SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement [ ]Confidential, for
Use of the
Commission
Only (as Permitted by
Rule 14a-6(e)(2))
[ X ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THERMOQUEST CORPORATION
(Name of Registrant as Specified in Charter)
____________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ]No fee required.
[ ]Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies: ______________________________________________
(2) Aggregate number of securities to which transaction
applies: ______________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined): _________________________
(4) Proposed maximum aggregate value of transaction: ______
(5) Total fee paid: _______________________________________
[ ]Fee paid previously with preliminary materials.
[ ]Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
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filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid: _______________________________
(2) Form, Schedule or Registration Statement No.: _________
(3) Filing Party: _________________________________________
(4) Date Filed: ___________________________________________
Notes:
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THERMOQUEST CORPORATION
355 River Oaks Parkway
San Jose, California 95134
April 29, 1997
Dear Stockholder:
The enclosed Notice calls the 1997 Annual Meeting of the
Stockholders of ThermoQuest Corporation. I respectfully request
all Stockholders attend this meeting, if possible.
Our Annual Report for the year ended December 28, 1996, is
enclosed. I hope you will read it carefully. Feel free to forward
any questions you may have if you are unable to be present at the
meeting.
Enclosed with this letter is a proxy authorizing three
officers of the Corporation to vote your shares for you if you do
not attend the meeting. Whether or not you are able to attend the
meeting, I urge you to complete your proxy and return it to our
transfer agent, American Stock Transfer and Trust Company, in the
enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the meeting, either in person or
by proxy.
I would appreciate your immediate attention to the mailing
of this proxy.
Yours very truly,
RICHARD W. K. CHAPMAN
President and Chief Executive
Officer
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THERMOQUEST CORPORATION
355 River Oaks Parkway
San Jose, California 95134
April 29, 1997
To the Holders of the Common Stock of
THERMOQUEST CORPORATION
NOTICE OF ANNUAL MEETING
The 1997 Annual Meeting of the Stockholders of ThermoQuest
Corporation (the "Corporation") will be held on Monday, June 2,
1997, at 10:00 a.m. at The Hyatt Regency Hotel, Hilton Head,
South Carolina. The purpose of the meeting is to consider and
take action upon the following matters:
1. Election of seven directors.
2. A proposal recommended by the Board of Directors to adopt an
employees' stock purchase plan and to reserve 100,000 shares of
the Corporation's Common Stock for issuance thereunder.
3. Such other business as may properly be brought before the
meeting and any adjournment thereof.
The transfer books of the Corporation will not be closed
prior to the meeting, but, pursuant to appropriate action by the
Board of Directors, the record date for the determination of the
Stockholders entitled to notice of and vote at the meeting is
April 7, 1997.
The By-laws require that the holders of a majority of the
stock issued and outstanding and entitled to vote be present or
represented by proxy at the meeting in order to constitute a
quorum for the transaction of business. It is important that your
shares be represented at the meeting regardless of the number of
shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed proxy in the
accompanying envelope, which requires no postage if mailed in the
United States.
This Notice, the proxy and proxy statement enclosed herewith
are sent to you by order of the Board of Directors.
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SANDRA L. LAMBERT
Secretary
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PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of
ThermoQuest Corporation (the "Corporation") for use at the 1997
Annual meeting of the Stockholders (the "meeting") to be held on
Monday, June 2, 1997, at 10:00 a.m. at The Hyatt Regency Hotel,
Hilton Head, South Carolina, and any adjournment thereof. The
mailing address of the executive office of the Corporation is 355
River Oaks Parkway, San Jose, California 95134. This proxy
statement and the enclosed proxy were first furnished to
Stockholders of the Corporation on or about May 2, 1997.
VOTING PROCEDURES
The Board of Directors intends to present to the meeting the
election of seven directors, constituting the entire Board of
Directors, as well as one other matter: a proposal to adopt an
employees' stock purchase plan and to reserve 100,000 shares of
the common stock of the Corporation, $.01 par value ("Common
Stock"), for issuance under the employees' stock purchase plan.
The representation in person or by proxy of a majority of
the outstanding shares of Common Stock entitled to vote at the
meeting is necessary to provide a quorum for the transaction of
business at the meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a
properly signed proxy. Each Stockholder's vote is very important.
Whether or not you plan to attend the meeting in person, please
sign and promptly return the enclosed proxy card, which requires
no postage if mailed in the United States. All signed and
returned proxies will be counted towards establishing a quorum
for the meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with
your instructions. You may specify your choice by marking the
appropriate box on the proxy card. If your proxy card is signed
and returned without specifying choices, your shares will be
voted for the management nominees for directors, for the
management proposal, and as the individuals named as proxy
holders on the proxy deem advisable on all other matters as may
properly come before the meeting.
In order to be elected a director, a nominee must receive
the affirmative vote of a majority of the shares of Common Stock
present and entitled to vote on the election. For the proposal to
adopt the employees' stock purchase plan, the affirmative vote of
a majority of shares present in person or represented by proxy,
and entitled to vote on the matter, is necessary for approval.
Withholding authority to vote for a nominee for director or an
instruction to abstain from voting on the proposal will be
treated as shares present and entitled to vote and, for purposes
of determining the outcome of the vote, will have the same effect
as a vote against the nominee or the proposal. With respect to
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the election of directors and the adoption of the employees'
stock purchase plan, broker "non-votes" will not be treated as
shares present and entitled to vote on a voting matter and will
have no effect on the outcome of the vote. A broker "non-vote"
occurs when a nominee holding shares for a beneficial holder does
not have discretionary voting power and does not receive voting
instructions from the beneficial owner.
A Stockholder who returns a proxy may revoke it at any time
before the Stockholder's shares are voted at the meeting by
written notice to the Secretary of the Corporation received prior
to the meeting, by executing and returning a later-dated proxy or
by voting by ballot at the meeting.
The outstanding stock of the Corporation entitled to vote
(excluding shares held in treasury by the Corporation) as of
April 7, 1997 consisted of 50,218,500 shares of Common Stock.
Only Stockholders of record at the close of business on April 7,
1997 are entitled to vote at the meeting. Each share is entitled
to one vote.
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- PROPOSAL 1 -
ELECTION OF DIRECTORS
Seven directors are to be elected at the meeting, each to
hold office until his successor is chosen and qualified or until
his earlier resignation, death or removal.
Nominees For Directors
Set forth below are the names of the persons nominated as
directors, their ages, their offices in the Corporation, if any,
their principal occupation or employment for the past five years,
the length of their tenure as directors and the names of other
public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the
Corporation's Common Stock and of the common stock of its parent
company, Thermo Instrument Systems Inc. ("Thermo Instrument"), a
manufacturer of analytical, environmental monitoring and process
control instrumentation, and Thermo Instrument's parent company,
Thermo Electron Corporation ("Thermo Electron"), a diversified
high technology company, is reported under the caption "Stock
Ownership." All of the nominees are currently directors of the
Corporation.
Richard W. K. Dr. Chapman, 52, has been the chief
Chapman executive officer, president and a director
of the Corporation since its inception in
June 1995. He served as president of
Finnigan Corporation ("Finnigan"), a
subsidiary of the Corporation, from 1992 to
1995, and as marketing manager of Finnigan
from 1989 to 1995. Dr. Chapman has been a
vice president of Thermo Instrument since
1992. He is also a director of Thermo
BioAnalysis Corporation.
George N. Dr. Hatsopoulos, 70, has been the chairman
Hatsopoulos of the board and a director of the
Corporation since its inception in June
1995. He has served as chairman and chief
executive officer of Thermo Electron since
he founded that company in 1956 and as
president of Thermo Electron from 1956 to
January 1997. Dr. Hatsopoulos is also a
director of Photoelectron Corporation,
Thermo Ecotek Corporation, Thermo Electron,
Thermo Fibertek Inc., Thermo Instrument,
Thermedics Inc., Thermo Optek Corporation
and ThermoTrex Corporation. Dr.
Hatsopoulos is the brother of John N.
Hatsopoulos, the chief financial officer
and a vice president of the Corporation.
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Frank Jungers Mr. Jungers, 69, has been a director of the
Corporation since January 1996. Mr.
Jungers has been a self-employed consultant
on business and energy matters since 1977.
In addition, he was vice chairman of Riedel
Environmental Technologies, Inc. from July
1989 to October 1991 and was president of
that company from January 1989 until July
1989. Mr. Jungers is also a director of
The AES Corporation, Donaldson, Lufkin &
Jenrette, Georgia-Pacific Corporation,
Thermo Electron and Thermo Ecotek
Corporation.
Earl R. Lewis Mr. Lewis, 53, has been a director of the
Corporation since April 1997. Mr. Lewis
has been president and chief operating
officer of Thermo Instrument since March
1997 and January 1996, respectively, was
executive vice president of Thermo
Instrument from January 1996 to March 1997,
was a senior vice president of Thermo
Instrument from January 1994 to January
1996, and was a vice president of Thermo
Instrument from March 1992 to January 1994.
Mr. Lewis also has been chief executive
officer of Thermo Optek Corporation, a
majority-owned subsidiary of Thermo
Instrument, since its inception in August
1995, and was president of Thermo Optek
Corporation from its inception until April
1997. Mr. Lewis is a director of Thermo
BioAnalysis Corporation, Thermo Optek
Corporation, ThermoSpectra Corporation and
Trex Medical Corporation.
Anthony J. Mr. Pellegrino, 56, has been a director of
Pellegrino the Corporation since its inception in June
1995. Mr. Pellegrino has been director of
corporate development of ThermoTrex
Corporation ("ThermoTrex"), a Thermo
Electron subsidiary which, among other
things, manufactures mammography and
needle-biopsy systems and supplies general
x-ray equipment, since March 1997 and was a
senior vice president of that company from
July 1995 to March 1997. For more than
five years prior to 1995, Mr. Pellegrino
served as the chief executive officer and
chairman of LORAD Corporation, a company
acquired in 1992 by ThermoTrex. Mr.
