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
Thermo Optek 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 filing by registration statement number, or the
PAGE
<PAGE>
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:
AA971210061
PAGE
<PAGE>
THERMO OPTEK CORPORATION
8E Forge Parkway
Franklin, Massachusetts 02038
April 29, 1997
Dear Stockholder:
The enclosed Notice calls the 1997 Annual Meeting of the
Stockholders of Thermo Optek 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,
EARL R. LEWIS
Chairman and Chief Executive
Officer
PAGE
<PAGE>
THERMO OPTEK CORPORATION
8E Forge Parkway
Franklin, Massachusetts 02038
April 29, 1997
To the Holders of the Common Stock of
THERMO OPTEK CORPORATION
NOTICE OF ANNUAL MEETING
The 1997 Annual Meeting of the Stockholders of Thermo Optek
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 five 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.
SANDRA L. LAMBERT
Secretary
2
PAGE
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of
Thermo Optek 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 8E
Forge Parkway, Franklin, Massachusetts 02038. 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 five 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
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 management
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 the election of directors and the
adoption of the employees' stock purchase plan, broker
3
PAGE
<PAGE>
"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 48,450,000 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.
4
PAGE
<PAGE>
- PROPOSAL 1 -
ELECTION OF DIRECTORS
Five 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.
George N. Hatsopoulos Dr. Hatsopoulos, 70, has been chairman of
the board and a director of the
Corporation since its inception in August
1995. He has served as chairman and
chief executive officer of Thermo
Electron since he founded that company in
1956 and as its president from 1956 to
January 1997. Dr. Hatsopoulos is also a
director of Photoelectron Corporation,
Thermedics Inc., Thermo Ecotek
Corporation, Thermo Electron, Thermo
Fibertek Inc., Thermo Instrument,
ThermoQuest Corporation and ThermoTrex
Corporation. Dr. Hatsopoulos is the
brother of John N. Hatsopoulos, the chief
financial officer and a vice president of
the Corporation.
5
PAGE
<PAGE>
Stephen R. Levy Mr. Levy, 56, has been a director of the
Corporation since November 1995. Since
November 1995, Mr. Levy has been
president of The Apogee Group, Inc., a
company that he founded that provides
consulting services in high technology.
Mr. Levy served as chairman of the board
and chief executive officer of BBN
Corporation, a high technology company,
from 1983 to 1994 and was president and
chief executive officer of BBN
Corporation from 1976 to 1983. He
retired from BBN Corporation in 1995 and
is currently its chairman emeritus. He
is also a director of BBN Corporation and
OneWave, Inc.
Earl R. Lewis Mr. Lewis, 53, has been chief executive
officer and a director of the Corporation
since its inception in August 1995. He
also served as the corporation's
president from August 1995 to 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 is
a director of Thermo BioAnalysis
Corporation, ThermoQuest Corporation,
ThermoSpectra Corporation and Trex
Medical Corporation.
Robert A. McCabe Mr. McCabe, 62, has been a director of
the Corporation since March 1996. He has
served as president of Pilot Capital
Corporation, which is engaged in private
investments and provides acquisition
services, since 1987. Prior to that
time, Mr. McCabe was a managing director
of Lehman Brothers Inc., an investment
banking firm. Mr. McCabe is also a
director of Borg-Warner Security
Corporation, Church & Dwight Company and
Thermo Electron.
6
PAGE
<PAGE>
Arvin H. Smith Mr. Smith, 67, has been a director of the
Corporation since its inception in August
1995. Mr. Smith has been the chairman of
the board and chief executive officer of
Thermo Instrument since March 1997 and
1986, respectively, and was president of
Thermo Instrument from 1986 to March
1997. Mr. Smith also has been an
executive vice president of Thermo
Electron since 1991 and 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
Mr. Levy (Chairman) and Mr. McCabe. 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. Levy and Mr.
