THERMOQUEST CORP \DE\, DEF 14A, 1998-04-30

THERMOQUEST CORP \DE\
DEF 14A, 1998-04-30
LABORATORY ANALYTICAL INSTRUMENTS

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<PAGE>

THERMOQUEST CORPORATION

2215 Grand Avenue Parkway
Austin, Texas 78728-3812

April 23, 1998
Dear Stockholder:

The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
ThermoQuest Corporation. I respectfully request that all Stockholders attend
this meeting, if possible.

Our Annual Report for the year ended January 3, 1998, 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 & 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
<PAGE>

THERMOQUEST CORPORATION

2215 Grand Avenue Parkway
Austin, Texas 78728-3812

April 23, 1998

To the Holders of the Common Stock of
THERMOQUEST CORPORATION

NOTICE OF ANNUAL MEETING

The 1998 Annual Meeting of the Stockholders of ThermoQuest Corporation (the
"Corporation") will be held on Monday, June 1, 1998, at 10:45 a.m. at The Hyatt
Regency Scottsdale Resort at Gainey Ranch, 7500 East Doubletree Ranch Road,
Scottsdale, Arizona, 85258. The purpose of the meeting is to consider and take
action upon the following matters:

1. Election of seven directors.

2. 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 receive notice
of and to vote at the meeting is April 3, 1998.

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.

SANDRA L. LAMBERT
Secretary
<PAGE>

PROXY STATEMENT

The enclosed proxy is solicited by the board of directors of ThermoQuest
Corporation (the "Corporation") for use at the 1998 Annual Meeting of the
Stockholders (the "Meeting") to be held on Monday, June 1, 1998, at 10:45 a.m.
at The Hyatt Regency Scottsdale Resort at Gainey Ranch, Scottsdale, Arizona, and
any adjournment thereof. The mailing address of the executive office of the
Corporation is 2215 Grand Avenue Parkway, Austin, Texas 78728-3812. This proxy
statement and the enclosed proxy were first furnished to Stockholders of the
Corporation on or about April 29, 1998.

VOTING PROCEDURES

The board of directors intends to present to the meeting the election of
seven directors, constituting the entire board of directors.

The representation in person or by proxy of a majority of the outstanding
shares of the common stock of the Corporation, $.01 par value, ("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,
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. Withholding authority to vote for a nominee for director 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. With respect to the election of directors, 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 3, 1998, consisted of
51,193,841 shares of Common Stock. Only Stockholders of record at the close of
business on April 3, 1998, are entitled to vote at the meeting. Each share is
entitled to one vote.

- 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

1
<PAGE>

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 instruments, and Thermo Instrument's parent company, Thermo Electron
Corporation ("Thermo Electron"), a provider of diversified products and services
for the biomedical, instrument and environmental markets, is reported under the
caption "Stock Ownership." All of the nominees are currently directors of the
Corporation.

<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------

RICHARD W. K. CHAPMAN Dr. Chapman, 53, has been the chief 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.
- ------------------------------------------------------------------------------------------------------------------

GEORGE N. HATSOPOULOS Dr. Hatsopoulos, 71, has been 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 Mr. John N. Hatsopoulos, the chief financial officer and a
senior vice president of the Corporation.
- ------------------------------------------------------------------------------------------------------------------

FRANK JUNGERS Mr. Jungers, 70, 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. 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, 54, has been a director of the Corporation since April 1997 and
chairman of the board since December 1997. Mr. Lewis has been president
and chief executive officer of Thermo Instrument since March 1997 and
January 1998, respectively, was chief operating officer of Thermo
Instrument from January 1996 to January 1998, 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. He
has been a vice president of Thermo Electron since September 1996. Prior
to Mr. Lewis' appointment as chief executive officer of Thermo Instrument,
he was also chief executive officer of Thermo Optek Corporation,
manufacturer of analytical instruments based upon the measurement of energy
and light and used in materials analysis, characterization and preparation,
from its inception in August 1995 to January 1998, and was the president of
its predecessor, Thermo Jarrell Ash Corporation, for more than five years
prior to 1995. Mr. Lewis is a director of Metrika Systems Corporation,
ONIX Systems Inc., Thermo BioAnalysis Corporation, Thermo Instrument,
Thermo Optek Corporation, ThermoSpectra Corporation and Thermo Vision
Corporation.
- ------------------------------------------------------------------------------------------------------------------