Pellegrino is also a director of ThermoLase
Corporation and Trex Medical Corporation.
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Michael E. Porter Dr. Porter, 49, has been a director of the
Corporation since November 1995. He has
been the C. Roland Christensen Professor of
Business Administration at the Harvard
Business School since 1990, and has held
various teaching positions at the Harvard
Business School since 1973. Dr. Porter is
also a director of Alpha-Beta Technologies
Inc. and Parametric Technologies
Corporation.
Arvin H. Smith Mr. Smith, 67, has been a director of the
Corporation since its inception in June
1995. Mr. Smith has been the chief
executive officer and chairman of the board
of Thermo Instrument since 1986 and March
1997, respectively, and also was the
president of Thermo Instrument from 1986 to
March 1997. He has been an executive vice
president of Thermo Electron since 1991 and
was a senior vice president of Thermo
Electron from 1986 to 1991. Mr. Smith is
also a director of Thermo BioAnalysis
Corporation, Thermo Instrument, Thermo
Power Corporation, ThermoQuest Corporation
and ThermoSpectra Corporation.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee
and a Human Resources Committee, each consisting solely of
outside directors. The present members of the Audit Committee are
Dr. Porter (Chairman) and Mr. Jungers. The Audit Committee
reviews the scope of the audit with the Corporation's independent
public accountants and meets with them for the purpose of
reviewing the results of the audit subsequent to its completion.
The present members of the Human Resources Committee are Mr.
Jungers (Chairman) and Dr. Porter. The Human Resources Committee
reviews the performance of senior members of management,
recommends executive compensation and administers the
Corporation's stock option and other stock-based compensation
plans. The Corporation does not have a nominating committee of
the Board of Directors. The Board of Directors met five times,
the Audit Committee met once and the Human Resources Committee
met six times during fiscal 1996. Each director attended at least
75% of all meetings of the Board of Directors and committees on
which he served held during fiscal 1996.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of any other companies affiliated with Thermo
Electron (also referred to as "outside directors") receive an
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annual retainer of $4,000 and a fee of $1,000 per day for
attending regular meetings of the Board of Directors and $500 per
day for participating in meetings of the Board of Directors held
by means of conference telephone and for participating in certain
meetings of committees of the Board of Directors. Payment of
directors' fees is made quarterly. Dr. Chapman, Dr. Hatsopoulos,
Mr. Lewis, Mr. Pellegrino and Mr. Smith are all employees of
Thermo Electron or its subsidiaries and do not receive any cash
compensation from the Corporation for their services as
directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending such meetings.
Deferred Compensation Plan
Under the Corporation's deferred compensation plan for
directors (the "Deferred Compensation Plan"), a director has the
right to defer receipt of his cash fees until he ceases to serve
as a director, dies or retires from his principal occupation. In
the event of a change in control or proposed change in control of
the Corporation that is not approved by the Board of Directors,
deferred amounts become payable immediately. Either of the
following is deemed to be a change of control: (a) the
occurrence, without the prior approval of the Board of Directors,
of the acquisition, directly or indirectly, by any person of 50%
or more of the outstanding Common Stock or the outstanding common
stock of Thermo Instrument or 25% or more of the outstanding
common stock of Thermo Electron; or (b) the failure of the
persons serving on the Board of Directors immediately prior to
any contested election of directors or any exchange offer or
tender offer for the Common Stock or the common stock of Thermo
Instrument or Thermo Electron to constitute a majority of the
Board of Directors at any time within two years following any
such event. Amounts deferred pursuant to the Deferred
Compensation Plan are valued at the end of each quarter as units
of the Corporation's Common Stock. When payable, amounts deferred
may be disbursed solely in shares of Common Stock accumulated
under the Deferred Compensation Plan. A total of 75,000 shares
of Common Stock have been reserved for issuance under the
Deferred Compensation Plan. As of March 1, 1997, deferred units
equal to 1,247.64 shares of Common Stock were accumulated under
the Deferred Compensation Plan. Directors Stock Option Plan
The Corporation's directors stock option plan (the
"Directors Plan") provides for the grant of stock options to
purchase shares of common stock of the Corporation to outside
directors as additional compensation for their service as
directors. The Directors Plan provides for the grant of stock
options upon a director's initial appointment and, beginning in
2000, awards options to purchase 1,000 shares annually to outside
directors. A total of 225,000 shares of Common Stock have been
reserved for issuance under the Directors Plan.
Under the Directors Plan, each outside director was granted
an option to purchase 45,000 shares of Common Stock upon the
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effective date of the Corporation's initial public offering. The
size of awards to new directors appointed to the Board of
Directors after 1996 is reduced by 11,250 shares each year.
Outside directors who join the Board of Directors after 1999
would not receive an option grant upon their appointment or
election to the Board of Directors, but would be eligible to
participate in the annual option awards described below. Options
evidencing initial grants to directors are exercisable six months
after the date of grant. The shares acquired upon exercise are
subject to restrictions on transfer and the right of the
Corporation to repurchase such shares at the exercise price in
the event the director ceases to serve as a director of the
Corporation or any other Thermo Electron company. The
restrictions and repurchase rights lapse or are deemed to have
lapsed in equal annual installments of 11,250 shares per year,
starting with the first anniversary of the grant date, provided
the director has continuously served as a director of the
Corporation or any other Thermo Electron company since the grant
date. These options expire on the fifth anniversary of the grant
date, unless the director dies or otherwise ceases to serve as a
director of the Corporation or any other Thermo Electron company
prior to that date.
Outside directors will also receive an annual grant of
options to purchase 1,000 shares of Common Stock, commencing with
the Annual meeting of the Stockholders to be held in 2000. The
annual grant will be made at the close of business on the date of
each Annual meeting of the Stockholders of the Corporation to
each outside director then holding office. Options evidencing
annual grants may be exercised at any time from and after the
six-month anniversary of the grant date of the option and prior
to the expiration of the option on the third anniversary of the
grant date. Shares acquired upon exercise of the options would
be subject to repurchase by the Corporation at the exercise price
if the recipient ceased to serve as a director of the Corporation
or any other Thermo Electron company prior to the first
anniversary of the grant date.
The exercise price for options granted under the Directors
Plan is the average of the closing prices of the common stock as
reported on the American Stock Exchange (or other principal
market on which the common stock is then traded) for the five
trading days preceding and including the date of grant, or, if
the shares are not then traded, at the last price per share paid
by third parties in an arms-length transaction prior to the
option grant. As of March 1, 1997, options to purchase 90,000
shares had been granted under the Directors Plan, no options had
lapsed or been exercised, and options to purchase 135,000 shares
of Common Stock were available for grant under the Directors
Plan.
Stock Ownership Policies for Directors
During 1996, the Human Resources Committee of the Board of
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Directors (the "Committee") established a stock holding policy
for directors. The stock holding policy requires each director
to hold a minimum of 1,000 shares of Common Stock. Directors are
requested to achieve this ownership level by the 1998 Annual
meeting of Stockholders. Directors who are also executive
officers of the Corporation are required to comply with a
separate stock holding policy established by the Committee in
1996, which is described in "Committee Report on Executive
Compensation - Stock Ownership Policies."
In addition, the Committee adopted a policy requiring
directors to hold shares of the Corporation's Common Stock equal
to one-half of their net option exercises over a period of five
years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to
exercise the option and the number of shares that could have been
surrendered to satisfy tax withholding obligations attributable
to the exercise of the option. This policy is also applicable to
executive officers and is described in "Committee Report on
Executive Compensation - Stock Ownership Policies."
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo Instrument,
the Corporation's parent company, and of Thermo Electron, Thermo
Instrument's parent company, as of March 1, 1997, with respect to
(i) each person who was known by the Corporation to own
beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director, (iii) each executive officer named in
the summary compensation table under the heading "Executive
Compensation" and (iv) all directors and current executive
officers as a group.
While certain directors and executive officers of the
Corporation are also directors and executive officers of Thermo
Instrument or its subsidiaries other than the Corporation, all
such persons disclaim beneficial ownership of the shares of
Common Stock owned by Thermo Instrument.
<TABLE>
ThermoQuest Thermo Thermo
Instrument Electron
Name (1) Corporation Systems Inc. Corporation
-------- ----------- ------------ -----------
(2) (3) (4)
--- --- ---
<S> <C> <C> <C>
Thermo Instrument 45,000,000 N/A N/A
Systems Inc. (5)
Richard W. K. Chapman 240,650 139,087 82,126
George N. Hatsopoulos 90,000 143,314 3,512,279
Frank Jungers 45,565 52,568 245,754
Earl R. Lewis 50,000 128,233 124,184
Anthony J. Pellegrino 91,000 0 115,875
Michael E. Porter 92,181 0 2,000
Arvin H. Smith 90,000 431,667 513,038
Philip L. Warren 85,000 59,935 21,518
All Directors and
current executive
officers as a group 882,496 1,054,700 5,288,540
</TABLE>
(1) Except as reflected in the footnotes to this table, shares
beneficially owned consist of shares owned by the indicated
person or by that person for the benefit of minor children and
all share ownership includes sole voting and investment power.
(2) Shares of the Common Stock beneficially owned by Dr.
Chapman, Dr. Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. Pellegrino,
Dr. Porter, Mr. Smith, Mr. Warren and all directors and executive
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officers as a group include 225,000, 90,000, 45,000, 50,000,
90,000, 90,000, 90,000, 75,000 and 851,000 shares, respectively,
that such person or group has the right to acquire within 60 days
of March 1, 1997, through the exercise of stock options. Shares
of Common Stock owned by Mr. Jungers, Dr. Porter and all
directors and executive officers as a group include 565, 681 and
1,246 full shares allocated through March 1, 1997, to their
respective accounts maintained pursuant to the Corporation's
deferred compensation plan for directors. No director or
executive officer beneficially owned more than 1% of the Common
Stock outstanding as of March 1, 1997; all directors and
executive officers as a group beneficially owned 1.8% of the
Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Instrument beneficially
owned by Dr. Chapman, Dr. Hatsopoulos, Mr. Jungers, Mr. Lewis,
Mr. Smith, Mr. Warren and all directors and executive officers as
a group include 121,287, 93,750, 13,809, 112,500, 234,375, 30,375
and 686,721 shares, respectively, that such person or group had
the right to acquire within 60 days after March 1, 1997, through
the exercise of stock options. Shares of the common stock of
Thermo Instrument beneficially owned by Dr. Hatsopoulos, Mr.
