions.
Selling, general and administrative expenses as a percentage
of contract revenues during the 9-month period ended September
30, 1994 increased to 5.7% from 5.6% for the same period in the
prior year, primarily due to increased personnel costs incurred
to enable CRC to bid on larger contracts in the first nine months
of 1994.
Selling, general and administrative expenses as a percentage
of contract revenues decreased to 5.0% in 1993 from 7.9% in 1992
and from 7.3% in 1991. The decrease from 1992 to 1993 was
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primarily due to the fact that CRC increased its total contract
base during 1993 without incurring comparable increases in
selling, general and administrative expenses. The increase from
1991 to 1992 was primarily due to heavy proposal activity which
occurred during 1992.
Interest
Interest expense during the 9-month period ended September
30, 1994 increased to $207,000 from $73,000 compared to the same
period in the prior year, primarily due to increased borrowing by
CRC under its bank line of credit, necessitated by cash flow
requirements due to continued expansion and slower than normal
payments by the government during the period. This increase in
interest expense was slightly offset as a result of the
implementation in mid-1994 of electronic funds transfers under
CRC government contracts, which improved CRC's cash receipts and
lowered its borrowing requirements during the 1994 period.
Interest expense increased to $93,000 in 1993 from $26,000
in 1992 as a result of increased borrowing incurred in 1993 under
CRC's line of credit incurred to fund growth. Interest expense
decreased to $26,000 in 1992 from $65,000 in 1991 as a result of
lower borrowing levels under CRC's line of credit.
Provision for Income Taxes
CRC is taxed as a professional service corporation at the
highest prevailing corporate tax rate. CRC's effective tax rate
was 40% for the 9-month period ended September 30, 1994 and 44%
for the nine-month period ended September 30, 1993, 32.4% for
1993, 45.5% for 1992, and 38.3% for 1991. The increases in CRC's
tax rate from 1991 to 1993 were primarily due to changes in
Internal Revenue Service regulations.
Liquidity and Capital Resources
CRC's primary sources of liquidity are provided by
operations and a $10,500,000 revolving credit loan agreement. At
September 30, 1994, December 31, 1993, and December 31, 1992, the
borrowings outstanding under such agreement were $3,233,000,
$5,375,000, and $1,000,000, respectively. Capital expenditures
were $3,531,000 for the 9-month period ended September 30, 1994,
$5,794,000 in 1993, and $3,360,000 in 1992. Expenditures for
rental of facilities and equipment were $3,538,000 for the
9-month period ended September 30, 1994.
Although accounts receivable increased to $26,456,000 at
December 31, 1993, from $15,911,000 at December 31, 1992, this
increase has not impaired CRC's cash flow. CRC continues to
actively monitor receivables with emphasis placed on collection
activities and the negotiation of more favorable payment terms,
and has seen an improvement in collections in 1994 as a result of
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the implementation in 1994 of electronic fund transfers under CRC
government contracts.
CRC's cash flows from operations plus its borrowing capacity
are expected to provide sufficient funds for its operations and
planned capital expenditures.
THERMO AND CRC MANAGEMENTS
Executive Officers and Directors of CRC
After the Merger, the executive officers and directors of
CRC are expected to be as follows:
Marshall J. Armstrong Chairman of the Board and
Director
James B. Morrison President and Director
Richard H. Levine Corporate Vice President,
Chief Financial Officer
and Director
Martin R. Adams Corporate Vice President
and Director
Buddy G. Beck Corporate Vice President
and Director
Robert V. Wells Corporate Vice President
and Director
Glenn K. Otis Corporate Vice President
Each director is elected to hold office until the next
annual meeting of shareholders and until his successor is elected
and qualified. The term of office of each officer is one year or
until a successor is chosen and qualified. There are no family
relationships among any of the executive officers or directors.
Marshall J. Armstrong, 59, has been a Director and Chairman
of the Board of Thermo's publicly traded Thermo Power Corporation
subsidiary since December 1990. Mr. Armstrong was appointed
Chief Executive Officer of Thermo Power Corporation in April
1991, and was appointed President in November 1992. He has been
a Vice President of Thermo since 1986. Mr. Armstrong is also a
Director of Thermo Instrument Systems Inc., a publicly traded
subsidiary of Thermo.
James B. Morrison, 45, has been President of CRC since 1988.
From 1982 to 1988, Mr. Morrison served as Corporate Vice
President/General Manager of CRC's Huntsville, Alabama Division.
As Corporate Vice President/General Manager, his responsibilities
included new business development; program, technical, and
administrative management; and staffing. Mr. Morrison spent the
first ten years of his career with Martin Marietta Aerospace in
both technical and management positions.
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Martin R. Adams, 58, has been Corporate Vice President of
CRC and President of the CRC Energy and Environmental Systems
("CEES") division since June 1991. Mr. Adams is responsible for
developing and managing CEES, which provides a wide range of
technical and support services to government and industry. From
1982 through June 1991, Mr. Adams was responsible to the
President/Chief Operating Officer of BDM International for the
management and development of the company's energy, environmental
and civil systems business sectors. Prior to BDM, Mr. Adams was
the Deputy Assistant Secretary for Oil, Gas and Shale Programs
and Deputy Director for Solar, Geothermal, Storage, and
Electrical Energy Systems with the U.S. Department of Energy.
Buddy G. Beck, 58, has been Corporate Vice President of CRC
since 1990 and has served as Chief Operating Officer of the CEES
division since 1991. Mr. Beck has more than 34 years of
experience in the management and development of high technology
programs in the aerospace, energy and environmental fields. From
1984 through 1989, Mr. Beck founded and managed Atlantic Systems
Research and Engineering, a Washington-based business providing
research and engineering services to the U.S. government and
private industry acquired by CRC in April 1990. Mr. Beck has
held high level positions in the U.S. government in the
Department of Defense and the White House National Security
Council Staff. Mr. Beck has served as a Fellow of The Brookings
Institution, Washington, D.C., since 1981.
Richard H. Levine, 43, has served as Corporate Vice
President, Business Operations since 1988 and Chief Financial
Officer of CRC since 1993. Mr. Levine has many years experience
in Department of Defense and Department of Energy contracts and
finance, dealing with all branches of the Armed Forces, as well
as private industry. Mr. Levine is responsible for all
contractual and financial activities at CRC. Prior to joining
CRC, Mr. Levine held contracts, finance, and accounting positions
for both small and large Department of Defense contractors.
Glenn K. Otis, 65, has been Corporate Vice President of CRC
since 1990. Mr. Otis is involved with strategic planning and new
business development. Mr. Otis was Senior Vice President at
Atlantic Systems Research and Engineering from 1989 until its
acquisition by CRC in 1990. At Atlantic Systems Research and
Engineering, Mr. Otis was responsible for business development.
Prior to his retirement from the U.S. Army in July, 1988, Mr.
Otis was the Commander of U.S. Army forces in Europe and the
Commander of NATO's Central Army Group for more than five years.
Robert V. Wells, 38, has been Corporate Vice President of
CRC, and has served as General Manager of CRC's Huntsville Group,
since 1988. Mr. Wells' responsibilities include new business
development; program, technical, and administrative management;
staffing; and technical contribution to key Group contracts. Mr.
Wells has extensive experience in missile system configuration
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design; performance and simulation analysis; missile component
performance/design analysis; and program and Group management.
Thermo Executive Officers and Directors and Executive
Compensation
For information concerning the directors and executive
officers of Thermo and the compensation of the directors and
executive officers of Thermo, see "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
OWNERSHIP OF CRC COMMON STOCK AND THERMO COMMON STOCK
Ownership of CRC Common Stock
The following table sets forth, as of December 1, 1994, the
beneficial ownership of CRC Common Stock (including, on a pro
forma basis, the beneficial ownership of shares of Thermo Common
Stock into which such shares of CRC Common Stock are convertible
upon consummation of the Merger) by (i) all persons known to CRC
to own beneficially five percent or more of the outstanding CRC
Common Stock, (ii) the sole director or CRC, (iii) each of the
executive officers of CRC and (iv) the sole director and all
executive officers of CRC together as a group. The address of
each such persons is 201 South Orange Ave., Suite 1300, Orlando,
Florida 32801. The pro forma number of shares of Thermo Common
Stock assumes an exchange ratio of .1905695 shares of Thermo
Common Stock for each share of CRC Common Stock.
Ownership Pro Forma Ownership
of of
CRC Common Stock Thermo Common Stock
---------------- -------------------
Number Number
of Percen- of Percen-
Name and Shares tage of Shares tage of
Address of Benefi- Out- Benefi- Out-
Beneficial cially Standing cially Standing
Owner (1) Owned Shares Owned Shares
--------- ----- ------ ----- ------
Thomas J. Coleman (2) 5,569,797 42.60% 1,061,433 1.98%
Michael A. Coleman (3) 1,214,671 9.23% 231,479 *
Cynthia C. Patz (4) 1,131,543 8.65% 215,637 *
Harriett C. Coleman (5) 5,569,797 42.60% 1,061,433 1.98%
James B. Morrison (6) 1,065,537 8.15% 203,058 *
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Buddy G. Beck (7) 726,525 5.56% 138,453 *
Martin Adams (8) 27,124 * 5,169 *
Richard H. Levine (9) 216,646 1.66% 41,286 *
Glenn K. Otis (10) 125,678 * 23,950 *
Robert V. Wells (11) 310,022 2.37% 59,080 *
Sole Director and All
Executive Officers
together as a group
(7 persons) (12) 8,041,329 61.50% 1,532,432 2.86%
* Less than 1%.
__________
(1) Shares of CRC Common Stock beneficially owned include shares
owned by the indicated person, by that person's spouse, by
that person and his spouse and by that person and his spouse
(or either of them) for the benefit of minor children.
Except as reflected in the footnotes to this table, all
share ownership involves sole voting and investment power.
(2) Shares of CRC Common Stock beneficially owned by Mr. Coleman
include 3,706,308 shares beneficially owned by certain
members of Mr. Coleman's family (see footnotes 3, 4 and 5,
below) and 81,779 shares allocated through December 1, 1994
to the account maintained for Mr. Coleman pursuant to CRC's
KSOP.
(3) Shares of CRC Common Stock beneficially owned by Mr. Coleman
include 28,000 shares held in trust for Mr. Coleman's minor
children, 1,700 shares that Mr. Coleman has the right to
acquire within 60 days after December 1, 1994 through the
exercise of stock options, and 34,631 shares allocated
through December 1, 1994 to the account maintained for Mr.
Coleman pursuant to CRC's KSOP.
(4) Shares of CRC Common Stock beneficially owned by Mrs. Patz
include 18,000 shares held in trust for Mrs. Patz's minor
children, 1,000 shares that Mrs. Patz has the right to
acquire within 60 days after December 1, 1994 through the
exercise of stock options, and 17,363 shares allocated
through December 1, 1994 to the account maintained for Mrs.
Patz pursuant to CRC's KSOP.
(5) Shares of CRC Common Stock beneficially owned by Mrs.
Coleman include 5,259,986 shares beneficially owned by
certain members of Mrs. Coleman's family (see footnotes 2, 3
and 4, above) and 14,101 shares allocated through December
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1, 1994 to the account maintained for Mrs. Coleman pursuant
to CRC's KSOP.
(6) Shares of CRC Common Stock beneficially owned by Mr.
Morrison include 73,057 shares allocated through December 1,
1994 to the account maintained for Mr. Morrison pursuant to
CRC's KSOP.
(7) Shares of CRC Common Stock beneficially owned by Mr. Beck
include 29,104 shares beneficially owned by certain members
of Mr. Beck's family and 102,102 shares allocated through
December 1, 1994 to the account maintained for Mr. Beck
pursuant to CRC's KSOP.
(8) Shares of CRC Common Stock beneficially owned by Mr. Adams
include 17,124 shares allocated through December 1, 1994 to
the account maintained for Mr. Adams pursuant to CRC's KSOP.
(9) Shares of CRC Common Stock beneficially owned by Mr. Levine
include 46,187 shares allocated through December 1, 1994 to
the account maintained for Mr. Levine pursuant to CRC's
KSOP.
(10) Shares of CRC Common Stock beneficially owned by Mr. Otis
include 15,000 shares that Mr. Otis has the right to acquire
within 60 days after December 1, 1994 through the exercise
of stock options and 19,728 shares allocated through
December 1, 1994 to the account maintained for Mr. Otis
pursuant to CRC's KSOP.
(11) Shares of CRC Common Stock beneficially owned by Mr. Wells
include 25,542 shares allocated through December 1, 1994 to
the account maintained for Mr. Wells pursuant to CRC's KSOP.
(12) Shares of CRC Common Stock beneficially owned by the sold
Directors and all executive officers together as a group
include 15,000 shares that the members of such group have
the right to acquire within 60 days after December 1, 1994
through the exercise of stock options, and 431,614 shares
allocated through December 1, 1994 to accounts maintained
for the members of such group pursuant to CRC's KSOP.
Ownership of Thermo Common Stock
After giving effect to the Merger, assuming full
participation in the Merger by all CRC shareholders and the prior
exercise of all outstanding options to purchase CRC Common Stock,
there will be approximately 53,526,635 shares of Thermo Common
Stock outstanding. After giving effect to the Merger, CRC
shareholders would own in the aggregate approximately 4.99% of
the issued and outstanding shares of Thermo Common Stock.
For information concerning the ownership of Thermo Common
Stock, including Thermo Common Stock owned by directors and
73
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executive officers of Thermo, see "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CRC leases an office building in Orlando, Florida (the "CRC
Lakehurst Facility"), from Thomas J. Coleman. The lease has a
term of 18 years ending March 31, 2003, and provides for
renegotiation of the rental rate every three years. The lease
was last renegotiated in 1991 and currently provides for monthly
rental payments of approximately $31,500. CRC will continue to
lease space in the CRC Lakehurst Facility upon consummation of
the Merger.
CRC leases office and laboratory space in Orlando, Florida
(the "Coleman Laboratories Facility"), from Coleman Family
Properties, Ltd., and entity owned directly or indirectly by
Thomas J. Coleman and members of his family. The lease has a
term of five years ending December 31, 1999, and requires the
lessor to pay all real property taxes and insurance. The monthly
rental payment effective January 1, 1995 will be approximately
$46,400.
CRC leases office space in Huntsville, Alabama (the "CRC
Huntsville Facility"), from Research Properties Partnership, a
general partnership of which James B. Morrison, Thomas J.
Coleman, Michael A. Coleman, Cynthia C. Patz and Robert V. Wells
and partners. The lease has a term of 18 years ending on April
1, 2008, and provides for monthly rental payments equal to the
greater of the partnership's mortgage payments or the amount
allowed by the Defense Contract Audit Agency.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income
tax consequences of the Merger and is based upon the applicable
provisions of the Code, regulations thereunder, and published
rulings and court decisions. Neither CRC nor Thermo intend to
seek a ruling from the Internal Revenue Service with regard to
the tax consequences of the Merger.
CRC and Thermo have received an opinion from Sirote &
Permutt, P.C., counsel for CRC, that under present law, and based
upon the representations contained in the representation letter
provided to such counsel by CRC, the Merger and the conversion of
each share of CRC Common Stock into Thermo Common Stock should
have the following consequences for federal income tax purposes:
1. The Merger will qualify as a "reorganization" as
defined in Code Sections 368(a)(1)(A) and 368(a)(2)(E).
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2. No gain or loss will be recognized by CRC as a
result of the Merger.
3. No gain or loss will be recognized by CRC
shareholders who exchange all of their CRC Common Stock
solely for Thermo Common Stock in the Merger. Shareholders
who exercise dissenters' rights will recognize gain or loss
upon the receipt of cash for their shares measured by the
difference between the cash received and the basis of their
stock, provided they own no shares of Thermo Common Stock.
4. The aggregate basis of the Thermo Common Stock
received by a CRC shareholder will be the same as the
aggregate basis of such shareholder in the CRC Common Stock
converted in the Merger.
5. The holding period of the Thermo Common Stock
received by a CRC shareholder will include the period during
which such shareholder held the CRC Common Stock converted
in the Merger, provided that such stock was held as a
capital asset on the Effective Date.
6. A CRC shareholder who receives a cash payment in
lieu of a fractional share of Thermo Common Stock will be
treated as if such fractional share were distributed in the
Merger and then redeemed by Thermo, and should recognize
capital gain or loss measured by the difference between the
amount of cash received and the shareholder's basis in the
fractional share (which will be a pro rata portion of the
shareholder's basis in the Thermo Common Stock received in
the Merger), provided that such shareholder's CRC Common
Stock is held as a capital asset on the Effective Date.
7. No gain or loss for federal income tax purposes
will be recognized by the holder of an option to purchase
shares of CRC Common Stock solely as a result of the
conversion of such options into options to purchase Thermo
Common Stock.
In order for the Merger to qualify as a tax-free
reorganization, the CRC shareholders must have the requisite
"continuity of interest" through ownership of the Thermo Common
Stock. It is the ruling position of the Internal Revenue Service
that the "continuity of interest" requirement is satisfied if
there is a continuing interest through stock ownership in the
acquiring corporation on the part of the former shareholders of
the acquired corporation, without any plan or intention by the
former shareholders of the acquired corporation to sell, exchange
or otherwise dispose of stock of the acquiring corporation, that
is equal in value, as of the effective date of the
reorganization, to at least 50% of the value of all the formerly
outstanding stock of the acquired corporation as of the same
date. Sirote & Permutt, P.C., has concluded as part of their
opinion, based upon the representations referred to above, that
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the "continuity of interest" requirement will be satisfied in
connection with the Merger. There can be no assurance, however,
that the former shareholders of CRC will not, pursuant to a
present plan or intention, sell or otherwise dispose of the
Thermo Common Stock in a sufficient amount to violate this
requirement. However, the holders of a majority of such shares
have represented that they have no such present plan or
intention.
Holders of CRC Common Stock are urged to consult with their
tax advisers as to the effect under state, local and foreign
income and other tax laws of the Merger.
EXPERTS
The consolidated financial statements and schedules of
Thermo incorporated by reference in this Registration Statement
have been examined by Arthur Andersen L.L.P., independent public
accountants, as indicated in their reports with respect thereto,
and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing
in giving said reports.
The financial statements and schedules of CRC included in
this Proxy Statement/Prospectus and the Registration Statement
have been audited by Thomas, Beck & Zurcher, P.A., independent
certified public accountants, to the extent and for the periods
set forth in their report appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such
report given upon the authority of such firm as experts in
auditing and accounting.
LEGAL OPINIONS
The validity of the Thermo Common Stock to be issued
pursuant to the Merger will be passed upon for Thermo by Seth H.
Hoogasian, Esq., General Counsel to Thermo. Mr. Hoogasian owns
or has the right to acquire through the exercise of stock options
shares of Thermo Common Stock and shares of the common stock of
certain of Thermo's subsidiaries the fair market value of which
exceeds $50,000. In addition, Sirote & Permutt, P.C., has
rendered the tax opinion described under "CERTAIN FEDERAL INCOME
TAX CONSEQUENCES."
-- PROPOSAL TWO --
APPROVAL OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
CRC's current Articles of Incorporation, as amended,
restrict ownership of the outstanding securities of CRC to
employees of CRC. In order to facilitate the Merger, CRC's Board
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of Directors proposes to adopt the Amended Articles, which delete
the provisions restricting ownership of the securities of CRC to
employees and which restate the Article of Incorporation by
incorporating all previous amendments still in effect. The
Amended Articles are attached to this Proxy Statement/Prospectus
as APPENDIX II.
THE MANAGEMENT AND BOARD OF DIRECTORS OF CRC RECOMMEND THAT
CRC SHAREHOLDERS VOTE IN FAVOR OF THE AMENDED ARTICLES.
-- PROPOSAL THREE --
APPROVAL OF THE COLEMAN LABORATORIES TRANSACTION
On January 6, 1992, CRC entered into an agreement (the
"Katoot Agreement") with Mohammad Walid Katoot and MK Industries,
Inc. ("MKI"), a corporation controlled by Mr. Katoot. The Katoot
Agreement involved the development and exploitation of an
approach to synthesizing a new class of materials having certain
unique properties.
On November 29, 1993, CRC became the sole limited partner of
Coleman Laboratories, Ltd., a limited partnership ("Coleman
L.P."), by acquiring a 49% interest in Coleman L.P. The general
partner of Coleman L.P. is Coleman Laboratories, Inc., a
corporation owned and controlled by Thomas J. Coleman and members
of Mr. Coleman's immediate family. On May 26, 1994, CRC and
Coleman L.P. entered into a licensing agreement that gave CRC
exclusive exploitation rights to material when and if developed
by Dr. Katoot or MKI (the "1994 License Agreement").
To satisfy a condition to the consummation of the Merger,
CRC proposes (i) to transfer its 49% interest in Coleman L.P. to
entities related to Thomas J. Coleman or his children and (ii) to
terminate its relationship with Dr. Katoot and MKI by assigning
and selling to Coleman L.P. for $10.00 (a) its rights under the
Katoot Agreement; (b) the 1994 License Agreement; (c) the
business of CRC related to the Katoot Agreement; and (d) certain
equipment currently used by MKI (collectively, the "Coleman
Laboratories Transaction"). CRC has received no revenue from its
interest in the Katoot Agreement, the 1994 Licensing Agreement or
Coleman L.P. and does not expect to receive revenues in the
immediate future from these interests if the Coleman Laboratories
Transaction does not occur. Coleman L.P. will indemnify and hold
CRC harmless from its obligations under the Katoot Agreement. If
approved by the CRC Shareholders, the Coleman Laboratories
Transaction will occur immediately prior to the Merger.
The Form of Assignment Agreement with respect to the Coleman
Laboratories Transaction, together with all relevant exhibits,
are attached to this Proxy Statement/Prospectus as APPENDIX III.
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Under Florida law, approval of the Coleman Laboratories
Transaction requires the affirmative vote of the holders of a
majority of the shares entitled to vote at the Special Meeting,
excluding the share beneficially owned by Thomas J. Coleman and
members of his family. THE CRC MANAGEMENT AND BOARD OF DIRECTORS
RECOMMEND THAT CRC SHAREHOLDERS VOTE IN FAVOR OF THE COLEMAN
LABORATORIES TRANSACTION.
OTHER MATTERS
CRC is not aware of any other matters to be presented at the
Special Meeting of Shareholders other than as specified in the
notice of such meeting and this Proxy Statement/Prospectus.
PROPOSALS OF STOCKHOLDERS
The deadline for the submission of proposals of stockholders
of Thermo for inclusion in the proxy statement and form of proxy
relating to the 1995 annual meeting of stockholders was December
15, 1994. Accordingly, under applicable Commission regulations,
shareholders of CRC who become stockholders of Thermo solely as a
result of the Merger will not be able to submit proposals for
inclusion in the proxy statement and form of proxy relating to
that meeting.
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INDEX TO FINANCIAL STATEMENTS
COLEMAN RESEARCH CORPORATION
AND SUBSIDIARY
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheets at December 31, 1993
and December, 1992 F-3
Consolidated Statements of Earnings for the Years
Ended December 31, 1993, December, 31, 1992
(unaudited) and December 31, 1991 (unaudited) F-5
Consolidated Statements of Changes in Stockholders'
Equity for the Years Ended December 31, 1993,
December, 31, 1992 (unaudited) and December 31,
1991 (unaudited) F-6
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1993, December, 31,
1992 (unaudited) and December 31, 1991 (unaudited) F-9
Notes to Consolidated Financial Statements F-12
Unaudited Consolidated Balance Sheets at September
30, 1994 and September 30, 1993 F-21
Unaudited Consolidated Statements of Earnings
for the Nine Months ended September 30, 1994 and
September 30, 1993 F-23
Unaudited Consolidated Statements of Cash Flows
for the Nine Months ended September 30, 1994 and
September 30, 1993 F-24
F-1
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<PAGE>
Board of Directors
Coleman Research Corporation and Subsidiary
Orlando, Florida
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Coleman
Research Corporation and Subsidiary as of December 31, 1993 and 1992, and the
related consolidated statement of earnings, stockholders' equity, and
consolidated cash flows for the year ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
presents fairly, in all material respects, the consolidated financial position
of Coleman Research Corporation and Subsidiary as of December 31, 1993 and 1992,
and the results of its operations and its cash flows for the year ended December
31, 1993, in conformity with generally accepted accounting principles.
Because we were not engaged to audit the consolidated statements of
earnings, changes in stockholders' equity and cash flows for the year ended
December 31, 1992, we did not extend our auditing procedures to enable us to
express an opinion on the consolidated results of operations and cash flows.
Accordingly, we do not express an opinion on them.
The 1991 consolidated financial statements were reviewed by us and our
report thereon dated April 1, 1992, stated we were not aware of any material
modifications that should be made to those statements for them to be in
conformity with generally accepted accounting principles. However, a review is
substantially less in scope than an audit and does not provide a basis for the
expression of an opinion on the financial statements taken as a whole.
As discussed in Note N, the 1993 and 1992 financial statements have been
restated and reissued to reflect subsequent events.
October 24, 1994 Thomas, Beck, & Zurcher, P.A.
F-2
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<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1993 and 1992
ASSETS
1993 1992
---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 245,176 $ 410,505
Accounts receivable 26,456,048 15,910,719
Notes receivable 326,503 481,991
Advances and employee receivables 27,331 16,431
Accrued interest 1,013 64,524
Prepaid rent 66,612 111,928
Prepaid income taxes 128,078 468,396
Prepaid expenses 90,507 36,063
----------- -----------
Total current assets 27,341,268 17,500,557
----------- -----------
PROPERTY AND EQUIPMENT - AT COST:
Furniture and fixtures 1,506,988 767,623
Equipment, computers and software 10,159,712 5,584,977
Computer equipment on operating lease 313,385 313,385
Leasehold improvements 688,117 139,244
----------- -----------
Total 12,668,202 6,805,229
Less: Accumulated depreciation (4,711,386) (3,092,795)
----------- -----------
Net property and equipment 7,956,816 3,712,434
Equipment under capital lease agreements,
net of accumulated amortization of
$14,996 in 1993 and $-0- in 1992 192,398 -
----------- -----------
Total property and equipment 8,149,214 3,712,434
----------- -----------
OTHER ASSETS:
Investment in non-marketable equity
security 10,000 -
Notes receivable 1,681,299 365,631
Lease deposits 222,256 75,749
Agreements not to compete, net of
accumulated amortization of $334,167
in 1993 and $233,611 in 1992 175,833 136,389
Goodwill, net of accumulated amortization
of $128,948 in 1993 and $80,429 in 1992 1,811,822 1,860,341
Construction in progress - 320,348
----------- -----------
Total other assets 3,901,210 2,758,458
----------- -----------
TOTAL ASSETS $39,391,692 $23,971,449
=========== ===========
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-3 PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Continued)
December 31, 1993 and 1992
LIABILITIES AND STOCKHOLDERS' EQUITY
1993 1992
---- ----
CURRENT LIABILITIES:
Accounts payable $ 5,109,684 $ 1,327,087
Billings in excess of costs and estimated
gross profit on contracts 2,114,234 730,700
Notes payable 5,375,225 1,000,000
Obligations under capital lease
agreements 52,441 -
Payroll taxes payable 108,589 319,465
Accrued expenses 7,524,181 6,013,173
Deferred income taxes 3,390,745 3,522,861
----------- -----------
Total current liabilities 23,675,099 12,913,286
----------- -----------
LONG-TERM LIABILITIES:
Obligations under capital lease
agreements, excluding current maturities 130,954 -
Accrued rent 38,087 28,613
Deferred income taxes 350,990 104,662
----------- -----------
Total liabilities 24,195,130 13,046,561
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
50,000,000 authorized; 13,075,868 and
11,334,940 issued 13,076 11,335
Additional paid-in capital, in excess
of par value 10,107,969 5,934,899
Retained earnings 5,547,441 5,312,213
----------- -----------
15,668,486 11,258,447
Treasury stock at cost, 258,921 and
214,360 shares (471,924) (333,559)
----------- -----------
Total stockholders' equity 15,196,562 10,924,888
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $39,391,692 $23,971,449
=========== ===========
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-4
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<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
For the Years Ended December 31, 1993, 1992 and 1991
(Unaudited) (Unaudited)
1993 1992 1991
---- ---- ----
CONTRACT REVENUES $104,789,592 $50,255,818 $37,053,629
------------ ----------- -----------
CONTRACT COSTS 98,676,295 45,508,008 31,985,842
RESEARCH AND DEVELOPMENT EXPENSES 483,551 212,726 -
SELLING, GENERAL & ADMINISTRATIVE
EXPENSES 5,219,007 3,970,442 2,720,813
------------ ----------- -----------
TOTAL OPERATING EXPENSES $104,378,853 $49,691,176 $34,706,655
------------ ----------- -----------
EARNINGS FROM OPERATIONS 410,739 564,642 2,346,974
OTHER INCOME (EXPENSE):
Other income (expense) 5,889 (5,110) (6,343)
Net gain (loss) on disposition of
equipment 2,409 (33,067) (3,637)
Interest income 21,766 104,083 114,107
Interest expense (92,850) (25,883) (64,565)
------------ ----------- -----------
Total other income (expense) (62,786) 40,023 39,562
------------ ----------- -----------
EARNINGS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 347,953 604,665 2,386,536
INCOME TAXES:
Current - - (181,795)
Deferred 185,579 275,003 1,096,647
------------ ----------- -----------
Total income tax expense 185,579 275,003 914,852
------------ ----------- -----------
EARNINGS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE 162,374 329,662 1,471,684
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE FOR INCOME
TAXES (NOTE A) 72,854 - -
------------ ----------- -----------
NET EARNINGS $ 235,228 $ 329,662 $ 1,471,684
============ =========== ===========
EARNINGS PER SHARE BEFORE
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE:
Primary $ .01 $ .03 $ .16
Fully diluted $ .01 $ .03 $ .16
EARNINGS PER SHARE:
Primary $ .02 $ .03 $ .16
Fully diluted $ .02 $ .03 $ .16
WEIGHTED AVERAGE SHARES:
Primary 12,024,099 10,959,168 9,269,229
Fully diluted 12,024,099 10,959,168 9,269,229
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-5
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<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Year Ended December 31, 1993
Additional
Paid-in
Common Capital in
Stock, $.001 Par Excess of Retained Treasury
Value Par Value Earnings Stock
----- --------- -------- -----
Shares Amount Shares Amount
------ ------ ------ ------
Balance at
December 31,
1992 11,334,940 $11,335 $ 5,934,899 $5,312,213 214,360 $(333,559)
Net earnings - - - 235,228 - -
Acquisition
of Plexus
Environmental
Services, Inc. 6,000 6 40,807 - - -
Issuance of
shares 1,734,928 1,735 4,132,263 - - -
Purchases of
company common
stock - - - - 44,561 (138,365)
---------- ------- ---------- --------- ------- ---------
Balance at
December 31,
1993 13,075,868 $13,076 $10,107,969 $5,547,441 258,921 $(471,924)
========== ======= =========== ========== ======= =========
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-6
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<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
For the Year Ended December 31, 1992
Additional
Paid-in
Common Capital in
Stock, $.001 Par Excess of Retained Treasury
Value Par Value Earnings Stock
----- --------- -------- -----
Shares Amount Shares Amount
------ ------ ------ ------
Balance at
December 31,
1991 10,415,440 $10,415 $3,901,701 $4,982,551 199,640 $(298,627)
Net earnings - - - 329,662 - -
Issuance of
shares 837,000 837 1,836,106 - - -
Issuance of
shares incident
to purchase of
company 82,500 83 197,092 - - -
Purchases of
company common
stock - - - - 14,720 (34,932)
---------- ------- ---------- ---------- ------- ---------
Balance at
December 31,
1992 11,334,940 $11,335 $5,934,899 $5,312,213 214,360 $(333,559)
========== ======= ========== ========== ======= =========
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-7
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<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
For the Year Ended December 31, 1991
Additional
Paid-in
Common Capital in
Stock, $.001 Par Excess of Retained Treasury
Value Par Value Earnings Stock
----- --------- -------- -----
Shares Amount Shares Amount
------ ------ ------ ------
Balance at
December 31,
1990 8,589,470 $8,589 $ 663,781 $3,510,867 188,900 $(282,274)
Net earnings - - - 1,471,684 - -
Issuance of
shares
incident to
purchase of
company 758,310 758 1,383,866 - - -
Issuance of
shares 1,067,660 1,068 1,854,054 - - -
Purchases of
company common
stock - - - - 10,740 (16,353)
---------- ------ ---------- ---------- ------- ---------
Balance at
December 31,
1991 10,415,440 $10,415 $3,901,701 $4,982,551 199,640 $(298,627)
========== ======= ========== ========== ======= =========
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-8
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<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993, 1992 and 1991
(Unaudited) (Unaudited)
1993 1992 1991
---- ---- ----
Cash flows from operating activities:
Cash received from customers $95,662,973 $46,713,320 $34,222,446
Cash paid to suppliers and
employees (96,813,035) (44,179,651) (33,190,947)
(Increase) decrease in employee
advances (10,900) 26,654 (11,802)
Interest received 85,277 88,616 86,212
Interest paid (83,738) (26,065) (66,648)
Income tax refund received 340,318 181,795 124,428
Income taxes paid - (132,000) (190,298)
(Increase) decrease in lease
deposits (146,507) 5,910 2,537
----------- ----------- -----------
Net cash provided from (used in)
operating activities (965,612) 2,678,579 975,928
Cash flows from investing activities:
Proceeds from sale of property and
equipment 2,409 15 571
Acquisition of property and
equipment (5,794,057) (3,360,431) (653,283)
Cash paid in exchange for notes
receivable (1,886,467) (625,586) (377,687)
Principal repayments on notes
receivable 726,287 432,671 217,021
Cash paid on acquisition of business - (210,906) (1,201,392)
Cash paid on acquisition of
agreements not to compete (140,000) (90,000) (80,000)
Stockholder repayments - - 11,250
----------- ----------- -----------
Net cash used in investing
activities (7,091,828) (3,854,237) (2,083,520)
Cash flows from financing activities:
Issuance of common stock 3,471,855 989,175 1,538,669
Proceeds from notes payable and
obligations under capital lease
agreements 19,027,670 1,000,000 -
Principal payments on notes payable (14,450,980) (501,712) (600,392)
Principal payments on capital lease
obligations (18,069) (12,652) (24,704)
Acquisition of treasury stock (138,365) (34,932) (16,353)
----------- ----------- --------
Net cash provided from
financing activities 7,892,111 1,439,879 897,220
----------- ----------- ---------
Net increase (decrease) in cash (165,329) 264,221 (210,372)
Cash at January 1 410,505 146,284 356,656
----------- ----------- -----------
Cash at December 31 $ 245,176 $ 410,505 $ 146,284
=========== =========== ===========
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-9
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<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For the Years Ended December 31, 1993, 1992 and 1991
(Unaudited) (Unaudited)
1993 1992 1991
---- ---- ----
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED (USED) BY OPERATING
ACTIVITIES:
Net earnings $ 235,228 $ 329,662 $1,471,684
---------- ---------- ----------
Adjustments to reconcile net
earnings to net cash provided
(used) by operating activities:
Depreciation and amortization 1,836,129 1,055,055 677,526
(Gain) loss on disposition of
property and equipment (2,409) 33,067 3,637
Compensatory stock option plan
expense 662,143 847,768 316,453
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable (10,516,042) (4,223,791) (2,771,897)
(Increase) decrease in advances
and employee receivables (10,900) 26,564 (11,802)
(Increase) decrease in accrued
interest 63,511 (15,467) (27,895)
(Increase) decrease in refundable
income taxes - 181,795 21,852
(Increase) decrease in prepaid rent 45,316 (99,369) 2,483
(Increase) decrease in prepaid
income taxes 340,318 (132,000) (190,299)
(Increase) decrease in prepaid
expenses (50,186) 97,384 25,442
(Increase) decrease in lease
deposits (146,507) 5,910 2,537
Increase (decrease) in accounts
payable 3,771,922 1,045,839 (388,187)
Increase (decrease) in billings
in excess of costs and estimated
gross profit on contracts 1,383,534 681,293 (59,286)
Increase (decrease) in payroll
taxes payable (210,876) 319,109 (45,431)
Increase (decrease) in accrued
expenses 1,511,008 2,247,676 966,965
Increase (decrease) in accrued rent 9,474 3,081 (35,283)
Increase (decrease) in deferred
income taxes 112,725 275,003 1,017,429
---------- ---------- ----------
Total adjustments (1,200,840) 2,348,917 (495,756)
---------- ---------- ----------
Net cash provided by (used in)
operating activities $ (965,612) $2,678,579 $ 975,928
========== ========== ==========
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-10
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For the Years Ended December 31, 1993, 1992 and 1991
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
The Company acquired all assets and liabilities of Plexus Environmental
Services, Inc. ("Plexus") during 1993, by exchanging its stock for all
outstanding shares of Plexus. Details regarding this acquisition are as follows:
Fair value of assets acquired $ 52,112
Liabilities assumed $(11,299)
Fair value of Coleman Research
Corporation shares exchanged $(40,813)
In addition, the Company acquired all assets and liabilities of Blackhawk
Geosciences, Inc. ("Blackhawk") during 1992, by exchanging its stock and cash
for all outstanding shares of Blackhawk. Details regarding this acquisition are
as follows:
Fair value of assets acquired $ 599,445
Liabilities assumed $(191,364)
Cash paid $(210,906)
Fair value of Coleman Research
Corporation shares exchanged $(197,175)
During 1991, the Company acquired all assets and liabilities of Digital Signal
Corporation, by exchanging its stock and cash for all shares of Digital Signal
Corporation. Details regarding this acquisition are as follows:
Fair value of assets acquired $ 3,561,897
Liabilities assumed $ (895,881)
Cash paid $(1,281,392)
Fair value of Coleman Research
Corporation shares exchanged $(1,384,624)
The Accompanying Notes Are An Integral Part of These Consolidated Financial
Statements
F-11
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL: The Company is a contractor providing systems integration, software,
prototype development, analytical services and scientific and engineering
technical assistance for the United States Government and private industries.