ANTHONY J. PELLEGRINO Mr. Pellegrino, 57, has been a director of 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.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

2
<PAGE>

MICHAEL E. PORTER Dr. Porter, 50, 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, 68, has been a director of the Corporation since its inception
in June 1995. Mr. Smith has been the chairman of the board of Thermo
Instrument since March 1997, and previously served as the chief executive
officer and president of Thermo Instrument from 1986 to January 1998 and
March 1997, respectively. Mr. Smith is also chairman of the board of
Thermo Power Corporation, a majority-owned subsidiary of Thermo Electron
that manufactures traffic control systems and industrial refrigeration
equipment. He has been an executive vice president of Thermo Electron
since 1991 and was a senior vice president of Thermo Electron since 1991.
Mr. Smith is also a director of ONIX Systems Inc., Thermo BioAnalysis
Corporation, Thermo Instrument, Thermo Optek Corporation, Thermo Power
Corporation, ThermoSpectra Corporation and Thermo Vision Corporation.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

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, approves 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 twice and the human resources committee
met three times during fiscal 1997. Each director attended at least 75% of all
meetings of the board of directors and committees on which he served held during
fiscal 1997.

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 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 acquisition, without the prior approval of
the board of directors, 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

3
<PAGE>

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, 1998, deferred
units equal to 2,466.83 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 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 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 immediately 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, 1998, options to purchase 90,000 shares of Common Stock had been
granted and were outstanding under the Directors Plan, no options had lapsed or
been exercised, and options to purchase 135,000 shares of Common Stock were
available for future grant.

STOCK OWNERSHIP POLICIES FOR DIRECTORS

During 1996, the human resources committee of the board of 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. The chief executive officer of the
Corporation is 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."

4
<PAGE>

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, 1998,
with respect to (i) each director, (ii) each executive officer named in the
summary compensation table under the heading "Executive Compensation" and (iii)
all directors and executive officers as a group. In addition, the following
table sets forth the beneficial ownership of Common Stock, as of March 1, 1998,
with respect to each person who was known by the Corporation to own beneficially
more than 5% of the outstanding shares of Common Stock.

While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, all such persons disclaim beneficial ownership of the
shares of Common Stock beneficially owned by Thermo Electron.

<TABLE>
<CAPTION>
THERMOQUEST THERMO INSTRUMENT
NAME (1) CORPORATION (2) SYSTEMS INC.(3) THERMO ELECTRON (4)
- ----------------------------------- ------------------------ --------------------------- -------------------------

<S> <C> <C> <C>
Thermo Electron Corporation (5) 45,058,152 N/A N/A
Richard W. K. Chapman 240,650 169,905 82,775
George N. Hatsopoulos 92,600 179,141 3,423,423
Frank Jungers 47,146 50,413 246,754
Earl R. Lewis 125,000 203,726 84,037
Anthony J. Pellegrino 91,000 0 70,875
Michael E. Porter 93,820 0 2210
Arvin H. Smith 90,000 539,583 519,038
Philip L. Warren 95,000 71,027 22,149
All directors and executive
officers as a group (10 persons) 980,716 1,321,386 5,264,088
</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 officers as a group include
225,000, 92,600, 45,000, 125,000, 90,000, 90,000, 90,000, 85,000 and
941,000 shares, respectively, that such person or group has the right to
acquire within 60 days of March 1, 1998, 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 1,146, 1,320 and 2,466
full shares allocated through March 1, 1998, 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, 1998; all directors and
executive officers as a group beneficially owned 1.9% of the Common Stock
outstanding as of such date.

5
<PAGE>

(3) The shares of the common stock of Thermo Instrument shown in the table
reflect a five-for-four split of such stock distributed in October 1997 in
the form of a 25% stock dividend. 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 140,624, 117,187, 17,257, 172,085, 292,968, 37,967, and
867,150 shares, respectively, that such person or group had the right to
acquire within 60 days after March 1, 1998, 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, 663 and 2,298 shares, respectively, allocated through
March 1, 1998, 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, 1998 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 636 shares held by
his spouse. Shares of the common stock of Thermo Instrument beneficially
owned by Dr. Hatsopoulos includes 26,710 shares held by his spouse and 63
shares allocated to the account of his spouse maintained pursuant to the
ESOP. Shares of the Common Stock of Thermo Instrument beneficially owned
by Mr. Lewis include 2,987 shares held by his spouse. No director or
executive officer beneficially owned more than 1% of the common stock of
Thermo Instrument outstanding as of March 1, 1998; all directors and
executive officers as a group beneficially owned approximately 1.1% of the
common stock of Thermo Instrument outstanding as of March 1, 1997.