Smith and all directors and executive officers as a group include
479, 530 and 1,984 shares, respectively, allocated through March
1, 1997, to their respective accounts maintained pursuant to
Thermo Electron's employee stock ownership plan (the "ESOP"), of
which the trustees, who have investment power over its assets,
are executive officers of Thermo Electron. Shares of common
stock of Thermo Instrument beneficially owned by Mr. Jungers and
all directors and executive officers as a group include 12,200
full shares allocated through March 1, 1997 to Mr. Junger's
account maintained pursuant to Thermo Instrument's deferred
compensation plan for directors. Shares of the common stock of
Thermo Instrument beneficially owned by Mr. Jungers includes 543
shares held by his spouse. Shares of the common stock of Thermo
Instrument beneficially owned by Dr. Hatsopoulos includes 21,368
shares held by his spouse and 50 shares allocated to the account
of his spouse maintained pursuant to the ESOP. The directors and
executive officers of the Corporation did not individually or as
a group beneficially own more than 1% of the common stock of
Thermo Instrument outstanding as of March 1, 1997.
(4) The shares of the common stock of Thermo Electron shown in
the table reflect a three-for-two split of such stock distributed
in June 1996 in the form of a 50% stock dividend. Shares of the
common stock of Thermo Electron beneficially owned by Dr.
Chapman, Dr. Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. Pellegrino,
Mr. Smith, Mr. Warren and all directors and executive officers as
a group include 80,284, 1,499,500, 9,375, 121,536, 115,875,
222,411, 19,386 and 2,595,626 shares, respectively, that such
person or group has the right to acquire within 60 days of March
1, 1997, through the exercise of stock options. Shares of the
common stock of Thermo Electron beneficially owned by Dr.
Hatsopoulos, Mr. Smith and all directors and executive officers
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as a group include 2,164, 1,717 and 7,139 full shares,
respectively, allocated to accounts maintained pursuant to the
ESOP. Shares beneficially owned by Dr. Hatsopoulos include
89,601 shares held by his spouse, 168,750 shares held by a QTIP
trust of which his spouse is the trustee, 39,937 shares held by a
family trust of which his spouse is the trustee and 153 shares
allocated to the account of his spouse maintained pursuant to the
ESOP. No director or executive officer beneficially owned more
than 1% of the common stock of Thermo Electron outstanding as of
March 1, 1997, except for Dr. Hatsopoulos, who beneficially owned
2.3% of such stock as of such date; all directors and executive
officers as a group beneficially owned approximately 3.5% of the
Thermo Electron common stock outstanding as of such date.
(5) As of March 1, 1997, Thermo Instrument beneficially owned
92.9% of the outstanding Common Stock. Thermo Instrument's
address is 1275 Hammerwood Avenue, Sunnyvale, California 94089.
As of March 1, 1997, Thermo Instrument had the power to elect all
of the members of the Corporation's Board of Directors. Thermo
Instrument is a majority owned subsidiary of Thermo Electron and
therefore, Thermo Electron may be deemed a beneficial owner of
the shares of Common Stock beneficially owned by Thermo
Instrument. Thermo Electron disclaims beneficial ownership of
these shares.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's directors and executive officers, and
beneficial owners of more than 10% of the Common Stock, such as
Thermo Electron, to file with the Securities and Exchange
Commission initial reports of ownership and periodic reports of
changes in ownership of the Corporation's securities. Based upon
a review of such filings, all Section 16(a) filing requirements
applicable to such persons were complied with during 1996, except
in the following instances. The Form 3 for Mr. Paul F. Kelleher
was omitted from the original filings for all executive officers
at the time of the Corporation's initial public offering and was
filed in February 1997. Thermo Instrument, the beneficial owner
of more than 10% of the Common Stock, filed three Forms 4 late,
reporting a total of four transactions, consisting of one grant
of an employee stock option to purchase shares of Common Stock
and the lapse of three such options without exercise. Thermo
Electron, the parent company of Thermo Instrument, filed five
Forms 4 late, reporting a total of 11 transactions, including the
four transactions reported by Thermo Instrument, as well as four
open market purchases, two exercises of employee stock options
and one additional lapse of such options without exercise.
EXECUTIVE COMPENSATION
NOTE: All share amounts reported below, in all cases, have been
adjusted as applicable to reflect a three-for-two stock split
with respect to the common stock of Thermo Electron distributed
in June 1996 in the form of a 50% stock dividend.
Summary Compensation Table
The following table summarizes compensation for services to
the Corporation in all capacities awarded to, earned by or paid
to the Corporation's chief executive officer and one other most
highly compensated executive officer for the last two fiscal
years. No other executive officer of the Corporation met the
definition of "highly compensated" within the meaning of the
Securities and Exchange Commission's executive compensation
disclosure rules.
The Corporation is required to appoint certain executive
officers and full-time employees of Thermo Electron as executive
officers of the Corporation, in accordance with the Thermo
Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's
affairs is provided to the Corporation under the Corporate
Services Agreement between the Corporation and Thermo Electron.
Accordingly, the compensation for these individuals is not
reported in the following table.
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<TABLE>
Summary Compensation Table
Long Term
Compensation
------------
Securities
Underlying
Name and Fiscal Annual Options (No. of All Other
------
Compensation Shares
------------
Principal Position Year Salary Bonus and Company) Compensati
------------------ ---- ------ ----- ------------ ----------
(1) on (2)
--- ------
<S> <C> <C> <C> <C> <C> <C> <c
Richard W. K. 1,996 $170,000$125,000 225,000 (TMQ) $6,130 (3
Chapman
President & Chief 150 (TMO)
Executive
Officer 30,000 (TBA)
2,000 (TFG)
2,000 (TLT)
15,000 (TOC)
2,000 (TSR)
4,000 (TXM)
1,995 $159,500 $95,000 -- -- $6,749
Philip L. Warren 1,996 $152,817 $80,000 75,000 (TMQ) $3,849 (3
Vice President 11,250 (TOC)
1,995 $146,931 $50,000 15,000 (TMO)
1,000 (TBA)
</TABLE>
(1) Options granted by the Corporation are designated in the
table as "TMQ." In addition, the named executive officers have
also been granted options to purchase common stock of the
following Thermo Electron companies from time to time as part of
Thermo Electron's stock option program: Thermo BioAnalysis
Corporation (designated in the table as TBA), Thermo Electron
(designated in the table as TMO), Thermo Fibergen Inc.
(designated in the table as TFG), ThermoLyte Corporation
(designated in the table as TLT), Thermo Optek Corporation
(designated in the table as TOC), Thermo Sentron Inc. (designated
in the table as TSR) and Trex Medical Corporation (designated in
the table as TXM).
(2) Represents the amount of matching contributions made by the
individual's employer on behalf of executive officers
participating in the 401(k) plan maintained by Finnigan
Corporation, a subsidiary of the Corporation.
(3) In addition to the matching contribution referred to in
footnote (2), such amount includes $3,443 and $1,853, which
represents the amount of compensation attributable to
interest-free loans provided to Dr. Chapman and Mr. Warren,
respectively, pursuant to the Corporation's Stock Holding
Assistance Plan. See "Relationship with Affiliates - Stock
Holding Assistance Plan."
Stock Options Granted During Fiscal 1996
The following table sets forth information concerning
individual grants of stock options made during fiscal 1996 to the
Corporation's chief executive officer and the other named
executive officer. It has not been the Corporation's policy in
the past to grant stock appreciation rights, and no such rights
were granted during fiscal 1996.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1996
Potential Realizable
Percent of Value at Assumed
Total Annual Rates of Stock
Options
Number of Granted to Exercise Price Appreciation for
Securities
Underlying Employees Price Expir- Option Term (2)
Options in Per ation
Name Granted (1) Fiscal Year Share Date 5% 10%
----------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard W. K. 225,000(TMQ) 12.3% $13.00 01/10/08 $2,328,750 $6,255,000
Chapman
150(TMO) 0.01%(3) $42.79 05/22/99 $1,011 $2,124
30,000(TBA) 3.7%(3) $10.00 01/31/08 $238,800 $641,400
2,000(TFG) 0.4%(3) $10.00 09/12/08 $15,920 $42,760
2,000(TLT) 0.6%(3) $10.00 03/11/08 $15,920 $42,760
15,000(TOC) 0.5%(3) $12.00 04/11/08 $143,250 $384,900
2,000(TSR) 0.4%(3) $14.00 03/11/08 $22,280 $59,880
4,000(TXM) 0.2%(3) $11.00 03/11/08 $35,000 $94,080
Philip L. Warren 75,000(TMQ) 4.1% $13.00 01/10/08 $776,250 $2,085,000
11,250(TOC) 0.4(3) $12.00 04/11/06 $ 84,938 $ 215,100
</TABLE>
(1) The options granted during the fiscal year are immediately
exercisable, except options to purchase the common stock of
ThermoLyte Corporation, which are not exercisable until the
earlier of (i) 90 days after the effective date of the
registration of that company's common stock under Section 12 of
the Securities Exchange Act of 1934 (the "Exchange Act") and (ii)
nine years after the grant date. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be
employed by such corporation or any other Thermo Electron
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company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. For publicly traded companies, the repurchase rights
generally lapse ratably over a five- to ten-year period,
depending on the option term, which may vary from seven to twelve
years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company. For companies
that are not publicly traded, the repurchase rights lapse in
their entirety on the ninth anniversary of the grant date.
Certain options granted as part of Thermo Electron's stock option
program have three-year terms, and the repurchase rights lapse in
their entirety on the second anniversary of the grant date. The
granting corporation may permit the holder of options to exercise
options and to satisfy tax withholding obligations by
surrendering shares equal in fair market value to the exercise
price or withholding obligation.