Work is performed generally under fixed price and cost plus fixed fee contracts.
CONSOLIDATION: The consolidated financial statements include the accounts of
Coleman Research Corporation and its wholly-owned subsidiary, Coleman
Technologies, Inc. All significant intercompany transactions and accounts have
been eliminated in consolidation.
ACCOUNTING CHANGES: The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes", which requires a change from the deferred method to the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities. Under SFAS No. 109, the effect
on deferred taxes of a change in tax rates is recognized in income in the period
that includes the enactment date. Under the deferred method, deferred taxes were
recognized using the tax rate applicable to the year of the calculation and were
not adjusted for subsequent changes in tax rates. The company elected to adopt
SFAS No. 109 in 1993 and has reported the cumulative effect of the change in the
method of accounting for income taxes as of the beginning of the 1993 fiscal
year in the consolidated statement of earnings.
Effective January 1, 1992, the Company adopted the straight line method of
depreciating its property and equipment acquired in 1992 and thereafter. The
purpose of this change is to better allocate the cost of these assets against
the revenues they produce. This change is being accounted for prospectively. If
the Company continued using the declining balance method of depreciating
property and equipment, depreciation expense would have increased by $158,406 in
1992.
REVENUE RECOGNITION: Revenues under cost-reimbursement contracts are recorded
as costs are incurred and include estimated earned fees in the proportion that
costs incurred to date bear to total estimated costs. The estimated sales value
of performance under fixed price contracts in process is recognized under the
percentage of completion method of accounting whereunder the estimated sales
value is determined on the basis of physical completion to date (the total
contract amount multiplied by percent of performance to date less sales value
recognized in the previous periods). Costs, including general and administrative
expenses, are expensed as incurred. In the event of cost overruns on contracts,
the estimated loss on the contract is recognized in full at the time the loss
can be reasonably determined.
Contract costs include all direct labor, materials and subcontract costs and all
overhead costs related to contract performance, such as indirect labor, rent,
insurance, supplies, utilities, travel, depreciation and amortization. General
and administrative expenses consists of expenses not related to contract
performance.
F-12
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Costs under U.S. Government contracts are subject to audit by the appropriate
U.S. Government agency. Management believes that cost disallowances, if any,
arising from audits of costs charged to government contracts through December
31, 1993 would not have a material effect on the financial position of the
Company.
EARNINGS PER SHARE: Primary and fully diluted earnings per share have been
computed based on the weighted average number of common shares outstanding
during the year, which includes all common stock equivalents.
STOCK SPLITS: All share and per share information has been restated to reflect
a ten-for-one stock split occurring November 10, 1992.
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Depreciation
is computed using the straight-line and declining balance methods for financial
and income tax reporting purposes over the estimated useful lives of the assets
as follows:
Furniture and fixtures 5-7 years
Equipment, computers and software 2-5 years
Computer equipment on operating lease 5 years
Leasehold improvements 5-40 years
Expenditures for additions, major renewals and betterments are capitalized and
expenditures for maintenance and repair are charged to income as incurred. Upon
sale or retirement of items of equipment, the cost and related accumulated
depreciation are eliminated from the accounts and the resulting gain or loss, if
any, is reflected in earnings of the period of disposition.
Depreciation expense totaled $1,672,058, $903,475 and $545,393 for the years
ended December 31, 1993, 1992 and 1991 respectively.
LEASE AGREEMENTS: As lessee, annual rentals pertaining to leases which convey
merely the right to use property are charged to current operations. Leases which
are in substance installment purchases of property are recorded as purchases
with the asset and related obligation recorded in the balance sheet.
As lessor, the Company has entered into an agreement to lease computer equipment
costing $313,385 which is accounted for under the operating method, which
recognizes income ratably over the life of the lease (See Notes C and D).
INVESTMENT IN NONMARKETABLE EQUITY SECURITY: As a result of acquiring all assets
and liabilities of Plexus Environmental Services, Inc. during 1993, the company
took title to 590 shares (.39%) of common stock of Terra RRG, an insurance
company. The carryover cost basis of the stock is $10,000. The shares are not
traded publicly, but have a book value of $26,361 at December 31, 1993.
INCOME TAXES: Income taxes are accrued concurrently with the recognition of
income for financial reporting purposes. Deferred income taxes represent the tax
effect of timing differences arising from the Company's election for income tax
reporting to recognize income and expenses under the cash basis method,
expensing equipment used in operations pursuant to Section 179 of the Internal
F-13
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Revenue Code and utilizing the Accelerated Cost Recovery System (ACRS) and
Modified Accelerated Cost Recovery System (MACRS) of depreciation for income tax
reporting.
With the enactment of the Revenue Reconciliation Act of 1993, the Company is
required to pay federal income taxes at the maximum tax rate of 35% (34% in 1992
and 1991) as a result of being classified as a personal service corporation.
VACATION PAY: In accordance with Statement of Financial Accounting Standards
Number 43 - Accounting for Compensated Absences, the Company accrues a liability
for vacation expense based upon the amount of vacation pay which has vested to
qualifying employees as of the balance sheet date.
PENSION AND 401(k) EMPLOYEE STOCK OWNERSHIP (KSOP) PLANS: The Company has
defined contribution pension and KSOP plans which are qualified plans under the
applicable income tax laws. Contributions for the KSOP plan are determined
annually by management while pension plan contributions are determined by
formula. Total pension and KSOP plan expense for the years ended December 31,
1993, 1992 and 1991 amounted to $3,184,222, $2,224,295 and $1,797,334
respectively.
Effective January 1, 1991, the Company amended the defined contribution profit
sharing plan to become a 401(k) Employee Stock Ownership Plan (KSOP). As
amended, the plan allows contributions to be in the form of cash or qualifying
employer securities.
ACCRUED EXPENSES: Accrued expenses consisted of the following at December 31:
1993 1992
---- ----
Accrued payroll and bonuses $2,576,717 $2,879,923
Accrued vacation pay 1,620,198 1,311,627
Accrued pension and KSOP
plan contributions 3,159,085 1,724,295
Accrued expenses - other 168,181 97,328
---------- ----------
Accrued expenses as presented $7,524,181 $6,013,173
========== ==========
CASH FLOWS PRESENTATION: For purposes of the statement of cash flows, the
Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
F-14
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE B - ACCOUNTS RECEIVABLE:
The following schedule provides a breakdown of accounts receivable from
long-term contracts and programs, in which the Company acts as either the prime
contractor or a subcontractor:
1993 1992
---- ----
U.S. GOVERNMENT:
Amounts billed $19,551,113 $11,133,684
Recoverable costs and accrued
profit on progress completed -
not billed 8,370,980 4,946,664
Less allowance for doubtful
accounts (1,466,045) (169,629)
----------- -----------
Accounts receivable, net $26,456,048 $15,910,719
=========== ===========
Recoverable costs and accrued profit not billed comprise principally amounts of
reimbursable costs and revenues recognized on contracts for which billings had
not been presented to the contract owners because the amounts were not billable
at the balance sheet date. As of September 30, 1994, $5,054,721 of the unbilled
amounts receivable from customers at December 31, 1993 had been billed. The
remaining unbilled balances consisted principally of contract cost and fee
retentions, the final payment of which is contingent upon an audit of contract
costs by the Defense Contract Audit Agency. The Company is unable to reasonably
estimate the collection date of these receivables, which may extend beyond one
year. Therefore, in accordance with industry practice, the Company classifies as
current all contract related assets and liabilities, which includes billed and
unbilled accounts receivable.
NOTE C - LEASES:
The Company is party to several lease agreements for equipment that are
accounted for as capital leases. Amortization on equipment under capital lease
agreements amounted to $14,996 in 1993, $2,813 in 1992 and $14,586 in 1991.
Total rental payments under these agreements amounted to $23,494 in 1993,
$12,652 in 1992 and $27,884 in 1991.
Future minimum lease payments for equipment under capital lease agreements at
December 31, 1993, is as follows:
For the year ended December 31, 1994 $ 64,417
1995 64,417
1996 49,058
1997 19,524
1998 11,389
--------
Total minimum obligations 208,805
Less portion representing interest (25,410)
--------
Present value of net minimum obligations 183,395
Less current obligations (52,441)
--------
Long term obligations $130,954
========
F-15
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE C - LEASES (CONTINUED):
In addition, the Company leases its operating facilities under several
non-cancelable operating leases expiring between 1995 and 2008. The following is
a schedule by years of future minimum rental payments required under these
leases:
For the year ended December, 1994 $ 4,036,426
1995 3,903,245
1996 3,541,075
1997 2,070,162
1998 1,451,794
1999 and thereafter 4,916,236
-----------
$19,918,938
===========
Rent expense under these operating leases amounted to $2,515,367 in 1993,
$1,799,639 in 1992 and $1,238,150 in 1991.
NOTE D - OPERATING LEASES AS LESSOR:
The Company has entered into an agreement to lease computer equipment costing
$313,385 to an unrelated party on a month to month basis. The agreement also
requires the performance of substantial additional services. The equipment is
being amortized over its useful life and amortization amounted to $785 in 1993,
$82,045 in 1992, and $99,996 in 1991, which is included in contract costs. Gross
rental income under this agreement amounted to $141,868 in 1993, $180,033 in
1992, and $193,416 in 1991 which is included in contract revenues.
NOTE E - NOTES RECEIVABLE: Notes receivable consisted of the following at
December 31:
1993 1992
---- ----
Note receivable from an individual,
collateralized by 20,000 shares of common
stock of an unrelated company. Interest
accrues annually at 10%, repaid in 1993 $ -0- $ 200,000
7%-9.3% Notes receivable from
stockholders, secured by common stock
of the company, maturing on various
dates 1,699,967 301,416
7%-8% Unsecured notes receivable from
stockholders, maturing on various dates
through December, 1994 307,835 346,206
---------- ----------
Total 2,007,802 847,622
Less portion currently receivable (326,503) (481,991)
---------- ----------
Long-term portion $1,681,299 $ 365,631
========== ==========
F-16
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE F - NOTES PAYABLE:
Notes payable consisted of the following at December 31:
1993 1992
---- ----
$6,500,000 Revolving line of credit
with a bank,(increased to $10,500,000
in March, 1994)interest payable
monthly at prime rate, collateralized
by all receivables and equipment,
cross collateralized by real property
owned by Research Properties
Partnership, due on demand $5,375,225 $1,000,000
---------- ----------
5,375,225 1,000,000
Less amounts due within one year (5,375,225) (1,000,000)
---------- ----------
Long term debt $ -0- $ -0-
========== ==========
Aggregate annual principal payments on long-term debt are as follows:
For the year ending December 31, 1994 $5,375,225
==========
NOTE G - RECAPITALIZATION:
Effective November 20, 1992, the Company recapitalized by converting each share
of $.01 par value voting common stock into 10 shares of $.001 par value voting
common stock. Authorized shares available was increased from 10,000,000 to
50,000,000 shares.
NOTE H - EMPLOYEE STOCK OPTIONS:
During 1990, the Company changed to a compensatory stock option plan from a
noncompensatory stock option plan, under which certain officers and employees
are participants. As of December 31, 1993, there were 910,405 shares of voting
common stock available under stock options, exercisable at prices ranging from
$1.49 to $3.00 per share, which is management's estimate of the fair value of
the stock at the date the option is granted. These options become exercisable on
various dates through December, 1995. Total compensation expense recognized
under this plan amounted to $662,143 in 1993, $847,768 in 1992, and $316,453 in
1991.
973,148 and 837,000 shares of voting common stock were issued during the years
ended December 31, 1993 and 1992 (after giving effect for the stock split
discussed in Note G), at prices ranging from $.16 to $3.00 per share. 1,067,660
shares of voting common stock were issued during 1991 at prices ranging from
$.01 to $1.826 per share.
NOTE I - TRANSACTIONS WITH RELATED PARTIES:
The Company leases its office facilities in Orlando, Florida from the Company's
founder and major shareholder under an eighteen year lease agreement. The lease
provides for renegotiation of the rental rate every three years, which was
renegotiated effective January 1, 1991, providing for revised monthly rental
F-17
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE I - TRANSACTIONS WITH RELATED PARTIES (CONTINUED):
payments of $31,447. The lease further provides that the Company is liable for
payment of all property taxes, utilities, electricity and insurance. Total
rents paid under this lease amounted to $377,364 in 1993, $365,769 in 1992 and
$377,360 in 1991. This lease expires June 30, 2003.
Effective December 29, 1993, the Company entered into an operating lease with
Coleman Family Properties, Ltd. for an office and laboratory facility in
Orlando, Florida. The lease has a term of five years and provides for the lessor
to pay real property taxes and insurance. There was no rent paid under this
agreement in 1993. In 1994 and thereafter, the company will be committed under
this agreement for monthly rental payments varying between $23,320 and $31,800,
in accordance with the lease terms.
In March, 1990, the Company entered into a lease agreement with Research
Properties Partnership for the use of an office building in Huntsville, Alabama.
Research Properties Partnership is a partnership formed by certain stockholders
of the Company. The lease is for eighteen years, expiring August, 2008, and
requires monthly rental payments of $30,600 plus payment of utilities, taxes and
insurance. The rental payments are adjustable by the lessor, depending on
changes in the partnership's debt service requirements. Total rents paid under
this lease amounted to $367,204 in 1993, $354,129 in 1992 and $297,429 in 1991.
NOTE J - INCOME TAXES:
Effective January 1, 1993, the company changed it method of accounting for
income taxes in accordance with Statement of Financial Accounting Standards
Number 109 - Accounting For Income Taxes, as issued by the Financial Accounting
Standards Board.
This new accounting standard requires that income tax expense be computed based
on the actual expense incurred for the period plus deferred taxes resulting from
temporary differences in income for financial and tax purposes, using the
liability method. The temporary differences result primarily from using the cash
basis method of accounting and accelerated depreciation methods for income tax
reporting. In adopting this new method, the company elected not to restate prior
year earnings and to include the cumulative effect of this accounting change in
1993 earnings.
F-18
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE J - INCOME TAXES (CONTINUED):
A reconciliation of the provision for taxes on income at the applicable federal
statutory income tax rate to the tax provision reported is as follows for the
three years ended December 31:
1993 1992 1991
---- ---- ----
Amount % Amount % Amount %
------ - ------ - ------ -
Provision computed at federal
statutory income tax rate on
earnings before income taxes $121,784 35% $205,586 34% $811,422 34%
Add tax on nondeductible items 45,033 13% 39,336 6% 7,992 -
Less tax benefit of state
income tax deduction (10,103) (3%) (15,495) (3%) (49,165) (2%)
Add provision for state income
taxes 28,865 8% 45,576 8% 144,603 6%
-------- -- -------- -- -------- --
Income tax expense as presented $185,579 53% $275,003 45% $914,852 38%
======== == ======== == ======== ==
The components of deferred income tax expense for the periods presented is
summarized as follows:
1993 1992 1991
---- ---- ----
Tax effects of timing differences
arising from utilizing the cash
basis method of accounting for
income tax reporting purposes $ (41,636) $ 201,934 $1,104,487
Difference between book and tax
depreciation 227,215 73,069 (7,840)
---------- ---------- ----------
$ 185,579 $ 275,003 $1,096,647
========== ========== ==========
NOTE K - CONTINGENCIES:
The Company is a guarantor under a bond guaranty agreement in the amount of
$3,500,000. The guaranty is in connection with the financing of an office
facility in Huntsville, Alabama owned by Research Properties Partnership, a
general partnership formed by the Company's principal stockholders and certain
corporate officers. The partnership's funding is from the issuance of first
mortgage industrial revenue bonds by the Industrial Development Board of the
City of Huntsville, Alabama. Additionally, the company is liable under standby
letters of credit in the amount of $67,748 through June 30, 1995.
NOTE L - BUSINESS COMBINATIONS:
On June 14, 1993, the Company acquired Plexus Environmental Services, Inc.
("Plexus") by exchanging 6,000 shares of Coleman Research common stock for all
shares of common stock of Plexus. This transaction has been accounted for as a
purchase. The results of operations and cash flows are included in the 1993
financial statements from the acquisition date.
F-19
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE L - BUSINESS COMBINATIONS (CONTINUED):
In addition, the Company paid $140,000 to the former shareholders of Plexus
Environmental Services, Inc. for agreements not to compete. The agreements are
being amortized over three years.
Details of the acquisition are as follows:
Assets Acquired $52,112
Liabilities Assumed (11,299)
-------
Value of Coleman Research
Corporation Shares Exchanged $40,813
=======
The Company acquired Blackhawk Geosciences, Inc. on July 29, 1992 by exchanging
82,500 shares of Coleman Research Corporation common stock and cash of $210,906.
The transaction has been accounted for as a purchase, and as a result, the
acquired assets and liabilities have been recorded at their estimated fair
values at the date of acquisition. The excess of the purchase price over the
fair value of the net assets acquired amounted to $190,155 and has been recorded
as goodwill, which is being amortized over forty years.
An agreement not to compete acquired incident to this transaction is being
amortized over three years. The results of operations and cash flows are
included in the 1992 financial statements from the acquisition date.
Additional data regarding the acquisition follows:
Assets acquired $ 599,445
Liabilities assumed (191,364)
---------
Net assets acquired $ 408,081
=========
Value of shares of Coleman Research
Corporation exchanged $ 197,175
Cash paid 210,906
---------
Totals $ 408,081
=========
On July 25, 1991, the company acquired Digital Signal Corporation by exchanging
cash of $1,281,392 and 758,310 shares of $.001 par value common stock. The
transaction has been accounted for as a purchase, and as a result, the acquired
assets and liabilities have been recorded at their estimated fair values at the
date of acquisition. The excess of the purchase price paid over the fair market
value of the net assets acquired amounted to $1,622,779 and has been recorded as
goodwill. This amount is being amortized over forty years. Incident to this
transaction, the company paid $80,000 to Digital Signal Corporation's former
controlling stockholder for a covenant not to compete. This agreement is being
amortized over three years. The results of operations and cash flows of Digital
Signal Corporation are included in the 1991 financial statements from the
acquisition date.
F-20
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE L - BUSINESS COMBINATIONS (CONTINUED):
Additional data regarding the above acquisition follows:
Assets acquired $3,561,897
Liabilities assumed (895,881)
----------
Net assets acquired $2,666,016
==========
Value of shares of Coleman Research
Corporation exchanged $1,384,624
Cash paid 1,281,392
----------
$2,666,016
==========
Amortization expense on noncompete agreements and acquired goodwill from the
above acquisitions amounted to $149,075 in 1993, $151,579 in 1992 and $132,133
in 1991.
NOTE M - CONCENTRATIONS OF CREDIT RISK:
As of December 31, 1992, the Company had cash deposits at a bank which exceeded
the FDIC insured amount by $141,961. The Company grants credit and provides
services to the Department of Defense, Department of Energy and private
industries on a national basis. The U.S. Government retains the right to
terminate a contract or reduce funding, subject to terms agreed to in the
contracts. Additionally, costs billed under U.S. Government contracts are
subject to final audit and negotiation by the appropriate contracting agency
prior to final payment.
NOTE N - REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS:
The 1993 financial information provided in these financial statements have been
revised to reflect changes resulting from the revision of estimated contract
cost data, overhead rates and subsequent renegotiation of fees to be earned on
certain contracts, which resulted in a reduction of sales of $1,840,855. These
revisions were based upon new information obtained subsequent to the issuance of
the originally issued financial statements on May 31, 1994.
The 1992 financial statements have been reissued reflecting changes made based
on revised contract cost estimates, settlement of a state sales and use tax
audit arising in 1994 for transactions occurring in 1992 and prior, and
increased estimates of accrued vacation pay and other items.
F-21
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, 1994 and 1993
ASSETS
------
1994 1993
---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 99,215 $ 81,235
Accounts receivable 28,149,434 23,173,295
Notes receivable 3,410 113,911
Advances and employee
receivables 2,081,170 524,050
Prepaid rent 198,014 --
Prepaid expenses 341,331 13,741
----------- -----------
Total current assets 30,872,574 24,106,232
----------- -----------
PROPERTY AND EQUIPMENT - AT COST:
Furniture and fixtures 2,098,277 1,248,908
Equipment, computers and software 12,600,871 8,872,012
Computer equipment on
operating lease 313,385 313,385
Leasehold improvements 1,177,239 347,483
----------- -----------
Total 16,189,772 10,781,788
Less: Accumulated depreciation ( 6,501,075) ( 4,177,127)
----------- -----------
Net property and equipment 9,688,697 6,604,661
Equipment under capital lease
agreements, net of
accumulated amortization 201,537 8,892
----------- -----------
Total property and equipment 9,890,234 6,613,553
----------- -----------
Total other assets 2,651,850 2,076,888
----------- -----------
TOTAL ASSETS $43,414,658 $32,796,673
F-22
PAGE
<PAGE>
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, 1994 and 1993
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
1994 1993
---- ----
CURRENT LIABILITIES:
Accounts payable $ 8,407,860 $ 6,487,983
Notes payable 3,232,732 1,829,852
Obligations under capital lease
agreements 62,432 --
Payroll taxes payable 9,222,561 7,034,181
Accrued expenses 495,093 253,267
Deferred income taxes 4,618,098 3,875,826
----------- -----------
Total current liabilities 26,038,776 19,481,109
----------- -----------
LONG-TERM LIABILITIES:
Obligations under capital lease
agreements, excluding
current maturities 113,050 --
Deferred income taxes 350,990 104,662
----------- -----------
Total liabilities 26,502,816 19,585,771
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
50,000,000 authorized 13,344 11,335
Additional paid-in capital,
in excess of par value 10,527,784 7,839,312
Retained earnings 7,352,441 5,768,038
----------- ----------
17,893,569 13,618,685
Treasury stock at cost (981,727) (407,783)
----------- -----------
Total stockholders' equity 16,911,842 13,210,902
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $43,414,658 $32,796,673
COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
F-23
PAGE
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
For the Quarters Ended September 30, 1994, and 1993
1994 1993
---- ----
CONTRACT REVENUES $107,360,868 $72,816,378
CONTRACT COSTS 97,484,150 67,709,876
RESEARCH AND DEVELOPMENT EXPENSES 637,478 354,315
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 6,143,901 4,100,276
------------ -----------
TOTAL OPERATING EXPENSES $104,265,529 $72,164,467
------------ -----------
EARNINGS FROM OPERATIONS 3,095,339 651,911
OTHER INCOME (EXPENSE):
Other income (expense) 137,867 225,029
Interest income 6,062 4,666
Interest expense (206,916) (72,816)
------------ -----------
Total other income (expense) (62,987) 156,879
------------ -----------
EARNINGS BEFORE INCOME TAXES 3,032,352 808,790
Total income tax expense 1,227,352 352,965
------------ -----------
NET EARNINGS $ 1,805,000 $ 455,825
EARNING PER SHARE: $ 0.1375 $ 0.0384
WEIGHTED AVERAGE SHARES: 13,123,364 11,876,232
F-24
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COLEMAN RESEARCH CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
For the Quarters Ended September 30, 1994, and 1993
1994 1993
---- ----
Cash flows from operating activities:
Cash received from customers $103,691,115 $65,048,131
Cash paid to suppliers
and employees (97,511,228) (64,395,700)
Interest received 6,062 4,666
Interest paid (206,916) (72,816)
(Increase) decrease in
lease deposits (304,713) 43,779
------------ -----------
Net cash provided from (used
in) operating activities 5,674,320 628,060
Cash flows from investing activities:
Proceeds from sale of property
and equipment -- --
Acquisition of property and
equipment (3,530,709) (3,985,451)
(Increase) decrease in notes
receivable (49,447) 368,080
----------- -----------
Net cash used in investing
activities (3,580,156) (3,617,371)
Cash flows from financing activities:
Issuance of common stock 420,083 1,904,413
Increase (decrease) in notes
payable (2,142,492) 829,852
Principal payments on capital
lease obligations (7,913) --
Acquisition of treasury stock (509,803) (74,224)
----------- ----------
Net cash provided from
financing activities (2,240,125) 2,660,041
----------- ----------
Net increase (decrease) in cash (145,961) (329,270)
Cash at January 1 245,176 410,505
----------- ----------
F-25
APPENDIX I
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT, dated as of the _____ day of January, 1995,
by and among Thermo Electron Corporation, a Delaware corporation
having an office at 81 Wyman Street, Waltham, Massachusetts
02254-9046 ("Thermo"), CRC Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Thermo
("Acquisition") and Coleman Research Corporation, a Florida
corporation having an office at 201 South Orange Avenue, Suite
1300, Orlando, Florida 32801 ("CRC" or the "Company").
WHEREAS, the Boards of Directors of Acquisition and CRC deem
it advisable and in the best interest of such corporations and
their respective shareholders that Acquisition be merged into and
with CRC on the terms and conditions set forth in this Agreement,
as a result of which CRC will become a wholly-owned subsidiary of
Thermo; and
WHEREAS, the Board of Directors of Thermo has approved the
merger;
NOW THEREFORE, for and in consideration of the mutual
covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt of which is acknowledged
by each party hereto, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
Section 1.1. Agreement and Plan of Merger. Effective as of
the Effective Date (as defined in Section 2.2 below), Acquisition
shall be merged with and into CRC (hereinafter sometimes called
the "Merger") in accordance with the terms of this Agreement and
the Articles of Merger set forth in Exhibit A hereto (the
"Articles of Merger"). CRC shall be the corporation surviving
the Merger (the "Surviving Corporation"), and the separate
existence of Acquisition shall cease as of the Merger. The
Amended and Restated Articles of Incorporation and Bylaws of CRC,
in effect immediately prior to the effective time of the Merger,
shall thereafter continue in full force and effect as the
Articles of Incorporation and Bylaws of the Surviving
Corporation. The directors and officers of the Surviving
Corporation, from and after the Effective Date, shall be the
directors and officers listed in the Articles of Merger, each to
hold office in accordance with applicable law and the Amended and
Restated Articles of Incorporation and Bylaws of CRC. The effect
of the Merger shall be as provided by the applicable provision of
PAGE
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the General Corporation Law of the State of Delaware, the Florida
General Corporation Act and the Florida Business Corporation Act.
Section 1.2. Conversion of CRC's Shares. At the effective
time of the Merger, each share of CRC's common stock outstanding
immediately prior thereto (herein referred to as a "CRC Share"
and collectively as the "CRC Shares") shall, by virtue of the
Merger and without any action on the part of the holder thereof,
but subject to this Section and to Sections 1.4, 1.5, 1.6 and 1.7
below, be canceled and converted into the right to receive
.1905695 shares (the "Thermo Shares") of Thermo common stock,
$1.00 par value (the "Thermo Common Stock"). The fraction of a
Thermo Share into which each CRC Share is to be converted
pursuant to this Agreement is hereinafter referred to as the
"Exchange Ratio."