(4) 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 80,584, 1,649,500, 10,375, 84,037, 70,875, 228,411, 19,686 and
2,898,940 shares, respectively, that such person or group has the right to
acquire within 60 days of March 1, 1998, 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 as a
group include 2,266, 1,717 and 7,445 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, 4,000 shares in a
second family trust and 153 shares allocated to the account of his spouse
maintained pursuant to the ESOP. Shares beneficially owned by Dr.
Hatsopoulos also include 50,000 shares that a family trust, of which Dr.
Hatsopoulos' spouse is the trustee, has the right to acquire within 60 days
of March 1, 1998 through the exercise of stock options. Shares of common
stock of Thermo Electron owned by Mr. Jungers and all directors and
executive officers as a group include 80,427 allocated to Mr. Jungers'
account maintained pursuant to Thermo Electron's deferred compensation plan
for directors. Shares of the common stock of Thermo Electron beneficially
owned by Mr. Jungers include 4,500 shares held by his spouse. No director
or executive officer beneficially owned more than 1% of the common stock of
Thermo Electron outstanding as of March 1, 1998, except for Dr.
Hatsopoulos, who beneficially owned 2.1% of such stock as of such date; all
directors and executive officers as a group beneficially owned
approximately 3.3% of the Thermo Electron common stock outstanding as of
such date.

(5) As of March 1, 1998, Thermo Electron, primarily through its majority-owned
subsidiary Thermo Instrument, beneficially owned 88.0% of the outstanding
Common Stock. Thermo Electron's address is 81 Wyman Street, Waltham,
Massachusetts 02254-9046. As of March 1, 1998, Thermo Electron had the
power to elect all of the members of the Corporation's Board of Directors.

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 1997, except in the following instances.
Thermo Electron filed six Forms 4 late, reporting a total of 16 transactions,
including nine open market purchases of shares of Common Stock, one open market
sale of a convertible debenture and

and

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<PAGE>

six transactions associated with the grant and exercise of options to purchase
Common Stock granted to employees under its stock option program.

EXECUTIVE COMPENSATION

NOTE: All share amounts reported below, in all cases, have been adjusted as
applicable to reflect a five-for-four stock split with respect to the common
stock of Thermo Instrument distributed in October 1997 in the form of a 25%
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 three 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.

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
-------------------
ANNUAL COMPENSATION SECURITIES UNDERLYING
NAME AND FISCAL -------------------------- OPTIONS (NO. OF SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY (1) COMPENSATION (2)
- ------------------------- ------- ------------ ------------ ----------------------- -----------------

<S> <C> <C> <C> <C> <C>
Richard W. K. Chapman 1997 $180,000 $153,000 300 (TMO) $ 42,787 (3)
President and 1996 $170,000 $125,000 225,000 (TMQ) $ 6,130 (3)
Chief Executive Officer 150 (TMO)
30,000 (TBA)
2,000 (TFG)
2,000 (TLT)
15,000 (TOC)
2,000 (TSR)
4,000 (TXM)
1995 $159,500 $ 95,000 -- $ 6,749
- ------------------------------------------------------------------------------------------------------------------------
Philip L. Warren 1997 $158,625 $ 70,000 10,000 (TMQ) $10,159 (4)
Vice President 300 (TMO)
1996 $152,817 $ 80,000 75,000 (TMQ) $ 3,849 (4)
11,250 (TOC)
1995 $146,931 $ 50,000 15,000 (TMO) $ 2,901
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 Electron

7
<PAGE>

(designated in the table as TMO), Thermo BioAnalysis Corporation
(designated in the table as TBA), 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
amounts include $10,480 and $6,659, respectively, which represent 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 in fiscal 1997. See "Relationship with Affiliates
- Stock Holding Assistance Plan." The amount reported for 1997 for Dr.
Chapman includes $28,147 for relocation expenses reimbursed to Dr. Chapman.