(2) The amounts shown on this table represent hypothetical gains
that could be achieved for the respective options if exercised at
the end of the option term. These gains are based on assumed
rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted to their
expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock
option exercises will depend on the future performance of the
common stock of the granting corporation, the optionee's
continued employment through the option period and the date on
which the options are exercised.
(3) These options were granted under stock option plans
maintained by Thermo Electron companies other than the
Corporation and accordingly are reported as a percentage of total
options granted to employees of Thermo Electron and its
subsidiaries.
Stock Options Exercised During Fiscal 1996 and Fiscal Year-End
Values
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options held at the end of fiscal 1996 by the Corporation's chief
executive officer and the other named executive officer. No
stock appreciation rights were exercised or were outstanding
during fiscal 1996.
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1996 And Fiscal 1996 Year-End Option Values
Number of
Unexercised
Options at Fiscal Value of
Shares Year-End Unexercised
Acquired Value (Exercisable/ In-the-Money
on
Name Company Exercise RealizedUnexercisable) (1) Options
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard W. K. ThermoQuest -- -- 225,000 /0 $0 /-
Chapman (2)
Thermo -- -- 150 /0 $0 /-
Electron
Thermo -- -- 30,000 /0 $93,750 /-
BioAnalysis
Thermo -- -- 2,000 /0 $1,500 /-
Fibergen
ThermoLyte -- -- 0 /2,000 - /$0 (4)
Thermo Optek -- -- 15,000 /0 $0 /-
Thermo -- -- 2,000 /0 $0 /-
Sentron
Trex Medical -- -- 4,000 /0 $6,500 /-
Philip L. Warren ThermoQuest -- -- 75,000 /0 $0 /-
Thermo 2,362 $63,445 19,386 /0 (3) $179,393 /-
Electron
Thermo -- -- 1,000 /0 $3,125 /-
BioAnalysis
Thermo -- -- 3,375 /0 $20,250 /-
Fibertek
Thermo -- -- 30,375 /0 $596,451 /-
Instrument
Thermo Optek -- -- 11,250 /0 $0 /-
Thermo- 200 $1,100 800 /0 $1,500 /-
Spectra
ThermoTrex 270 $8,687 -/- -/-
</TABLE>
(1) All of the options reported outstanding at the end of the
fiscal year are immediately exercisable as of the fiscal
year-end, except options to purchase the common stock of
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<PAGE>
ThermoLyte Corporation, which are not exercisable until the
earlier of (i) 90 days after the effective date of the
registration of that company's common stock under Section 12 of
the Exchange Act and (ii) nine years after the grant date. In
all cases, the shares acquired upon exercise of the options
reported in the table are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be
employed by such corporation or any other Thermo Electron
company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. For publicly traded companies, the repurchase rights
generally lapse ratably over a five- to ten-year period,
depending on the option term, which may vary from seven to twelve
years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company. For companies
that are not publicly traded, the repurchase rights lapse in
their entirety on the ninth anniversary of the grant date.
Certain options granted as a part of Thermo Electron's stock
option program have three-year terms, and the repurchase rights
lapse in their entirety on the second anniversary of the grant
date. The granting corporation may permit the holder of such
options to exercise options and to satisfy tax withholding
obligations by surrendering shares equal in fair market value to
the exercise price or withholding obligation.
(2) Dr. Chapman also holds other unexercised options to purchase
common stock of Thermo Electron and its subsidiaries other than
the Corporation. These options are not reported here as they
were granted as compensation for service to other Thermo Electron
companies in capacities other than in his capacity as chief
executive officer of the Corporation.
(3) Options to purchase 15,000 shares of the common stock of
Thermo Electron granted to Mr. Warren are subject to the same
terms as described in footnote (1), except that the repurchase
rights of the granting corporation generally do not lapse until
the tenth anniversary of the grant date. In the event of the
optionee's death or involuntary termination prior to the tenth
anniversary of the grant date, the repurchase rights of the
granting corporation shall be deemed to have lapsed ratably over
a five-year period, commencing with the fifth anniversary of the
grant date.
(4) No public market for the shares underlying these options
existed at fiscal year-end. Accordingly, no value in excess of
the exercise price has been attributed to these options.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation
All decisions on compensation for the Corporation's
executive officers are made by the Human Resources Committee of
the Board of Directors (the "Committee"). In reviewing and
establishing total cash compensation and stock-based compensation
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<PAGE>
for executives, the Committee follows guidelines established by
the Human Resources Committees of the Board of Directors of its
parent corporations, Thermo Electron and Thermo Instrument. The
executive compensation program presently consists of annual base
salary ("salary"), short-term incentives in the form of annual
cash bonuses, and long-term incentives in the form of stock
options.
The Committee believes that the compensation of executive
officers should reflect the scope of their responsibilities, the
success of the Corporation, and the contributions of each
executive to that success. In addition, the Committee believes
that base salaries should approximate the mid-point of
competitive salaries derived from market surveys and that
short-term and long-term incentive compensation should reflect
the performance of the Corporation and the contributions of each
executive.
External competitiveness is an important element of the
Committee's compensation policy. The competitiveness of the
Corporation's compensation for its executives is assessed by
comparing it to market data provided by its compensation
consultant and by participating in annual executive compensation
surveys, primarily "Project 777," an executive compensation
survey prepared by Management Compensation Services, a division
of Hewitt Associates. The majority of firms represented in the
Project 777 survey are included in the Standard & Poor's 500
Index, but do not necessarily correspond to the companies
included in the Corporation's peer group index, the Dow Jones
Total Return Index for the Diversified Technology Industry Group.
Principles of internal equity are also central to the
Committee's compensation policies. Compensation considered for
the Corporation's officers, whether cash or stock-based
incentives, is also evaluated by comparing it to compensation of
other executives within the Thermo Electron organization with
comparable levels of responsibility for comparably sized business
units.
The process for determining each of these elements for the
Corporation's executive officers is outlined below.
Base Salary
Base salaries are intended to approximate the mid-point of
competitive salaries for similar organizations of comparable size
and complexity to the Corporation. Executive salaries are
adjusted gradually over time and only as necessary to meet this
objective. Increases in base salary may be moderated by other
considerations, such as geographic or regional market data,
industry trends or internal fairness within the Corporation and
Thermo Electron. It is the Committee's intention that over time
the base salaries for the chief executive officer and the other
named executive officers will approach the mid-point of
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<PAGE>
competitive data. The salary increases in 1996 for the chief
executive officer and the other named executive officers
generally reflect this practice of gradual increases and
moderation.
Cash Bonus
The Committee establishes a median potential bonus for each
executive by using the market data on total cash compensation
from the same executive compensation surveys as used to determine
salaries. Specifically, the median potential bonus plus the
salary of an executive officer is approximately equal to the
mid-point of competitive total cash compensation for a similar
position and level of responsibility in businesses having
comparable sales and complexity to the Corporation. The actual
bonus awarded to an executive officer may range from zero to
three times the median potential bonus. The value within the
range (the bonus multiplier) is determined at the end of each
year by the Committee in its discretion. The Committee exercises
its discretion by evaluating each executive's performance using a
methodology developed by its parent corporation, Thermo Electron,
and applied throughout the Thermo Electron organization. The
methodology incorporates measures of operating returns, designed
to measure profitability and contributions to shareholder value
and are measures of corporate and divisional performance that are
evaluated using graphs developed by Thermo Electron intended to
reward performance that is perceived as above average and to
penalize performance that is perceived as below average. The
measures of operating returns used in the Committee's
determinations in calendar 1996 measured return on net assets,
growth in income, and return on sales and the Committee's
determinations also included a subjective evaluation of the
contributions of each executive that are not captured by
operating measures but are considered important to the creation
of long-term value for the Stockholders. These measures of
achievements are not financial targets that are met, not met or
exceeded. The relative weighting of the operating measures and
subjective evaluation varies among the executives, depending on
their roles and responsibilities within the organization.
The bonuses for named executive officers approved by the
Committee with respect to 1996 performance in each instance
exceeded the median potential bonus.
Stock Option Program
The primary goal of the Corporation is to excel in the
creation of long-term value for the Stockholders. The principal
incentive tool used to achieve this goal is the periodic award to
key employees of options to purchase common stock of the
Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock
options to purchase the shares of both the Corporation and other
19
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<PAGE>
companies within the Thermo Electron group of companies
accomplish many objectives. The grant of options to key employees
encourages equity ownership in the Corporation, and closely
aligns management's interests to the interests of all the
Stockholders. The emphasis on stock options also results in
management's compensation being closely linked to stock
performance. In addition, because they are subject to vesting
periods of varying durations and to forfeiture if the employee
leaves the Corporation prematurely, stock options are an
incentive for key employees to remain with the Corporation
long-term. The Committee believes stock option awards in its
parent companies, Thermo Electron and Thermo Instrument, and the
other majority-owned subsidiaries of Thermo Electron and Thermo
Instrument, are an important tool in providing incentives for
performance within the entire organization.
In determining awards, the Committee considers the average
annual value of all options to purchase shares of the Corporation
and other companies within the Thermo Electron organization that
vest in the next five years. (Values are established using a
modified Black-Scholes option pricing model.) As a guideline, the
Committee strives to maintain the aggregate amount of net awards
to purchase shares of Common Stock to all employees over a
five-year period below 12% of the Corporation's outstanding
common stock, although other factors such as unusual transactions
and acquisitions and standards for awards of comparably situated
companies may affect the number of awards granted.
Awards are not made annually in conjunction with the annual
review of cash compensation, but are made periodically. The
Committee considers total compensation of executives, actual and
anticipated contributions of each executive (which includes a
subjective assessment by the Committee of the value of the
executive's future potential within the organization), as well as
the value of previously awarded options, as described above, in
determining awards. The option awards made to the named
executive officer in 1996 with respect to the common stock of the
majority-owned subsidiaries of the Corporation's parent company,
Thermo Instrument, were made as part of Thermo Electron's overall
stock option program and were determined by the human resources
committee of the board of directors of the granting company using
a similar analysis.