McCabe (Chairman). 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 eight times, the Audit Committee met twice 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
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. Hatsopoulos, Mr. Lewis
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
7
PAGE
<PAGE>
reimbursed for out-of-pocket expenses incurred in attending such
meetings.
Deferred Compensation Plan
Under the 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
556.47 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 eligible director was granted
an option to purchase 45,000 shares upon the effective date of
the Corporation's initial public offering. In addition, each new
outside director who joined the Board of Directors during 1996
was granted an option to purchase 45,000 shares of Common Stock.
The size of awards to new directors appointed to the Board of
Directors after 1996 is reduced by 11,250 shares in each
subsequent 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
8
PAGE
<PAGE>
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 another 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 another 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 future grant under the
Directors Plan.
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. Directors who are also executive
officers of the Corporation are required to comply with a
9
PAGE
<PAGE>
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 a certain number of 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>
<CAPTION>
Thermo Thermo
Thermo Optek Instrument Electron
Name (1) Corporation Systems Inc. Corporation
(2) (3) (4)
<S> <C> <C> <C>
Thermo Instrument Systems Inc. 45,000,000 N/A N/A
George N. Hatsopoulos 110,000 143,314 3,512,279
Kristine A. Langdon 75,500 7,417 16,452
Stephen R. Levy 47,556 0 0
Earl R. Lewis 254,000 128,233 124,184
Robert A. McCabe 48,000 53,504 47,515
Robert J. Rosenthal 113,500 61,441 31,350
Arvin H. Smith 98,000 431,667 513,038
All directors and current
executive officers as a group
(9 persons) 872,556 925,472 4,916,584
</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.
Hatsopoulos, Ms. Langdon, Mr. Levy, Mr. Lewis, Mr. McCabe,
Dr. Rosenthal, Mr. Smith and all directors and executive
officers as a group include 90,000, 75,000, 45,000, 225,000,
45,000, 112,500, 90,000 and 778,500 shares, respectively,
that such person or group has the right to acquire within 60
days of March 1, 1997, through the exercise of stock
10
PAGE
<PAGE>
options. Shares of the Common Stock beneficially owned by
Ms. Langdon include a total of 500 shares held by her as
custodian for two minor children. Shares of the Common
Stock beneficially owned by Mr. Lewis include 2,500 shares
owned by his spouse and a total of 2,000 shares owned by two
sons. 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. Hatsopoulos, Ms. Langdon, Mr. Lewis, Mr.
McCabe, Dr. Rosenthal, Mr. Smith and all directors and
executive officers as a group include 93,750, 7,124,
112,500, 10,995, 60,890, 234,375 and 600,529 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 529, 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, of which the trustees, who have investment
power over its assets, are executive officers of Thermo
Electron (the "ESOP"). Shares beneficially owned by Dr.
Hatsopoulos include 21,368 shares held by his spouse and 50
shares allocated to the account of his spouse maintained
pursuant to the ESOP. Shares beneficially owned by Mr.
Lewis include 2,390 shares held by Mr. Lewis' spouse. 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. Hatsopoulos, Ms. Langdon, Mr.
Lewis, Mr. McCabe, Dr. Rosenthal, Mr. Smith and all
directors and executive officers as a group include
1,499,500, 15,750, 121,536, 9,375, 30,900, 222,411 and
2,426,731 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 as a group include 2,164, 1,717 and 7,139 full
shares, respectively, allocated to accounts maintained
pursuant to the ESOP. Shares of the common stock of Thermo
Electron beneficially owned by Mr. McCabe and all directors
and executive officers as a group include 34,725 full shares
11
PAGE
<PAGE>
allocated to Mr. McCabe's account under Thermo Electron's
deferred compensation plan for directors. Shares of the
common stock of Thermo Electron beneficially owned by Dr.
Hatsopoulos include 89,601 shares held by Dr. Hatsopoulos'
spouse, 168,750 shares held by a QTIP trust of which Dr.