(4) In addition to the matching contribution referred to in footnote (2), such
amounts include $3,443 and $1,853, respectively, which represent 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 in fiscal 1996. See "Relationship with Affiliates - Stock
Holding Assistance Plan."

STOCK OPTIONS GRANTED DURING FISCAL 1997

The following table sets forth information concerning individual grants of
stock options made during fiscal 1997 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 1997.

<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1997
- ---------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF STOCK
NUMBER OF SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING OPTIONS EMPLOYEES IN PRICE PER EXPIRATION OPTION TERM (2)
---------------
Name GRANTED (1) FISCAL YEAR SHARE DATE 5% 10%
- --------------------- -------------- ------------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>

Richard W. K. Chapman 300 (TMO) 0.02% (3) $34.20 6/3/00 $ 1,617 $ 3,396
- ---------------------------------------------------------------------------------------------------------------------
Philip L. Warren 10,000 (TMQ) 1.30% $17.01 12/19/04 $69,200 $161,400
300 (TMO) 0.02% (3) $34.20 6/3/00 $ 1,617 $ 3,396
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The options granted during the fiscal year are immediately exercisable as
of the end of the fiscal year. 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 company. The granting corporation may exercise
its repurchase rights within six months after the termination of the
optionee's employment. 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. 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.

8
<PAGE>

(2) The amounts shown in 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 1997 AND FISCAL YEAR-END VALUES

The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options held at the end of
fiscal 1997 by the Corporation's chief executive officer and the other named
executive officer. No stock appreciation rights were exercised or were
outstanding during fiscal 1997.

<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF
UNEXERCISED
OPTIONS AT
SHARES FISCAL VALUE OF
ACQUIRED VALUE YEAR-END UNEXERCISED
ON REALIZED (EXERCISABLE/ IN-THE-MONEY
Name COMPANY EXERCISE (1) UNEXERCISABLE) (2) OPTIONS
- ------------------------- ----------------- -------- --------- ----------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Richard W. K. Chapman (3) ThermoQuest -- -- 225,000 /-- $1,125,000 /--
Thermo Electron -- -- 450 /-- (4) $ 2,756 /--
Thermo -- -- 30,000 /-- $ 285,000 /--
BioAnalysis
Thermo Fibergen -- -- 2,000 /-- $ 0 /--
ThermoLyte -- -- 0 /2,000 --/ 0 (5)
Thermo Optek -- -- 15,000 /-- $ 71,700 /--
Thermo Sentron -- -- 2,000 /-- $ 0 /--
Trex Medical -- -- 4,000 /-- $ 12,500 /--
- ------------------------------------------------------------------------------------------------------------------
Philip L. Warren ThermoQuest -- -- 85,000 /-- $ 384,900 /--
Thermo Electron -- -- 19,686 /-- (4) $ 287,510 /--
Thermo -- -- 1,000 /-- $ 9,500 /--
BioAnalysis
Thermo Fibertek -- -- 3,375 /-- $ 31,010 /--
Thermo Instrument -- -- 37,967 /-- $ 888,767 /--
Thermo Optek -- -- 11,250 /-- $ 53,776 /--
ThermoSpectra -- -- 800 /-- $ 50 /--
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.

(2) All of the options reported outstanding at the end of the fiscal year are
immediately exercisable as of the end of the fiscal year, 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
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

9
<PAGE>

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 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.

(3) 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.

(4) Options to purchase 45,000 and 15,000 shares, respectively, of the common
stock of Thermo Electron granted to Dr. Chapman and Mr. Warren,
respectively, are subject to the same terms as described in footnote (2),
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.

(5) 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 for executives, the Committee follows guidelines established
by the Human resources committees of the board of directors of its parent
companies, 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 (collectively referred to as "total compensation").

The Committee believes that the total 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.

ESTABLISHING COMPETITIVENESS

External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's total compensation
for its executives is assessed by comparing it to market data provided by
compensation consultants 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.

10
<PAGE>

Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total 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. For its review of the compensation of the
other officers of the Corporation, the Committee follows a substantially similar
process.