Policy on Deductibility of Compensation
The Committee has also considered the application of Section
162(m) of the Internal Revenue Code to the Corporation's
compensation practices. Section 162(m) limits the tax deduction
available to public companies for annual compensation paid to
senior executives in excess of $1 million unless the compensation
qualifies as "performance based" or is otherwise exempt under
Section 162(m). The annual compensation paid to individual
executives does not approach the $1 million threshold, and it is
believed that stock incentive plans of the Corporation qualify as
20
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<PAGE>
"performance based." Therefore, the Committee does not believe
any further action is necessary in order to comply with Section
162(m). From time to time, the Committee will reexamine the
Corporation's compensation practices and the effect of Section
162(m).
Stock Ownership Policies
During 1996, the Committee established a stock holding
policy for executive officers of the Corporation. The stock
holding policy specifies an appropriate level of ownership of the
Corporation's Common Stock as a multiple of the officer's
compensation. For the chief executive officer, the multiple is
one times his base salary and reference bonus for the calendar
year. For all other officers, the multiple is one times the
officer's base salary. The Committee deemed it appropriate to
permit officers to achieve these ownership levels over a
three-year period.
In order to assist officers in complying with the policy,
the Committee also adopted a stock holding assistance plan under
which the Corporation is authorized to make interest-free loans
to officers to enable them to purchase shares of the Common Stock
in the open market. The loans are required to be repaid upon the
earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. During 1996,
Dr. Richard W. K. Chapman, the Corporation's chief executive
officer, and Mr. Philip L. Warren, the Corporation's vice
president, each received loans in the principal amounts of
$210,653.50 and $139,881.57, respectively, under this plan. See
"Relationship with Affiliates - Stock Holding Assistance Plan."
The Committee also adopted a policy requiring its executive
officers to hold shares of the Corporation's Common Stock
acquired upon the exercise of stock options granted by the
Corporation. Under this policy, executive officers are required
to hold one-half of their net option exercises over a period of
five years. The net option exercise is determined by calculating
the number of shares acquired upon exercise of a stock option,
after deducting the number of shares that could have been traded
to exercise the option and the number of shares that could have
been surrendered to satisfy tax withholding obligations
attributable to the exercise of the options.
1996 CEO Compensation
The salary and bonus of Dr. Chapman are established using
the same criteria as for the salaries and bonuses for the
Corporation's other named executive officer. In determining Dr.
Chapman's compensation as reported, the committee considered
among other factors, his contributions and achievement since
successfully completing the initial public offering of the
Corporation's Common Stock in March 1996.
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<PAGE>
The Committee awarded to Dr. Chapman options to purchase
225,000 shares of the Common Stock in fiscal 1996. This award
was determined in a manner consistent with awards to other
officers, as described above.
In addition to stock option awards by the Committee, Dr.
Chapman may receive awards to purchase shares of the common stock
of Thermo Electron or Thermo Instrument or any of their majority
owned subsidiaries from time to time as part of Thermo Electron's
stock option program due to his position as a chief executive
officer of a majority owned subsidiary of Thermo Electron or due
to his position as a vice president of Thermo Instrument. These
awards are determined using an analysis similar to that used by
the Committee as described above under "Stock Option Program."
The stock option awards to Dr. Chapman in fiscal 1996 with
respect to shares of the following companies were awarded under
this program: Thermo BioAnalysis Corporation, Thermo Fibergen
Inc., ThermoLyte Corporation, Thermo Optek Corporation, Thermo
Sentron Inc. and Trex Medical Corporation. The award to purchase
shares of common stock of Thermo Electron granted to Dr. Chapman
in fiscal 1996 was made by the Thermo Electron human resources
committee under a program which awards options to certain
eligible employees annually based on the number of shares of the
common stock of Thermo Electron held by the employee, as an
incentive to buy and hold Thermo Electron shares.
Frank Jungers (Chairman)
Michael E. Porter
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the
Corporation include in this Proxy Statement a line-graph
presentation comparing cumulative, five-year shareholder returns
for the Corporation's Common Stock with a broad-based market
index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The
Corporation's Common Stock has been publicly traded since March
19, 1996 and, as a result, the following graph commences as of
such date. The Corporation has compared its performance with the
American Stock Exchange Market Value Index and the Dow Jones
Total Return Index for the Diversified Technology Industry Group.
Comparison of Total Return Among ThermoQuest Corporation,
the American Stock Exchange Market Value Index and the Dow Jones
Total Return Index for the Diversified Technology Industry Group
from March 19, 1996 to December 27, 1996.
GRAPH APPEARS HERE
3/19/96 12/27/96
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TMQ `100 71
AMEX 100 103
DJ DTC 100 121
The total return for the Corporation's Common Stock (TMQ),
the American Stock Exchange Market Value Index (AMEX) and the Dow
Jones Total Return Index for the Diversified Technology Industry
Group (DJ DTC) assumes the reinvestment of dividends, although
dividends have not been declared on the Corporation's Common
Stock. The American Stock Exchange Market Value Index tracks the
aggregate performance of equity securities of companies listed on
the American Stock Exchange. The Corporation's Common Stock is
traded on the American Stock Exchange under the ticker symbol
"TMQ."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority
interest in subsidiary companies to outside investors as an
important tool in its future development. As part of this
strategy, Thermo Electron and certain of its subsidiaries have
created several privately and publicly held subsidiaries, and
Thermo Instrument has created the Corporation and other
subsidiaries as publicly held, majority-owned subsidiaries and
privately held majority-owned subsidiaries. From time to time,
Thermo Electron and its subsidiaries will create other
majority-owned subsidiaries as part of its spinout strategy. (The
Corporation and such other majority-owned Thermo Electron
subsidiaries are hereinafter referred to as the "Thermo
Subsidiaries.")
Thermo Electron and each of the Thermo Subsidiaries
recognize that the benefits and support that derive from their
affiliation are essential elements of their individual
performance. Accordingly, Thermo Electron and each of the Thermo
Subsidiaries have adopted the Thermo Electron Corporate Charter
(the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the
Charter is to ensure that (1) all of the companies and their
stockholders are treated consistently and fairly, (2) the scope
and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial,
managerial and technological strengths of the others, and (4)
Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general
principles to be followed by the companies, addresses the role
and responsibilities of the management of each company, provides
for the sharing of group resources by the companies and provides
for centralized administrative, banking and credit services to be
performed by Thermo Electron. The services provided by Thermo
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<PAGE>
Electron include collecting and managing cash generated by
members, coordinating the access of Thermo Electron and the
Thermo Subsidiaries (the "Thermo Group") to external financing
sources, ensuring compliance with external financial covenants
and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit
services. Pursuant to the Charter, Thermo Electron may also
provide guarantees of debt or other obligations of the Thermo
Subsidiaries or may obtain external financing at the parent level
for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on
behalf of, the consolidated entity or may obtain financing
directly from external financing sources. Under the Charter,
Thermo Electron is responsible for determining that the Thermo
Group remains in compliance with all covenants imposed by
external financing sources, including covenants related to
borrowings of Thermo Electron or other members of the Thermo
Group, and for apportioning such constraints within the Thermo
Group. In addition, Thermo Electron establishes certain internal
policies and procedures applicable to members of the Thermo
Group. The cost of the services provided by Thermo Electron to
the Thermo Subsidiaries is covered under existing corporate
services agreements between Thermo Electron and each of the
Thermo Subsidiaries.
The Charter presently provides that it shall continue in
effect so long as Thermo Electron and at least one Thermo
Subsidiary participate. The Charter may be amended at any time by
agreement of the participants. Any Thermo Subsidiary, including
the Corporation, can withdraw from participation in the Charter
upon 30 days' prior notice. In addition, Thermo Electron may
terminate a subsidiary's participation in the Charter in the
event the subsidiary ceases to be controlled by Thermo Electron
or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the
Charter automatically terminates the corporate services agreement
and tax allocation agreement (if any) in effect between the
withdrawing company and Thermo Electron. The withdrawal from
participation does not terminate outstanding commitments to third
parties made by the withdrawing company, or by Thermo Electron or
other members of the Thermo Group, prior to the withdrawal.
However, a withdrawing company is required to continue to comply
with all policies and procedures applicable to the Thermo Group
and to provide certain administrative functions mandated by
Thermo Electron so long as the withdrawing company is controlled
by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo
Electron have entered into a Corporate Services Agreement (the
"Services Agreement") under which Thermo Electron's corporate
staff provides certain administrative services, including certain
legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns,
centralized cash management and financial and other services to
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the Corporation. The Corporation was assessed an annual fee equal
to 1.0% of the Corporation's revenues for these services for
fiscal 1996. The fee is reviewed annually and may be changed by
mutual agreement of the Corporation and Thermo Electron. During
fiscal 1996, Thermo Electron assessed the Corporation $3,138,000
in fees under the Services Agreement. Management believes that
the charges under the Services Agreement are reasonable and that
the terms of the Services Agreement are fair to the Corporation.
For items such as employee benefit plans, insurance coverage and
other identifiable costs, Thermo Electron charges the Corporation
based on charges attributable to the Corporation. The Services
Agreement automatically renews for successive one-year terms,
unless canceled by the Corporation upon 30 days' prior notice. In
addition, the Services Agreement terminates automatically in the
event the Corporation ceases to be a member of the Thermo Group
or ceases to be a participant in the Charter. In the event of a
termination of the Services Agreement, the Corporation will be
required to pay a termination fee equal to the fee that was paid
by the Corporation for services under the Services Agreement for
the nine-month period prior to termination. Following
termination, Thermo Electron may provide certain administrative
services on an as-requested basis by the Corporation or as
required in order to meet the Corporation's obligations under
Thermo Electron's policies and procedures. Thermo Electron will
charge the Corporation a fee equal to the market rate for
comparable services if such services are provided to the
Corporation following termination.