Section 1.3. CRC Stock Options. At or prior to the
Effective Date, Thermo and CRC shall take all action necessary to
cause the assumption by Thermo as of the Effective Date of the
options to purchase CRC common stock outstanding as of the
Effective Date (the "CRC Options"). Each of the CRC Options
shall be converted without any action on the part of the holder
thereof into an option to purchase shares of Thermo Common Stock
(the "Thermo Options") as of the Effective Date. The number of
shares of Thermo Common Stock that each record holder of an
option agreement which represents CRC Options (the
"Optionholders") shall be entitled to receive upon the exercise
of such option shall be a number of whole and fractional shares
determined by multiplying the number of shares of CRC common
stock subject to such option, determined immediately before the
Effective Date, by the Exchange Ratio. The option exercise price
of each share of Thermo common stock subject to an assumed CRC
Option shall be the amount (rounded up to the nearest whole cent)
obtained by dividing the exercise price per share of CRC common
stock at which such option is exercisable immediately before the
Effective Date by the Exchange Ratio. The assumption and
conversion of CRC Options to Thermo Options as provided herein
shall not give the Optionholders additional benefits which they
did not have immediately prior to the Effective Date, result in
any acceleration of any vesting schedule for any CRC Option,
other than the acceleration of the vesting schedules pursuant to
the terms of the CRC Nonqualified Stock Option Plan dated January
2, 1990 (the "Option Plan"), or relieve the Optionholders of any
obligations or restrictions applicable to their options or the
shares obtainable upon exercise of the options. Only whole
shares of Thermo Common Stock shall be issued upon exercise of
any Thermo Option and in lieu of receiving any fractional share
of Thermo Common Stock, the holder of such option shall receive
in cash the fair market value of the fractional share, net of the
applicable exercise price of the fractional share and applicable
withholding taxes.
Section 1.4. Limit on Issuance of Thermo Shares. Anything
to the contrary herein notwithstanding, the total number of
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Thermo Shares which shall be required to be issued pursuant to
Section 1.2 and upon the exercise of CRC Options that are
converted into Thermo Options pursuant to Section 1.3 shall not
(except as such number of shares shall be required to be
adjustment pursuant to Section 1.10) exceed 2,669,158. In the
event that the application of the Exchange Ratio set forth in
Section 1.2 could result in the issuance of more than 2,669,158
Thermo Shares, such Exchange Ratio rate shall be automatically
adjusted such that the total number of Thermo Shares will not
exceed 2,669,158.
Section 1.5. Dissenting Shares. Each outstanding CRC Share
held by a CRC shareholder who has demanded and perfected his or
her right to an appraisal of his or her CRC Shares in accordance
with Sections 607.1301, 607.1302 and 607.1320 of the Florida
Business Corporation Act and who has not effectively withdrawn or
lost his or her right to such appraisal ("Dissenting Shares")
shall not be converted into or represent the right to receive the
Thermo Shares represented by such CRC Shares pursuant to Section
1.2 above, but the holder thereof shall be entitled only to such
rights as are granted by Sections 607.1301, 607.1302 and 607.1320
of the Florida Business Corporation Act.
Section 1.6. Payment for the CRC Shares. Promptly
following the Effective Date of the Merger, The First National
Bank of Boston, Thermo's stock transfer agent (the "Exchange
Agent"), shall transmit to each record holder of an outstanding
certificate which prior thereto represented CRC Shares (the
"Shareholders") a form of letter of transmittal and instructions
for use in effecting the surrender of such certificate and/or
option agreement in exchange for the Thermo Shares represented by
such CRC Shares. Upon the proper surrender of such certificates
and a duly executed letter of transmittal and any required tax
certifications, in accordance with such instructions, to the
Exchange Agent, the Exchange Agent shall deliver a certificate
for the Thermo Shares that such person is entitled to receive,
minus the deduction specified in Section 1.7. It shall be a
condition of such payment and delivery that the surrendered
certificate be properly endorsed or otherwise in proper form for
transfer and that the person requesting such shall pay any
transfer or other taxes required by reason of such payment or
delivery or establish to the satisfaction of the Transfer Agent,
Thermo and/or the Surviving Corporation that such tax has been
paid or is not applicable. Until so surrendered for exchange,
each certificate heretofore representing CRC common stock (other
than Dissenting Shares) shall, subject to Section 1.7 hereof, be
deemed for all purposes to evidence the right to receive the
consideration as described in accordance with Section 1.2 above;
provided, however, that unless and until any such outstanding
certificate is so surrendered, the holder of such outstanding
certificate shall cease to have any rights as a stockholder of
CRC, except such rights, if any, as such holder may have with
respect to Dissenting Shares and shall not be entitled to receive
any consideration from the Surviving Corporation and/or Thermo
PAGE
<PAGE>
with respect to the CRC Shares represented by such certificate.
Each Shareholder, upon surrender of each such certificate to the
Exchange Agent, shall receive promptly in exchange for each such
certificate the shares of Thermo Common Stock and cash (if any)
to which such holder is entitled pursuant to Sections 1.2, 1.9
and 1.10 of this Agreement. Unless and until any such
outstanding certificates for CRC Shares shall be so surrendered,
no dividend (cash or stock) payable to holders of record of
shares of Thermo Common Stock as of any date subsequent to the
Effective Date shall be paid to the holder of any such
outstanding certificate and his other rights as a stockholder of
Thermo shall be suspended, but upon such surrender of such
outstanding certificate there shall be paid to the record holder
of the certificate of shares of Thermo Common Stock issued in
exchange therefor the amount of dividends, if any, without
interest and less any taxes which may have been imposed thereon,
that have theretofore become payable with respect to the number
of those shares of Thermo Common Stock represented by such
certificate issued upon such surrender and exchange, and his
other rights as a stockholder of Thermo shall thereafter be
restored.
Section 1.7. Escrow Account. For the purpose of providing
support of the representations and warranties contained herein
and to induce Thermo to enter into this Agreement, ten percent
(10%) of Thermo Shares each Shareholder has the right to
beneficially receive pursuant to Section 1.2 (including Thermo
Shares to be issued to the CRC 401(k) Employee Stock Ownership
Plan (the "KSOP")) shall be withheld from payment to such
Shareholder pursuant to Section 1.2 and shall be set aside in
escrow pursuant to the terms of an Indemnification and Stock
Escrow Agreement to be entered into at the Closing by and among
Thermo, CRC, the Shareholder Representative (as defined therein)
and The First National Bank of Boston, as escrow agent, in
substantially the form of Exhibit B hereto (the "Escrow
Agreement"). The amount of shares placed in escrow pursuant to
this Section 1.7 shall be considered the "Escrowed Shares." The
Escrowed Shares shall be held as a trust fund and shall not be
subject to any lien, attachment, trustee process or any other
judicial process of any creditor of any party, and shall be held
and disbursed by the Escrow Agent solely for the purposes and in
accordance with the terms of the Escrow Agreement. It is
intended that the assets held in escrow as above provided shall
facilitate Thermo's and the Surviving Corporation's ability to
recover amounts to which they are entitled under this Agreement
or the Escrow Agreement as a result of misrepresentations,
breaches of warranties and breaches of covenants contained in
this Agreement and to satisfy claims of Thermo and Acquisition
arising as a result of this Agreement or the Escrow Agreement.
Accordingly, and to the extent necessary to provide such
protection to Thermo and the Surviving Corporation, property held
in escrow thereunder shall be available to satisfy claims of
Thermo and the Surviving Corporation under this Agreement or the
Escrow Agreement to the extent provided in such agreements. The
PAGE
<PAGE>
adoption of this Agreement and the approval of the Merger by the
Shareholders shall constitute approval of the Escrow Agreement,
including without limitation, placement and escrow of the
Escrowed Shares and the appointment of the Shareholder
Representative.
Section 1.8. Certain Other Agreements. Concurrently with
the execution and delivery of this Agreement, CRC shall deliver
to Thermo: (i) an Affiliate Agreement in the form of Exhibit C
attached hereto and a Continuity of Interest Certificate in the
form attached as Exhibit D hereto duly executed and delivered by
each affiliate of CRC and other parties (collectively, the
"Affiliate Agreements"); (ii) the noncompetition agreement
between Thomas J. Coleman and CRC in the form of Exhibit E
attached hereto duly executed and delivered by Thomas J. Coleman;
(iii) amended employment agreements between CRC and each of James
B. Morrison, Richard H. Levine and John L. Gardner in the form of
Exhibit F attached hereto; and (iv) amended compensation
agreements between CRC and certain key employees of CRC to be
identified by Thermo.
Section 1.9. No Fractional Shares of Thermo Common Stock.
Notwithstanding any other provision of this Agreement, neither
certificates nor scrip for fractional shares of Thermo Common
Stock shall be issued to any holder of CRC common stock in the
Merger and the holder thereof shall not be entitled to any voting
or other rights of a holder of shares or a fractional share
interest. Each CRC Shareholder who otherwise would have been
entitled to receive a fraction of a share of Thermo Common Stock
shall receive in lieu thereof cash, without interest, in an
amount determined by multiplying such Shareholder's fractional
interest by the closing price of Thermo Common Stock as reported
on the New York Stock Exchange on the Effective Date. All
amounts of cash in respect of fractional interests which have not
been claimed at the end of three years from the Effective Date by
surrender of certificates for shares of CRC common stock shall be
repaid to the Surviving Corporation, subject to the provisions of
applicable escheat or similar laws, for the account of the
holders entitled thereto.
Section 1.10. Adjustments. In the event Thermo shall
declare, pay, make or effect between the date of this Agreement
and the Effective Date of the Merger (a) any stock dividend or
other distribution in respect of the Thermo Common Stock payable
in shares of capital stock of Thermo, (b) any stock split or
other subdivision of outstanding shares of Thermo Common Stock
into a larger number of shares, (c) any combination of
outstanding shares of Thermo Common Stock into a smaller number
of shares, (d) any reclassification of Thermo Common Stock into
other shares of capital stock or securities, or (e) any exchange
of the outstanding shares of Thermo Common Stock, in connection
with a merger or consolidation of Thermo or sale by Thermo of all
or part of its assets, for a different number of class of shares
of stock or securities of Thermo or for the share of the capital
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stock or other securities of any other corporation, appropriate
adjustment shall be made in the ratio for the conversion of CRC
Shares into Thermo Shares as may be required to put the
Shareholders in the same position as if the record date, with
respect to any such transaction or transactions which shall so
occur, had been immediately after the Effective Date of the
Merger, or otherwise to carry out the intents and purposes of
this Agreement.
Section 1.11. Closing of Stock Transfer Books. The stock
transfer books of CRC shall be closed at the close of business on
the business day immediately preceding the Effective Date. In
the event of a transfer of ownership of CRC common stock, the
shares of Thermo Common Stock and cash (if any) to be issued in
the Merger as provided herein may be delivered to a transferee,
if the certificate representing such CRC common stock is
presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by payment of
any applicable stock transfer taxes.
Section 1.12. Lost Certificates. In the event any
certificate representing a Shareholder's CRC Shares shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such certificate or option
instrument to be lost, stolen or destroyed, the Exchange Agent or
the Surviving Corporation shall issue in exchange for such lost,
stolen or destroyed certificate or option instrument the
consideration payable in exchange therefor pursuant to this
Article 1. The Board of Directors of the Exchange Agent or the
Surviving Corporation may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate to give the Exchange Agent
or the Surviving Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the
Surviving Corporation with respect to the certificate or option
instrument alleged to have been lost, stolen or destroyed.
Section 1.13. Conversion of Acquisition Shares. At the
Effective Date, each share of Acquisition's common stock
outstanding immediately prior thereto shall, by virtue of the
Merger and without any action on the part of the holder thereof,
be canceled and converted into one (1) fully paid and
nonassessable common share of the Surviving Corporation, which
shares shall be registered in the name of and beneficially owned
by Thermo.
Section 1.14. Adoption. This Agreement shall be submitted
to the shareholders of Acquisition and CRC as provided by law.
In the case of Acquisition, Thermo, as its sole shareholder,
shall vote all its shares in favor of adoption of this Agreement.
In the case of CRC, this Agreement shall be promptly submitted to
its shareholders at a duly called and held shareholder meeting
for their approval pursuant to the Florida General Corporation
Act and Florida Business Corporation Act. The Board of Directors
PAGE
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of CRC shall recommend to the Shareholders the approval of this
Agreement and the Merger.
ARTICLE 2
CLOSING
Section 2.1. Time and Place of Closing. The closing under
this Agreement (herein called the "Closing") shall take place at
the offices of Thermo Electron Corporation, 81 Wyman Street,
Waltham, Massachusetts 02254 at 10:00 A.M., local time, on the
day of the later of (i) the approval by the shareholders of CRC
of the execution, delivery and performance by CRC of this
Agreement and (ii) satisfaction of all other conditions to
Closing as set forth in Article 5 hereof, or at such other time
or date as may be mutually agreeable to the parties hereto (the
date on which Closing occurs being herein called the "Closing
Date"). All transactions at the Closing shall be deemed to take
place simultaneously and no transaction shall be deemed to have
been completed and no document or certificate shall be deemed to
have been delivered until all transactions are completed and all
documents delivered.
Section 2.2. Consummation of the Merger. As soon as is
practicable after the satisfaction or waiver of the conditions
set forth in Article 5 hereof, the parties hereto will cause the
Merger to be consummated by delivering to the Secretary of State
of the State of Florida the Articles of Merger and to the
Secretary of the State of Delaware a certificate of merger (the
"Certificate of Merger") in such form or forms as may be required
by, and executed and acknowledged in accordance with, the
relevant provisions of the laws of the state of Florida and
Delaware, as the case may be. The Merger shall become effective
at the later of (x) the time that the Articles of Merger are
filed with the Department of the State of the State of Florida or
(y) the time that the Secretary of State of the State of Delaware
files the Certificate of Merger, in each case in accordance with
the relevant provisions of the laws of the state of Florida or
the Delaware (or at such later time, which shall be as soon as
reasonably practicable, specified as the effective date in the
Articles of Merger or the Certificate of Merger). The term
"Effective Date" shall mean the later of (x) the date and time of
the filing of the Articles of Merger with the Department of State
of the State of Florida or (y) the date and time of the filing of
the Certificate of Merger by the Secretary of State of the State
of Delaware (or such later time, which shall be as soon as
reasonably practicable, as may be specified in the Articles of
Merger or the Certificate of Merger).
PAGE
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1. Definitions. The term the "Company", when
used in this Agreement, shall include CRC and each entity of
which fifty percent (50%) or more of the effective voting power
or equity interest is owned directly or indirectly by CRC (a
"Subsidiary"), as an entirety, and representations, warranties
and covenants as to the Company contained herein shall be deemed
to mean CRC and each Subsidiary, both separately and together as
a consolidated whole, unless and except to the extent expressly
indicated otherwise. The term "knowledge", when used below with
respect to the Company, shall mean actual knowledge of the
following executive officers of the Company: Thomas J. Coleman,
James B. Morrison, Richard H. Levine, Harriett C. Coleman, Martin
R. Adams, Buddy G. Beck, Glenn K. Otis, and Robert V. Wells, or
of any of the foregoing, in each case after reasonable and
diligent investigation. The term "basis", when used below, shall
mean any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could form
the basis for any specified consequence. The term "ordinary
course of business", when used below, shall mean the ordinary
course of business of the Company consistent with its past custom
and practice (including with respect to frequency and amount).
The term "Code" when used in this Agreement shall mean the
Internal Revenue Code of 1986, as amended and in effect.
Section 3.2. Representations and Warranties Pertaining to
the Company. CRC, on its own behalf and on behalf of any
Subsidiary, represents and warrants to Thermo and Acquisition
that, except as set forth on the Disclosure Schedule attached
hereto as Exhibit G (specifically identifying the relevant
subsection hereof):
(a) Organization and Qualification. CRC is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Florida and has all requisite corporate and
other power and authority to own, operate and lease its
properties and to carry on its business as it is now being
conducted. The Articles of Incorporation and Bylaws of CRC, as
amended to date, are attached hereto as Exhibit H. The Company
is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction in which the character of
the properties owned, operated or leased by it or the nature of
its activities is such that such qualification is required by
applicable law. All such jurisdictions are listed on the
Disclosure Schedule.
(b) Capitalization. The authorized capital stock of CRC
consists of 50,000,000 shares of common stock, $.001 par value
per share. There is no other capital stock of CRC authorized for
issuance. As of January , 1995, there were 13,074,427 shares
--
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of CRC's common stock issued and outstanding, and these shares
constitute the total issued and outstanding share capital of CRC.
The Disclosure Schedule sets forth a complete and accurate list
of all Shareholders, indicating the number of CRC Shares held by
such Shareholder and such Shareholder's state of residence. All
of such shares have been duly authorized and validly issued, are
fully paid, nonassessable and free of preemptive rights. The
offer and sale of all securities of the Company complied with all
federal, state and foreign securities laws. As of January __,
1995, there were outstanding options to purchase an aggregate of
931,786 shares of common stock of CRC held by the Optionholders
in the amounts listed on the Disclosure Schedule, which list
shall also include the state of residence of each such
Optionholder. All other options to purchase common stock of CRC
have expired or have been legally terminated. There are no other
options to purchase shares of CRC Common Stock. Since January
__, 1995, no shares of capital stock of the Company have been
repurchased from shareholders. No shares of CRC's capital stock
are reserved for issuance (except for the CRC Options), and
except for the Stock Redemption Agreements dated __________ and
__________ (the "Redemption Agreements") and as required under
the KSOP, there are no warrants, convertible instruments or other
rights, agreements or commitments, contingent or otherwise,
obligating CRC to issue, sell or purchase shares of capital
stock. The books and records of the 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 the Company.
(c) Subsidiaries. CRC has no subsidiaries. Except for its
interest in Coleman Laboratories, Ltd., the Company is not a
partner or joint venturer with any other person. The Company is
not subject to any obligation, contingent or otherwise, to
provide funds to or make an investment (in the form of a loan,
capital contribution or otherwise) in any entity.
(d) Authority. Subject to shareholder approval, the
Company has full right, power, capacity and authority to execute,
deliver and perform this Agreement, to execute, deliver and file
the Articles of Merger and to consummate the transactions
contemplated thereby. This Agreement has been duly and validly
authorized by all necessary corporate action on the part of the
Company, subject only, in respect of the consummation of the
Merger, to approval by the shareholders of CRC holding a majority
in voting interest of the outstanding CRC Shares. The Board of
Directors of CRC has (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, are fair
to and in the best interest of the Shareholders, (ii) approved
this Agreement and the transactions contemplated hereby,
including the Merger, and (iii) resolved to recommend approval
and adoption of this Agreement and the Merger by the
Shareholders. This Agreement has been duly and validly executed
and delivered by CRC and constitutes the valid and binding
obligation of CRC, enforceable against it in accordance with its
PAGE
<PAGE>
terms. Upon execution and filing of the Articles of Merger, the
Articles of Merger will have been duly executed and filed by CRC.
Neither the execution, delivery and performance of this
Agreement, the filing of the Articles of Merger 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 Articles of Incorporation or
Bylaws of the Company, as amended, or of any note, bond,
mortgage, indenture, license, agreement or other instrument or
obligation to which the Company is a party or by which the
Company 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 the
Company or its properties or assets; (iii) result in the
imposition of any lien, encumbrance, charge or claim upon any of
the Company's assets; or (iv) entitle any employee to severance
or other payments by the Company or create any other obligation
to an employee, including an increase in benefits. Except for
the approval by the Shareholders of the Merger, a filing under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "Antitrust Improvements Act"), filing of a
registration statement on Form S-4 with the Securities and
Exchange Commission (the "Commission"), filing of the Articles of
Merger with the Secretary of State of the State of Florida and
filing of the Certificate of Merger with the Secretary of the
State of Delaware, 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 the Company or the consummation
of the transactions contemplated hereby.
(e) Financial Statements. The Company has delivered to
Thermo prior to the execution of this Agreement true and complete
copies of: (i) the unaudited consolidated balance sheet of CRC
and its Subsidiaries as at September 30, 1994 (the "Balance
Sheet") and the unaudited consolidated statements of earnings and
cash flows for CRC and its Subsidiaries for the 9-month period
ended September 30, 1994, (ii) the audited consolidated balance
sheet of CRC and its Subsidiaries as at December 31, 1993 and the
audited consolidated statements of earnings and cash flows for
the year ended December 31, 1993, accompanied by the report
thereon by Thomas, Beck & Zurcher, P.A., (iii) the audited
consolidated balance sheet of CRC and its Subsidiaries as at
December 31, 1992, accompanied by the report thereon by Thomas,
Beck & Zurcher, P.A., and the unaudited consolidated statements
of earnings and cash flows for the year ended December 31, 1992,
and (iv) the unaudited consolidated balance sheet of CRC and its
Subsidiaries as at December 31, 1991 and the unaudited
consolidated statements of earnings and cash flows for the year
ended December 31, 1991 (collectively, the "Financial
Statements"). Each of the Financial Statements has been prepared
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in accordance with generally accepted accounting principles
applied on a consistent basis with previous years both as to
classification of items and amounts (except as may be indicated
therein or in the notes thereto) and comply as to form in all
material respects to the interpretations and pronouncements of
the Commission, and the Financial Statements fairly present the
financial condition, results of operations and cash flows of the
Company as at the dates and for the periods indicated. Measured
in accordance with the same revenue recognition policies applied
by the Company during calendar year 1993, the Company had
contract revenues of at least $33,800,000 for the period
beginning October 1, 1994 through December 31, 1994.
(f) No Undisclosed Liabilities; No Dealings with
Shareholders, Officers, Directors or Employees. The Company has
no liabilities or obligations of any nature, other than those
shown on the Balance Sheet and those which have arisen after the
date of the Balance Sheet in the ordinary course of business
which are not in the aggregate or individually material. As used
in this Agreement, the term "liability" includes any
indebtedness, claim, loss, damage, deficiency (including deferred
income tax), cost, expense, guaranty or responsibility, whether
known or unknown, absolute, accrued, contingent or otherwise, and
whether due or to become due. The Company does not have any
contractual arrangement with, or commitment to or from, any of
its shareholders, officers, management, directors, 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, any contractual
arrangement or commitment whereby any of such persons are
directly or indirectly a joint investor or coventurer with
respect to, or owner, lessor, lessee, licensor or licensee of,
any real or personal property, tangible or intangible, owned or
used by, or a lender to or debtor of, the Company.
(g) Tax Matters.
(i) For purposes of this Agreement, "Tax" means any
federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental
(including without limitation Taxes under Code Section 59A),
customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax or other fiscal charges of
any kind whatsoever, including without limitation any
interest, penalty, or addition thereto, whether disputed or
not.
(ii) For purposes of this Agreement, "Tax Return"
means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including
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without limitation any schedule or attachment thereto, and
any amendment thereof.
(iii) Except as set forth on the Disclosure Schedule,
CRC and its Subsidiaries have accurately prepared and duly
and timely filed all Tax Returns that they were required to
file. Except as set forth on the Disclosure Schedule, to
the knowledge of CRC and its Subsidiaries all such Tax
Returns were correct and complete in all material respects.
All taxes owed by CRC and its Subsidiaries as reflected on
the Tax Returns have been paid when due, other than those
being contested in good faith and where adequate reserves
have been established therefor. Except as set forth on the
Disclosure Schedule, none of CRC and its Subsidiaries is
currently the beneficiary of any extension of time within
which to file any Tax Return. No claim or inquiry with
respect to any material amount of Taxes has ever been made
by an authority in a jurisdiction where CRC or any of its
Subsidiaries did not file Tax Returns that it is or may be
subject to any Tax by that jurisdiction for any period
ending on or before the Closing Date. There are no liens or
other security interests on any of the assets of the CRC and
its Subsidiaries that arose in connection with any failure
(or alleged failure) to pay any Tax.
(iv) Neither CRC nor any of its Subsidiaries has ever
filed a consolidated return with a company other than CRC
and its Subsidiaries.
(v) CRC has delivered to Thermo true and complete
copies of the income, franchise, excise, sales, use,
property and employment tax returns filed by the CRC and its
Subsidiaries with any federal, state, local or foreign
governmental authority since January 1, 1988, together with
all examination reports and statements of deficiencies
assessed, proposed in writing to be assessed against, or
agreed to by the CRC or its Subsidiaries.
(vi) Except for Taxes attributable to the change in
CRC's accounting method upon consummation of the Merger
(from the cash method to the accrual method), all Taxes of
CRC and its Subsidiaries attributable to Tax periods or
portions thereof ending on or prior to the Effective Date,
including Taxes that may become payable by CRC and its
Subsidiaries in future periods in respect of any
transactions or sales occurring on or prior to the Effective
Date, that have not yet been paid have, in the aggregate,
been adequately reflected as a liability on the books of CRC
and its Subsidiaries in accordance with generally accepted
accounting principles consistently applied.
(vii) Without limiting the generality of the
foregoing, CRC and its Subsidiaries have withheld or
collected and duly paid all Taxes required to have been
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withheld or collected and paid in connection with payments
to foreign persons, sales and use Tax obligations with
respect to any and all states, and amounts paid or owing to
any employee, independent contractor, creditor, stockholder
or other person.
(viii) None of the Tax Returns of CRC and its
Subsidiaries have been or are being currently audited or
examined by any governmental authority, nor have any
deficiencies for any Tax been asserted against the CRC or
any of its Subsidiaries.
(ix) There are no outstanding agreements or waivers
extending the statute of limitations applicable to any Tax
Return of CRC or any of its Subsidiaries for any period.
(x) None of CRC and its Subsidiaries has filed a
consent under Code Section 341(f) concerning collapsible
corporations. None of CRC and its Subsidiaries has made any
payments, is obligated to make any payments, or is a party
to any agreement that could obligate it to make any payments
that will be an "excess parachute payment" under Code
Section 380G. None of CRC and its Subsidiaries has been a
United States real property holding corporation within the
meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii). None of
CRC and its Subsidiaries has been a passive foreign
investment company as defined in Code Sections 1291-1297.
Each of CRC and its Subsidiaries has disclosed on its
federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal
income Tax within the meaning of Code Section 6662. None of
CRC and its Subsidiaries is a party to any Tax allocation or
sharing agreement. None of CRC and its Subsidiaries has any
liability for any Taxes of any person (other than any of CRC
and its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or
any similar provision of federal, state, local, or foreign
law), as a transferee or successor, by contract, or
otherwise.
(h) Properties; Environmental, Health and Safety Matters.
The Company has good, full and marketable title to, or a valid
and continuing leasehold interest in, all properties and assets,
real and personal, reflected on the Balance Sheet or acquired by
the Company since the date of the Balance Sheet (except personal
property leases terminated, or personal property sold or
otherwise disposed of, in the ordinary course of business since
the date of the Balance Sheet), free and clear of all mortgages,
liens, attachments, pledges, encumbrances or security interests
of any nature whatsoever, except for liens for taxes not yet due
and the rights of any lessor under any lease to which CRC is a
party. The Company has never owned any real estate other than
the improvements constructed on the real property leased by the
Company at 5950 Lakehurst Drive, Orlando, Florida (the
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"Property"). All leases pursuant to which the Company leases
real or personal property are in good standing, and are valid and
in full force and effect in accordance with their respective
terms. There are no defaults under any such leases attributable
to the Company, and no event has occurred that (whether or not
with notice, lapse of time or both) would constitute a default.
To the best knowledge of the Company, all buildings,
improvements, machinery, equipment, vehicles and items of
tangible personal property used in connection with the operations
of the Company are structurally sound, are in good operating
condition and repair, are adequate for the uses to which they are
being put and are not in need of maintenance or repairs except
for ordinary, routine maintenance.
The Disclosure Schedule sets forth or describes in
reasonable detail with respect to the Property and to the best of
the Company's knowledge with respect to all other real property
currently leased by the Company or leased by the Company at any
time since January 1, 1990:
(i) (a) landfills, surface impoundments, pits, ponds,
lagoons, underground injection wells, waste piles, land
treatment units, incinerators and any other units used by
the Company for the handling, treatment, recycling, reuse,
storage and disposal (hereinafter "Management") of wastes or
recyclable materials and (b) all underground, in-ground or
on-ground storage tanks on any such real property;
(ii) for all units identified in clause (i)(a),
information on the time period used, type of waste or
recyclable material, method of Management, and whether there
is any evidence of releases of pollutants or contaminants
from such units onto the ground or subsurface or into
groundwater or surface waters;
(iii) for all tanks identified in clause (i)(b),
information on the time period used, material being stored,
and when and what tests, if any, have been conducted
regarding tank integrity and test results, and whether there
is any evidence of releases of material from such units onto
the ground or subsurface or into groundwater or surface
waters;
(iv) any evidence, including sample results, of soil
or groundwater contamination on or migrating from any such
real property which is not addressed by clauses (ii) or
(iii);
(v) a list of all sites to which wastes or recyclable
materials have been sent by the Company for Management, the
owner or operator of such off-site facilities, the
transporter of such wastes or recyclable materials, type of
waste or recyclable materials, method of Management used,
and time period of use;
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(vi) reports of releases (including continuous release
reports) of hazardous substances or oil occurring on or from
facilities of the Company and reported to (1) the National
Response Center, State Emergency Response Commissions, Local
Emergency Planning Committees or the United States
Environmental Protection Agency (the "EPA") pursuant to
requirements of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), the Resource Conservation and Recovery Act
("RCRA"), the Clean Water Act ("CWA") or other federal
statutes; or (2) any foreign, state or local governmental
authority;
(vii) non-compliance by the Company since January 1,
1980 with conditions of environmental permits or licenses
issued pursuant to, or other requirements of, the Clean Air
Act, CWA, RCRA, the Toxic Substances Control Act ("TSCA"),
the Safe Drinking Water Act, CERCLA or similar foreign,
state or local statutes, laws, ordinances, rules or
regulations;
(viii) Hazardous Waste Manifest Discrepancy Reports,
RCRA biennial reports or similar state reports, Discharge
Monitoring Reports, air emission monitoring reports and air
emission inventories, filed by the Company with any
government agency;
(ix) Reports of environmental audits conducted of
facilities located on real property owned or leased by the
Company, and action plans and progress reports responding to
audit findings. Such audits include audits conducted by the
Company, its consultants, insurance companies or
governmental agencies;
(x) Claims, litigation and other legal proceedings
(including but not limited to notices of violation, notices
of noncompliance, citations, orders, consent orders, consent
decrees and administrative or judicial enforcement
proceedings) seeking or alleging money damages (resulting
from injury to person or property), injunctive relief,
remedial action, fines, penalties or any other remedy by
reason of (1) violation of or noncompliance with any law,
regulation, rule or requirement of law or regulation
relating to pollution or protection of the environment
("Environmental Laws"), or any permit, license or
registration issued thereunder; or (2) the disposal,
discharge or release of solid wastes, pollutants or
hazardous substances, whether or not in compliance with
Environmental Laws; or (3) the ownership, operation or use
of any landfill, surface impoundment, pit, pond, lagoon,
underground injection well, waste pile, land treatment unit,
wastewater treatment plant, air pollution control equipment,
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or any other unit used for Management of waste or recyclable
material; or (4) exposure to any chemical substances,
noises, odors, or vibration at or emanating from any real
property which has been or is currently owned or leased by
the Company. This item includes all legal proceedings which
have been concluded (e.g., a judgment or consent decree has
been entered) but pursuant to which work is ongoing (e.g., a
decree requiring remedial activity to be undertaken);
(xi) All environmentally related permits and licenses
and pending applications for such permits and licenses for
facilities which are currently owned or leased by the
Company. For facilities located in the United States, this
item includes notifications to governmental agencies
required by Sections 3010(a) (notice of hazardous waste
activity) and 9002 (underground storage tanks) of RCRA and
by comparable state laws, and notices and reports required
pursuant to Sections 302, 311, 312 and 313 of Title III of
the Superfund Amendments and Reauthorization Act of 1986 and
comparable state laws;
(xii) All current and expired or terminated contracts
involving the off-site transportation or Management of
wastes or recyclable materials generated by the Company;
(xiii) All reports of environmental assessments,
surveys or analyses addressing the operational safety of
facilities and/or activities (e.g., transportation) of the
Company and/or hazards and risks (including risk of episodic
releases and impact of routine, continuous releases)
associated therewith, including but not limited to process
risk surveys, operational safety surveys, air emissions
modeling, and risk assessments, and action plans and
progress reports responding to any such reports;
(xiv) A description of the manner in which asbestos
was or is used or otherwise present at any facility located
on real property which has been or is currently owned or
leased by the Company; and
(xv) A list of all governmental inspections relating
to the environment of Company facilities located on real
property which has been or is currently owned or leased by
the Company and any reports or studies generated therewith.