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 approximate the
mid-point of competitive data. The salary increases in 1997 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 company,
Thermo Electron, and applied throughout the Thermo Electron organization. The
methodology incorporates measures of operating returns which are 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 fiscal
1997 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 fiscal 1997 performance in each instance exceeded the median
potential bonus.

STOCK OPTION PROGRAM

The primary goal of the Corporation and its parent company, Thermo
Electron, 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 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

11
<PAGE>

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 for each officer the annual
value of all options to purchase shares of the Corporation and other companies
within the Thermo Electron organization that vest in the next year and compares
the individual's total compensation using this value to competitive data. The
Committee uses a modified Black-Scholes option pricing model to determine the
value of an option award. In addition, the Committee considers the aggregate
amount of net awards to purchase shares of Common Stock granted to all employees
over the last five years to monitor the number of aggregate awards to all
employees. In reviewing the aggregate number of awards, the Committee considers
such factors as the size of the company, its stage of development, and its
growth strategy, as well as the aggregate awards and option practices of
comparably situated companies.

The Committee periodically awards options based on its assessment of the
total compensation of each executive, the 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. Such a
discretionary award to purchase shares of the common stock was made by the
committee to one of the named executive officers in 1997. The option awards
made to the named executive officers in 1997 with respect to the common stock of
Thermo Electron, the parent company of Thermo Instrument, was made by the Thermo
Electron human resources committee pursuant to a program that awards options to
certain eligible employees annually based on the number of shares of Thermo
Electron held by the employee, as an incentive to buy and hold Thermo Electron
shares.

STOCK OWNERSHIP POLICIES

The Committee established a stock holding policy for executive officers of
the Corporation in 1996 that required executive officers to own a multiple of
their compensation in shares of the Corporation's Common Stock. For the chief
executive officer, the multiple was one times his base salary and reference
bonus for the calendar year. For all other officers, the multiple was 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. The policy
was amended in 1998 to apply only to the chief executive officer.

In order to assist officers in complying with the policy, the Committee
also adopted in 1996 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, of which amounts
$168,522.80 and $111,905.26, respectively, were outstanding as of April 23,
1998. This plan was also amended in 1998 to apply only to the chief executive
officer. See "Relationship with Affiliates - Stock Holding Assistance Plan."

The Committee also has 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.

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

12
<PAGE>

executives does not approach the $1 million threshold, and it is believed that
stock incentive plans of the Corporation qualify as "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).

1997 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 as part of its subjective evaluation, among other things, his
leadership and general management of the Corporation.

No award of options to purchase shares of the Common Stock was made to Dr.
Chapman in fiscal 1997. In addition to stock option awards by the Committee,
Dr. Chapman may receive awards to purchase shares of the common stock of
majority-owned subsidiaries of Thermo Electron 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. No stock option
awards were made to Dr. Chapman in fiscal 1997 under this stock option program.
The award to purchase shares of common stock of Thermo Electron granted to Dr.
Chapman in fiscal 1997 was made by the Thermo Electron human resources committee
under a program that 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

<PAGE>

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 only 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 as of the
last trading day of the Corporation's fiscal year.

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
JANUARY 2, 1998

[GRAPH APPEARS HERE]

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

14
<PAGE>

of the Thermo Subsidiaries, including the Corporation, 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
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. In
addition, 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 the Corporation. The
Corporation was assessed an annual fee equal to 1.0% of the Corporation's
revenues for these services in fiscal 1996 and 1997. The annual fee has been
reduced to 0.8% of the Corporation's total revenues for fiscal 1998. The fee is
reviewed annually and may be changed by mutual agreement of the Corporation and
Thermo Electron. During fiscal 1997, Thermo Electron assessed the Corporation
$4,389,000 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

15
<PAGE>

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. In 1997, the Corporation paid Thermo
Electron $14,000 under the Tax Allocation Agreement.

From time to time, the Corporation may transact business with other
companies in the Thermo Group.