The Corporation has entered into a Tax Allocation Agreement
with Thermo Electron which outlines the terms under which the
Corporation is to be included in Thermo Electron's consolidated
Federal and state income tax returns. Under current law, the
Corporation will be included in such tax returns so long as
Thermo Electron owns at least 80% of the outstanding common stock
of Thermo Instrument and Thermo Instrument owns at least 80% of
the outstanding Common Stock of the Corporation. In years in
which the Corporation has taxable income, it will pay to Thermo
Electron amounts comparable to the taxes the Corporation would
have paid if it had filed its own separate company tax returns.
If Thermo Instrument's equity ownership of the Corporation were
to drop below 80%, the company would file its own tax returns.
From time to time, the Corporation may transact business
with other companies in the Thermo Group. During fiscal 1996
these transactions included the following:
The Corporation acts as a distributor of certain products of
Thermo BioAnalysis Corporation ("Thermo BioAnalysis"), is the
exclusive distributor of such company's MALDI-TOF products in
Japan and is the exclusive distributor of its CE products in
countries where the Corporation maintains a direct sales force.
In consideration of such arrangements, Thermo BioAnalysis sells
the Corporation such products at discounted rates negotiated by
the parties. The Corporation is responsible for all installation
25
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and warranty labor obligations at its expense. These
arrangements may be terminated on not less than three months'
notice by either party. For the fiscal year ended December 28,
1996, Thermo BioAnalysis sold $1,974,000 of products to the
Corporation under these arrangements. In addition, Thermo
BioAnalysis pays the Corporation a finder's fee for each
qualified lead that generates an order for its MALDI-TOF products
from customers in the United States and Europe.
Thermo BioAnalysis has also entered into an arrangement with
the Corporation whereby the Corporation provides assembly labor
for Thermo BioAnalysis' CE products on a contract basis. Under
this arrangement, the Corporation assembles instruments as
required by Thermo BioAnalysis for a charge based on the sum of
the Corporation's actual cost of materials and the allocable
portion of its labor, overhead and other indirect expenses. For
the fiscal year ended December 28, 1996, Thermo BioAnalysis paid
the Corporation approximately $468,000 under this arrangement.
The Corporation has entered into a lease and services
arrangement with Thermo BioAnalysis under which the Corporation
leases approximately 15,000 square feet of space, and provides
certain accounting and administrative services to, Thermo
BioAnalysis. Thermo BioAnalysis pays the Corporation rent in the
amount of 3 British Pounds Sterling per square foot and an
allocated portion of the Corporation's costs for providing such
services. This arrangement may be terminated by the Corporation
or by Thermo BioAnalysis upon 30 days prior notice. For the
fiscal year ended December 28, 1996, Thermo BioAnalysis paid the
Corporation approximately $105,000 under this arrangement.
The Corporation acts as a distributor in various countries
outside the United States for certain products manufactured by
various other subsidiaries of Thermo Electron. For the fiscal
year ended December 28, 1996, the Corporation purchased
approximately $2,567,000 of products from such companies. In
addition, various other subsidiaries of Thermo Electron act as
distributors for certain of the Corporation's products in various
countries outside the United States. For the fiscal year ended
December 28, 1996, such companies purchased approximately
$10,895,000 of the Corporation's products under these
arrangements.
Certain of the Corporation's products incorporate circuit
boards and other equipment manufactured by Thermo Optek
Corporation ("Thermo Optek"), a majority-owned subsidiary of
Thermo Instrument. For the fiscal year ended December 28, 1996,
the Corporation purchased approximately $5,924,000 of Thermo
Optek's products under this arrangement. In addition, Tecomet
Inc. ("Tecomet"), a wholly owned subsidiary of Thermo Electron,
manufactures certain parts of the Corporation's quadrupole mass
spectrometers. For the fiscal year ended December 28, 1996, the
Corporation purchased approximately $1,135,000 of Tecomet's
products under this arrangement.
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In August 1995, Thermo Electron purchased $10,000,000
principal amount of the Corporation's 5% Convertible Subordinated
Debentures due 2000, at par and on terms identical to those
offered to unaffiliated investors.
As of December 28, 1996, $152,063,000 of the Corporation's
cash equivalents were invested in a repurchase agreement with
Thermo Electron. Under this agreement, the Corporation in effect
lends excess cash to Thermo Electron which Thermo Electron
collateralizes with investments principally consisting of U.S.
government agency securities, corporate notes, commercial paper,
money market funds, and other marketable securities, in the
amount of at least 103% of such obligation. The Corporation's
funds subject to the repurchase agreement are readily convertible
into cash by the Corporation. The repurchase agreement earns a
rate based on the 90-day Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter.
Stock Holding Assistance Plan
In 1996, the Corporation adopted a stock holding policy
which requires its executive officers to acquire and hold a
minimum number of shares of Common Stock. In order to assist the
executive officers in complying with the policy, the Corporation
also adopted a stock holding assistance plan under which it may
make interest-free loans to certain key employees, including its
executive officers, to enable these individuals to purchase
Common Stock in the open market. In 1996, Dr. Richard W. K.
Chapman, the Corporation's chief executive officer, received a
loan in the principal amount of $210,653.50 under this plan to
purchase 15,000 shares of common stock, and Mr. Philip L. Warren,
the Corporation's vice president, received a loan in the
principal amount of $139,881.57 under this plan to purchase
10,000 shares of common stock. Each loan is repayable upon the
earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Human Resources
Committee of the Corporation's Board of Directors.
-- PROPOSAL 2--
PROPOSAL TO ADOPT AN EMPLOYEES' STOCK PURCHASE PLAN
The Board of Directors has approved an employees' stock
purchase plan (the "Stock Purchase Plan") and reserved 100,000
shares of the Corporation's Common Stock for issuance thereunder,
subject to Stockholder approval. The Board of Directors is
recommending that the Stockholders approve the Stock Purchase
Plan and the reservation of shares at this meeting. The purpose
of the Stock Purchase Plan is to grant options to purchase shares
of Common Stock of the Corporation to eligible employees of the
Corporation. The Board of Directors believes that the Stock
Purchase Plan is an important incentive in attracting and
retaining key personnel, and motivating individuals to contribute
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significantly to the Corporation's future growth and success, and
in aligning the long-term interest of these individuals with
those of the Corporation's Stockholders. Accordingly, the Board
of Directors acted to adopt the Stock Purchase Plan subject to
Stockholder approval.
Summary of the Stock Purchase Plan
The full text of the Stock Purchase Plan is set forth in
Attachment A to this proxy statement. A description of the
principal features of the Stock Purchase Plan follows, but it is
qualified in its entirety by reference to the full text.
Participation; Administration
All full-time employees and part-time employees working at
least 20 hours per week and who have been employed for at least
six months by the Corporation are eligible to participate in the
Stock Purchase Plan, unless they own more that 5% of the Common
Stock of the Corporation. For purposes of determining the term
of employment, employees are credited with years of continuous
employment with Thermo Electron or its other subsidiaries
immediately prior to joining the Corporation. Options to
purchase shares of Common Stock of the Corporation may be granted
from time to time at the discretion of the Board of Directors,
which also determines the date upon which such options are
exercisable. The number of employees potentially eligible to
participate in the Stock Purchase Plan is approximately 1,270
persons.
Contributions
A participating employee may purchase stock only through
payroll deductions. Eligible employees are also permitted to
participate in the Thermo Electron employees' stock purchase
plan, which has substantially the same terms as the Stock
Purchase Plan. The aggregate amount which may be contributed
under the Thermo Electron employees' stock purchase plan and the
Corporation's Stock Purchase Plan may not exceed 10% of the
employee's gross salary or wages during the year. The Board of
Directors may fix the aggregate amount that may be contributed to
the Stock Purchase Plan each year in its discretion within such
limitation. Employees are allowed to decrease, but not
increase, the percentage of wages contributed once during the
Stock Purchase Plan year. An employee may suspend his or her
contributions, but then is not permitted to contribute again for
the remainder of the Stock Purchase Plan year.
Terms of Options
The exercise price is fixed on the grant date and is 95% of
the fair market value for the Common Stock on such date. On the
exercise date, participants may elect to use their accumulated
payroll deductions to purchase shares at the exercise price.
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Participants must agree not to resell the shares so purchased for
a period of six months following the exercise date. The options
are nontransferable, and except in the case of death of the
employee, may not be exercised if the employee is not still
employed by the Corporation at the exercise date. If an employee
dies, his or her beneficiary may withdraw the accumulated payroll
deduction or use such deductions to purchase shares on the
exercise date. A participant may elect to discontinue
participation at any time prior to the exercise date and to have
his or her accumulated payroll deduction refunded together with
interest on such amount as fixed by the Board of Directors from
time to time.
Shares Subject to the Stock Purchase Plan
The number of shares that are reserved for issuance under
the Stock Purchase Plan will be 100,000 shares of the
Corporation's Common Stock, subject to adjustment for stock
splits and similar events. The proceeds received by the
Corporation from exercise under the Stock Purchase Plan will be
used for the general purposes of the Corporation. Shares issued
under the Stock Purchase Plan may be authorized but unissued or
shares reacquired by the Corporation and held in its treasury.
Amendment and Termination
The Stock Purchase Plan shall remain in full force and
effect until suspended or discontinued by the Board of Directors.
The Board of Directors may at any time or times amend or review
the Stock Purchase Plan for any purpose which may at any time be
permitted by law, or may at any time terminate the Stock Purchase
Plan, provided that no amendment that is not approved by the
Stockholders shall be effective if it would cause the Stock
Purchase Plan to fail to satisfy the requirements of Rule 16b-3
(or any successor rule) of the Securities Exchange Act of 1934,
as amended. No amendment of the Stock Purchase Plan may
adversely affect the rights of any recipient of any option
previously granted without such recipient's consent.
Effective Date of the Stock Purchase Plan
The Stock Purchase Plan will become effective as of
November 1, 1997, provided that it is approved by the
Stockholders at this meeting.