The Company is not and has not been in violation of any
law, regulation or ordinance (including without limitation,
Environmental Laws and laws, regulations or ordinances relating
to building, health code, zoning, land use or similar matters)
relating to its properties or facilities. Neither the Property
nor, to the best of the Company's knowledge, any other real
property currently or previously leased by the Company is or has
been polluted or contaminated, nor has the Property or, to the
best of the Company's knowledge, any other real property
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currently or previously leased by the Company ever been the
subject of environmental clean-up or remediation. Neither the
Property nor, to the best of the Company's knowledge, any other
real property currently or previously leased by the Company
contains any Hazardous Material (as defined below), nor has any
Hazardous Material been discharged or spilled thereon. The
Company has never owned or operated a petroleum or hazardous
waste landfill or any petroleum or other hazardous waste
treatment, storage or disposal facility. There are no past or
present events, conditions, circumstances, activities, practices,
incidents, actions or plans of the Company which may interfere
with or prevent continued compliance, or which may give rise to
any common law or legal liability, or otherwise form the basis of
any claim, action, suit, proceeding, hearing, or investigation,
based on or related to the disposal, storage, handling,
manufacture, processing, distribution, use, treatment, or
transport, or the emission, discharge, release or threatened
release into the environment, of any pollutant or waste. There
are no proceedings affecting the Property or, to the best of the
Company's knowledge, any other real property currently or
previously leased by the Company, or, to the best of the
Company's knowledge, threatened which could have an adverse
effect on the present or future use of any such property for the
purposes for which it was acquired or the purpose for which it is
used. Neither the Property nor, to the best of the Company's
knowledge, any other real property currently or previously leased
by the Company at any time is or has been on any federal or state
"Superfund" list or on EPA's Comprehensive Response, Compensation
and Liability Information System ("CERCLIS") list or on any
analogous state environmental agency list. The Company has not
received any notice from any governmental agency or other party
seeking any information or alleging any liability with regard to
the real property occupied or used by the Company now or at any
time or with regard to any off-site environmental conditions.
The real property occupied by the Company is not subject to a
lien under any Environmental Laws.
For purposes of this Agreement, "Hazardous Material" means
any petroleum product or any 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 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 and petroleum
products, and may include, but not be limited to, the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended; the
TSCA; the CWA; the National Environmental Policy Act, as amended;
the Solid Waste Disposal Act, as amended; the CERCLA, as amended;
the Clean Air Act, as amended; the Emergency Planning and
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Community Right-to-Know Act, as amended; the Occupational Safety
and Health Act, as amended; Hazardous Materials Transportation
Act, as amended; and all rules and regulations promulgated
pursuant to such federal, state, and county and foreign laws and
ordinances.
(i) 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 to the date hereof are valid and
enforceable, to the best knowledge of the Company are not subject
to any defense, set-off, counterclaim or claim for refund, 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 (with the
exception of receivables to be collected in connection with
contract close-outs in an aggregate amount not to exceed
$100,000) in any event within six months from the Effective 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
the accounts and notes receivable acquired subsequent to the date
of the Balance Sheet.
(j) Purchase and Sale Commitments. No outstanding purchase
commitments by the Company are in excess of the normal, ordinary
and usual requirements of the business 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 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 loss to the Company. Except as set forth on
the Disclosure Schedule and except for the U.S. Government, there
are no 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.
(k) Governmental Authorizations. Set forth on the
Disclosure Schedule is a complete and accurate list of all
material governmental permits, licenses, franchises, concessions,
zoning variances and other approvals, authorizations and orders
which have been obtained in connection with the conduct of the
business now being conducted by the Company. Such permits,
licenses, franchises, concessions, zoning variances, approvals,
authorizations and orders constitute all governmental permits,
licenses, franchises, concessions, zoning variances, approvals,
authorizations and orders which are required under all applicable
local, state, federal or foreign laws and regulations for the
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operation of the business being conducted by the Company as it
has been heretofore conducted. All such permits, licenses,
franchises, concessions, zoning variances, approvals,
authorizations and orders are presently in full force and effect,
the Company is in compliance with the requirements thereof
(except for minor violations that could not result in a
suspension or forfeiture thereof), no suspension or cancellation
of any of them is threatened to the knowledge of the Company, and
with the exception of possible novation requirements for
contracts with the U.S. Department of Defense and U.S. Department
of Energy, the filing of the Articles of Merger and the
consummation of the Merger will not adversely affect the validity
or effectiveness of, and will not require, for retention thereof
after such change of ownership, the consent or approval of any
party to, or any other person or governmental agency having
jurisdiction of, any such permit, license, franchise, concession,
zoning variance, approval, authorization or order. The Company
has no knowledge of any fact or circumstance which would prevent,
limit or restrict the Company from continuing to operate its
business in the present manner, and no new material requirements
pertaining to the manner of operating its specific business (not
businesses in general) 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 about the Company's operations as presently being
conducted. The Company has furnished or made available to Thermo
all reports and applications filed by the Company with any
governmental agency in the last three years.
(l) Patents; Trademarks. Except for rights reserved by the
U.S. Government for its sole noncommercial use under government
contracts with the Company, the Company solely owns or has the
exclusive right to use, free and clear of any obligation of
payment, encumbrance, lien or claim, all patents, patent and
know-how licenses, trademarks, trade names, service marks, brand
names and copyrights, and registrations and applications
therefor, used in the conduct of its business or the use of which
is necessary for its business as now being conducted (the
"Intangibles"). Set forth on the Disclosure Schedule is a
complete list and summary description of all Intangibles and
licenses (including, but not limited to, rights reserved by the
U.S. Government with respect to specific Intangibles),
sublicenses or other rights entered into or granted by or to the
Company with respect thereto. The Company owns or possesses
adequate rights to use, free and clear of any obligation of
payment, encumbrance, lien or claim, all inventions, technology,
technical know-how, processes, designs, trade secrets, vendor and
customer lists and other confidential information required for or
used in its business. To the extent that the Company has
provided to the U.S. Government any trade secrets, know how, or
proprietary data, the Company has marked such trade secrets, know
how, and proprietary data with adequate restrictive legends which
identify such as either "restricted computer software" or
"limited rights data", as those terms are defined in the Federal
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Acquisition Regulations ("FAR") at Subpart 27.4. To the extent
that the Company has provided to any third party, other than the
U.S. Government, any trade secrets, know how, or proprietary
data, such information has been provided subject to an adequate
non-disclosure agreement. No person has made any claim or demand
upon the Company pertaining to, and no proceeding is pending, or
so far as is known, threatened, which challenges (i) the rights
of the Company in respect of any Intangibles or (ii) the rights
of the Company to any confidential information or trade secrets
used in the conduct of its business. No Intangible owned or used
by the Company is subject to any order, ruling, decree, judgment
or stipulation by or with any court, arbitrator or administrative
agency which is adverse to the Company's business. No person has
made any claim or demand, nor is the Company aware that it has,
infringed, or engaged in the unauthorized use of, any patent,
trademark, trade name, service mark, brand name or copyright, or
any invention, technology, technical know-how, process, design,
trade secret or other intellectual property of another. The
Company is not aware of any infringement or unauthorized use by a
third party of any patent, trademark, trade name, service mark,
brand name or copyright, or any invention, technology, technical
know-how, process, design, trade secret or other intellectual
property owned or used by the Company. Each technical or
managerial employee of the Company is bound by the terms of an
Employee Patent and Confidential Information Agreement or similar
agreement, a copy of which has been supplied to Thermo.
(m) Government Property; Accounting for Government
Contracts. The Disclosure Schedule contains an accurate list of
the type and location of each item of property owned or furnished
directly or indirectly by the U.S. Government or by
non-government customers to be used by the Company in connection
with the performance of prime contracts or subcontracts for the
U.S. Government or any agency or department thereof or, as the
case may be, for other non-government customers; in each case
where the original acquisition price exceeded $100,000. All such
property is present at the location so indicated, is in as good
condition as when originally furnished, except for ordinary wear
and tear, and is being accounted for pursuant to applicable
Federal regulations or customer requirements. The Company has
not fraudulently claimed reimbursement under contracts with the
U.S. Government for costs which are unallowable, including costs
specifically allowed by FAR Part 31, entitled "Contract Cost
Principles and Procedures." The Company's costs accounting
system complies with generally accepted accounting principles,
consistently applied, and the Cost Accounting Standards, as
promulgated by the Cost Accounting Standards Board and reflected
in Appendix B to the FAR. Moreover, the Company has not made any
changes to its accounting practices that would require submission
of a cost impact proposal to the U.S. Government and no cost
impact proposal has been requested by the U.S. Government. There
are no pending, or to the Company's best knowledge, threatened
audits by the Defense Contracts Audit Agency or other government
audit authority under which allowance and allocation of cost
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and/or accounting for cost is at issue or that could lead to the
disallowance of repayment of any monies already received.
(n) Insurance. To the best knowledge of the Company, 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 or has reserved for such premiums due on such
insurance, and 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
its assets and its business (including products liability
insurance) from insurers which to its knowledge 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. All policies of insurance held by the Company are
listed on the Disclosure Schedule. No basis exists which would
jeopardize the coverage under any such insurance. Under the
terms of the policy relating thereto, no such insurance will be
automatically terminated or canceled by reason of the execution,
delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby.
(o) Employee Benefit Plans. For the purposes of this
Section 3.2(o), the following definitions shall apply:
(i) Accumulated Funding Deficiency: An "accumulated
funding deficiency" as defined in ERISA Section 302(a)(2) or
the last two sentences of Section 412(a) of the Code, or, in
either case, successor provisions to such provisions adopted
by amendments to ERISA or the Code, as the case may be, and
including, in each case, other provisions of ERISA, of the
Code or of other law, and regulations adopted under ERISA or
the Code or such other law, modifying, amending,
interpreting or otherwise affecting the application of such
provisions, either in general or as applied to the nature or
circumstances of a particular entity that is a party to, or
is affected by or is involved in the transactions
contemplated by, this Agreement and with respect to which
entity the use of the term in this Agreement, or in the
particular location in this Agreement, is relevant.
(ii) Complete Withdrawal: A "complete withdrawal"
from a Multiemployer Plan as defined in Section 4203 of
ERISA or successor provisions to such provision adopted by
amendments to ERISA and including other provisions of ERISA
or of other law, and regulations adopted under ERISA or such
other law, modifying, amending, interpreting or otherwise
affecting the application of such provision, either in
general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or
is involved in the transactions contemplated by this
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Agreement and with respect to which entity the use of the
term in this Agreement, or in the particular location in
this Agreement, is relevant.
(iii) ERISA: The Employee Retirement Income Security
Act of 1974, as amended and in effect at the time of
execution of this Agreement.
(iv) CRC's ERISA Affiliate: CRC's ERISA Affiliate
shall mean any member of any controlled group of
corporations, group of trades or businesses under common
control, or affiliated service group (as defined for
purposes of Section 414(b), (c) and (m), respectively, of
the Code) which includes CRC.
(v) Multiemployer Plan: A "multiemployer plan" as
defined in ERISA Section 3(37) or Section 414(f) of the
Code, or, in either case, successor provisions to such
provisions adopted by amendments to ERISA or the Code, as
the case may be, and including, in each case, other
provisions of ERISA, of the Code or of other law, and
regulations adopted under ERISA or the Code or such other
law, modifying, amending, interpreting or otherwise
affecting the application of such provisions, either in
general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or
is involved in the transactions contemplated by this
Agreement and with respect to which entity the use of the
term in this Agreement, or in the particular location in
this Agreement, is relevant.
(vi) Partial Withdrawal: A "partial withdrawal" from
a Multiemployer Plan as defined in Section 4205 of ERISA or
successor provisions to such provision adopted by amendments
to ERISA and including other provisions of ERISA or of other
law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the
application of such provision, either in general or as
applied to the nature or circumstances of a particular
entity that is a party to, or is affected by or is involved
in the transactions contemplated by this Agreement and with
respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement,
is relevant.
(vii) Plan Termination: A termination of a Pension
Plan, whether partial or complete, within the meaning of
Title IV of ERISA.
(viii) PBGC: The Pension Benefit Guaranty
Corporation.
(ix) Pension Plan: A "pension plan" or "employee
pension benefit plan" as defined in Section 3(2) of ERISA or
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successor provisions to such provision adopted by amendments
to ERISA and including other provisions of ERISA or of other
law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the
application of such provision, either in general or as
applied to the nature or circumstances of a particular
entity that is a party to, or is affected by or is involved
in the transactions contemplated by this Agreement and with
respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement,
is relevant.
(x) Prohibited Transaction: A "prohibited
transaction" as defined in ERISA Section 406 or Section
4975(c) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA
or the Code, as the case may be, and including, in each
case, other provisions of ERISA, of the Code or of other
law, and regulations adopted under ERISA or the Code or such
other law, modifying, amending, interpreting or otherwise
affecting the application of such provisions, either in
general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or
is involved in the transactions contemplated by this
Agreement and with respect to which entity the use of the
term in this Agreement, or in the particular location in
this Agreement, is relevant.
(xi) Reportable Event: A "reportable event" as
defined in Section 4043(b) of ERISA or successor provisions
to such provision adopted by amendments to ERISA and
including other provisions of ERISA or of other law, and
regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the
application of such provision, either in general or as
applied to the nature or circumstances of a particular
entity that is a party to, or is affected by or is involved
in the transactions contemplated by this Agreement and with
respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement,
is relevant.
(xii) Welfare Plan: A "welfare plan" or an "employee
welfare benefit plan" as defined in Section 3(1) of ERISA or
successor provisions to such provision adopted by amendments
to ERISA and including other provisions of ERISA or of other
law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the
application of such provision, either in general or as
applied to the nature or circumstances of a particular
entity that is a party to, or is affected by or is involved
in the transactions contemplated by this Agreement and with
respect to which entity the use of the term in this
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Agreement, or in the particular location in this Agreement,
is relevant.
Except as disclosed in the Disclosure Schedule:
The Company does not maintain or contribute to any Pension
Plan or any Welfare Plan, nor has the Company or any of CRC's
ERISA Affiliates ever had, an obligation to contribute to any
Multiemployer Plan. All Pension Plans and Welfare Plans of the
Company have been administered in compliance with their terms,
ERISA and, where applicable, the Code. The Company has applied
to the Internal Revenue Service for a favorable determination
letter with respect to the qualification of each such Pension
Plan which is intended to qualify under Section 401(a) of the
Code and the exemption of any corresponding trust. A copy of
each such application has been furnished to Thermo, and the
Company has no reason to believe that such favorable
determination letters will not be issued in the ordinary course.
With respect to each Pension Plan: (1) there is no fact,
including, without limitation, any Reportable Event, that exists
that would constitute grounds for termination of such Plan by the
PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such plan, in each case
as contemplated by ERISA; (2) neither the Company nor any
fiduciary, trustee or administrator of any Pension Plan or
Welfare Plan has engaged in any Prohibited Transaction that could
subject the Company to any tax or any penalty imposed by ERISA or
the Code; (3) the Company has no liability to the PBGC (other
than for payment of premiums); and (4) there is no Accumulated
Funding Deficiency with respect to any Pension Plan maintained by
the Company or any of CRC's ERISA Affiliates, whether or not
waived.
No Pension Plan or Welfare Plan, the Company or any of CRC's
ERISA Affiliates, or any "party in interest" or "disqualified
person" (as such terms are defined in Section 3 of ERISA and
Section 4975 of the Code) with respect to any Pension Plan or
Welfare Plan has taken any action including the making of any
investment, or failed to take any action, that could subject any
of them or any other person to any liability for any tax or for
breach of fiduciary duty with respect to or in connection with
any Pension Plan or Welfare Plan. No Pension Plan or Welfare
Plan, administrator or fiduciary of any Pension Plan or Welfare
Plan, or the Company has any liability under any provision of any
applicable law by reason of any communication or failure to
communicate with respect to or in connection with any Pension
Plan or Welfare Plan, or any filing or failure to file with any
governmental entity. No Pension Plan or Welfare Plan,
administrator or fiduciary of any Pension Plan or Welfare Plan,
or the Company or any of CRC's ERISA Affiliates has any liability
to any plan participant, beneficiary or other person under any
provision of any applicable law by reason of any payment of
benefits or other amounts or failure to pay benefits or any other
amounts, or by reason of any credit or failure to give credit for
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any benefits or rights (such as, but not limited to, vesting
rights) with respect to benefits under or in connection with any
Pension Plan or Welfare Plan, other than benefit claims in the
normal administration of each Pension Plan or Welfare Plan. The
Company is not delinquent or in arrears on any amounts owed to,
or with respect to any contributions under, any Pension Plan or
Welfare Plan. No person is a participant in or eligible for
participation (without regard to age or service) in, any Pension
Plan or Welfare Plan who is not a present or former employee of
the Company or a beneficiary of such Pension Plan or Welfare
Plan. Except as may be required by the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), none of the Pension
Plans or Welfare Plans provides for continuing accrual of
benefits or coverage for any participant or beneficiary of a
participant after such participant's termination of employment
with the Company.
Except to the extent COBRA requires the Company to offer
health insurance and the Company incurs administrative costs,
there are no unfunded obligations under any Pension Plan or
Welfare Plan providing benefits after termination of employment
to any employee of the Company (or beneficiary thereof),
including without limitation retiree health coverage and deferred
compensation. There has been no Plan Termination that has
occurred during the five-year period ending on the date hereof.
The Company has no liability incurred under Title IV of ERISA by
the Company with respect to any Pension Plan maintained by a
trade or business (whether or not incorporated) which is under
common control with, or part of a controlled group of
corporations with, the Company, within the meaning of Sections
414(b) or (c) of the Code. No event has occurred and no
condition exists with respect to any Pension Plan or Welfare Plan
that would subject the Company to any tax under Section 4972,
4977, 4979 or 4980B of the Code or to a fine under ERISA Section
502(c) with respect to any such plan. No Welfare Plan is funded
with a trust or other funding vehicle, other than insurance
policies. No Welfare Plan or Pension Plan, plan documentation or
agreement, summary plan description or other written
communication distributed to employees prohibits the Company from
amending or terminating any such plan. There has occurred no
Complete Withdrawal or Partial Withdrawal with respect to any
Multiemployer Plan that could cause the Company to incur any
liability under or as a result of ERISA other than to the extent
previously paid or fully provided for in the Balance Sheet, and
all payments required to be made to any such Plan by the Company
under any applicable collective bargaining agreements have been
made. As of the date of the Balance Sheet, the Company had no
liability in connection with any Pension Plan, Welfare Plan or
other employee benefit plan which was not fully provided for on
the Balance Sheet. There are no actions, arbitration's or claims
pending or threatened with respect to any Pension Plan, Welfare
Plan or other employee benefit plans or any fiduciary or sponsor
thereof.
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(p) Descriptions and Lists. Set forth on the Disclosure
Schedule is an accurate and complete list of the following oral
or written contracts, agreements, leases and other documents in
effect as of __________ to which the Company is a party or by
which it or its properties or assets are bound:
(i) a list of all interests in real property owned or
leased by the Company;
(ii) a list of (a) each executory or unexpired
contract awarded by the U.S. Government from which the
Company derived more than 5% of its revenue in 1994 or from
which the Company believes it will derive more than 5% of
its revenue in 1995, which list (i) separates contracts by
category, i.e., fixed price, cost plus fixed fee, etc.; (ii)
includes designation as small business set aside and (iii)
sets forth contract value (plus options), contract funding,
contract to-date cost, contract backlog (plus options), and
funds backlog, monthly expenditure rate, (b) each
outstanding proposal submitted in response to solicitations
issued by any agency of the U.S. Government, (c) each
agreement of the Company made in the ordinary course of
business (other than leases for real property, bank loans
and contracts awarded by the U.S. Government) which involves
aggregate future payments by or to the Company of more than
one hundred thousand dollars ($100,000) per year whose term
extends beyond one year after the date hereof; (d) all
distributorship, sales, agency or franchise agreements of
the Company; (e) each agreement containing any covenant
restricting the freedom of the Company to compete in any
line of business or area or with any person; (f) each
agreement obligating, absolutely or on a contingency basis,
the Company to make payments to a third party based on
future sales, revenues or earnings of the Company from a
product or service; and (g) each agreement of the Company
not made in the ordinary course of business which is or was
to be performed after December 31, 1994 and not otherwise
disclosed pursuant to another section of the Disclosure
Schedule, including (1) any obligation providing for
indemnification or responsibility for the obligations or
losses of another person (including guarantees) or (2) any
financing agreements;
(iii) a list of (a) the names, titles, location,
salaries, bonuses, vacation and other allowances, and other
employment conditions of all present officers (whether
executive officers or division officers) of the Company,
including the last date of any increase in such persons'
compensation; (b) any of such persons on leave of absence or
who are currently collecting disability payments; and (c)
all employment, consulting or similar compensation
agreements of the Company which may not be terminated by the
Company without penalty within thirty days after the
Closing;
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(iv) A list of all loans to employees including amount
due, interest, term and collateral;
(v) a list of (a) 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 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,
the methods of computing the Company's obligations
thereunder, and a description of any funding vehicles
therefor; (b) all agreements, plans or arrangements under
which any person may receive payments from the Company that
may be subject to the tax imposed by Section 4999 of the
Code or included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (c)
all agreements or plans binding the Company, including
without limitation any stock option plan, stock appreciation
right plan, restricted stock plan, stock purchase plan,
severance benefit plan or employee benefit plan, any of the
benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of
the Merger or the value of any of the benefits of which will
be calculated on the basis of any of the transactions
contemplated by this Agreement;
(vi) a list of all labor unions or other organizations
representing, purporting to represent or attempting to
represent any employees of the Company, and a list of all
collective bargaining agreements of the Company with any
labor unions or other representatives or employees,
including agreements, amendments, supplements, letters and
memoranda of understanding of all kinds with the local unit
of each such union or other organization;
(vii) a list of each agreement or other instrument or
arrangement defining the terms on which any indebtedness of
the Company is or may be issued;
(viii) a list of each outstanding commitment by the
Company to make a capital expenditure, capital addition or
capital improvement involving an amount in excess of one
hundred thousand dollars ($100,000);
(ix) a list of (a) aged accounts receivable; (b) any
inventory having a value in excess of fifty thousand dollars
($50,000); (c) any prepaid expense in excess of fifty
thousand dollars ($50,000); (d) all items of machinery,
equipment or other tangible personal property with a
depreciated book value in excess of fifty thousand dollars
($50,000); and (e) all automobiles and trucks;
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(x) the name of every bank in which the Company has an
account or safe deposit box, the identifying number of all
such accounts and safe deposit boxes, and the names of all
persons having power to borrow, discount debt obligations,
cash or draw checks or otherwise act on behalf of the
Company in any dealings with such banks;
(xi) all health and/or safety audit reports (and
related action plans) which were prepared since January 1,
1990;
(xii) all industrial hygiene surveys and personnel
safety statistics prepared since January 1, 1990;
(xiii) summaries of all epidemiological or
toxicological studies, conducted by or on behalf of, or in
the possession of the Company;
(xiv) all occupational safety and health reports filed
with governmental agencies or instrumentalities since
January 1, 1990;
(xv) annual summaries of workers compensation
liabilities in excess of five thousand dollars ($5,000) per
person per year since January 1, 1990;
(xvi) all citations, notices of violations, orders,
consent orders, administrative or judicial enforcement
proceedings from governmental agencies or instrumentalities
with respect to health or safety matters issued or pending
since January 1, 1990;
(xvii) each inspection by any governmental agency or
instrumentality concerning health, safety or environmental
matters;
(xviii) all submissions to health, safety and product
safety regulatory agencies since January 1, 1990;
(xix) a list of each accident or event occurring after
January 1, 1990 which has resulted in, or to the Company's
best knowledge, may result in a claim against the Company
that personal injury, property damage or economic loss was
caused by the Company or involved any employee in his
capacity as an employee, or any property of, or product or
service sold by, the Company; and
(xx) a list of all claims pending under the insurance
policies listed pursuant to Section 3.2(n) (including, in
their aggregate amount, employee benefit claims other than
health or dental insurance claims and workers' compensation
claims in excess of $5,000 per year).
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The Company has furnished or made available to Thermo a
true, correct and complete copy of each document that is referred
to or otherwise related to any item referred to in this Section
3.2(p) or otherwise in this Agreement.
(q) Validity. There is no default or claimed or purported
or alleged default on the part of the Company, 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 the Company to be performed under any lease, contract, plan,
policy or other instrument or arrangement referred to in Section
3.2(p) or otherwise in this Agreement. The Company has received
no "show cause" or "cure notice" under any contract with the U.S.
Government referred to in Section 3.2 (p)(ii). In addition, the
Company is aware of no facts suggesting or indicating that the
U.S. Government is contemplating the termination for convenience
of any executory or unexpired U.S. Government contract referred
to in Section 3.2(p)(ii).
(r) No Changes. Since the date of the Balance Sheet there
has not been:
(i) any material adverse change in the financial
condition, assets, liabilities, earnings, business or
prospects of the Company;
(ii) any damage, destruction or loss (whether or not
covered by insurance) to property which materially and
adversely affects the condition (financial or otherwise),
assets, liabilities, earnings or business of the Company;
(iii) any declaration, setting aside or payment of any
dividend, or other distribution, in respect of the Company's
capital stock or any direct or indirect redemption, purchase
or other acquisition of such stock except for redemptions of
stock required by the Redemption Agreements and the KSOP;
(iv) any option to purchase the Company's capital
stock granted to any person, or any employment or deferred
compensation agreement entered into between the Company and
any of its officers, directors or consultants;
(v) any issuance or sale by the Company of any stock
(other than upon the exercise of stock options), bonds or
other corporate securities, or any partial or complete
formation, acquisition, disposition or liquidation of the
Company;
(vi) any labor union trouble (including without
limitation any negotiation, or request for negotiation, with
respect to any union representation or any labor contract)
respecting the Company;
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(vii) to the Company's knowledge any statute, rule or
regulation, or any government policy, adopted which pertains
particularly to the Company's business (and not businesses
in general) and which may materially and adversely affect
the business or assets of the Company;
(viii) 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 asset,
except for liens for taxes not yet due, and for equipment
leases and purchase money security interests entered into in
the ordinary course of business;
(ix) any indebtedness or other liability or obligation
(whether absolute, accrued, contingent or otherwise)
incurred, or other transaction (except that reflected in
this Agreement or attributable to the obligations of the
Company under this Agreement or the preparation thereof)
engaged in, by the Company, except those in the ordinary
course of business consistent with past practice;
(x) 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 consistent with past
practice;
(xi) any sale, assignment, lease, transfer or other
disposition of any tangible asset of the Company, except in
the ordinary course of business (or as necessary to
consummate the Coleman Laboratories Transaction (as herein
defined)), or any sale, assignment, lease, transfer or other
disposition of any of its patents, trademarks, trade names,
brand names, copyrights, licenses or other intangible assets
other than the transfers necessary to consummate the Coleman
Laboratories Transaction;
(xii) any amendment, termination or waiver of any
material right belonging to the Company, including with
respect to government contracts;
(xiii) any increase in the compensation or benefits
payable or to become payable by the Company to any of its
officers or employees except for ordinary increases for
non-management employees in accordance with prior practice
and increases for management employees which are properly
chargeable to a U.S. Government reimbursable account;
(xiv) any transaction or contract with a Company
director or officer (whether executive officer or division
officer) or a member of any such director's or officer's
family, including a loan, change of employment conditions,
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change of pension rights or bonus, not approved in writing
by Thermo or pursuant to the Redemption Agreements or to the
Option Plan;
(xv) any material reduction in the total funding
available and obligated by the U.S. Government for any
cost-reimbursement contract;
(xvi) any material increase in the costs incurred by
the Company in excess of an established funding ceiling as
reflected in a "Limitation of Cost" clause, "Limitation of
Funds" clause, or any other provision contained in any
cost-reimbursement contract with the U.S. Government (or any
subcontract thereunder) purporting to limit to an
pre-established amount the U.S. Government's (or the prime
contractor's) liability for reimbursement of incurred costs;
(xvii) any audit of any Tax; or
(xviii) any other action or event not in the ordinary
course of business.
(s) Litigation or Proceedings. The Company is not engaged
in, or a party to, or threatened with, any claim or legal action
or other proceeding before any court, any arbitrator of any kind
or any administrative agency, or any governmental investigation,
or any suspension or debarment proceeding, nor, to the best
knowledge of the Company, does any basis for any claim or legal
action or other proceeding or governmental investigation or any
suspension or debarment proceeding exist. There are no orders,
rulings, decrees, judgments or stipulations to which the Company
is a party by or with any court, arbitrator or administrative
agency affecting the Company, or its business or properties.
(t) 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 control or other federal, state, local or foreign
law, ordinance, regulation, rule, order or governmental policy
applicable to its plants, structures or equipment or the
operation thereof, or any employment, equal opportunity or
similar law, ordinance, regulation, rule, order or governmental
policy, or any other law, ordinance, regulation, rule, order or
governmental policy applicable to the Company, or its business or
assets not disclosed in writing to Thermo; (ii) has not received
any complaint from any governmental authority, and none is
threatened, alleging that the Company has violated any such law,
ordinance, regulation, order or 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 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,
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injunction, rule, regulation, code or ordinance, which materially
and adversely affects, or might reasonably be expected materially
and adversely to affect, the business, operations, prospects,
properties, assets or financial condition of the Company.
(u) Corporate Practices. CRC has never, directly or
indirectly: (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (ii) made any unlawful payment to
foreign or domestic government officials or employees, or to
foreign or domestic political parties or campaigns, from
corporate funds; (iii) violated any provisions of the Foreign
Corrupt Practices Act of 1977; (iv) established or maintained any
unlawful or unrecorded fund of monies or other assets; (v) made
any false or fictitious entry on its books or records; (vi) made
any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any person; (vii) made any bribe, kickback,
finder's fee, commission, or other payment or compensation of a
similar or comparable nature, whether lawful or not, to any
person or entity, private or public, regardless of form, whether
in money, property or services, to obtain favorable treatment in
securing business or to obtain special concessions, or to pay for
favorable treatment for business secured or for special
concessions already obtained; (viii) submitted, or caused to be
submitted, any false claims against the U.S. Government or (ix)
made, or caused to be made, any false statements to the U.S.
Government subject to prosecution under 18 U.S.C. Section 1001.
(v) Hart-Scott-Rodino Filing. The Company has complied, or
will comply before the Effective Date, with all applicable
requirements under the Antitrust Improvements Act relating to
filings with and furnishing information to the Federal Trade
Commission and the United States Department of Justice in
connection with the transactions contemplated hereby.
(w) Labor Matters. There are no activities or
controversies, such as labor organizing activities, election
petitions or proceedings, labor strikes, disputes, slowdowns,
work stoppages or unfair labor practice complaints pending or
threatened against the Company or between the Company and any of
its employees, nor have there been any such activities or
controversies within the three years prior to this Agreement. No
labor grievance has been filed and no arbitration proceeding has
arisen out of or under collective bargaining agreements and is
pending and no claim therefor has been asserted.
(x) Brokers and Finders. The Company has not employed any
broker, agent or finder or incurred any liability on behalf of
the Company for any brokerage fees, agents' commissions or
finders' fees in connection with the transactions contemplated
hereby.
(y) Powers of Attorney. The Company has no powers of
attorney or similar authorizations outstanding.
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(z) Product Warranties. The Company has never sold any
products manufactured by the Company other than computer software
and prototype electronic devices. The Company has no active
warranties in effect in connection with the sale of such software
or devices.
(aa) No Termination of Relationship. As of the date
hereof, the Company is unaware that any relationship between the
Company and a distributor, customer, supplier, lender, employee
or other person may be terminated or adversely affected as a
result of the Merger.
(bb) Consummation of Coleman Laboratories Transaction.
Effective as of the Closing Date, CRC will consummate the Coleman
Laboratories Transaction, and the Company will thereafter have no
obligation to make any further investments in Dr. Mohammad Walid
Katoot ("Dr. Katoot"), MK Industries, Inc. ("MKI"), Coleman
Laboratories, Ltd. ("Coleman L.P.") and/or Coleman Laboratories,
Inc. ("Coleman Laboratories").
(cc) Compliance with the Securities Act. The Company has
delivered to Thermo a letter identifying all persons who are
"affiliates" of it for purposes of Rule 145 under the Securities
Act of 1933, as amended (the "Securities Act"). The Company has
caused each person who it identified as an "affiliate" to deliver
to Thermo, and each "affiliate" has, concurrently with the
signing of this Agreement, signed an Affiliate Agreement
providing that such person has no plan or intention and will not
sell, pledge, transfer or otherwise dispose of the CRC Shares or
in any way reduce their risk relative to any such shares, until
such time as financial results covering at least 30 days of
combined operations of Thermo and CRC have been published within
the meaning of Section 201.01 of the Codification of Financial
Reporting Policies of the Commission and except in compliance
with the applicable provisions of the Securities Act, and the
rules and regulations thereunder.