In July 1997, the Corporation acquired three business units within the
Laboratory Products Group of the Life Sciences International PCL subsidiary
("Life Sciences") of Thermo Instrument. The Corporation also agreed to acquire
Life Sciences' Hypersil operations. Thermo Instrument acquired Life Sciences in
March 1997. The aggregate purchase price for these businesses was approximately
$160.4 million, and consisted of: (i) $107.3 million in cash, (ii) 1,000 shares
of the Corporation's Common Stock and (iii) the assumption of $53.1 million of
debt payable to Thermo Instrument. The purchase price represents the sum of the
net tangible book value of the Laboratory Products businesses and Hypersil as of
June 28, 1997, plus a percentage of Thermo Instrument's total cost in excess of
net assets acquired associated with its acquisition of Life Sciences, based on
the aggregate 1996 revenues of the Laboratory Products businesses of Hypersil
relative to Life Sciences' 1996 consolidated revenues. In December 1997, the
Corporation was notified by Thermo Instrument that the Corporation would receive
an adjustment to the purchase price of $3.5 million in the first quarter of 1998
based on Thermo Instrument's final determination of the tangible book value of
the businesses acquired by the Corporation and a final determination of Thermo
Instrument's total cost in excess of net assets acquired associated with its
acquisition of Life Sciences.

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 January 3, 1998, Thermo
BioAnalysis paid the Corporation approximately $74,250 under this arrangement.

The Corporation purchases and sells products and/or services in the
ordinary course of business with other subsidiaries of Thermo Electron. In
1997, the Corporation sold a total of $7,090,000 of products and/or services to
Thermo Electron subsidiaries and purchased a total of $23,791,000 of products
and/or services from such companies.

The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with Barclays Bank, which includes a $150 million
credit facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide
credit support for overdraft obligations of other participants. As of January
3, 1998, the Corporation had a positive cash balance of approximately $747,000,
based on an exchange rate of $1.65/(Pounds)1.00 as of January 3, 1998. For
1997, the average annual interest rate earned on GBP deposits by participants in
this credit arrangement was approximately 6.5% and the average annual interest
rate paid on overdrafts was approximately 7.2%.

16
<PAGE>

The Corporation, along with certain other Thermo Subsidiaries, also
participates in a notional pool arrangement with ABN AMRO, which includes a $50
million credit facility. Only European-based Thermo Subsidiaries participate in
this arrangement. Under this arrangement the Bank notionally combines the
positive and negative cash balances held by the participants to calculate the
net interest yield/expense for the group. The benefit derived from this
arrangement is then allocated based on balances attributable to the respective
participants. Thermo Electron guarantees all of the obligations of each
participant in this arrangement. In addition, funds on deposit under this
arrangement provide credit support for overdraft obligations of other
participants. As of January 3, 1998, the Corporation had a positive cash
balance of approximately $1,224,000, based on an exchange rate of $0.495/NLG1.00
as of January 3, 1998. For 1997, the average annual interest rate earned on NLG
deposits by participants in this credit arrangement was approximately 4.8% and
the average annual interest rate paid on NLG overdrafts was approximately 4.8%.

As of January 3, 1998, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $5,462,000 for amounts due under the Corporate
Services Agreement and related administrative charges, the Tax Allocation
Agreement, for other products and services, and for miscellaneous items, net of
amounts owed to the Corporation by Thermo Electron and its other subsidiaries
for amounts due in connection with the sales of products and services, and for
miscellaneous items. The largest amount of net indebtedness owed by the
Corporation to Thermo Electron and its other subsidiaries since December 29,
1996 was $6,340,000. These amounts do not bear interest and are expected to be
paid in the normal course of business.

As of January 3, 1998, $60,376,000 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 of which amount $168,522.80 was
outstanding as of the date of April 23, 1998. 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 of which
amount $111,905.26 had been repaid as of the end of fiscal 1997. 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. This policy and plan were amended in 1998 to
apply only to the chief executive officer of the Corporation in the future.

APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1998. Arthur Andersen 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.

17
<PAGE>

STOCKHOLDER PROPOSALS

Proposals of Stockholders intended to be presented at the 1999 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 December 29, 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 or 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.

Austin, Texas
April 23, 1998

18
<PAGE>

FORM OF PROXY

THERMOQUEST CORPORATION

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 1, 1998

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

The undersigned hereby appoints Richard W. K. Chapman, John N.
Hatsopoulos and Melissa F. Riordan, 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
1, 1998, at 10:45 a.m. at The Hyatt Regency Scottsdale Resort at Gainey Ranch,
Scottsdale, Arizona, 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 3, 1998, 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.)
<PAGE>

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.

2. 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 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.