Federal Income Tax Aspects
Federal income tax is not imposed upon an employee in the
year an option is granted or the year the shares are purchased
pursuant to the exercise of the option granted under the Stock
Purchase Plan. Federal income tax generally is imposed upon an
employee when he or she sells or otherwise disposes of the shares
acquired pursuant to the Stock Purchase Plan. When an employee
sells or disposes of the shares, if such sale or disposition
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occurs more than two years from the grant date and more than one
year from the exercise date, then Federal income tax assessed at
ordinary rates will be imposed upon the amount by which the fair
market value of the shares on the date of grant or disposition,
whichever is less, exceeds the amount paid for the shares. In
addition, the difference between the amount received by the
employee at the time of sale and the employee's tax basis in the
shares, which is equal to the amount paid on exercise of the
option plus the amount recognized as ordinary income, will be
recognized as a capital gain or loss. The Corporation will not
be allowed a deduction under these circumstances for Federal
income tax purposes. If the employee sells or disposes of the
shares sooner than two years from the grant date or one year from
the exercise date, then the employee's entire gain (the
difference between the fair market value at disposition and the
amount paid for the shares) will be taxed as ordinary income, and
the Corporation would be entitled to a deduction equal to that
amount.
The closing price per share on the American Stock Exchange
of the Common Stock on April 25, 1997 was $13.675.
Recommendation
The Board of Directors believes that adoption of the Stock
Purchase Plan and the reservation of shares thereunder is
important for the Corporation to attract and retain key employees
and to be able to continue to offer them the opportunity to
participate in the ownership and growth of the Corporation
through an employees stock purchase plan. In addition, the Board
of Directors believes the Stock Purchase Plan is in the best
interest of the Corporation and its Stockholders and recommends
that the Stockholders vote FOR the approval of the Stock Purchase
Plan and the reservation of 100,000 shares of Common Stock
thereunder. Thermo Instrument, which owned of record
approximately 89% of the outstanding voting stock of the
Corporation on April 7, 1997, has indicated its intention to vote
for the proposal.
The affirmative vote of a majority of the Common Stock
present and entitled to vote on this proposal is required to
approve the adoption of the Stock Purchase Plan and the
reservation of 100,000 shares of Common Stock thereunder. The
Board of Directors believes that the adoption of the Stock
Purchase Plan is in the best interest of the Corporation and its
Stockholders and recommends that you vote FOR approval of the
Stock Purchase Plan and the reservation of the shares. If not
otherwise specified, Proxies will be voted FOR approval of this
proposal.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as
independent public accountants for fiscal 1997. Arthur Andersen
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LLP has acted as independent public accountants for the
Corporation since its inception in 1995. Representatives of that
firm are expected to be present at the meeting, will have the
opportunity to make a statement if they desire to do so and will
be available to respond to questions. The Board of Directors has
established an Audit Committee, presently consisting of two
outside directors, the purpose of which is to review the scope
and results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters
that will be presented for action at the meeting. Should any such
matters be presented, the proxies grant power to the proxy
holders to vote shares represented by the proxies in the
discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the
1998 Annual meeting of the Stockholders of the Corporation must
be received by the Corporation for inclusion in the proxy
statement and form of proxy relating to that meeting no later
than January 2, 1998.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by
the Corporation. Solicitation will be made primarily by mail, but
regular employees of the Corporation may solicit proxies
personally, by telephone, facsimile transmission or telegram.
Brokers, nominees, custodians and fiduciaries are requested to
forward solicitation materials to obtain voting instructions from
beneficial owners of stock registered in their names, and the
Corporation will reimburse such parties for their reasonable
charges and expenses in connection therewith.
San Jose, California
April 29, 1997
Attachment AA-33
THERMOQUEST CORPORATION
EMPLOYEES' STOCK PURCHASE PLAN
1. Definitions. As used in this Employees' Stock Purchase
Plan of ThermoQuest Corporation, the following terms shall have
the meanings respectively assigned to them below:
(a) Base Compensation means annual or annualized base
compensation, exclusive of overtime, bonuses, contributions to
employee benefit plans, or other fringe benefits, sales
commissions, moving expense reimbursements or other special
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payments.
(b) Beneficiary means the person designated as beneficiary
on the Participant's Membership Agreement or, if no such
beneficiary is named, the person to whom the Option is
transferred by will or under the applicable laws of descent and
distribution.
(c) Board means the board of directors of the Company.
(d) Code means the Internal Revenue Code of 1986, as
amended.
(e) Company means ThermoQuest Corporation, a Delaware
corporation.
(f) Company Stock means the common stock, $.01 par value,
of the Company.
(g) Eligible Employee means a person who is eligible under
the provisions of Section 7 to receive an Option as of a
particular Grant Date.
(h) Enrollment Agreement means an agreement whereby a
Participant authorizes the Company to withhold payroll deductions
from his or her Gross Compensation.
(i) Exercise Date means a date not more than one year after
a Grant Date, as determined by the Board, on which Options must
be exercised by Eligible Employees.
(j) Grant Date means a date specified by the Board on which
Options are to be granted to Eligible Employees.
(k) Gross Compensation means Base Compensation plus sales
commissions, overtime pay and cash bonuses.
(1) Market Value means, as of a particular date, the last
sale price of the Company Stock if such stock is reported on the
American Stock Exchange, or if not so reported, the average of
bid and asked prices of the Company Stock last quoted by NASDAQ
in the over-the-counter market on such date, as the case may be.
(m) Option means an option to purchase shares of Stock
granted under the Plan.
(n) Option Shares means shares of Stock purchasable under
an Option, which shares may not be transferred by the Participant
until at least six months after the Exercise Date.
(o) Participant means an Eligible Employee to whom an
Option is granted and who authorizes the Company to withhold
payroll deductions by completing an Enrollment Agreement.
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(p) Plan means this Employees' Stock Purchase Plan of the
Company, as amended from time to time.
(q) Related Corporation means any corporation which is a
parent corporation of the Company, as defined in Section 425(e)
of the Code, and any corporation controlled by that parent
corporation or the Company.
(r) Rule 16b-3 means Rule 16b-3 and any successor rule
promulgated under Section 16 of the Securities Exchange Act of
1934, as amended.
(s) Section 423 means Section 423 of the Code.
2. Purpose of the Plan. The Plan is intended to
encourage ownership of Company Stock by employees of the Company
and to provide additional incentive for the employees to promote
the success of the business of the Company. It is intended that
the Plan shall be an "employee stock purchase plan" within the
meaning of Section 423.
3. Term of the Plan. The Plan shall become effective on
November 1, 1997. No option shall be granted under the Plan
after November 2, 2007.
4. Administration of the Plan. The Plan shall be
administered by the Board, which annually shall determine whether
to grant Options under the Plan, shall specify which dates shall
be Grant Dates and Exercise Dates, and shall fix the respective
maximum percentages of each Participant's Gross Compensation
which may be withheld for the purpose of purchasing shares of
Company Stock; provided, that, the maximum aggregate percentage
of each Participant's Gross Compensation which may be withheld
for the purpose of purchasing shares of stock under this Plan and
all other employees stock purchase plans (as defined in Section
423(b) of the Code) administered by a Related Corporation and in
which Eligible Employees may participate shall not exceed ten
percent of the Participant's Gross Compensation. The Board shall
have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine
the terms of Options granted under the Plan, and to make all
other determinations necessary or advisable for the
administration of the Plan.
The Board may appoint a committee, consisting of
"non-employee directors" as defined in Rule 16b-3, to administer
the Plan and may, in its sole and absolute discretion, delegate
any or all of the functions specified herein regarding
administration of the Plan to such committee.
5. Termination and Amendment of Plan. The Board may
terminate or amend the Plan at any time; provided, however, that
no amendment, unless approved by the holders of a majority of the
issued and outstanding shares of Company Stock shall be effective
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if it would cause the Plan to fail to satisfy the requirements of
Rule 16b-3. No termination of or amendment to the Plan may
adversely affect the rights of a Participant with respect to any
Option held by the Participant as of the date of such termination
or amendment.
6. Shares of Stock Subject to the Plan. No more than an
aggregate of 100,000 shares of Company Stock may be issued or
delivered pursuant to the exercise of Options granted under the
Plan, subject to adjustments made in accordance with Section 9.8.
Option Shares may be either shares of Company Stock which are
authorized but unissued or shares of Company Stock held by the
Company in its treasury. If an Option expires or terminates for
any reason without having been exercised in full, the unpurchased
Option Shares shall become available for other Options granted
under the Plan. The Company shall, at all times during which
Options are outstanding, reserve and keep available shares of
Company Stock sufficient to satisfy such Options, and shall pay
all fees and expenses incurred by the Company in connection
therewith. In the event of any capital change in the outstanding
Company Stock as contemplated by Section 9.8, the number of
shares of Company Stock reserved and kept available by the
Company shall be appropriately adjusted.
7. Persons Eligible to Receive Options. Each employee of
the Company shall be granted an Option on each Grant Date on
which such employee meets all of the following requirements:
(a) The employee has completed at least six months of
continuous employment for the Company or a Related Corporation.
Employment shall include any leave of absence for military
service, illness or other bona fide purpose which does not exceed
the longer of 90 days or the period during which the absent
employee's reemployment rights are guaranteed by statute or
contract.
(b) The employee is customarily employed by the Company for
more than 20 hours per week and for more than five months per
calendar year.
(c) The employee will not, after grant of the Option, own
stock possessing five percent or more of the total combined
voting power or value of all classes of stock of the Company or
of any Related Corporation. For purposes of this paragraph (c),
the rules of Section 425(d) of the Code shall apply in
determining the stock ownership of the employee, and stock which
the employee may purchase under outstanding options shall be
treated as stock owned by the employee.
(d) Upon grant of the Option, the employee's rights to
purchase stock under all employee stock purchase plans (as
defined in Section 423(b) of the Code) of the Company and its
Related Corporations will not accrue at a rate which exceeds
$25,000 of fair market value of the Stock (determined as of the
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Grant Date for such Option) for each calendar year in which such
Option is outstanding at any time. The accrual of rights to
purchase Stock shall be determined in accordance with Section
423(b) (8) of the Code.