(dd) Pooling Accounting. The Company and the Shareholders
have taken no actions that would prevent Thermo from accounting
for the Merger as a pooling-of-interests for accounting purposes.
(ee) Continuity of Interest. To the best of the Company's
knowledge, there is no plan or intention on the part of the
Shareholders to sell, exchange or otherwise dispose of a number
of shares of Thermo Shares received in the Merger that would
reduce the Shareholders' ownership of Thermo stock to a number of
shares having a value, as of the Effective Date, of less than
fifty (50%) percent of the value of all of the formerly
outstanding stock of CRC as of the same date. For purposes of
this representation, shares of CRC common stock surrendered by
dissenters or exchanged for cash or in lieu of fractional shares
of Thermo Common Stock will be treated as outstanding CRC common
stock on the Effective Date. Moreover, shares of CRC common
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stock and shares of Thermo Common Stock held by the Shareholders
and otherwise sold, redeemed, or disposed of prior or subsequent
to the Merger will be considered in making this representation.
The Company has caused each person who it identified as an
"affiliate" to deliver to Thermo and each "affiliate" has,
concurrently with the signing of this Agreement, signed an
Affiliate Agreement.
(ff) Information About the Company in the Registration
Statement. The information in Thermo's Registration Statement on
Form S-4 registering the issuance of the Thermo Shares with the
Commission (the "Registration Statement") that pertains to the
Company and its Shareholders, directors and officers (i) does not
contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make
a statement therein, in light of the circumstances under which it
was made, not misleading and (ii) complies as to form in all
material respects with the Securities Act. The Company has not
taken any action that constitutes an "offer", "offer to sell",
"offer for sale" or "sale" of Thermo Shares within the meaning of
Rule 145 under the Securities Act. The description in the
Registration Statement of the tax consequences to the
Shareholders and Optionholders of the transactions contemplated
herein is accurate and complete in all material respects.
(gg) Expenses. The Disclosure Schedule sets forth a
description of all fees and expenses the Company has paid or
incurred as of the date hereof in connection with the
transactions contemplated hereby.
(hh) All Information. The Company has been furnished or
made available in writing prior to the execution of this
Agreement all information as to the condition (financial or
otherwise), assets, liabilities, earnings, business and prospects
of the Company, material to a determination by a reasonable buyer
to enter into this Agreement and to consummate the transactions
contemplated hereby.
(ii) Statements True and Correct; Further Representations
and Warranties. This Agreement (including the Exhibits and any
documents delivered pursuant hereto) does not contain any untrue
statement of a material fact or omit any material fact required
to be stated herein or therein or necessary to make the
statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
Section 3.3. Representations and Warranties of Thermo and
Acquisition. Thermo and Acquisition represent and warrant to the
Company that:
(a) Organization and Good Standing. Thermo is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite
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corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being
conducted. Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to
carry on its business at it is now being conducted. Thermo and
Acquisition are duly qualified to do business as a foreign
corporation, and are in good standing, in each jurisdiction in
which the character of the properties owned, operated or leased
by the respective corporation or the nature of the respective
corporation's activities is such that qualification as a foreign
corporation is required by applicable law.
(b) Authority. The execution and delivery hereof, and the
consummation of the transactions contemplated hereby, have been
duly and validly authorized by all necessary corporate action on
the part of Thermo and Acquisition, and this Agreement
constitutes the valid and legally binding obligation of Thermo
and Acquisition enforceable in accordance with its terms.
Neither the execution and delivery hereof nor the consummation of
the transactions contemplated hereby will (i) conflict with or
result in a violation, breach or termination of or default under
(or would result in a violation, breach, termination or default
with the giving of notice or passage of time or both) any of the
terms, conditions or provisions of the respective charter
documents or Bylaws of Thermo or Acquisition, as amended, or of
any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Thermo or Acquisition is a
party, or by which Thermo or Acquisition or any of their
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 Thermo or Acquisition, or their
properties or assets or (iii) result in the imposition of any
lien, encumbrance, charge or claim upon any of Thermo's assets.
Except for a filing under the Antitrust Improvements Act, the
filing of the Registration Statement with the Commission, a
filing of a listing application with the New York Stock Exchange
and filings with certain states under "blue sky" laws, 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
Thermo or Acquisition or the consummation of the transactions
contemplated hereby.
(c) SEC Documents. Thermo has delivered to the Company
four (4) true and complete copies of each report and definitive
proxy statement filed by Thermo with the Commission since January
1, 1994 (as such documents have since the time of their filing
been amended, the "Thermo SEC Documents") which are all the
reports and proxy statements (other than preliminary material)
that Thermo was required to file with the Commission since such
date. As of their respective dates, the Thermo SEC Documents
complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
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and the rules and regulations of the Commission thereunder
applicable to such Thermo SEC Documents and none of the Thermo
SEC Documents when filed contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, at
the time in light of the circumstances under which they were
made, not misleading. The financial statements of Thermo
included in the Thermo SEC Documents complied as to form in all
material respects with applicable accounting requirements and
with published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated therein
or in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q of the Commission) and
fairly present (subject, in the case of the unaudited statements,
to normal recurring audit adjustments) the consolidated financial
position of Thermo and its consolidated subsidiaries as at the
dates thereof and the consolidated results of their operations
and cash flows for the periods then ended.
(d) Capital Stock of Thermo. As of October 1, 1994, Thermo
had authorized, issued and outstanding the number of shares of
capital stock set forth below:
Issued and Reserved
Class Authorized Outstanding for Issuance
----- ---------- ----------- ------------
Common Stock 175,000,000 50,951,625 32,871,075*
($1.00 par value
per share)
Preferred Stock 10,000 -0- -0-
($100 par value
per share)
Series A Junior 40,000 -0- -0-
Participating
Preferred Stock
($100 par value
per share)
______________
* Includes shares of Common Stock reserved for issuance under
Thermo's equity incentive plans and upon conversion of
outstanding convertible debentures.
(e) Brokers and Finders. Thermo and Acquisition have not
employed any broker, agent or finder or incurred any liability
for any brokerage fees, agents' commissions or finders' fees in
connection with the transactions contemplated hereby.
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(f) Hart-Scott-Rodino Filing. Thermo has complied, or will
comply before the Effective Date, with all applicable
requirements under the Antitrust Improvements Act, and the rules
and regulations promulgated thereunder, relating to making filing
with and furnishing information to the Federal Trade Commission
and the United States Department of Justice in connection with
the transactions contemplated hereby.
(g) Authorized Shares. The Thermo Shares to be delivered
at the Closing pursuant to this Agreement are duly authorized
and, when and if so delivered, will be validly issued,
outstanding, fully paid and nonassessable.
(h) Novation of Contracts. Thermo and Acquisition
acknowledge that novation of CRC's U.S. Government contracts may
be required after the Effective Date.
(i) No Intent to Sell or Transfer CRC. Thermo has no
present intention of selling or otherwise disposing of the
capital stock of CRC, of any division of CRC or of any
substantial portion of CRC's assets. Notwithstanding the
foregoing, Thermo expressly reserves the right to sell or
otherwise dispose of the capital stock of CRC, of any division of
CRC or of any or all of CRC's assets at any time or from time to
time.
(j) Absence of Material Adverse Changes. Since October 1,
1994, there has not been any material adverse change in Thermo's
financial condition, business or prospects, or any material
damage, deterioration or destruction to or of any of Thermo's
assets, which damage, deterioration or destruction is not
covered by insurance.
(k) Statements True and Correct; Further Representations
and Warranties. This Agreement (including the Exhibits and any
documents delivered pursuant hereto) and the Thermo SEC
Documents, when taken together, do not contain any untrue
statement of a material fact or omit any material fact required
to be stated herein or therein or necessary to make the
statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
Section 3.4. Representations and Warranties are Separate.
In the event of any inconsistency or overlap among the
representations and warranties made herein, the representation
and warranty most restrictive to the party making the
representations and warranties shall govern and control.
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ARTICLE 4
COVENANTS
Section 4.1. Acts of the Company. The Company agrees that,
from the date hereof to the Closing, except to the extent that
Thermo shall otherwise give its written consent:
(a) Business in Ordinary Course. The Company will operate
its business only in the ordinary course and consistent with past
practice, and, to the extent of and consistent with such
operation, it will use its best efforts to preserve intact its
present business organization and to preserve its relationships
with employees and persons having business dealings with it.
(b) Maintain Properties. The Company will maintain all of
its properties in customary repair, order and condition,
reasonable wear and use and damage by unavoidable casualty
excepted, and take all steps reasonably necessary to maintain its
Intangibles.
(c) Maintain Management. The Company will not make any
changes in the persons serving as management of the Company.
(d) Compensation. The Company will not (i) grant any
increase in compensation or bonus to any member of management or
(ii) except in the ordinary course of business consistent with
past practice, enter into or amend or alter any bonus, incentive
compensation, deferred compensation, profit sharing, stock
option, retirement, severance, indemnification, pension,
insurance, death benefit or other fringe benefit plan, agreement
or arrangement, or any employment or consulting agreement.
(e) No Related Party Transactions. The Company will not
enter into any transaction or contract with any of its
shareholders, officers, management, directors or employees or
their family members, including the lending of any monies, except
that the Company may continue to grant non-interest-bearing loans
to employees for the purchase of personal computers consistent
with its past practice, and other than as necessary to consummate
the Coleman Laboratories Transaction.
(f) Indebtedness. The Company will not create, incur,
assume, guarantee, or otherwise become liable with respect to any
indebtedness other than in the ordinary course of business.
(g) Maintain Books. The Company will maintain its books,
accounts and records in its usual, regular and ordinary manner.
(h) No Amendments. Except as contemplated in Section
4.6(ii) hereof, the Company will not amend its Articles of
Incorporation or Bylaws; and it will maintain its corporate
existence and powers and its qualifications as a foreign
corporation in each jurisdiction where it is so qualified.
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(i) Pay Taxes. The Company will file all Tax Returns and
pay all Taxes as they become due.
(j) No Disposition or Encumbrances. The Company will
refrain from disposing of or encumbering any of its properties
and assets other than in the ordinary course of business.
(k) Insurance. The Company will maintain insurance upon
its properties and insurance in respect of the kinds of risks
currently insured against, in accordance with its current
practice.
(l) No Mergers. The Company will not merge or consolidate
with any other corporation, or acquire any stock, or, except in
the ordinary course of business, any business, property or assets
of any other person, firm, association, corporation or other
business organization.
(m) No Securities Issuance. The Company will not issue any
shares of capital stock except pursuant to options outstanding as
of the date hereof, or enter into any commitment or agreement, or
grant any option, warrant or right, calling for the issuance of
any shares of stock, and will not create or issue any securities
convertible into any such shares or convertible into securities
in turn so convertible, or enter into any commitment or
agreement, or grant any option, warrant or right, calling for the
issuance of any such convertible securities.
(n) Dividends; Repurchases. The Company will not declare
any dividends on or in respect of shares of capital stock; nor
will it redeem, repurchase or otherwise acquire any shares of
stock, except pursuant to the Redemption Agreements and as
required by the KSOP.
(o) Contracts. Except in the ordinary course of business
consistent with its past practice, the Company will not enter
into, assume or cancel any material contract, agreement,
obligation, lease, license or commitment, and it will not do any
act or omit to do any act which would cause a material breach of
or default under any contract, commitment or obligation of the
Company.
(p) Advice of Change. The Company will promptly advise
Thermo in writing of any material adverse change in the condition
(financial or otherwise), assets, liabilities, earnings, business
or prospects of the Company.
(q) Due Compliance. The Company will duly comply in all
material respects with all laws, rules and regulations applicable
to it and to the conduct of its business.
(r) No Waivers of Rights. The Company will not amend,
terminate or waive any material right.
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(s) Capital Commitments. The Company will not make or
commit to make any capital expenditure, capital addition or
capital improvement involving an amount in excess of one hundred
thousand dollars ($100,000) except for capital leases.
(t) No Breaches. The Company will not take any action that
would constitute or result in a breach of any representation or
warranty herein, either as of the date made or on the Effective
Date.
(u) Confidential Information. The Company shall not,
except as required by law or by agreements existing on the date
hereof, disclose to any third person, and shall preserve and
maintain and prevent the disclosure or publication of, any
proprietary information or trade secrets belonging to the
Company.
(v) Objections to the Merger. The Company will promptly
advise Thermo of any written objection to the Merger from a
shareholder of CRC.
(w) Pooling Accounting. The Company will not take any
action directly or indirectly (e.g., through or by affiliates)
that would prevent Thermo from accounting for the Merger and
other transactions contemplated by this Agreement as a
pooling-of-interests for accounting purposes.
(x) Tax-free Reorganization. The Company shall not take
any action directly or indirectly (e.g., through or by
affiliates) that would prevent the Merger from qualifying as a
tax-free reorganization under Section 368(a) of the Code.
(y) Prospectus. The Company will not take any action that
constitutes an "offer," "offer to sell," "offer for sale," or
"sale" of Thermo Shares within the meaning of Rule 145 of the
Securities Act, except for the distribution of the Proxy
Materials referred to in Section 4.5 (including preliminary forms
thereof distributed in accordance with Rule 430 under the
Securities Act).
Section 4.2. Acts of Thermo. Thermo agrees that, from the
date hereof to the Closing, except to the extent that the Company
shall otherwise gives its written consent:
(a) Tax-Free Reorganization. Thermo will not take any
action directly or indirectly (e.g., through or by affiliates)
that would prevent the Merger from qualifying as a tax-free
reorganization under Section 368(a) of the Code.
(b) Advice of Change. Thermo will promptly advise the
Company in writing of any material adverse change in the
condition (financial or otherwise) of its assets, liabilities,
earnings, business or prospects.
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(c) Due Compliance. Thermo will duly comply in all
material respects with all laws, rules and regulations applicable
to it and to the conduct of its business.
(d) No Breaches. Thermo will not take any action that
would constitute or result in a breach of any representation or
warranty herein, either as of the date made or on the Effective
Date.
Section 4.3. Satisfaction of Conditions Precedent. The
parties hereby agree, subject to the terms and conditions
provided in this Agreement, to use their reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, appropriate or desirable under
applicable laws and regulations to consummate the transactions
contemplated by this Agreement, including the satisfaction of the
conditions precedent contained in Article 5 hereof. Each party
will use their respective reasonable efforts to obtain consents
of all third-parties and governmental authorities necessary,
appropriate or desirable for the consummation of the transactions
contemplated by this Agreement.
Section 4.4. Access to Records and Properties. Thermo may,
prior to the Closing, through its employees, agents and
representatives, make or cause to be made such investigation as
it deems necessary or advisable of the assets and business of the
Company, but such investigation shall not affect the
representations and warranties under Section 3.2 hereof. The
Company agrees to permit Thermo and its employees, agents and
representatives to have full access on reasonable notice and
during regular business hours to its properties, books, records,
contracts and other documents, to furnish to Thermo such
financial and operating data and other information with respect
to its business and properties as Thermo shall from time to time
reasonably request, and to authorize the Company's employees,
agents and representatives to discuss the Company's affairs with
employees, agents and representatives of Thermo.
Section 4.5. Preparation of Registration Statement. The
Company shall cooperate with Thermo in the preparation of a proxy
statement/prospectus to be mailed to the Shareholders in
connection with the transactions contemplated hereby and in
Section 4.6 (the "Proxy Materials") which will be included within
the Registration Statement. When the Registration Statement or
any post-effective amendment thereto shall become effective, and
at all times subsequent to such effectiveness, up to and
including the date or the special meeting of the Shareholders
with respect to the transactions contemplated by this Agreement,
such Registration Statement and Proxy Materials and all
amendments or supplements thereto, with respect to all
information set forth therein furnished or to be furnished by any
party with respect to itself or its affiliates, (i) will comply
in all material respects with the applicable provisions of the
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Securities Act and the Exchange Act and the rules and regulations
promulgated by the Commission thereunder and (ii) will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements contained therein not misleading. CRC shall
advise Thermo promptly of the happening of any event which makes
untrue any statement of a material fact contained in the
Registration Statement or Proxy Materials or any amendment or
supplement thereto or omit to state a material fact necessary in
order to make any statement therein not misleading. Thermo shall
advise CRC, promptly after Thermo receives notice thereof, of the
time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of Thermo
Common Stock to be issued in connection with the Merger for the
offering or sale in any jurisdiction, of the initiation or threat
of any proceeding for any such purpose, or of any request by the
Commission for the amendment or supplementation of the
Registration Statement or for additional information.
Section 4.6. Distribution of Proxy Materials; Shareholders'
Approval. CRC shall take all action necessary in accordance with
applicable law to convene a meeting of the Shareholders to be
held at the earliest possible time after the effective date of
the Registration Statement for the purpose of (i) approving and
adopting this Agreement (including the transactions contemplated
hereby), (ii) approving and adopting the amendment of CRC's
Articles of Incorporation, as amended, limiting stock ownership
of CRC to employees of CRC; and (iii) approving the assignment
and sale of certain rights and assets to Coleman Laboratories,
Ltd. in connection with the transactions contemplated by Section
3.2(bb) (including, without limitation, the matter referred to in
Section 3.2(bb)). CRC shall submit the Proxy Materials to the
Shareholders, and its Board of Directors shall recommend to the
Shareholders the adoption of this Agreement and the approval of
the Merger and such other matters referred to above. It shall,
at such meeting of the Shareholders, present this Agreement and
the other matters for adoption by its Shareholders. It shall use
all reasonable efforts to obtain all votes and approvals of the
Shareholders necessary for the approval and adoption of this
Agreement and the other matters under the Florida Business
Corporation Act, and its certificate of incorporation and
by-laws.
Section 4.7. Certain Employee Benefits Matters.
(a) Thermo currently intends to maintain all material
Pension Plan, Welfare Plans and other CRC employee benefit plans
or programs (including without limitation CRC's annual bonus
program, tuition reimbursement program and non-interest-bearing
loan program for the purchase of personal computers by employees)
without significant modification after the Closing, except that
the KSOP, the CRC Contract Stock Options and the Annual Stock
Option Bonus program would be amended as described on Schedule
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4.7 hereto. Notwithstanding the foregoing, Thermo expressly
reserves the right to modify or terminate any Pension Plan,
Welfare Plan or other CRC benefit plan or program, at any time or
from time to time.
(b) Except as may be otherwise required by ERISA, Thermo
will give CRC employees credit for service with the Company when
such employees become eligible for participation in any of
Thermo's benefit plans which have vesting or length of service
requirements.
(c) All otherwise eligible CRC employees will be entitled
to participate in any employee stock purchase plan adopted from
time to time by Thermo, in accordance with the terms thereof.
Section 4.8. Expenses. Each party will bear entirely the
respective out-of-pocket expenses that it incurs in connection
with the transactions contemplated hereby including legal and
accounting fees. Notwithstanding the foregoing, this Section 4.8
shall not be construed as relieving any party from any liability
which it may have for any breach of any representation or
warranty made by it herein or any failure to perform any
obligation or comply with any covenant imposed on it herein.
Section 4.9. Indemnification of CRC by Thermo.
(a) CRC upon its demand shall be indemnified by Thermo 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 Thermo in or pursuant to this Agreement, in the form
and to the extent so made, or the omission of any material
fact relating thereto; and
(ii) any failure by Thermo or Acquisition to perform
any obligation or comply with any covenant or agreement
specified in this Agreement or in any other document
executed at the Closing.
(b) For the purpose of this Agreement, the term "damages"
shall be determined and computed by reference to the actual
economic loss to CRC (and not just by reference to any effect on
the value of the shares of CRC) and shall be deemed to include
all losses, liabilities, expenses or costs incurred by the CRC,
including reasonable attorney's fees.
(c) The right of CRC to be indemnified pursuant to Section
4.9 (i) shall not apply until the sum of the damages suffered by
CRC on a cumulative basis equals or exceeds $500,000, at which
point Thermo shall become liable for all damages, not just
amounts in excess of $500,000, and (ii) shall be only for claims
that are asserted by CRC before the first anniversary of the
Closing Date. In no event shall Thermo's liability hereunder
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exceed $__________. Notwithstanding the foregoing, this Section
4.9(c) shall not apply in the event Thermo has actual knowledge
of a breach of a representation or warranty.
ARTICLE 5
CONDITIONS TO OBLIGATIONS OF THERMO,
ACQUISITION AND THE COMPANY
Section 5.1. Conditions to Obligations of Thermo and
Acquisition. The obligations of Thermo and Acquisition to
consummate the transactions contemplated hereby are subject to
the satisfaction, on or before the Closing, of the following
conditions (unless waived in writing by Thermo and Acquisition in
the manner provided in Section 6.2 hereof):
(a) Representations, Warranties and Performance of the
Company. The representations and warranties set forth in Section
3.2 hereof shall be accurate in all material respects on and as
of the date hereof, and on and as of the Effective Date as though
made on and as of the Effective Date except as set forth on the
Disclosure Schedule, and the Company shall have performed in all
material respects all obligations and complied with in all
material respects all covenants required to be performed or to be
complied with by them under this Agreement prior to the Closing.
(b) Authorization. All action necessary to authorize the
execution, delivery and performance hereof by the Company and the
consummation of the transactions contemplated hereby, including
the approval by the Shareholders of the execution, delivery and
performance of this Agreement in accordance with the applicable
laws of the State of Florida and such other matters set forth in
the Proxy Materials, shall have been duly and validly taken by
the Company. The Company shall have furnished Thermo with a copy
of all resolutions adopted by the Board of Directors and
shareholders of CRC in connection with such action, certified by
the Secretary or Assistant Secretary of CRC, together with copies
of such other instruments and documents as Thermo shall have
reasonably requested.
(c) Consents. Any governmental authority having
jurisdiction over the Company, Thermo or Acquisition or any other
person in any contractual or other relationship with the Company,
to the extent that its consent or approval is required by
applicable law or regulation or any applicable contract or other
instrument for the performance of this Agreement or the
consummation of the transactions contemplated hereby or for the
continuation of any material existing contractual relationship,
shall have granted any necessary consent or approval, except
novations of contracts with the U.S. Government.
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(d) Amendment to Articles of Incorporation. CRC shall have
filed an Amendment to its Articles of Incorporation, in
substantially the form attached hereto as Exhibit I.
(e) Consummation of the Coleman Laboratories Transaction.
CRC shall have consummated the assignment of its 49% interest in
Coleman L.P. to entities related to Thomas J. Coleman or members
of his family and shall have terminated CRC's relationship with
Dr. Katoot and MKI by assigning and selling to Coleman L.P. CRC's
rights under certain agreements with Dr. Katoot and MKI and
certain equipment currently used by MKI (the "Coleman
Laboratories Transaction").
(f) Permits and Approvals. Any and all consents, permits,
approvals or other actions of any person, jurisdiction or
authority required in the reasonable opinion of Thermo (including
without limitation, confirmation of filing of the Articles of
Merger with the Secretary of State of the State of Florida and
the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware) for lawful consummation of the
transactions contemplated hereby shall have been obtained, and
shall be in full force and effect, and no such consent, permit,
approval or other action shall contain any provision that in the
reasonable judgment of Thermo is unduly burdensome.
(g) Registration Statement Effective. The Registration
Statement shall become effective and no stop order suspending the
effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been
initiated or threatened by the Commission.
(h) Good Standing Certificates. CRC shall have delivered
to Thermo a long-form corporate good standing certificate from
its jurisdiction of incorporation and good standing certificates
from each jurisdiction in which CRC is qualified to transact
business.
(i) President's Certificate. The Company shall have
delivered to Thermo a certificate executed by the President of
the Company, dated the Effective Date, certifying to the
fulfillment of the conditions specified in Section 5.1(a).
(j) NYSE Listing. The New York Stock Exchange shall have
approved the Thermo Shares for listing, subject to official
notice of issuance.
(k) Dissenters' Rights. The holders of not more than 3% of
the CRC Shares shall have demanded and perfected their right to
an appraisal of their CRC Shares in accordance with the Florida
Business Corporation Act.
(l) Accountants' Opinion. Thermo shall have received an
opinion from Thomas, Beck & Zurcher, P.A., in form and substance
satisfactory to Thermo's independent accountants, to the effect
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that Thomas, Beck & Zurcher, P.A. is not aware of any fact
concerning the Company that would preclude Thermo from accounting
for the Merger and all other transactions contemplated by this
Agreement as a "pooling-of-interests" for accounting purposes.
(m) Legal Opinions of Counsel for the Company. Thermo
shall have received an opinion of Sirote & Permutt, P.C., counsel
for the Company and the Shareholders, dated the Effective Date
and in the form attached hereto as Exhibit J, together with such
other opinions of counsel as Thermo may reasonably require
(including without limitation an opinion to the effect that when
the Merger is consummated in accordance with the terms of this
Agreement, the Merger should be treated for Federal income tax
purposes as a tax-free reorganization within the meaning of
Section 368(a) of the Code, in the form attached hereto as
Exhibit K (the "Tax Opinion").
(n) Performance of Affiliate Agreements. All the terms,
covenants and conditions of the Affiliate Agreements to be
complied with and performed by CRC and the Shareholders on or
before the Effective Date shall have been fully complied with and
performed in all material respects.
(o) No Litigation or Proceedings with Respect to the
Merger. No legal action or other proceedings to restrain or
prohibit the consummation of the transactions contemplated by
this Agreement shall be pending or threatened.
(p) Releases of Guarantees. The Company shall have been
released from any and all guarantees of obligations owed to third
parties by Thomas J. Coleman, by any of his affiliates, or by any
entity controlled by Thomas J. Coleman or any of such affiliates.
(q) Indemnification and Stock Escrow Agreement. The Escrow
Agreement shall be in full force and effect.
(r) Documents Satisfactory. The form and substance of all
legal matters contemplated herein and of all papers used or
delivered hereunder shall be reasonably acceptable to Thermo, and
Thermo shall have received all documents that it may have
reasonably requested in connection with the transactions
contemplated hereby, in form and substance reasonably
satisfactory to it.
(s) Compliance with Antitrust Improvements Act. Any
waiting period (and any extension thereof) applicable to the
consummation of the Merger under the Antitrust Improvements Act
shall have expired or been terminated.
Section 5.2. Conditions to Obligations of the Company. The
obligations of the Company to consummate the transactions
contemplated hereby are subject to the satisfaction, on or before
the Closing, of the following conditions (unless waived by the
Company in writing in the manner provided in Section 6.2 hereof):
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(a) Representations, Warranties and Performance of Thermo
and Acquisition. The representations and warranties of Thermo
and Acquisition set forth in Section 3.3 hereof shall be accurate
in all material respects on and as of the date hereof, and on and
as of the Effective Date as though made on and as of the
Effective Date, and Thermo and Acquisition shall have performed
in all material respects all obligations and complied in all
material respects with all covenants required to be performed or
to be complied with by them under this Agreement prior to the
Closing.
(b) Authorization. All action necessary to authorize the
execution, delivery and performance hereof by Thermo and
Acquisition and the consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Boards of
Directors of Thermo and Acquisition and the shareholders of
Acquisition. Thermo and Acquisition shall have furnished the
Company with a copy of all resolutions adopted by the Board of
Directors of Thermo and Acquisition and the shareholders of
Acquisition in connection with such actions, certified by the
Secretary or an Assistant Secretary of Thermo and Acquisition,
together with copies of such other instruments and documents as
the Company shall have reasonably requested.
(c) Consents. Any governmental authority having
jurisdiction over the Company, or any other person in any
contractual or other relationship with the Company, to the extent
that its consent or approval is required by applicable law or
regulation or any applicable contract or other instrument for the
performance of this Agreement or the consummation of the
transactions contemplated hereby, shall have granted any
necessary consent or approval, except novation of contracts with
the U.S. Government.
(d) Permits and Approvals. Any and all consents, permits,
approvals or other actions of any person, jurisdiction or
authority required in the reasonable opinion of counsel for the
Company (including without limitation, confirmation of filing of
the Articles of Merger with the Secretary of State of the State
of Florida and the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware) for lawful
consummation of the transactions contemplated hereby shall have
been obtained, and shall be in full force and effect, and no such
consent, permit, approval or other action shall contain any
provision that in the reasonable judgment of such counsel is
unduly burdensome.
(e) CRC Shareholder Approval. The approval by the
Shareholders of the execution, delivery and performance of this
Agreement and the Merger in accordance with the applicable laws
of the State of Florida shall have been duly and validly
obtained.
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(f) Registration Statement Effective. The Registration
Statement shall become effective and no stop order suspending the
effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been
initiated or threatened by the Commission.
(g) Good Standing Certificates. Thermo shall deliver to
the Company a long form corporate good standing certificate from
its jurisdiction of incorporation.
(h) Officer's Certificate. Thermo shall have delivered to
the Company a certificate executed by an officer of Thermo, dated
the Effective Date, certifying to the fulfillment of the
conditions specified in Section 5.2(a).
(i) NYSE Listing. The New York Stock Exchange shall have
approved the Thermo Shares for listing, subject to official
notice of issuance.
(j) No Litigation or Proceedings with Respect to the
Merger. No legal action or other proceedings to restrain or
prohibit the consummation of the transactions contemplated by
this Agreement shall be pending or threatened.
(k) Tax Opinion. CRC and the Shareholders shall have
received the Tax Opinion from Sirote & Permutt, P.C.
(l) Documents Satisfactory. The form and substance of all
legal matters contemplated herein and of all papers used or
delivered hereunder shall be reasonably acceptable to counsel for
the Company and the Company shall have received all documents
that such counsel may have reasonably requested in connection
with the transactions contemplated hereby, in form and substance
reasonably satisfactory to such counsel.
(m) Legal Opinion of Thermo's Counsel. CRC shall have
received an opinion of Thermo's general counsel, dated the
Effective Date and in the form attached hereto as Exhibit L.
(n) Compliance with Antitrust Improvements Act. Any
waiting period (and any extension thereof) applicable to the
consummation of the Merger under the Antitrust Improvements Act
shall have expired or been terminated.
ARTICLE 6
MODIFICATION, TERMINATION AND WAIVER
Section 6.1. Modification, Amendments and Waivers. The
parties may mutually amend any provision of this Agreement at any
time prior to the Effective Date; provided, however, that any
amendment effected subsequent to the CRC Shareholder approval
shall be subject to the restrictions contained in the Florida
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General Corporation Act and Florida Business Corporation Act. No
amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by all of the
parties.
Section 6.2. Waivers. The parties hereto may, by a written
signed instrument, extend the time for or waive the performance
of any of the obligations of another party hereto or waive
compliance by such other party with any of the covenants or
conditions contained herein.
Section 6.3. Termination. At any time prior to the
Closing, this Agreement may be terminated (a) by mutual consent
of Thermo and Acquisition, on the one hand, and the Company on
the other; (b) by Thermo and Acquisition if (i) there has been a
material breach by the Company of a covenant, representation or
warranty contained in this Agreement; (ii) Thermo has notified
the Company in writing of the existence of such breach; and (iii)
the Company has failed to cure such breach within a reasonable
period of time after receiving such notice; (c) by the Company if
(i) there has been a material breach by Thermo or Acquisition of
a covenant, representation or warranty contained in this
Agreement; (ii) the Company has notified Thermo in writing of the
existence of such breach; and (iii) Thermo or Acquisition, as the
case may be, has failed to cure such breach within 30 days after
receiving such notice; (d) by the Company or Thermo if (i) there
shall be an order of a court in effect preventing consummation of
this Agreement or (ii) there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated, issued
or deemed applicable to this Agreement, by a governmental entity
that would make consummation of this Agreement illegal; or (e) by
Thermo or the Company if the Shareholders disapprove any matter
submitted to them pursuant to Section 4.5 or if the Closing does
not occur by February 28, 1995.
Section 6.4. Effect of Termination. If this Agreement
shall be terminated as provided in Section 6.3, this Agreement
shall forthwith become void (except as otherwise provided in
Section 4.8).
ARTICLE 7
GENERAL
Section 7.1. 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:
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If to Thermo or Acquisition:
Thermo Electron Corporation
81 Wyman Street
Waltham, MA 02254-9046
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to the Company, to:
Coleman Research Corporation
201 South Orange Avenue, Suite 1300
Orlando, Florida 32801
Attention: President
With a copy to:
Sirote & Permutt, P.C.
2222 Arlington Avenue South
P.O. Box 55727
Birmingham, Alabama 35255-5727
Attention: Joseph T. Ritchey, Esquire
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.
Section 7.2. 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 and the consummation of the transactions contemplated
hereby for a period of one year. All statements contained in any
certificates or other instruments delivered by or on behalf of
Thermo, Acquisition, or the Company or the Shareholders 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.
Section 7.3. Entire Agreement. This Agreement supersedes
any and all oral or written agreements or understandings
heretofore made relating to the subject matter hereof (including
without limitation the Letter of Intent executed by Thermo and
CRC dated August 9, 1994, as amended on November 30, 1994) and
constitutes the entire agreement of the parties relating to the
subject matter hereof, except for the Confidentiality Agreements
executed by Thermo and CRC dated March 22, 1994.
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Section 7.4. 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.
Section 7.5. 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.
Section 7.6. 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.
Section 7.7. 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.
Section 7.8. 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.
Section 7.9. No Solicitation. Prior to the earlier of (i)
the Closing or (ii) the termination of this Agreement, the
Company will not, directly or indirectly, solicit, encourage or
initiate any discussions with, or negotiate or otherwise deal
with, or provide any information to, any person other than Thermo
concerning any merger, sale of substantial assets or similar
transactions involving the Company or any sale of its capital
stock.
Section 7.10. Relief. In the event of a breach of the
provisions of this Agreement by a party to this Agreement prior
to the Closing, in addition to any other rights and remedies that
party may have under law or in equity, the non-breaching party
shall have the right to specific performance and injunctive
relief, it being acknowledged and agreed that money damages will
not provide an adequate remedy. In the event litigation is
maintained by a party to this Agreement against any other party
to enforce this Agreement or to seek any remedy for breach, then
the party prevailing in such litigation shall be entitled to
recover from the non-prevailing party reasonable attorneys' fees
and costs of suit.
Section 7.11. Exhibits. The Exhibits attached hereto and
referred to in this Agreement are a part of this Agreement for
all purposes.
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Section 7.12. Assignment. This Agreement and the rights
and duties hereunder shall be binding upon and inure to the
benefit of the successors, assigns, heirs and legal and personal
representatives of the parties hereto, but shall not be
assignable or delegable by any party without the prior written
consent of the other parties and any purported assignment without
such prior written consent shall be null and void, except that
Thermo and Acquisition may assign this Agreement, or rights and
duties hereunder, after the Closing.
Section 7.13. Further Assurances. The Company will execute
and furnish to Thermo and Acquisition all documents and will do
or cause to be done all other things that Thermo may reasonably
request from time to time in order to give full effect to this
Agreement and to effectuate the intent of the parties, including
without limitation novation agreements for Government contracts.
Section 7.l4. Gender. In this Agreement, unless the
context requires otherwise the singular includes the plural, the
plural the singular, the masculine gender includes the neuter,
masculine and feminine genders and vice versa.
Section 7.15. Public Announcement. The content and timing
of any public announcement pertaining to this Agreement shall be
subject to the prior agreement and approval of Thermo and the
Company.
Section 7.16. Governing Law. This Agreement shall be
governed by the law of the State of Delaware applicable to
agreements made and to be performed wholly within such
jurisdiction, without regard to the conflicts of laws provisions
thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
THERMO ELECTRON CORPORATION
[Seal] By: ______________________________
Title: ___________________________
CRC ACQUISITION CORP.
[Seal] By: ______________________________
Title:
---------------------------
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COLEMAN RESEARCH CORPORATION
[Seal] By: ______________________________
Title:
---------------------------
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EXHIBIT B
INDEMNIFICATION AND STOCK ESCROW AGREEMENT
INDEMNIFICATION AND STOCK ESCROW AGREEMENT, dated as of
February __, 1995 by and among Thermo Electron Corporation, a
Delaware corporation ("Thermo"), Coleman Research Corporation, a
Florida corporation ("CRC"), Thomas J. Coleman (the "Shareholder
Representative"), and The First National Bank of Boston, as
escrow agent ("Escrow Agent").
WHEREAS, Thermo and CRC have entered into an Agreement and
Plan of Merger dated January __, 1995 (the "Merger Agreement"),
contemplating the acquisition by Thermo of all of the issued and
outstanding shares of capital stock of CRC (the "CRC Shares");
and
WHEREAS, the parties desire that certain shares of Thermo
common stock to be issued pursuant to the Merger be received,
held and disposed of by the Escrow Agent subject to the terms and
conditions herein expressed;
WHEREAS, the execution and delivery of this Agreement is a
condition precedent to the obligation of Thermo to consummate the
transactions contemplated by the Merger Agreement;
NOW, THEREFORE, as an inducement to Thermo to consummate the
transactions contemplated by the Merger Agreement and in
consideration of these premises and other good and valuable
consideration, the parties hereto hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein
which are defined in the Merger Agreement but not defined herein
shall have the same meanings herein as therein. "Escrow
Termination Date" shall mean February __, 1996.
Section 2. Consent of Shareholders. By virtue of the
Shareholders' approval of the Merger Agreement, the Shareholders
have, without any further act of any Shareholder, consented to:
(i) the establishment of the escrow account to secure CRC's
indemnification obligations under Section 4 of this Agreement in
the manner set forth herein, (ii) the appointment of the
Shareholder Representative as their representative for purposes
of this Agreement and as attorney-in-fact and as agent for and on
behalf of each Shareholder, the taking by the Shareholder
Representative of any and all actions and the making of any
decisions required or permitted to be taken or made by him under
this Agreement and (iii) all of the other terms, conditions and
limitations of this Agreement.
Section 3. Deposit of Escrow Property. Thermo hereby
deposits with Escrow Agent, and Escrow Agent hereby acknowledges
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receipt of, a stock certificate evidencing ___________ (______)
shares of Thermo's common stock, $1.00 par value per share (the
"Escrowed Shares"). Such certificate has been issued in the name
of Escrow Agent or its nominee.
In case any distribution (except a cash dividend paid out of
earned surplus) or stock dividend shall be made on or in respect
of the Escrowed Shares, or any property shall be distributed upon
or with respect to the Escrowed Shares pursuant to the
recapitalization, liquidation or reclassification of the capital
structure of Thermo or pursuant to the merger, consolidation or
reorganization of Thermo, the money, stock or property so
distributed or paid shall be delivered to and held by Escrow
Agent hereunder. Such money, stock and property, together with
the Escrowed Shares, are sometimes referred to hereinafter as the
"Escrow Property." Shareholders shall be entitled to receive, in
proportion to their respective number of Escrowed Shares, all
cash dividends paid in respect of the Escrowed Shares out of the
earned surplus of Thermo.
While the Escrowed Shares are held by Escrow Agent,
Shareholders shall be entitled to direct Escrow Agent as to how
to vote the Escrowed Shares, in proportion to their respective
number of Escrowed Shares, with respect to matters placed before
the shareholders of Thermo, and Escrow Agent shall vote
accordingly.
Section 4. Holding and Distribution of Escrow Property.
Thermo and Acquisition (including the Surviving Corporation after
the Merger) upon their demand shall be indemnified for the full
amount of all damages (as defined below) suffered by them as a
direct or indirect result of:
(i) the inaccuracy of any representation or
warranty made by CRC in or pursuant to the Merger
Agreement, in the form and to the extent so made, or
the omission of any material fact relating thereto;
(ii) any failure by CRC to perform any obligation
or comply with any covenant or agreement specified in
the Merger Agreement or in any other document executed
at the Closing; and
(iii) any other claims (including, without
limitation, claims alleging death or injury to persons
or damage to property caused by, or resulting from, any
defect or claimed defect in or with respect to products
of CRC (whether based in tort or contract), any tort,
default in the performance or breach of any contract or
commitment, or for consequential, special or punitive
damages) for all conditions, acts or failures to act of
CRC or other occurrences prior to or on the Closing
Date or resulting from or caused by any product
purchased for resale, manufactured or sold, or service
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provided, by CRC prior to the Closing Date; all bodily
injury and property damage arising after the Closing
Date out of continuous or repeated exposure to
substantially the same general conditions in existence
on or before the Closing Date shall be considered as
arising out of one occurrence prior to the Closing
Date.
For the purpose of this Agreement, the term "damages" shall
be determined and computed by reference to the actual economic
loss to Thermo, Acquisition and/or the Surviving Corporation (and
not just by reference to any effect on the value of the shares of
the Surviving Corporation) and shall be deemed to include all
losses, liabilities, expenses or costs incurred by the Surviving
Corporation, including reasonable attorney's fees.
Thermo shall give the Shareholder Representative 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. Thermo shall have the right to defend, contest,
protest and otherwise control the resolution of any such claim,
action or proceeding (unless Thermo decides in good faith not to
contest such claim and such claim, action or proceeding relates
to a matter which, if adversely determined, would have no impact
on the Surviving Corporation's liability in another proceeding,
goodwill or reputation or on the future conduct by the Surviving
Corporation of its business or on its Tax or accounting
positions, in which case the next paragraph shall apply), but
shall keep the Shareholder Representative apprised of material
developments. The Shareholder Representative shall have the
right to participate in any such legal proceeding, subject to
Thermo's right of control thereof, at the expense of the
Shareholder Representative by counsel of the Shareholder
Representative's choice. Thermo, acting in good faith, shall
have the right in its sole discretion to settle any such claim.
If the claim, action or proceeding is one which, if
adversely determined, would have no impact on Thermo's or the
Surviving Corporation's liability in another proceeding, goodwill
or reputation or on the future conduct by the Surviving
Corporation of its business or on its Tax or accounting
positions, then (i) the Shareholder Representative shall have the
right, at his expense, to defend, contest, protest and otherwise
control the resolution thereof, but shall keep Thermo apprised of
material developments and (ii) Thermo shall have the right to
participate in any such legal proceeding, subject to the
Shareholder Representative's right of control thereof, at
Thermo's expense and with counsel selected by Thermo.
The Shareholders hereby designate and appoint Mr. Thomas J.
Coleman (the "Shareholder Representative") as their
representative and attorney-in-fact through whom all actions by
the Shareholders relating to this Agreement after the Closing
Date, including those acts as are required, authorized or
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contemplated by this Agreement with respect to the settlement of
a claim or the defense thereof, shall be made or directed, and
hereby acknowledge that the Shareholder Representative shall be
the only person authorized to take any action so required,
authorized or contemplated by this Agreement on behalf of the
Shareholders. The Shareholders further acknowledge that the
foregoing appointment and designation shall be deemed to be
coupled with an interest and shall survive the disability, death
or incompetency of any Shareholder. The other parties hereto are
and will be entitled to rely on any action so taken or any notice
given by the Shareholder Representative and entitled and
authorized to give notices only to the Shareholder Representative
for any notice contemplated by this Agreement to be given any
such person. The Shareholder Representative shall serve without
compensation but shall be reimbursed for his reasonable
out-of-pocket expenses from the Escrow Property. The Shareholder
Representative shall have the right to sell Escrow Property in
order to obtain funds to pay such expenses. The Shareholder
Representative shall furnish reports as to the status of the
escrow to the Shareholders as and when Escrowed Shares are
released from the escrow or claims are paid. Thermo, Acquisition
or the Surviving Corporation shall not have any liability or
responsibility to the Shareholder Representative.
The Shareholder Representative shall receive and deliver
notices on behalf of the Shareholders and take all such action as
in the Shareholder Representative's discretion may be necessary,
appropriate, permitted or advisable to be taken under the terms
of this agreement in order to consent to, pay, contest,
arbitrate, litigate or settle any claim or alleged claim asserted
hereunder.
The Shareholder Representative shall not be personally
liable to the other Shareholders for any action taken, suffered
or omitted by him in good faith and reasonably believed by him to
be authorized or within the discretion of the rights or powers
conferred upon him by this Agreement.
In acting as representative of the Shareholders, the
Shareholder Representative may rely upon, and shall be protected
in acting or refraining from acting upon, an opinion of counsel,
certificate of auditors or other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
arbitrator's award, appraisal, bond or other paper or document
reasonably believed by him to be genuine and to have been signed
or presented by the proper party or parties. The Shareholder
Representative may consult with counsel and any advice of such
counsel shall be full and complete authorization and protection
in respect to any action taken or suffered or omitted by him in
such capacity in good faith and in accordance with such opinion
of counsel. The Shareholder Representative may perform his
duties as Shareholder Representative either directly or by or
through his agents or attorneys and the Shareholder
Representative shall not be responsible to the other Shareholders
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for any misconduct or negligence on the part of any agent or
attorney appointed with reasonable care by him hereunder.
Upon receiving notice of the death or incapacity of the
Shareholder Representative, the Shareholders shall by majority
vote (based on their number of CRC Shares held immediately prior
to the Closing Date) appoint a successor to fill the vacancy.
The Shareholders may by such a majority vote remove the
Shareholder Representative with or without cause and appoint a
successor, provided that notice thereof is given by the new
Shareholder Representative to each of the other parties hereto.
The Shareholder Representative may resign if, and only if, he is
simultaneously replaced with a substitute Shareholder
Representative reasonably acceptable to Thermo.
Section 5. Limitation of Liability. The right of Thermo,
Acquisition and the Surviving Corporation to be indemnified
pursuant to Section 4 shall be (a) limited to the return to
Thermo of the Escrow Property, (b) shall not apply until the sum
of the damages suffered by Thermo, Acquisition and the Surviving
Corporation on a cumulative basis equals or exceeds $500,000, at
which point the Company shall become liable for all damages, not
just amounts in excess of $500,000, and (c) only for claims that
are asserted by Thermo, Acquisition or the Surviving Corporation
before the first anniversary of the Closing Date.
Notwithstanding the foregoing, this Section 5 shall not apply in
the event the Company has actual knowledge of a breach of a
representation or warranty.
Section 6. Escrow Account. It is intended that the assets
held in escrow as above provided shall facilitate Thermo's and
the Surviving Corporation's ability to recover amounts to which
they are entitled as a result of misrepresentations, breaches of
warranties and breaches of covenants contained in the Merger
Agreement or this Agreement and to satisfy claims of Thermo and
Acquisition arising as a result of the Merger Agreement or this
Agreement. Accordingly, and to the extent necessary to provide
such protection to Thermo and the Surviving Corporation, property
held in escrow hereunder shall be available to satisfy claims of
Thermo and the Surviving Corporation under this Agreement to the
extent provided herein. In the event the Escrowed Property is
insufficient to pay all damages to Thermo, Acquisition and the
Surviving Corporation, including by virtue of the expiration of
the escrow period, no Shareholder shall be liable under this
Agreement to pay any amount in addition to such Shareholder's
proportionate share of the Escrow Property claimed by Thermo
prior to the Escrow Termination Date. Once the Escrow Property
or balance thereof is released to the Shareholders, Thermo,
Acquisition and the Surviving Corporation have no right to
recover damages from the Shareholders in the absence of actual
knowledge of a breach of a representation or warranty.
Section 7. Registration of Claims. In the event that
Thermo or the Surviving Corporation asserts any claim for
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indemnification against the Escrowed Shares, it shall deliver to
Escrow Agent and the Shareholder Representative a written notice
thereof (the "Notice of Claim") setting forth (a) a demand for
payment of a specified amount from the Escrowed Shares or, if
such amount can not be specified, the basis upon which the amount
would be determined and (b) a description of the asserted claim
and the basis thereof, and Thermo shall deliver to the
Shareholder Representative thereafter such other information as
may be reasonably requested by the Shareholder Representative to
evaluate the asserted claim. It is understood and agreed among
the parties hereto that Thermo's and the Surviving Corporation's
right to assert claims for indemnification under this Agreement
is limited to those matters set forth in this Agreement, although
the Escrow Agent shall have no obligation to determine or verify
whether such condition has been met.
Section 8. Payment of Amounts from Escrow Property Upon
Demand Without Objection. If Thermo delivers to the Shareholder
Representative and Escrow Agent a Notice of Claim pursuant to
Section 4 hereof and if no written objection to such demand is
received by Escrow Agent and Thermo, from the Shareholder
Representative, within 30 days following the delivery of such
Notice of Claim to Escrow Agent and the Shareholder
Representative, then Escrow Agent shall pay the claim out of the
Escrow Property by forthwith endorsing and delivering to Thermo
the certificates representing the Escrowed Shares. Thermo shall
be entitled to retain that number of Escrowed Shares which, when
multiplied by the Per Share Value (as defined below), shall equal
the amount of the claim as provided in Section 4 hereof;
provided, however, that Notices of Claim must be delivered before
the Escrow Termination Date and Thermo may not retain more than
the Escrowed Shares. Thermo shall return one or more
certificates for the excess Escrowed Shares to Escrow Agent for
continued holding hereunder. To the extent the value (calculated
on the basis of the Per Share Value, regardless of actual market
value at the time) of the Escrowed Shares retained by Thermo is
less than the amount of the claim, Escrow Agent shall also
transfer to Thermo other Escrow Property, if any, in addition to
the Escrowed Shares.
The Per Share Value shall be $__________ per share,
representing the reported closing price of Thermo's Common Stock
on the New York Stock Exchange on February __, 1995.
Section 9. Payment of Amounts from Escrow Property After
Notice of Objection. If Thermo delivers to the Shareholder
Representative and Escrow Agent a Notice of Claim pursuant to
Section 4 hereof, and if the Shareholder Representative shall
give written objection thereto to Escrow Agent and Thermo prior
to the expiration of the 30-day period specified in Section 8,
Escrow Agent shall make no payment in respect of the demand set
forth in such Notice of Claim until it shall have received one of
the following:
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(a) written instructions signed on behalf of both Thermo
and the Shareholder Representative; or
(b) a final order of a court having jurisdiction over the
asserted claim, after expiration of any applicable appeal period.
Upon receipt of any such instructions or order, Escrow Agent
shall pay such amount from the Escrow Property to Thermo as may
be directed by such instructions or order; provided, however that
(i) the limitations set forth in Section 8 hereof on the number
of Escrowed Shares retainable by Thermo shall also apply to
claims paid under this Section 9, and (ii) all Escrowed Shares
delivered to Thermo shall be valued on the basis of the Per Share
Value, regardless of the actual market price of Thermo's Common
Stock on the date such shares are delivered to Thermo. If the
final order of a court having jurisdiction over the asserted
claim, after expiration of any applicable appeal period, upholds
the Shareholder Representative's objection to the Escrow Agent,
Thermo shall reimburse the Escrow Agent for reasonable attorneys'
fees and expenses paid from the Escrow Property to pursue the
objection.
Section 10. Payment of Escrow Property to Shareholders. On
the Escrow Termination Date, Escrow Agent shall deliver to Thermo
and the Shareholder Representative a statement of the remaining
balance, if any, of the Escrow Property (calculated on the basis
of the Per Share Value, regardless of the actual market price of
Thermo's Common Stock at that time), and the total amount of all
claims registered pursuant to Section 7 hereof and not
theretofore resolved and paid (the excess, if any, of such
remaining balance over the total amount of such claims shall be
referred to as the "Final Escrow Balance"). Thermo and the
Shareholder Representative shall review the accuracy of the Final
Escrow Balance and notify Escrow Agent within 30 days of the
foregoing statement of any asserted discrepancy. Upon the
expiration of the 30-day period after receipt by Thermo and the
Shareholder Representative of such statement, and if Escrow Agent
has not been notified of any discrepancy by Thermo or the
Shareholder Representative within the 30-day period specified in
the preceding sentence, Escrow Agent shall deliver to each
Shareholder Escrow Property representing such Shareholder's share
of the Final Escrow Balance, free and clear of the escrow created
by this Agreement. After the last registered claim shall have
been resolved pursuant to Section 8 and Section 9 hereof, as the
case may be, and paid, the remaining balance, if any, of the
Escrow Property shall be delivered by Escrow Agent to
Shareholders, free and clear of the escrow created by this
Agreement; provided, however, that upon the disposition of any
such claim prior to the disposition of all such claims Escrow
Agent shall deliver to Shareholders the Escrow Property in excess
of the amount of the remaining aggregate claims as determined
above. All payments by Escrow Agent to Shareholders pursuant to
this Agreement shall be made in proportion to the Shareholders'
respective interests in the Escrowed Shares.
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Section 11. Responsibility of Escrow Agent. Escrow Agent
may act upon any instrument or other writing believed by it in
good faith to be genuine and to have been signed or presented by
the proper person and shall not be liable to any party hereto in
connection with the performance of its duties hereunder, except
for its own negligence or willful misconduct. Escrow Agent's
duties shall be determined only with reference to this Escrow
Agreement and applicable laws and Escrow Agent is not charged
with knowledge of, or any duties or responsibilities in
connection with, any other document or agreement. If in doubt as
to its duties and responsibilities hereunder, Escrow Agent may
consult with counsel of its choice and shall be protected in any
action taken or omitted in connection with the advice or opinion
of such counsel.
If any party to this Agreement disagrees on anything
connected with this escrow (1) Escrow Agent will not have to
settle the matter, (2) Escrow Agent may wait for a settlement by
appropriate legal proceedings or other means it may require, and
in such event it will not be liable for interest or damage, (3)
if Escrow Agent intervenes in or is made a party to any legal
proceedings, it will be entitled to such reasonable compensation
for services, costs and attorney's fees as the court may award
and (4) Escrow Agent is entitled to hold documents and assets
deposited in this escrow pending settlement of the disagreement
by any of the above means.
Escrow Agent is to act as a depositary agent only and is
hereby relieved of any liability in connection with any
representations made by the other parties hereto or any of their
agents. Escrow Agent shall not be responsible for and shall not
be under a duty to examine any other agreement.
Section 12. Indemnification and Fees of Escrow Agent. In
consideration of its acceptance of the appointment as Escrow
Agent, Thermo shall indemnify and hold Escrow Agent harmless as
to any liability incurred by it to any other person, firm or
corporation by reason of its having accepted the same or in
carrying out any of the terms hereof, and to reimburse the Escrow
Agent for all its out-of-pocket expenses, including, among other
things, reasonable counsel fees and court costs, incurred by
reason of its position hereunder or actions taken pursuant
hereto, except in the event of the negligence or willful
misconduct of Escrow Agent. The fees and charges set forth below
for the services of Escrow Agent will be considered compensation
for Escrow Agent's ordinary services as contemplated by this
Agreement. In the event the conditions of the escrow are not
promptly fulfilled or Escrow Agent renders any service not
provided for in this Agreement or there is any assignment of any
interest in the subject matter of this escrow or modification of
any interest or if any controversy arises in connection with it,
Escrow Agent will be reasonably compensated for such
extraordinary services, and will be reimbursed for all reasonable
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costs, attorney's fees and expenses occasioned thereby, which
compensation, costs, fees and expenses shall be paid by Thermo.
Escrow Agent's initial acceptance fee is $1,250 and Escrow
Agent's annual fee hereunder is $1,750, which fees are
nonrefundable and shall be paid in advance by Thermo.
Section 13. Resignation of Escrow Agent. Escrow Agent may
resign and be discharged from its duties hereunder at any time by
giving not less than 60 days prior written notice of such
resignation to Thermo and the Shareholder Representative, which
notice shall specify the date when such resignation shall take
effect. Upon such notice, Thermo and the Shareholder
Representative shall appoint a successor escrow agent. If Thermo
and the Shareholder Representative are unable to agree upon a
successor escrow agent within 30 days after such notice, Escrow
Agent may apply to a court of competent jurisdiction for such
appointment. Escrow Agent shall continue to serve until its
successor delivers to Thermo and the Shareholder Representative a
duly executed instrument of acceptance of the terms and
conditions of this Agreement and receives the Escrow Property.
Section 14. Investments. Escrow Agent shall invest the
cash portion of the Escrow Property, if any, in money market
accounts at The First National Bank of Boston. Income from any
such investment shall be held by Escrow Agent, shall be
reinvested in accordance with this Section 14 and shall be
considered part of the Escrow Property.
Section 15. Security Interest. To secure the obligations
that may be owed it hereunder, Thermo shall have a security
interest in the Escrow Property, and for purposes of protection
of an enforceable security interest, possession of the Escrow
Property by the Escrow Agent shall be deemed possession by
Thermo.
Section 16. Notices and Communications. Any notice or
other communications hereunder shall be deemed to have been duly
delivered if delivered by hand or overnight courier service to
the party to whom such notice or other communication is to be
delivered at such party's address set forth below, or sent by
certified or registered mail, return receipt requested, postage
prepaid, as follows:
If to Thermo:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: President
With a copy to:
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Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to CRC, to:
Coleman Research Corporation
201 South Orange Avenue, Suite 1300
Orlando, Florida 32801
Attention: President
With a copy to:
Sirote & Permutt, P.C.
2222 Arlington Avenue, South
P.O. Box 55727
Birmingham, Alabama 35255-5727
Attention: Joseph T. Ritchey, Esquire
and
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to the Shareholder Representative, to:
Thomas J. Coleman
6123 Parawood Drive
Orlando, Florida 32819
If to a Shareholder, to:
At Shareholder's respective address set forth
on Thermo's stock records.
If to Escrow Agent, to:
The First National Bank of Boston
150 Royall Street
Mail Stop 45-02-15
Canton, Massachusetts 02021
Attention: Corporate Trust Division
or to such other address, or to the attention of such other
individual, as any party hereto may designate in writing to the
other parties to this Agreement. Any such notice, request,
demand, consent or other communication shall be deemed to have
been given on the earlier of (i) the date of delivery if by hand
or by overnight courier service or (ii) five days after having
been mailed.
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Section 17. Governing Law. This Agreement shall be
governed by the law of the State of Delaware applicable to
agreements made and to be performed wholly within such
jurisdiction, without regard to the conflicts of laws provisions
thereof. Each of the parties agrees to personal jurisdiction in
any action brought under this Agreement in any court, federal or
state, within the State of Florida having subject matter
jurisdiction over such action. The parties to this Agreement
agree that any suit, action or proceeding arising out of or
relating to this Agreement may be instituted in the United States
District Court located in Orlando, Florida, or, in the absence of
jurisdiction, the Superior Court for Orange County, Florida.
Each party waives any objection which such party may have now or
hereafter to the laying of the venue of any such suit, action or
proceeding, and irrevocably submits to the jurisdiction of any
such court in any such suit, action or proceeding and hereby
agrees that such party cannot contest any judgment rendered
thereby based on lack of jurisdiction, improper venue or
inadequate service of process. The Shareholder Representative
hereby agrees to remain a resident of Florida at his current
address (or as reported in writing to Thermo), unless and until a
successor Shareholder Representative with a Florida residence is
appointed pursuant to documentation acceptable to Thermo.
Section 18. Amendments. This instrument supersedes any and
all prior agreements among the parties with regard to the matters
set forth herein and may not be altered or amended except by a
writing signed by the parties against whom such alteration or
amendment is sought.
Section 19. Waiver. No waiver of any term or provision of
this Agreement shall be effective unless made in a writing signed
by the party against whom the enforcement of the waiver is
sought. No waiver of any term or provision of this Agreement
shall be deemed to be a waiver of any other breach of such term
or provision of this Agreement.
Section 20. Section Headings. The headings in this
Agreement are for the purposes of reference only and shall not
limit or otherwise affect any of the terms or provisions hereof.
Section 21. Successor and Assigns. The rights and
obligations of the parties hereto shall inure to the benefit of
and shall be binding upon the successors and assigns of each of
them; provided, however, that neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto without the prior written consent of
the other parties hereto.
Section 22. Counterparts. This Agreement may be executed
in several identical counterparts each of which when executed by
the parties hereto and delivered shall be an original, but all of
which together shall constitute a single instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
THERMO ELECTRON CORPORATION
By: _______________________________
Title:
COLEMAN RESEARCH CORPORATION
By: _______________________________
Title:
SHAREHOLDER REPRESENTATIVE
___________________________________
Thomas J. Coleman
THE FIRST NATIONAL BANK OF BOSTON,
as Escrow Agent
By:________________________________
Title:
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EXHIBIT C
COLEMAN RESEARCH CORPORATION
AFFILIATE AGREEMENT
January __, 1995
Coleman Research Corporation
201 South Orange Avenue, Suite 1300
Orlando, Florida 32801
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Ladies and Gentlemen:
The undersigned Shareholder (the "Shareholder") of Coleman
Research Corporation, a Florida corporation ("CRC"), understands
that CRC has entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated as of January __, 1995 among Thermo
Electron Corporation, a Delaware corporation ("Thermo"), CRC
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Thermo ("Acquisition"), and CRC.
Pursuant to the Merger Agreement Acquisition will merge (the
"Merger") with and into CRC, following which CRC will become a
wholly-owned subsidiary of Thermo. The Merger Agreement provides
that, on the Effective Date of the Merger (as defined in the
Merger Agreement), all of the outstanding shares of capital stock
of CRC will be converted into shares of common stock of Thermo
(the "Thermo Common Stock") in accordance with the applicable
exchange ratio specified in the Merger Agreement.
The Shareholder has been advised that as of the date hereof,
the Shareholder may be deemed to be an "affiliate" of CRC, as the
term "affiliate" is (i) defined for purposes of paragraphs (c)
and (d) of Rule 145 promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933,
as amended (the "Act"), and (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the
Commission.
The Shareholder understands that the representations,
warranties and covenants set forth herein will be relied upon by
Thermo, Acquisition, CRC and other shareholders of CRC, and their
respective counsel and accounting firms.
The Shareholder represents, warrants and agrees with Thermo
and CRC as follows:
1. The Shareholder is the beneficial owner of the shares
of CRC capital stock and options to purchase CRC capital stock
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indicated on the last page hereof (the "CRC Securities"), which
at the date hereof and at all times up until the Effective Date
will be free and clear of any liens, clams, options, charges or
other encumbrances not described on such page. Except for CRC
Securities, the Shareholder does not beneficially own any shares
of capital stock of CRC or any other equity securities of CRC or
any other options, warrants or other rights to acquire any equity
securities of CRC. The Shareholder has full power and authority
to make, enter into and carry out the terms of this Agreement.
2. The Shareholder has been advised that the issuance of
shares of Thermo Common Stock to the Shareholder (the "Thermo
Shares") in connection with the Merger has been or will be
registered with the Commission under the Act on a Registration
Statement on Form S-4. However, the Shareholder has also been
advised that, since at the time the Merger is to be submitted for
a vote of the shareholders of CRC the Shareholder may be deemed
to be an affiliate of CRC and the distribution by the Shareholder
of any Thermo Shares will not have been registered under the Act,
the Shareholder may not sell, transfer or otherwise dispose of
the Thermo Shares unless (i) such sale, transfer or other
disposition has been registered under the Act, (ii) such sale,
transfer or other disposition is made in compliance with Rule 145
promulgated by the Commission under the Act, or (iii) such sale,
transfer or other disposition is otherwise exempt from
registration under the Act.
3. The Shareholder shall not make any sale, transfer or
other disposition of the Thermo Shares in violation of the Act or
the rules and regulations promulgated thereunder.
4. The Shareholder understands that Thermo is under no
obligation to register the sale, transfer or other disposition of
the Thermo Shares, or Thermo Common Stock held on the
Shareholder's behalf, under the Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
5. Notwithstanding any other provision hereof to the
contrary, during the period commencing on the date hereof and
ending at such time as financial results covering at least thirty
days of combined operations of CRC and Thermo have been published
by Thermo in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a
report to the Commission on Form 10-K, 10-Q or 8-K, or any other
public filing or announcement which includes the combined results
of operations of Thermo and CRC, the Shareholder will not sell,
transfer or otherwise dispose of, or offer or agree to sell,
transfer or otherwise dispose of, or in any other way reduce the
risk of the Shareholder's ownership of or investment in, any CRC
Securities, any shares of CRC common stock or other equity
securities of CRC which the Shareholder purchases or acquires
after the execution of this Agreement, the Thermo Shares or any
securities which may be paid as a dividend or otherwise
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<PAGE>
distributed thereon or with respect thereto or issued or
delivered in exchange or substitution therefor (all such shares
and other securities being referred to herein, collectively, as
"Restricted Securities"), or any option, right or other interest
with respect to any Restricted Securities. Without limiting the
foregoing, the Shareholder acknowledges that such restriction
prohibits the acquisition of a "put" option or other hedging
instrument with respect to Thermo common stock. The Shareholder
does not own, and has never owned, any Thermo Common Stock or
securities relating thereto.
6. Stock transfer instructions will be given to Thermo's
transfer agent with respect to the Thermo Shares and there will
be placed on the certificates for the Thermo Shares, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued
in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares
represented by this certificate may only be transferred
in accordance with the terms of an agreement dated as
of January __, 1995 between the registered holder
hereof and Thermo Electron Corporation, a copy of which
agreement is on file at the principal offices of Thermo
Electron Corporation.