8. Dates for Granting Options. Options shall be granted
on each date designated by the Board as a Grant Date.
9. Terms and Conditions of Options.
9.1. General. All Options granted on a particular Grant
Date shall comply with the terms and conditions set forth in
Sections 9.3 through 9.12, and each Option shall be identical
except as to the number of shares of Company Stock purchasable
under the Option, which shall be determined in accordance with
Section 9.2.
9.2. Number of Shares. The maximum number of shares of
Company Stock which a Participant shall be permitted to purchase
shall be equal to the amount of the Participant's Gross
Compensation permitted to be withheld for purchasing Company
Stock during the period running from the Grant Date to the
Exercise Date, divided by the purchase price determined in
accordance with Section 9.3. The number of shares which a
Participant is permitted to purchase may be further limited by
the amount of payroll deductions actually withheld as of the
Exercise Date.
9.3. Purchase Price. The purchase price of Option Shares
shall be 95 percent of the Market Value of Company Stock as of
the Grant Date. If the Grant Date shall fall on a Saturday,
Sunday or other legal holiday, the Market Value shall be
determined as of the trading day immediately preceding the Grant
Date.
9.4. Restrictions on Transfer. Options may not be
transferred otherwise than by will or under the laws of descent
and distribution, or pursuant to a qualified domestic relations
order. An Option may not be exercised by anyone other than the
Participant during the lifetime of the Participant. Option
Shares may not be sold or otherwise transferred by the
Participant until at least six months after the Exercise Date.
The Company shall have the right to place a legend on all stock
certificates representing Option Shares setting forth the
restriction on transferability of such shares.
9.5. Expiration. Each Option shall expire at the close of
business on the Exercise Date or on such earlier date as may
result from the operation of Section 9.6.
9.6. Termination of Employment of Participant. If a
Participant ceases for any reason, voluntary or involuntary
(other than death or retirement), to be continuously employed by
the Company or a Related Corporation, his or her Option shall
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immediately expire, and the Participant's accumulated payroll
deductions shall be returned by the Company with interest
pursuant to Section 9.12. For purposes of this Section 9.6, a
Participant shall be deemed to be employed throughout any leave
of absence for military service, illness or other bona fide
purpose which does not exceed the longer of ninety days or the
period during which the Participant's reemployment rights are
guaranteed by statute or by contract. If the Participant does
not return to active employment prior to the termination of such
period, his or her employment shall be deemed to have ended on
the 91st day of such leave of absence.
9.7 Retirement or Death of Participant. If a Participant
retires or dies, the Participant or, in the case of death, his or
her Beneficiary, shall be entitled to withdraw the Participant's
accumulated payroll deductions with interest pursuant to Section
9.12, or to purchase shares on the Exercise Date to the extent
that the Participant would have been so entitled had he or she
continued to be employed by the Company. The number of shares
purchasable shall be limited by the amount of the participant's
accumulated payroll deductions as of the date of his or her
retirement or death. Accumulated payroll deductions shall be
applied by the Company toward the purchase of shares unless the
Participant or Beneficiary withdraws such funds prior to the
Exercise Date.
9.8 Capital Changes Affecting the Stock. In the event
that, between the Grant Date and the Exercise Date of an Option,
a stock dividend is paid or becomes payable in respect of Company
Stock or there occurs a split-up or contraction in the number of
shares of Company Stock, the number of shares for which the
Option may thereafter be exercised and the price to be paid for
each such share shall be proportionately adjusted. In the event
that, after the Grant Date, there occurs a reclassification or
change of outstanding shares of Company Stock or a consolidation
or merger of the Company with or into another corporation or a
sale or conveyance, substantially as a whole, of the property of
the Company, the Participant shall be entitled on the Exercise
Date to receive shares of stock or other securities equivalent in
kind and value to the shares of stock he or she would have held
if he or she had exercised the Option in full immediately prior
to such reclassification, change, consolidation, merger, sale or
conveyance and had continued to hold such shares (together with
all other shares and securities thereafter issued in respect
thereof) until the Exercise Date. In the event that there is to
occur a recapitalization involving an increase in the par value
of Company Stock which would result in a par value exceeding the
exercise price under an outstanding Option, the Company shall
notify the Participant of such proposed recapitalization
immediately upon its being recommended by the Board to the
Company's shareholders, after which the Participant shall have
the right to exercise his or her Option prior to such
recapitalization; if the Participant fails to exercise the Option
prior to recapitalization, the exercise price under the Option
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shall be appropriately adjusted. In the event that, after the
Grant Date, there occurs a dissolution or liquidation of the
Company, except pursuant to a transaction to which Section 425(a)
of the Code applies, each Option to purchase Company Stock shall
terminate, but the Participant holding such Option shall have the
right to exercise his or her Option prior to such dissolution or
liquidation.
9.9. Payroll Deductions. Any Eligible Employee, who wishes
to authorize payroll deductions for the purchase of Option Shares
under the Plan, must complete and return to the human resources
department of the Company prior to the Grant Date an Enrollment
Agreement indicating the total percentage (which shall be a full
integer between one and the maximum determined by the Board in
accordance with Section 4 hereof) of his or her Gross
Compensation which is to be withheld each pay period. Prior to
the Exercise Date, the Participant shall be permitted only once
to (a) withdraw accumulated payroll deductions, (b) discontinue
payroll deductions, or (c) decrease, but not increase, the
percentages of Gross Compensation withheld. The Participant may
not recommence payroll deductions at any time prior to the
Exercise Date.
9.10. Exercise of Options. On the Exercise Date the
Participant shall be deemed to have exercised his or her Option
to purchase the maximum number of Option Shares purchasable by
his or her accumulated payroll deductions, provided that:
(a) The number of Option Shares of Company Stock
purchasable shall not exceed the number of shares the Participant
is entitled to purchase pursuant to Section 9.2.
(b) If the total number of Option Shares of Company Stock
which all Participants elect to purchase, together with any
Option Shares of Company Stock already purchased under the Plan,
exceeds the total number of shares of Company Stock which may be
purchased under the Plan pursuant to Section 6, the number of
shares of Company Stock which each Participant is permitted to
purchase shall be decreased pro rata based on the Participant's
accumulated payroll deductions with respect to Company Stock in
relation to all accumulated payroll deductions currently being
withheld under the Plan with respect to Company Stock.
(c) If the number of Option Shares purchasable includes a
fraction, such number shall be adjusted to the next smaller whole
number and the purchase price shall be adjusted accordingly.
(d) Notwithstanding the foregoing, a Participant may notify
the Company's human resources department at least 30 days prior
to an Exercise Date, by completing an Enrollment/Change
Agreement, that he or she elects not to exercise his or her
Option and desires to withdraw his or her accumulated payroll
deductions withheld under the Plan, as provided in Section 9.9.
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9.11. Delivery of Stock. Within a reasonable time after
the Exercise Date, the Company shall deliver or cause to be
delivered to the Participant a certificate or certificates for
the number of shares purchased by the Participant. If any law or
applicable regulation of the Securities and Exchange Commission
or other body having jurisdiction in the premises shall require
that the Company or the Participant take any action in connection
with the shares being purchased under the Option, delivery of the
certificate or certificates for such shares shall be postponed
until the necessary action shall have been completed, which
action shall be taken by the Company at its own expense, without
unreasonable delay. The Participant shall have no rights as a
shareholder in respect of shares for which he or she has not
received a certificate.
9.12. Return of Accumulated Payroll Deductions. In the
event that the Participant or the Beneficiary is entitled to the
return of accumulated payroll deductions, whether by reason of
voluntary withdrawal, termination of employment, retirement,
death, or in the event that accumulated payroll deductions exceed
the price of Option Shares purchased, such amount, together with
interest thereon at the rate fixed by the Board of Directors
(which rate for a particular plan year running from Grant Date to
Exercise Date shall be fixed annually by the Board of Directors
prior to the commencement of such period), shall be returned
within a reasonable time by the Company to the Participant or the
Beneficiary, as the case may be; provided, however, that
interest shall not be paid on any amount returned which is less
than the purchase price of one Option Share of Company Stock for
which such payroll deductions were withheld.
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FORM OF PROXY
THERMOQUEST CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 2, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Richard W. K. Chapman, John
N. Hatsopoulos and Jonathan W. Painter, or any one of them in the
absence of the others, as attorneys and proxies of the
undersigned, with full power of substitution, for and in the name
of the undersigned, to represent the undersigned at the Annual
Meeting of the Stockholders of ThermoQuest Corporation, a
Delaware corporation (the "Company"), to be held on Monday, June
2, 1997, at 10:00 a.m. at The Hyatt Regency Hotel, Hilton Head,
South Carolina, and at any adjournment or postponement thereof,
and to vote all shares of common stock of the Company standing in
the name of the undersigned on April 7, 1997, with all of the
powers the undersigned would possess if personally present at
such meeting:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
Please mark your
[ x ] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [ ] WITHHELD [ ]
______________________________________
FOR all nominees listed at right, except authority to vote
withheld for the following nominees (if any)
Nominees: Richard W. K. Chapman, George N. Hatsopoulos, Frank
Jungers, Earl R. Lewis, Anthony J. Pellegrino, Michael E. Porter
and Arvin H. Smith.
FOR AGAINST ABSTAIN
2. Approve management proposal
to adopt the [ ] [ ] [ ]
Corporation's employees'
stock purchase plan
and reserve 100,000 shares of the common stock
for issuance thereunder.
3. In their discretion on such other matters as may properly
come before the Meeting.
The shares represented by this Proxy will be voted "FOR" the
39
PAGE
<PAGE>
proposals set forth above if no instruction to the contrary is
indicated or if no instruction is given.
Copies of the Notice of Meeting and of the Proxy Statement have
been received by the undersigned.
SIGNATURE(S)_______________________________________
DATE_________________
Note: 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.
AA971210007
40