7. Unless the transfer by the Shareholder of the Thermo
Shares has been registered under the Act, or is a sale made in
compliance with Rule 145, Thermo reserves the right to put a
legend on the certificates issued to any transferee of the
Shareholder stating in substance:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and
were acquired from a person who received such shares in
a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares may not be
sold, pledged or otherwise transferred except in
accordance with an exemption from the registration
requirements of the Securities Act of 1933."
8. The legends set forth in paragraphs 6 and 7 above shall
be removed by delivery of substitute certificates without the
applicable legend if, in the opinion of counsel to Thermo, (a)
such legend is not required for purposes of the Act or (b) the
sale or other disposition of the shares evidenced by the
certificate is permitted by the provisions of Rule 145(d)). In
any event, such legend may be removed upon request of the
Shareholder no later than two years after the Merger is
consummated, unless the Shareholder is then an "affiliate" of
Thermo within the meaning of Rule 145(d).
9. At every meeting of the shareholders of CRC called with
respect to any of the following, and at every adjournment
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thereof, and on every action or approval by written consent of
the shareholders of CRC with respect to any of the following, the
Shareholder shall vote all his CRC Shares: (i) in favor of
approval of the Merger Agreement and the Merger and any matter
that could reasonably be expected to facilitate the Merger; and
(ii) against approval of any proposal made in opposition to or
competition with consummation of the Merger (the foregoing is
hereinafter referred to as an "Opposing Proposal").
10. Except as required by law, including actions which
Shareholder determines after consultation with legal counsel are
required pursuant to Shareholder's fiduciary duties under
applicable law, Shareholder will not, and will not permit any
entity under Shareholder's control to: (i) solicit proxies or
become a "participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the Exchange Act) with respect to
an Opposing Proposal; (ii) initiate a shareholders' vote or
action by consent of CRC shareholders with respect to an Opposing
Proposal; or (ii) become a member of a "group" (as such term is
used in Section 13(d) of the Exchange Act) with respect to any
voting securities of CRC, in connection with an Opposing
Proposal.
11. The Shareholder hereby covenants and agrees to execute
and deliver any additional documents necessary or desirable, in
the opinion of Thermo, to carry out the intent of this Agreement.
12. Miscellaneous.
12.1 If any term, provisions, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, all other terms, provisions,
covenants and restrictions of this Agreement shall nevertheless
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
12.2 This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns,
but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of
the parties hereto may be assigned by either of the parties
without the prior written consent of the other.
12.3 This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of
a written agreement executed by the parties hereto.
12.4 The parties hereto acknowledge that Thermo will
be irreparably harmed and that there will be no adequate remedy
at law for a violation of any of the covenants or agreements of
Shareholder set forth herein. Therefore, it is agreed that, in
addition to any other remedies that may be available to Thermo
upon any such violation, Thermo shall have the right to enforce
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<PAGE>
such covenants and agreements by specific performance, injunctive
relief or by any other means available to Thermo at law or in
equity.
12.5 All notices, requests, claims,, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by cable, telegram or telex, or sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or overnight courier (prepaid) to the respective
parties as follows:
If to CRC: Coleman Research Corporation
201 South Orange Avenue, Suite 1300
Orlando, FL 32801
Attention: President
with a copy to: Sirote & Permutt, P.C.
2222 Arlington Avenue South
P.O. Box 55727
Birmingham, Alabama 35255-5727
Attention: Joseph T. Ritchey, Esquire
and to: Thermo Electron Corporation
81 Wyman Street
Waltham, MA 02254
Attention: General Counsesl
If to Shareholder: to the address set forth on the last page
hereof
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall only be effective upon receipt.
12.6 This Agreement contains the entire understanding
of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the
parties with respect to such subject matter.
12.7 This Agreement may be executed in several
counterparts, each of which shall be an original, but all of
which together shall constitute one and the same agreement.
13. Thermo agrees to publish, as promptly as practicable
following the Merger, results covering at least thirty days of
combined operations of Thermo and CRC in the form of a quarterly
earnings report, an effective registration statement filed with
the Commission, a report to the Commission on Form 10-K, 10-Q or
8-K, or any other public filing or announcement which includes
the combined results of operations of Thermo and CRC; provided,
however, that Thermo shall be under no obligation to publish any
such financial information other than with respect to a fiscal
quarter of Thermo.
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Very truly yours,
______________________________
(Print Shareholder's Name)
By: __________________________
Title: _______________________
(if applicable)
Shareholders' Address:
______________________________
______________________________
______________________________
Number of shares of CRC Common Stock
beneficially owned by the
Shareholder: ___________
Number of shares of CRC Common Stock
subject to options beneficially
owned by the Shareholder: ______________
Encumbrances: _______________________
Accepted this ____ day
of ____________, 1995
COLEMAN RESEARCH CORPORATION
By:_____________________________
Title:____________________________
Accepted this ____ day
of ___________, 1995
THERMO ELECTRON CORPORATION
By: _____________________________
Title:
----------------------------
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EXHIBIT E
NONCOMPETITION AGREEMENT
NONCOMPETITION AGREEMENT, dated as of February __, 1995, by
and among Thermo Electron Corporation, a Delaware corporation
("Thermo"), Coleman Research Corporation, a Florida corporation
("CRC"), and Thomas J. Coleman ("Coleman").
WHEREAS, Thermo and CRC have entered into an Agreement and
Plan of Merger dated January __, 1995 (the "Merger Agreement"),
contemplating the acquisition by Thermo or its subsidiary of all
of the issued and outstanding shares of capital stock of CRC; and
WHEREAS, the execution and delivery of this Agreement is a
condition precedent to the obligation of Thermo to consummate the
transactions contemplated by the Merger Agreement; and
WHEREAS, to induce Thermo to consummate the transactions
contemplated in the Merger Agreement, Coleman is willing to agree
to not compete with Thermo and CRC on the terms contained herein;
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by all parties, the parties hereto
hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein
which are defined in the Merger Agreement but not defined herein
shall have the same meanings herein as therein.
Section 2. Termination of Employment; Resignation as
Director and Officer. Effective as of the Closing Date,
Coleman's employment with CRC shall terminate. In addition, as
of the Closing Date, Coleman shall resign as sole Director of CRC
and as Chairman of the Board and from all offices he may hold in
CRC.
Section 3. Noncompetition by Coleman. Coleman agrees that
for a period of three years after the Closing Date, he will not,
either alone or as a partner, shareholder, officer, director,
advisor, consultant or employee of, or as to, any company or any
other organization or enterprise, directly or indirectly, engage
in any activity in the United States relating to the development,
marketing or sale of any product or service which competes with
any product or service currently sold by CRC, currently under
development by CRC, or which CRC may offer or develop in the
future (collectively, the "CRC Services"). The CRC Services
include, without limitation, systems integration, systems
engineering and analytical services to government and commercial
customers in the fields of information technology, energy and the
environment, software engineering, launch systems, advanced radar
and imaging and health systems, but do not include the materials
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research products and services under development by Coleman
Laboratories Ltd. in conjunction with Dr. Mohammad Katoot and MK
Industries. Notwithstanding the foregoing, it is not Thermo's
intent to interfere with Coleman establishing or participating in
a systems engineering business (the "Business") providing
services similar to those of CRC as long as the Business does not
compete with CRC and is not, in the sole judgment of CRC, in
conflict with the best interests of CRC during the period of
noncompetition set forth above. For purposes of the preceding
sentence, neither Coleman nor the Business will be deemed to be
competing with CRC if:
(a) neither Coleman nor the Business takes any action
to encourage any party to place restrictions (e.g., small
business set aside restrictions) on procurements in which
CRC has an interest in participating and in which such
restrictions would be, in the sole judgment of CRC, not in
the best interests of CRC; or
(b) Coleman and/or the Business participate as a prime
contractor or as a subcontractor on any procurement in which
CRC does not intend to participate either as a prime
contractor or as a subcontractor; or
(c) Coleman and/or the Business bid on any Small
Business Innovative Research contracts, irrespective of
whether CRC intends to participate in such a bid as a
subcontractor to another eligible bidder.
Notwithstanding the foregoing, Coleman may, solely as an
investment, own securities of any such competing company that is
traded on a recognized securities exchange if he does not,
directly or indirectly, own one percent (1%) or more of any class
of securities of any such competing company (other than Thermo).
Without limiting the generality of the first sentence of this
Section 3, during the period of noncompetition set forth above,
Coleman shall not (i) divert or attempt to divert (by
solicitation or by any other means) any customers of CRC to any
competitor of CRC, or (ii) hire, solicit, interfere with or
endeavor to entice away any officer or employee of CRC or in any
matter encourage any officer or employee of CRC to leave its
employ; except that he may solicit Harriett C. Coleman, Michael
Coleman, Benjamin Patz and Cynthia Patz to leave the employ of
CRC.
If this Section 3 or any portion hereof shall be determined
by a court of competent jurisdiction to be unenforceable by
reason of its extending for too great a period of time or over
too large a geographic area or over too great a range of
activities, it shall be interpreted to extend only over the
maximum period of time, geographic area or range of activities as
to which it may be enforceable.
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Coleman agrees that damages are an inadequate remedy for any
breach of this Section 3 and that Thermo shall, whether or not it
is pursuing any potential remedies at law, be entitled to
equitable relief in the form of preliminary and permanent
injunctions without bond or other security in the event it claims
any actual or threatened breach hereof.
Section 4. Notices and Communications. Any notices or
other communications hereunder shall be deemed to have been duly
delivered if delivered by hand or overnight courier service to
the party to whom such notice or other communication is to be
delivered at such parties' address set forth below, or sent by
certified or registered mail, return receipt requested, postage
pre-paid as follows:
If to Thermo, to:
Thermo Electron Corporation
81 Wyman Street
Waltham, MA 02254-9046
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to the CRC, to:
Coleman Research Corporation
201 South Orange Avenue, Suite 1300
Orlando, Florida 32801
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, MA 02254
Attn.: General Counsel
If to Coleman, to:
Thomas J. Coleman
6123 Parawood Drive
Orlando, Florida 32819
With a copy to:
Sirote & Permutt, P.C.
2222 Arlington Avenue South
P.O. Box 55727
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Birmingham, Alabama 35255-5727
Attention: Joseph T. Ritchey, Esquire
or to such other address, or to the attention of such other
individual, as any party hereto may designate in writing to the
other parties to this Agreement. Any such notice, request,
demand, consent or other communication shall be deemed to have
been given on the earlier of (i) the date of delivery if by hand
or by overnight courier service, or (ii) five (5) days after
having been mailed.
Section 5. Governing Law. This Agreement shall be
governed by the law of the State of Florida applicable to
agreements made and to be performed wholly within such
jurisdiction, without regard to the conflicts of laws provisions
thereof. Each of the parties agrees to personal jurisdiction in
any action brought under this Agreement in any court, federal or
state, within the State of Florida having subject matter
jurisdiction over such action. The parties to this Agreement
agree that any suit, action or proceeding arising out of or
relating to this Agreement may be instituted in the United States
District Court located in Orlando, Florida, or, in the absence of
jurisdiction, the Superior Court for Orange County, Florida.
Each party waives any objection which such party may have now or
hereafter to the laying of the venue of any such suit, action or
proceeding, and irrevocably submits to the jurisdiction of any
such court in any such suit, action or proceeding and hereby
agrees that such party cannot contest any judgment rendered
thereby based on lack of jurisdiction, improper venue or
inadequate service of process. In the event litigation is
maintained by a party to this Agreement against any other party,
then the prevailing party in such litigation shall be entitled to
recover from the non-prevailing party reasonable attorneys' fees
and costs of suit.
Section 6. Amendments. This instrument supersedes any and
all prior agreements among the parties with regard to the matters
set forth herein and may not be altered or amended except by a
writing signed by the parties against whom such alteration or
amendment is sought.
Section 7. Waiver. No waiver of any term or provision of
this Agreement shall be effective unless made in a writing signed
by the party against whom the enforcement of the waiver is
sought. No waiver of any term or provision of this Agreement
shall be deemed to be a waiver of any other breach of such term
or provision of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
THERMO ELECTRON CORPORATION
By: _______________________________
Title:
COLEMAN RESEARCH CORPORATION
By: _______________________________
Title:
___________________________________
APPENDIX II
STATE OF FLORIDA
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
COLEMAN RESEARCH CORPORATION
(BY VOTE OF SHAREHOLDERS)
Pursuant to Sections 607.1006 and 607.1007 of the Florida
Business Corporation Act, the undersigned corporation hereby
adopts these Amended and Restated Articles of Incorporation.
ARTICLE I - NAME
The name of this corporation is COLEMAN RESEARCH
CORPORATION.
ARTICLE II - DURATION
This Corporation shall have perpetual existence.
ARTICLE III - PURPOSE
This Corporation is organized for the following purposes:
1. To operate a business engaged in studies, consultation,
planning, engineering and other support efforts of a high
technology nature involving defense, space, energy, and similar
programs; to operate necessary facilities in support of such
activities and to carry on any and all operations related
thereto.
2. To transact any and all lawful business.
ARTICLE IV - POWERS
This corporation shall have all of the corporate powers
enumerated in the Florida Business Corporation Act.
ARTICLE V - CAPITAL STOCK
(a) The total number of shares which the Corporation shall
have authority to issue is 50,000,000 shares of Common of the par
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value of $.001 per share, constituting a total authorized capital
of $50,000, and consisting of such one class only.
(b) Except as otherwise provided by law or in the by-laws
of the corporation, the entire voting power for the election of
directors and for all other purposes shall be vested exclusively
in the holders of the outstanding Common Stock of the
corporation, and each shareholder shall have one vote per share
of Common Stock.
ARTICLE VI - PRE-EMPTIVE RIGHTS
The shareholders of this corporation shall have no
preemptive right to acquire unissued or treasury shares of the
corporation or securities of the corporation convertible into or
carrying a right to subscribe to or acquire shares.
ARTICLE VII - REGISTERED OFFICE AND AGENT
The street address of the registered office of this
corporation is 201 South Orange Avenue, Suite 1300, Orlando,
Florida 32801, and the name of the registered agent of this
corporation at that address is THOMAS JEFFERSON COLEMAN.
ARTICLE VIII - INITIAL BOARD OF DIRECTORS
This article has been deleted and no substitution made.
ARTICLE IX - INCORPORATOR
The name and address of the person signing the initial
articles of incorporation was:
Thomas Jefferson Coleman
6123 Tarawood Drive
Orlando, FL 32811
ARTICLE X - BY-LAWS
The power to adopt, alter, amend or repeal by-laws shall be
vested in the Board of Directors and the shareholders.
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ARTICLE XI - OFFICERS
The officers of the corporation shall be a president and
such other officers as shall be determined by the Board of
Directors.
The Board of Directors may provide for the election or
appointment and prescribe the duties of all officers and agents
as the board may deem desirable and proper, and may take such
action not inconsistent with the Articles of Incorporation and
the by-laws of the corporation and the laws of the State of
Florida as such board may deem advisable for the conduct and
operation of the business of the corporation.
ARTICLE XII - MEETINGS
Meetings of shareholders and directors, including the time,
place, and manner of calling such meetings, shall be fixed by the
by-laws of the corporation.
ARTICLE XIII - AMENDMENT
This corporation reserves the right to amend or repeal any
provisions contained in these Articles of Incorporation, or any
amendment hereto, and any right conferred upon the shareholders
is subject to this reservation.
ARTICLE XIV - STOCK RESTRICTION
This article has been deleted and no substitution made.
- - - - - - - - - - - - -
The Articles of Incorporation, as amended, have been further
amended by these Amended and Restated Articles of Incorporation
as follows:
(1) Article VII has been amended to reflect the current
address of the registered office and registered agent, which
amendment does not require shareholder approval.
(2) Article VIII setting forth the names and addresses of
the initial directors has been deleted in its entirety and no
substitution made, which amendment does not require shareholder
approval.
(3) Article XIV restricting stock ownership to employees of
the Corporation, the Corporation, a trust qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended, or the
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Coleman Family has been deleted in its entirety and no
substitution made, which amendment could be deemed to require
shareholder approval.
The amendments to the Articles of Incorporation of the
Corporation set forth above were adopted on the _____ day of
________________, 1995, by a vote of the Board of Directors and
the Common shareholders of the Corporation, on which date there
were _________________________ shares outstanding and entitled to
vote thereon; and the number of votes cast for the amendments by
the shareholders was sufficient for approval.
Signed this _____ day of _____________________, 1995.
COLEMAN RESEARCH CORPORATION
By____________________________
James B. Morrison
President
By____________________________
Harriett C. Coleman
Secretary
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VERIFICATION
I, the undersigned, as President of Coleman Research
Corporation, do hereby verify that the above and foregoing
instrument represents an amendment to the Articles of
Incorporation of Coleman Research Corporation, a Florida
corporation, as set forth in these Amended and Restated Articles
of Incorporation, duly approved and adopted by a vote of the
directors and the shareholders of the Corporation and that the
statements contained therein are true and correct.
This _____ day of _____________________, 1995.
_______________________________
James B. Morrison,
President
Sworn to and subscribed before me on this _____ day of
________________, 1995.
________________________________
Notary Public
My Commission Expires:
-----------------------
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APPENDIX III
A G R E E M E N T
THIS AGREEMENT is made on this the _____ day of
________________, 1995, by and among COLEMAN RESEARCH
CORPORATION, a Florida corporation, of 201 South Orange Avenue,
Suite 1300, Orlando, Florida 32801 (hereinafter referred to as
the "Assignor"), and COLEMAN LABORATORIES, LTD., a Florida
limited partnership, of 5885 Lakehurst Drive, Orlando, Florida
32819 (hereinafter referred to as the "Assignee"), as follows:
WITNESSETH:
WHEREAS, on January 6, 1992, Assignor entered into an
agreement, as amended on January 30, 1992, with Mohammad Walid
Katoot, doing business as MK Industries, Inc., a Florida
corporation (hereinafter "Katoot"), in connection with the
development and exploitation of a unique approach for the
synthesis of a new class of materials having extraordinary
properties such as high index of refraction, a copy of which
agreement and amendment is attached hereto as Exhibit "A" and
made a part hereof by reference and incorporation (hereinafter
referred to as the "1992 Agreement"); and
WHEREAS, Assignor desires to assign its rights under
the 1992 Agreement and sell the business related thereto to
Assignee; and
WHEREAS, Assignee desires to accept assignment of the
1992 Agreement and the business related thereto and the
obligations in connection therewith;
WHEREAS, Assignor also desires to assign its rights
under the Coleman Laboratories, Ltd/ Coleman Research Corporation
Agreement dated May 26, 1994, a copy of which is attached hereto
as Exhibit "B" and made a part hereof by reference and
incorporation (herein referred to as the "1994 Agreement"); and
WHEREAS, Assignee desires to accept assignment of the
1994 Agreement and the obligations in connection therewith;
NOW, THEREFORE, in consideration of Ten Dollars
($10.00), the premises, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Effective on the Closing Date, Assignor hereby
transfers and assigns to Assignee the 1992 Agreement, together
with all of Assignor's right, title and interest in and to the
1992 Agreement and does hereby grant, bargain, sell and convey
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the business of Assignor related to the 1992 Agreement to
Assignee.
2. Effective on the Closing Date, Assignee hereby
accepts this assignment of the 1992 Agreement and the business
related to the 1992 Agreement and Assignee fully assumes the
obligations of the Assignor as Purchaser under the 1992 Agreement
and assumes all obligations of the business related to the 1992
Agreement. Further, Assignee shall indemnify and hold harmless
Assignor from all claims, liabilities, damages, costs and
expenses, including attorney's fees, which relate to or arise
from the 1992 Agreement or the business related to the 1992
Agreement.
3. Effective on the Closing Date, Assignor hereby
transfers and assigns to Assignee the 1994 Agreement, together
with all of Assignor's right, title, and interest in and to the
1994 Agreement.
4. Effective on the Closing Date, Assignee hereby
accepts this assignment of the 1994 Agreement and fully assumes
the obligations of the Assignor under the 1994 Agreement.
Further, Assignee shall indemnify and hold harmless Assignor from
all claims, liabilities, damages, costs and expenses, including
attorney's fees, which relate to or arise from the 1994
Agreement.
5. The Assignment of the 1992 Agreement, the sale of
the business related to the 1992 Agreement and assignment of the
1994 Agreement is conditioned upon the following:
a. The merger between Assignor and Thermo
Electron Corporation, or one of its
subsidiaries (hereinafter referred to as
the "Merger"); and
b. The approval of the assignment of the
1992 Agreement, the sale of the business
of Assignor related to the 1992
Agreement, and the assignment of the
1994 Agreement by the shareholders of
Assignor, immediately prior to the
Merger.
6. For purposes of this Agreement, the term "Closing
Date" shall mean the date the Merger is effective under the laws
of the State of Florida.
7. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original which
together constitute one and the same instrument.
8. The terms of this Agreement shall be construed
under the laws of the State of Florida.
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9. The parties to this Agreement acknowledge and
agree that no promises, representations, statements, inducements,
or agreements not herein expressed, have been made.
10. Assignor and Assignee agree and acknowledge that
this Agreement constitutes the entire Agreement of the parties,
superseding any prior understandings or agreements, oral or
written, concerning the assignment of the 1992 Agreement, the
sale of the business related to the 1992 Agreement and the
assignment of the 1993 Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.
ASSIGNOR:
COLEMAN RESEARCH CORPORATION,
a Florida corporation
By: _______________________________
James B. Morrison, President
WITNESS
____________________________
ASSIGNEE:
Coleman Laboratories, Ltd.,
a Florida limited partnership
By: Coleman Laboratories, Inc.,
its general partner
By: _______________________________
T.J. Coleman, President
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EXHIBIT A
AMENDMENT TO KATOOT/COLEMAN
RESEARCH CORPORATION AGREEMENT
(ORIGINAL AGREEMENT #92-014)
It is agreed by the parties that payment, in accordance with
paragraph 3, "Financing," of the Katoot/Coleman Research
Corporation Agreement dated 6 January 1992 will be made to OETECH
at 1810 Northwest 6th St., Gainesville, Florida 32609.
All other terms and conditions of original agreement remain
unchanged.
DATED this 30th day of January 1992
COLEMAN RESEARCH CORPORATION
/s/ T. J. Coleman
-----------------------------------
T. J. Coleman
Chairman & CEO
OETECH
/s/ Mohamad Katoot
-----------------------------------
Dr. Mohamad Katoot
DR. MOHAMAD KATOOT
/s/ Mohamad Katoot
-----------------------------------
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KATOOT / COLEMAN RESEARCH CORPORATION AGREEMENT
This agreement, made on the day last signed. between Dr. Mohammad
Walid Katoot (hereinafter, KATOOT), having an address at 50
Oceans Way Dr., Ponce Inlet, FL 32127, and Coleman Research
Corporation (hereinafter CRC), having a business address at 5950
Lakehurst Dr., Orlando, FL 32819.
WHEREAS, KATOOT has a unique approach (hereinafter KA), which he
claims provides him with the capability to synthesize and
develop, using simulations and experiment, a new class of
materials having extraordinary properties such as high index of
refraction.
WHEREAS, CRC is desirous of obtaining rights to this new class of
materials when and if developed.
IN CONSIDERATION of the following, KATOOT and CRC agree as
follows:
1. Development of Materials - KA will be used by KATOOT to
research and develop materials, processes, and products, whether
now or hereafter patented, hereinafter MATERIALS).
2. Steering Committee - A steering committee will be formed
consisting of Dr. Katoot, Dr. Jerry Weinberg, and Mr. T. J.
Coleman. Should Mr. Coleman be unable to serve on this committee
for any reason, he will be replaced by another CRC employee
acceptable to Dr. Katoot and Dr. Weinberg (or their successors).
This committee will provide overall guidance to the application
of the KA Including recommendation such as:
(1) policy,
(2) when and what to patent,
(3) when and if KA Is disclosed,
(4) what and when MATERIALS are developed,
(5) set license and royalty fees (as defined in
paragraph 4.),
(6) negotiate license agreements for COMMERCIAL
MATERIALS, and
(7) select and manage an organization to receive
and distribute license and royalty fees,
(8) set performance criteria.
This committee will decide on any KA-related issues not
covered by this agreement. All decisions on major Issues of this
committee are to be unanimous. It no agreement is reached, the
disagreement will be settled by arbitration.
3. Financing - CRC agrees to pay an amount not to exceed
$150,000 towards development of MATERIALS. It is understood that
additional funds of at least $600,000 will be provided to KATOOT
by others. it is understood that any equipment purchased for use
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in support of the early phase of this research effort will use
CRC-provided funds up to a maximum of $90,000. Equipment
purchased with CRC funds will be owned by CRC and may be
reclaimed by CRC only if this research effort is terminated or
this agreement is breached by KATOOT. KATOOT agrees to maintain
and secure equipment. The remaining CRC funds will be provided to
KATOOT, to expedite development of MATERIAL(S) acceptable to CRC.
Monthly financial and technical progress reports will be
submitted to CRC by KATOOT.
4. License Grants - KATOOT hereby grants to CRC the world-wide
exclusive rights (exclusive to all others, Including, but not
limited to, KATOOT) to use and sell and sub-license without
KATOOT's consent, the use of the following three general classes
of GOVERNMENT MATERIALS: 1) laser materials (except x-ray laser
applications), 2) electromagnetic energy absorbing materials for
stealth applications, and 3) detector/sensor materials.
GOVERNMENT MATERIALS are defined as all MATERIALS used for all
U.S. and foreign military purposes and also for all other
purposes where the ultimate use Is by or for the benefit of the
U.S. Department of Defense or U.S. Department of Energy. CRC may
manufacture these three classes of GOVERNMENT MATERIALS subject
to the prior approval of the steering committee which shall not
be unreasonably withheld.
Also, CRC Is granted world-wide exclusive rights to any
other MATERIALS developed by KATOOT with additional CRC funds.
CRC will put forth Its best efforts to obtain reasonable and fair
license and royalty fees for the use of MATERIALS. CRC guarantees
that a minimum of $15,000 per year In earned royalty fees will be
paid to the disbursing organization, beginning three years after
the effective date of this agreement or the steering committee is
satisfied with CRC's marketing efforts, otherwise CRC will lose
the rights granted herein. When these fees are specified in CRC's
contracts, such that they are readily identifiable, sixty-percent
(60%) of any such direct royalty payments received by CRC will be
retained by CRC and forty percent (40%) will be paid to the
disbursing organization as described in paragraph 2.7) above,
except for MATERIALS that were developed with additional CRC
funds. Fees from these CRC-financed MATERIALS will be shared on a
30% to disbursing organization and 70% to CRC basis. In all other
cases where fees cannot be reasonably Identified (for Instance,
where CRC uses MATERIALS in a CRC product and then sells this
product) any royalties or license fees to be paid by CRC to the
disbursing organization will be negotiated in good faith on a
case-by-case basis. It Is generally understood that these
negotiated fees to be paid by CRC will be forty percent (40%)
(thirty percent when CRC-financed MATERIALS are used) of the
'fair market fees' as best as the steering committee can
determine.
CRC Is also granted the right of first refusal on the use of
all other MATERIALS, including COMMERCIAL MATERIALS. COMMERCIAL
MATERIALS are defined as all MATERIALS that are not GOVERNMENT
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MATERIALS. No licenses are granted for the use of COMMERCIAL
MATERIALS at this time.
5. License and Royalty Fees for COMMERCIAL MATERIALS - The
license and royalty fees for COMMERCIAL MATERIALS will be set by
the steering committee on a case-by-case basis.
6. Marketing - Marketing of MATERIALS will begin when mutually
agreed on a case-by-case basis. CRC is granted the right to use,
in Its marketing, any trademark associated with MATERIALS. It Is
understood that only MATERIALS will be marketed and that the KA
is not to be marketed.
7. Disclosure - KATOOT will document the KA in sufficient
detail so that KATOOT's GOVERNMENT MATERIALS research work on the
three classes of MATERIALS specified in Item 4. can be continued
by CRC In the event that KATOOT is Incapacitated for an extended
period of time or otherwise not performing according to this
agreement. If such an event occurs, CRC agrees to use KA only to
develop GOVERNMENT MATERIALS. This document shall be prepared by
KATOOT within 30 days of the effective date of this agreement,
sealed in a package, and held by a mutually agreed upon third
parry, to be opened and released to CRC only if KATOOT cannot
perform or is obviously not performing. KATOOT may decide at a
later date to disclose KA to CRC, but In any case, the KA is not
to be disclosed to any third party by KATOOT or CRC except by
recommendation of the steering committee. Manufacturing processes
for MATERIALS will be disclosed to third parties only if
MATERIALS are patented.
Employees or other associated persons of either KATOOT or
CRC that work on KA related research and development projects
shall agree in writing to a nondisclosure agreement prior to
commencing such work, and shall be re-informed of their
obligations should any such employee be separated from either
KATOOT or CRC.
8. Best Efforts - KATOOT agrees to put forth his best efforts
in using KA to research and develop MATERIALS that can be
marketed to the benefit of the parties to this agreement. CRC
also agrees to put forth its best efforts to bring these
MATERIALS to the market.
9. Warranties and Representations - KATOOT warrants that KA is
presently unencumbered by any past employment or other technical
development obligations which KATOOT may have been subject to in
the past, and that KATOOT Is freely able to enter into this
agreement and possesses all right and title to KA at the outset.
KATOOT warrants that he is unaware of any patents which will be
infringed by KA or expected MATERIALS. KATOOT warrants that KA
has not been published, made public, or otherwise made known to
any third party. This agreement shall Inure to the benefit of the
parties hereto and all rights of ownership in KA and MATERIALS
shall vest In the parties as described herein.
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10. Successors - This agreement shall be binding and inure to
the benefit of the successors, assigns, and legal representatives
of the respective parties hereto, except that neither party shall
assign any rights nor delegate any duties under this agreement
without the prior written consent, not unreasonably withheld, of
the other party; provided, however, that this agreement shall be
assignable by either party with the assignment, sale, or transfer
of the business to which it pertains.
11. Term and Termination - This agreement shall remain in force
for a period of seventeen years or until termination, whichever
occurs first. The terms of the agreement may be extended by
mutual agreement. The agreement shall be considered automatically
terminated in the event either party is In material breach of the
agreement and does not cure their breach within thirty days of
being notified in writing of the material breach by the other
party. A material breach shall include any breach of a warranty
or representation made in this agreement. In the event of
termination owing to material breach by KATOOT, CRC is under no
obligation whatever to expend additional monies and to whatever
extent MATERIALS has been developed at the time of termination,
ownership rights are as defined herein. In the event of
termination for a breach, all unspent monies and equipment shall
be immediately returned to CRC by KATOOT.
12. Merger and Specified Law - This agreement sets forth the
entire agreement and understanding between the parties and merges
all prior discussions and writings, and none of the parties shall
be bound by any conditions, definitions, warranties,
understandings, or representations other than as expressly
provided herein or as duly set forth on, or subsequent to, the
date hereof In writing and signed by a duly authorized
representative of the party bound thereby. The laws of the State
of Florida shall govern the interpretation of the terms of this
agreement.
13. Miscellaneous - if any provision or provisions of this
agreement shall be held to be illegal, invalid, or unenforceable,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or Impaired thereby.
The headings of the several paragraphs are inserted for
convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this agreement.
Failure of any parry hereto to enforce any of the provisions
of this agreement. or any rights with respect thereto, or failure
to exercise any election provided for herein, shall no way be
considered a waiver of such provisions, rights, or elections, or
in any way effect the validity of this agreement. The failure by
any party hereto to enforce any of provisions, rights, or
elections shall not prejudice that party from later enforcing or
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exercising the same or any other provisions, rights, or elections
which it may have under this agreement.
The owner of any licensed patent shall be responsible for
maintaining such patent and for payment of all maintenance fees.
Nothing contained in this agreement shall be construed as
creating a joint venture, partnership, employment relationship,
or agency relationship between the parties now shall either party
have the right, power, or authority to create any obligation or
duty expressed or implied on behalf of the other.
This agreement will not be binding until it has been signed
herein below by or on behalf of each party, witnessed, and
delivered, in which event, it shall be effective as of the date
last executed. Two originals of this agreement shall be executed,
one to be retained by each party. No amendment or modification
hereof shall be valid or binding upon the parties unless made in
writing and signed as aforesaid.
COLEMAN RESEARCH CORPORATION
/s/ T. J. Coleman /s/___________________________
Signature Witness
T. J. Coleman
6 January 1992
DR. MOHAMMAD WALID KATOOT
/s/ Mohammad W. Katoot /s/_____________________________
Signature Witness
1-6-1991
Date
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EXHIBIT B
COLEMAN LABORATORIES, LTD./COLEMAN RESEARCH CORPORATION
AGREEMENT
This Agreement, made the 26th day of May, 1994, by and between
Coleman Research Corporation (hereinafter "CRC"), a Florida
corporation with a principal business address at 5950 Lakehurst
Dr., Orlando, FL 32819, and COLEMAN LABORATORIES, LTD.
(hereinafter "CL"), a Florida limited partnership having a
principal business address at 5885 Lakehurst Drive, Orlando,
Florida 32819.
WHEREAS, Dr. Mohammad W. Katoot (hereinafter "Katoot") has
developed certain expertise and unique techniques In the area of
synthesizing and developing, through simulations and experiments,
various new and original photonic, radar, solar cell, polymer,
and protein materials having extraordinary properties, such
materials being potentially useful in various government
activities and other high technology fields (such material(s)
hereinafter referred to as the "Material" or "Materials");
WHEREAS, CL has obtained certain rights to Materials to be
developed by Katoot and/or MK Industries (MKI);
WHEREAS, CRC is desirous of obtaining exploitation rights to
certain Materials from CL when developed by Katoot/MKI;
WHEREAS, CL is willing to grant CRC certain exclusive
exploitation rights to Materials when and If developed by Katoot,
UNITEK, and/or MKI, namely, all government applications of
photonic (herein defined) and radar Materials, and all government
applications of all conductive polymer (herein after defined)
Materials (all such rights hereinafter referred to as the "CRC
Materials"), provided CRC provides certain funding (as described
herein at 3(a)) to promote the development of the Materials.
Photonic materials are defined as any materials (except solar
cells) that use, modify, generate, detect, or convert photons as
part of its application(s). Conductive polymer materials are
defined as polymer materials that have a bulk resistivity of less
than or equal to one ohm-centimeter.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth hereinbelow, CL and CRC agree as follows:
1. Grant of License.
CL hereby grants to CRC and CRC accepts an exclusive world-wide
license to further develop, test, analyze, make, use, sell, and
otherwise commercialize or exploit the government applications of
all radar, photonic and conductive polymer materials developed by
Katoot and/or MKI from 6 January 1992 forward. This grant is
exclusive of all third parties, including MKI, and applies to all
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Materials specified herein developed by Katoot and/or MKI,
regardless of the source of funding for the development of the
Materials.
2. Right to Sublicense.
The license granted to CRC in Section 1 hereof includes the right
to grant any third party an exclusive or nonexclusive world-wide
sublicense(s) to any or all CRC Materials. These sublicense(s)
shall include the exclusive rights to further develop, modify,
manufacture, and otherwise commercialize the CRC Materials
consistent with sound and reasonable business practices and
judgment.
3. Research Funding and Royalties.
(a) Funding.
CRC agrees to provide MKI with support for research and
development of the Materials of no less than $363,841, not
Including rent or capital equipment, for calendar year 1994. The
exact amount of such funding will be determined by CRC, in its
sole discretion, based on its evaluation of progress made In the
development of Materials by MKI. Such contribution can be in the
form of cash, labor, equipment, supplies, or other personal
property as determined by CRC. CRC will have the sole discretion
whether or not to provide further funding past 1994. All funds
received by MKI from CRC shall be devoted solely and exclusively
to the research and development of the Materials.
(b) CRC shall pay CL a royalty on all sales or uses of CRC
Materials. These royalties (except for the government
applications of photonic and radar materials) will, in general,
be equal to the royalties that would be paid by an independent
third party under similar circumstances. The amount and nature of
such royalty shall be mutually agreed upon by the parties through
good faith negotiations at the time CRC begins its first use or
sales of materials. For the government applications of photonic
and radar Materials, CRC will pay thirty percent (30%) of the
royalties that would be paid by an independent third party under
similar circumstances.
(c) CRC shall pay all royalties due hereunder on a monthly
basis, by the 16th day of the month immediately following the
month In which the royalty is received or sales are made which
require a payment of royalties under the terms of this agreement.
4. Patent Filing and Expenses.
(a) General.
MKI has the responsibility for diligently pursuing the
preparation, filing, prosecution (including appeals,
interferences, and other ex parte and inter parte proceedings),
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of patent applications and patents on the Materials, throughout
the world. Decisions to patent or not to patent CRC aerials will
be made jointly by MKI, CRC, and CL. Subject to the terms of
Sections 4(b) and (c), MKI shall control and be responsible for
the preparation and prosecution of all such patent applications
and patents, and CRC agrees to assist MKI in connection
therewith. Patent costs, fees, and maintenance will be paid by
CRC. Should CRC choose not to pursue a patent on any CRC Material
and should CL and/or MKI pursue the patent, CRC will pay
one-third of the patent costs or lose the rights to the Materials
as stated herein.
(b) Patent Filings; Cooperation.
During the exclusive license term of this Agreement, CL and CRC
shall cooperate fully in the preparation, filing, prosecution,
and maintenance of all patent applications and patents licensed
hereunder, Including the execution by CRC and CL and its agents
or employees of all necessary papers and Instruments. Each party
shall provide to the other parties prompt notice as to all
matters which come to its attention which may affect the
preparation, filing, prosecution, or maintenance of any such
patent application or patents.
(c) Patent Filings; Licensee's Option to Proceed.
In the event that MKI and/or CL does not proceed to file a patent
application for any CRC Material in any country, CL shall so
inform CRC at least one hundred eighty (180) days prior to the
last date on which a patent application may be filed for that CRC
Material under the relevant patent application statute or law of
that country, and CRC may, at its sole option, proceed to make
such filing at its own expense and in its own name, in which case
CL agrees to assign any patent right in the CRC Material to CRC.
If, pursuant to this Agreement, CL modifies, enhances, or
otherwise exploits the Materials such that the modification or
enhancement is itself patentable, CRC shall have the right to
prosecute patents on such enhancements or modifications in its
own name, and CL agrees to cooperate fully in the preparation,
filing, prosecution, and maintenance of such applications and
patents issued thereunder, including the execution by CL and its
employees or agents of all necessary papers and instruments. Any
decision not to patent any CRC material will be made jointly by
MKI, CRC, and CL.
5. Records and Reporting.
(a) General Bookkeeping.
CRC shall keep, and shall require their affiliates and
sublicensees to keep, accurate and correct records of Materials
sold and of all sublicenses granted under this Agreement, and all
other records appropriate to determine the amount of royalties
and other consideration due hereunder. Such records shall be
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retained for at least three (3) years following a given reporting
period. They shall be available during normal business hours and
at times convenient to CL for inspection in confidence at the
expense of the Inspecting party by an independent Certified
Public Accountant or any similarly qualified Independent person
selected by the inspecting party and approved by CRC, which
approval shall not be unreasonably withheld. Information
disclosed by CRC under this section shall be maintained in
confidence by the inspecting party except to the extent required
by law or regulation.
(b) Reporting.
CRC shall submit to CL within thirty (30) days after
each calendar quarter a report setting forth for the preceding
three (3) month period the sublicenses granted and the amount of
Materials sold by the reporting party, Its affiliates, and
sublicensees in each country, and the amount of royalty or other
consideration due. If no royalties or other consideration are due
to the other party for any reporting period, the written report
shall so state. All such reports shall be maintained in
confidence by the parties, except as required by law or by
regulation.
6. Infringement.
(a) Right to Bring Suits; Adjustments.
If at any time a third party shall infringe or appear
to infringe a patent on CRC Materials issued to Katoot, MKI or CL
in any country, and MKI does not bring suit within ninety (90)
days of learning of such infringement or apparent infringement,
(a) CL may bring suit at CL's expense against such infringer, (b)
if CL does not bring suit within ninety (90) days of learning of
such infringement or apparent infringement, CRC may bring suit at
CRC's expense against such infringer in the name of CRC or in the
name of CL or jointly in the name of CRC and CL if CL is a
legally indispensable party. The party bringing the suit shall
control the prosecution thereof, the other party being entitled
to be represented in such suit by counsel of its own selection at
its own expense. Any recoveries received shall first be applied
to reimburse the litigation costs of the party hereto bringing
the suit, and the balance, if any, shall be shared by the parties
equally.
(b) Suits Required in Owner's Name; Assignment.
If, in exercising its rights under Section 6(a) CRC
decides to sue, and the laws of the jurisdiction or country in
which such suit must be brought require that only the owner of a
patent has standing to bring such a suit such that MKI and/or
Katoot is a legally Indispensable party, CL agrees to require
(under separate agreement) MKI and/or Katoot to assign to CRC all
of its right, title, and interest in the patent or patents
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concerned, subject to all government or third party rights
therein, in which event suit by CRC on such patent or patents
shall thereafter be brought or continued solely in its name. All
other procedures set forth in Section 6(a) shall apply. At the
conclusion of any legal action in which a court or other
authority has issued a final order from which no appeal may be
taken, CRC shall assign back to MKI, CL, and/or Katoot all of the
right, title, and interest in the patents assigned to CRC under
this section.
(c) Defense of Suits and Forced Licenses; Payment of Costs
and Royalties.
If CRC employees or affiliates are sued for
infringement of a third party's patent or for violation by CL,
MKI (or any of its employees) or Katoot of any third party's
rights under any trade secrets laws or similar laws in CL's,
MKI's or Katoot's creation, development, enhancement, or
modification of any Materials, or Is forced to take a license
under any such patent based on the manufacture, sale, or use
hereunder of any Material, the damages, settlement amounts,
judgments, expenses and costs of such suit and/or the royalty
paid for such license, whichever the case may be, shall be paid
for and indemnified jointly and severally by CL. The terms of
this Section 6(c) shall survive the termination of this Agreement
as to that particular Material.
7. Term of Agreement.
The term of the exclusive licenses granted to CL hereunder
shall begin on the date hereof and shall terminate, as to each
respective application of each CRC Material, on the last of the
following to occur:
(a) the expiration of any U.S. Patent issued on such
Material;
(b) the expiration of any U.S. Patent issued for specific
application of the Material;
(c) if neither the Material nor the specific application of
the Material is patented but either is patentable, the expiration
of the period of time that such Material or application would
have been patented had a patent application been submitted to the
U.S. Patent Office within a reasonable time after MKI learned of
facts from which it was reasonable to conclude that the Material
or application was patentable; or
(d) if neither the Material nor the specific application is
patentable, seventeen (17) years from the date the specific
application of the Material is developed.
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8. Termination of Agreement.
If either MKI or CL terminate their agreement as described in
their agreement dated ________________, then:
(a) CRC gives up rights to any future inventions, for which
CRC shall be paid a reasonable compensation to be negotiated In
good faith.
(b) CRC keeps existing rights to all patented and already
developed materials.
(c) All license and royalty-free arrangements remain Intact
with respect to all patented and already developed materials.
9. General.
(a) No Assignment; Binding upon Successors.
Without the prior written approval of the other party,
no party may assign or transfer its interest in or obligations
under this Agreement to any other Individual or entity' except as
defined herein, and any such transfer without approval shall be
null and void. This Agreement shall be binding upon the
successors, legal representatives, and proper assignees of the
parties hereto.
(b) Legal Construction.
The Interpretation and application of the provisions of
the Agreement shall be governed by the laws of the State of
Florida In the United States of America; provided that all
questions concerning the construction or effect of patent
applications and patents shall be decided In accordance with the
laws of the country in which the particular patent application or
patent conceived has been filed or granted as the case may be.
(c) Notices.
Written notices required to be given under this
Agreement shall be deemed delivered upon receipt of a notice of
delivery when sent prepaid by any method which provides for such
receipt addressed as follows:
If to CL: Coleman Laboratories
5885 Lakehurst Dr.
Orlando, Fl 32819
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If to CRC: Coleman Research Corporation
201 S. Orange Ave., Suite 1300
Orlando, FL 32801
or such other addresses as either party may request in writing.
(d) Severability.
Should a court of competent jurisdiction later consider
any provision of this Agreement to be invalid, Illegal, or
unenforceable, it shall be considered severed from this
Agreement. All other provisions, rights and obligations shall
continue without regard to the severed provision, provided that
the remaining provisions of this Agreement are in accordance with
the intention of the parties.
(e) Arbitration.
In the event of any controversy or claims arising out
of or relating to any provision of this Agreement or the breach
thereof, or because of the parties' inability to mutually agree
as contemplated herein, the parties shall attempt to settle such
controversy or claim amicably between themselves. Should they
fail to agree, the matter in dispute shall be settled in the
United States by arbitration in accordance with the rules then
obtaining of the American Arbitration Association (the
"Association"). The Association is authorized to make
arrangements for such arbitration, to be held under its rules in
Orlando, Florida, or such other locality in the United States
agreed upon by the parties. The award through arbitration shall
be final and binding. Any party may enter any such award in a
court having jurisdiction or may make application to such court
for judicial acceptance of the award and an order of enforcement,
as the case may be.
(f) Waiver.
The failure of either party to enforce any term of this
Agreement shall not be deemed to waive its rights to enforce this
Agreement in any respect on any other occasion.
(g) Use of Names and Marks.
No party shall use the trade name(s) of any other party
or its employees or any other party's trademarks, service marks
or any adaptations thereof In any advertising, promotion,
product, or sales materials, Including any offering or financial
materials, without the prior written consent of the other party.
(h) Sole Agreement.
This Agreement constitutes the entire understanding
among the parties and none of the parties shall be obligated by
any condition or representation other than those expressly stated
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herein or as may be subsequently agreed to by the parties hereto
in writing. Katoot specifically acknowledges and agrees that this
Agreement supersedes and cancels the Katoot/Coleman Research
Corporation Agreement, dated January 6,1992.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
on the day and year first above written.
COLEMAN LABORATORIES, LTD.,
By: COLEMAN LABORATORIES, INC.
ATTEST:
/s/B. Patz By /s/ T.J. Coleman
Its Vice President Its President
(General Partner)
COLEMAN RESEARCH CORPORATION
ATTEST:
/s/ Richard Levine By /s/ James B. Morrison
Its Corp. Vice President Its President
APPENDIX IV
SECTIONS 607.1301 THROUGH 607.1320
OF THE FLORIDA BUSINESS CORPORATION ACT
RELATING TO DISSENTERS' RIGHTS
607.1301 DISSENTER'S RIGHTS; DEFINITIONS. The following
definitions apply to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a
dissenting shareholder before the corporate action or the
surviving or acquiring corporation by merger or share exchange of
that issuer.
(2) "Fair value," with respect to a dissenter's shares,
means the value of the shares as of the close of business on the
day prior to the shareholders' authorization date, excluding any
appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on
which the shareholders' vote authorizing the proposed action was
taken, the date on which the corporation received written
consents without a meeting from the requisite number of
shareholders in order to authorize the action, or, in the case of
a merger pursuant to s. 607.1104, the day prior to the date on
which a copy of the plan of merger was mailed to each shareholder
of record of the subsidiary corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT. (1) Any
shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his shares in the event of,
any of the following corporate actions:
(a) Consummation of a plan of merger to which the
corporation is a party:
1. If the shareholder is entitled to vote on the merger,
or
2. If the corporation is a subsidiary that is merged with
its parent under s.607.1104, and the shareholders would have been
entitled to vote on action taken, except for the applicability of
s. 607.1104;
(b) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation, other than
in the usual and regular course of business, if the shareholder
is entitled to vote on the sale or exchange pursuant to s.
607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds of the
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sale will be distributed to the shareholders within 1 year after
the date of sale;
(c) As provided in s. 607.0902(11), the approval of a
control-share acquisition;
(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which
will be acquired, if the shareholder is entitled to vote on the
plan;
(e) Any amendment of the articles of incorporation if the
shareholder is entitled to vote on the amendment and if such
amendment would adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights attached
to any of his shares;
2. Altering or abolishing the voting rights pertaining to
any of his shares, except as such rights may be affected by the
voting rights of new shares then being authorized of any existing
or new class or series of shares;
3. Effecting an exchange, cancellation, or
reclassification of any of his shares, when such exchange,
cancellation, or reclassification would alter or abolish his
voting rights or alter his percentage of equity in the
corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his
redeemable shares, altering or abolishing any provision relating
to any sinking fund for the redemption or purchase of any of his
shares, or making any of his shares subject to redemption when
they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of
any of his preferred shares which had theretofore been
cumulative;
6. Reducing the stated dividend preference of any of his
preferred shares; or
7. Reducing any stated preferential amount payable on any
of his preferred shares upon voluntary or involuntary
liquidation; or
(f) Any corporate action taken, to the extent the articles
of incorporation provide that a voting or nonvoting shareholder
is entitled to dissent and obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified
in paragraph (1)(e) has the right to dissent only as to those of
his shares which are adversely affected by the amendment.
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(3) A shareholder may dissent as to less than all the
shares registered in his name. In that event, his rights shall
be determined as if the shares as to which he has dissented and
his other shares were registered in the names of different
shareholders.
(4) Unless the articles of incorporation otherwise provide,
this section does not apply with respect to a plan of merger or
share exchange or a proposed sale or exchange of property, to the
holders of shares of any class or series which, on the record
date fixed to determine the shareholders entitled to vote at the
meeting of shareholders at which such action is to be acted upon
or to consent to any such action without a meeting, were either
registered on a national securities exchange or designated as a
national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.,
or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment
for his shares under this section may not challenge the corporate
action creating his entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
(1) (a) If a proposed corporate action creating dissenters'
rights under s. 607.1320 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that
shareholders are or may be entitled to assert dissenters' rights
and be accompanied by a copy of ss. 607.1301, 607.1302, and
607.1320. A shareholder who wishes to assert dissenter's rights
shall:
1. Deliver to the corporation before the vote is taken
written notice of his intent to demand payment for his shares if
the proposed action is effectuated, and
2. Not vote his shares in favor of the proposed action. A
proxy or vote against the proposed action does not constitute
such a notice of intent to demand payment.
(b) If proposed corporate action creating dissenters'
rights under s. 607.1302 is effectuated by written consent
without a meeting, the corporation shall deliver a copy of ss.
607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for his written consent or, if
such a request is not made, within 10 days after the date the
corporation received written consents without a meeting from the
requisite number of shareholders necessary to authorize the
action.
(2) Within 10 days after the shareholders' authorization
date, the corporation shall give written notice of such
authorization or consent or adoption of the plan of merger, as
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the case may be, to each shareholder who filed a notice of intent
to demand payment for his shares pursuant to paragraph (1)(a) or,
in the case of action authorized by written consent, to each
shareholder, excepting any who voted for, or consented in writing
to, the proposed action.
(3) Within 20 days after the giving of notice to him, any
shareholder who elects to dissent shall file with the corporation
a notice of such election, stating his name and address, the
number, classes, and series of shares as to which he dissents,
and a demand for payment of the fair value of his shares. Any
shareholder failing to file such election to dissent within the
period set forth shall be bound by the terms of the proposed
corporate action. Any shareholder filing an election to dissent
shall deposit his certificates for certificated shares with the
corporation simultaneously with the filing of the election to
dissent. The corporation may restrict the transfer of
uncertificated shares from the date the shareholder's election to
dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the
shareholder shall thereafter be entitled only to payment as
provided in this section and shall not be entitled to vote or to
exercise any other rights of a shareholder. A notice of election
may be withdrawn in writing by the shareholder at any time before
an offer is made by the corporation, as provided in subsection
(5), to pay for his shares. After such offer, such notice of
election may be withdrawn unless the corporation consents
thereto. However, the right of such shareholder to be paid the
fair value of his shares shall cease, and he shall be reinstated
to have all his rights as a shareholder as of the filing of his
notice of election, including any intervening preemptive rights
and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed,
in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time
of such expiration or completion, but without prejudice otherwise
to any corporate proceedings that may have been taken in the
interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded
or the shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair
value by a court has been made or filed within the time provided
in this section; or
(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this
section.
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(5) Within 10 days after the expiration of the period in
which shareholders may file their notices of election to dissent,
or within 10 days after such corporate action is effected,
whichever is later (but in no case later than 90 days from the
shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand
as provided in this section to pay an amount the corporation
estimates to be the fair value for such shares. If the corporate
action has not been consummated before the expiration of the
90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such
action. Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which
the dissenting shareholder holds, as of the latest available date
and not more than 12 months prior to the making of such offer;
and
(b) A profit and loss statement of such corporation for the
12-month period ended on the date of such balance sheet or, if
the corporation was not in existence throughout such 12-month
period, for the portion thereof during which it was in existence.
(6) If within 30 days after the making of such offer any
shareholder accepts the same, payment for his shares shall be
made within 90 days after the making of such offer or the
consummation of the proposed action, whichever is later. Upon
payment of the agreed value, the dissenting shareholder shall
cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the
period specified therefor in subsection (5) or if it makes the
offer and any dissenting shareholder or shareholders fail to
accept the same within the period of 30 days thereafter, then the
corporation, within 30 days after receipt of written demand from
any dissenting shareholder given within 60 days after the date on
which such corporate action was effected, shall, or at its
election at any time within such period of 60 days may, file an
action in any court of competent jurisdiction in the county in
this state where the registered office of the corporation is
located requesting that the fair value of such shares be
determined. The court shall also determine whether each
dissenting shareholder, as to whom the corporation requests the
court to make such determination, is entitled to receive payment
for his shares. If the corporation fails to institute the
proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders
(whether or not residents of this state), other than shareholders
who have agreed with the corporation as to the value of their
shares, shall be made parties to the proceeding as an action
against their shares. The corporation shall serve a copy of the
initial pleading in such proceeding upon each dissenting
shareholder who is a resident of this state in the manner
provided by law for the service of a summons and complaint and
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upon each nonresident dissenting shareholder either by registered
or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and
exclusive. All shareholders who are proper parties to the
proceeding are entitled to judgment against the corporation for
the amount of the fair value of their shares. The court may, if
it so elects, appoint one or more persons as appraisers to
receive evidence and recommend a decision on the question of fair
value. The appraisers shall have such power and authority as is
specified in the order of their appointment or an amendment
thereof. The corporation shall pay each dissenting shareholder
the amount found to be due him within 10 days after the final
determination of the proceedings. Upon payment of the judgment,
the dissenting shareholder shall cease to have any interest in
such shares.
(8) The judgment may, at the discretion of the court,
include a fair rate of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be
determined by the court and shall be assessed against the
corporation, but all or any part of such costs and expenses may
be apportioned and assessed as the court deems equitable against
any or all of the dissenting shareholders who are parties to the
proceeding, to whom the corporation has made an offer to pay for
the shares, if the court finds that the action of such
shareholders in failing to accept such offer was arbitrary,
vexatious, or not in good faith. Such expenses shall include
reasonable compensation for, and reasonable expenses of, the
appraisers, but shall exclude the fees and expenses of counsel
for, and experts employed by, any party. If the fair value of
the shares, as determined, materially exceeds the amount which
the corporation offered to pay therefor or if no offer was made,
the court in its discretion may award to any shareholder who is a
party to the proceeding such sum as the court determines to be
reasonable compensation to any attorney or expert employed by the
shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of
the agreed value thereof or pursuant to payment of the judgment
entered therefor, as provided in this section, may be held and
disposed of by such corporation as authorized but unissued shares
of the corporation, except that, in the case of a merger, they
may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the
shares of such dissenting shareholders would have been converted
had they assented to the merger shall have the status of
authorized but unissued shares of the surviving corporation.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware, as amended, gives Delaware corporations the power to
indemnify each of their present and former directors or officers
under certain circumstances, if such person acted in good faith
and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation.
Article Thirteenth of the Registrant's Amended and Restated
Certificate of Incorporation provides that no director of the
Registrant shall be liable for any breach of fiduciary duty,
except to the extent that the Delaware General Corporation Law
prohibits the elimination or limitation of liability of directors
for breach of fiduciary duty.
Article Ninth of the Registrant's Amended and Restated
Certificate of Incorporation provides that a director or officer
of the Registrant (a) shall be indemnified by the Registrant
against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement incurred in connection with
any litigation or other legal proceeding (other than action by or
in the right of the Registrant) brought against him by virtue of
his position as a director or officer of the Registrant if he
acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the Registrant and
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (b)
shall be indemnified by the Registrant against all expenses
(including attorneys' fees) and amounts paid in settlement
incurred in connection with any action by or in the right of the
Registrant brought against him by virtue of his position as a
director of officer of the Registrant if he acted in good faith
and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Registrant, except that no
indemnification shall be made with respect to any matter as to
which such person shall have been adjudged to be liable to the
Registrant, unless a court determines that, despite such
adjudication but in view of all of the circumstances, he is
entitled to indemnification of such expenses. Notwithstanding
the foregoing, to the extent that a director or officer has been
successful, on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, he is
required to be indemnified by the Registrant against all expenses
(including attorneys' fees) incurred in connection therewith.
Expenses may be advanced to a director or officer at his request,
provided that he undertakes to repay the amount advanced if it is
ultimately determined that he is not entitled to indemnification
for such expenses. Indemnification shall be made by the
Registrant (unless ordered by a court) only upon a determination
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that the applicable standard of conduct required for
indemnification has been met. Article Ninth of the Registrant's
Amended and Restated Certificate of Incorporation further
provides that the indemnification provided therein is not
exclusive. The Registrant has indemnification agreements with
its directors and officers that provide for the maximum
indemnification allowed by law.
The Registrant maintains officers' and directors' insurance
covering certain liabilities that may be incurred by officers and
directors in the performance of their duties.
Item 21. Exhibits and Financial Statement Schedules.
See the Exhibit Index included immediately preceding the
exhibits to this Registration Statement.
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
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The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed to be
underwriters, in addition to the information called for by the
other Items of the applicable form.
The Registrant undertakes that every prospectus (i) that is
filed pursuant to the immediately preceding undertaking or (ii)
that purports to meet the requirements of section 10(a)(3) of the
Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
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The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the
registration statement through the date of responding to the
request.
The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Waltham, Commonwealth of
Massachusetts, on this 29th day of December, 1994.
THERMO ELECTRON CORPORATION
By: /s/ George N. Hatsopoulos
George N. Hatsopoulos,
President and Chief
Executive Officer
POWER OF ATTORNEY
Each of the undersigned Directors and Officers of Thermo
Electron Corporation hereby appoints John N. Hatsopoulos, Paul F.
Kelleher, Jonathan W. Painter, Seth H. Hoogasian and Sandra L.
Lambert, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
Signature Title Date
/s/ George N. Hatsopoulos President, Chief
George N. Hatsopoulos Executive Officer, December 29, 1994
Chairman of the
Board of Directors
/s/ John N. Hatsopoulos Executive Vice December 29, 1994
John N. Hatsopoulos President and
Chief Financial Officer
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/s/ Paul F. Kelleher Vice President, December 29, 1994
Paul F. Kelleher Finance (Chief
Accounting Officer)
/s/ John M. Albertine Director December 29, 1994
John M. Albertine
/s/ Peter O. Crisp Director December 29, 1994
Peter O. Crisp
/s/ Elias P. Gyftopoulos Director December 29, 1994
Elias P. Gyftopoulos
/s/ Frank Jungers Director December 29, 1994
Frank Jungers
/s/ Robert A. McCabe Director December 29, 1994
Robert A. McCabe
/s/ Frank E. Morris Director December 29, 1994
Frank E. Morris
/s/ Donald E. Noble Director December 29, 1994
Donald E. Noble
/s/ Hutham S. Olayan Director December 29, 1994
Hutham S. Olayan
/s/ Roger D. Wellington Director December 29, 1994
Roger D. Wellington
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EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page No.
2.1 Agreement and Plan of Merger dated
as of January __, 1995, among
Coleman Research Corporation, Thermo
Electron Corporation and CRC
Acquisition Corp., including the
principal exhibits thereto. Schedules
to the Agreement and Plan of Merger are
not filed, but will be provided
supplementally to the Commission
upon request. _____
4.1 Rights Agreement, dated as of May 4,
1988 between Thermo Electron
Corporation and The First National
Bank of Boston, which includes as
Exhibit A the Form of Certificate of
Designations, as Exhibit B the Form of
Rights Certificate, and as Exhibit C
the Summary of Rights to Purchase
Preferred Stock (incorporated by
reference to Exhibit No. 1 to the
Registrant's Registration Statement
on Form 8-A, declared effective by
the Commission on June 25, 1988,
as amended).
5.1* Opinion of Seth H. Hoogasian, Esq.
8.1* Opinion of Sirote & Permutt, P.C.
23.1 Consent of Arthur Andersen & Co. _____
23.2 Consent of Thomas, Beck & Zurcher, P.A. _____
23.3 Consent of Seth H. Hoogasian, Esq.
(contained in Exhibit 5.1)
23.4 Consent of Sirote & Permutt, P.C.
(contained in Exhibit 8.1)
24.1 Power of Attorney (see page II - 4
of this Registration Statement) _____
99.1 Form of Proxy for Special Meeting
of Shareholders _____
__________
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form
S-4 of our report dated February 17, 1994 included in Thermo
Electron Corporation's Form 10-K for the year ended January 1,
1994 and to all references to our Firm included in this
registration statement.
Arthur Andersen L.L.P.
Boston, Massachusetts
December 30, 1994
EXHIBIT 23.2
CONSENT OF THOMAS, BECK & ZURCHER, P.A., INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated October 24, 1994, in
this Registration Statement and related Prospectus/Proxy
Statement of Thermo Electron Corporation and Coleman Research
Corporation for the registration of 2,669,158 shares of Common
Stock of Thermo Electron Corporation.
Thomas, Beck & Zurcher, P.A.
Orlando, Florida
EXHIBIT 99.1
COLEMAN RESEARCH CORPORATION
201 South Orange Avenue
Suite 1300
Orlando, Florida, 32801
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Thomas J. Coleman, James B.
Morrison and Richard H. Levine, and each of them, proxies of the
undersigned, each with power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated
below, all the shares of common stock of Coleman Research
Corporation ("CRC") held of record by the undersigned on January
25, 1995, at the Special Meeting of the Shareholders of CRC to be
held at the corporate offices of CRC, located at 201 South Orange
Avenue, Suite 1300, Orlando, Florida 32801, on Thursday,
February 23, 1995, at 11:00 a.m. Eastern Standard Time, and at
any postponement or adjournment thereof, as set forth herein, and
in their discretion upon any other business that may properly
come before the meeting.
______________________________
The Proxy will be voted as specified, or if no choice is
specified, FOR proposals 1, 2 and 3, and as said proxies deem
advisable on such other matters as may properly come before the
meeting.
Management and the Board of Directors recommend a vote
FOR Proposals 1, 2 and 3.
______________________________
1. To Approve and adopt the Agreement and Plan of Merger,
dated January __, 1995, among CRC, Thermo Electron Corporation
("Thermo"), and CRC Acquisition Corp., a wholly owned subsidiary
of Thermo ("Acquisition Corp."), providing, among other things,
for the merger of Acquisition Corp. with and into CRC (the
"Merger") pursuant to which each share of CRC's common stock,
$.001 par value per share, outstanding at the effective time of
the Merger (other than shares with respect to which dissenters'
rights are perfected) will be converted into .1905695 shares of
Thermo's common stock, $1.00 par value per share, and CRC will
become a wholly owned subsidiary of Thermo.
______ ______ ______
For Against Abstain
2. To approve the Amended and Restated Articles of
Incorporation of CRC, which deletes a current provision in CRC's
PAGE
<PAGE>
Articles of Incorporation, as amended, that limits stock
ownership to employees of CRC.
______ ______ ______
For Against Abstain
3. To approve the assignment by CRC of its 49% interest in
Coleman Laboratories, Ltd., a limited partnership ("Coleman
L.P."), to entities related to Thomas J. Coleman or members of
his family and the termination of CRC's relationship with Dr.
Mohammed Katoot and MK Industries Inc. ("MKI") by assigning and
selling to Coleman L.P. CRC's rights under certain agreements
with Dr. Katoot and MKI and certain equipment currently used by
MKI.
______ ______ ______
For Against Abstain
(IMPORTANT - TO BE COMPLETED, SIGNED AND DATED ON REVERSE SIDE)
4. To transact such other business as may property come
before the Special Meeting or any adjournments or postponements
thereof.
(This proxy should be dated, signed by the shareholder(s)
exactly as his or her name appears hereon, and returned promptly
in the enclosed envelope. Persons signing in a fiduciary
capacity should so indicate. If shares are held by joint tenants
or as community property, both should sign.)
Signature: ______________________________ Date: __________