Hatsopoulos' spouse is the trustee, 39,937 shares held by a
family trust of which Dr. Hatsopoulos' spouse is the
trustee, and 153 shares allocated to the account of Dr.
Hatsopoulos' spouse maintained pursuant to the ESOP. Shares
beneficially owned by Ms. Langdon include 310 shares held by
her as custodian for two minor children. No director or
executive officer beneficially owned more than 1% of the
common stock of Thermo Electron outstanding as of March 1,
1997, except Dr. Hatsopoulos who beneficially owned 2.3% of
such stock; all directors and executive officers as a group
beneficially owned approximately 3.2% of the Thermo Electron
common stock outstanding as of such date.
(5) As of March 1, 1997, Thermo Instrument beneficially owned
93% 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.
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 Instrument and its parent company, 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. Mr. Stephen R. Levy, a director of the Corporation,
filed one Form 4 late reporting one transaction. Thermo
Instrument filed three Forms 4 late, reporting a total of three
transactions consisting of the lapse and cancellation of options
to purchase the Common Stock granted to its employees. Thermo
Electron filed six Forms 4 late, reporting a total of 21
transactions, including the three transactions described above
for Thermo Instrument, an additional 16 open market purchases of
Common Stock, one additional lapse and cancellation without
exercise of options granted to its employees to purchase the
Common Stock and one grant to employees of options to purchase
the Common Stock.
12
PAGE
<PAGE>
EXECUTIVE COMPENSATION
NOTE: All share amounts reported below have, in all cases, been
adjusted as applicable to reflect a three-for-two stock split
distributed in June 1996 with respect to the common stock of
Thermo Electron 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 its two other
most highly compensated executive officers 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.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Securities
Underlying
Annual Options (No. of
Name and Fiscal Compensation Shares All Other
Principal Position Year Salary Bonus and Company (1)Compensation
(2)
<S> <C> <C> <C> <C> <C> <C> <C>
Earl R. Lewis (3) 1996 $72,000 $64,000 225,000 (TOC) $11,550 (4)
Chief Executive 2,000 (TFG)
Officer
2,000 (TLT)
2,000 (TSR)
1995 $123,250 $76,500 150 (TMO) $6,750
7,500 (TBA)
5,000 (TLZ)
Robert J. Rosenthal 1996 $135,000 $120,000 112,500 (TOC) $4,500
(5)
150 (TMO)
President and
Chief Operating 10,000 (TMQ)
Officer
1995 $119,945 $97,000 15,000 (TMO) $4,500
2,000 (TBA)
Kristine A. Langdon 1996 $100,000 $40,000 75,000 (TOC) $5,344
Vice President 5,000 (TMQ)
1995 $ 93,000 $35,000 -- $5,198
</TABLE>
(1) Options granted by the Corporation are designated in the
table as "TOC." In addition, the named executive officers
have been granted options to purchase common stock of Thermo
Electron companies from time to time as part of Thermo
Electron's stock option program. Options have been granted
to the named executive officers during the last two fiscal
years in the following Thermo Electron companies: 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), ThermoLase
Corporation (designated in the table as TLZ), ThermoLyte
Corporation (designated in the table as TLT), ThermoQuest
Corporation (designated in the table as TMQ) and Thermo
Sentron Inc. (designated in the table as TSR).
(2) Represents the amount of matching contributions made by the
individual's employer on behalf of named executive officers
participating in the Thermo Electron 401(k) plan or the
13
PAGE
<PAGE>
Nicolet Retirement Savings Plan.
(3) Mr. Lewis was appointed chief executive officer of the
Corporation in August 1995 and vice president of Thermo
Electron in September 1996. Mr. Lewis was also appointed
chief operating officer of Thermo Instrument effective
January 1996, and as such, is responsible for the day-to-day
operations of Thermo Instrument. A portion of Mr. Lewis'
annual cash compensation (salary and bonus) has been
allocated to and paid by Thermo Instrument and Thermo
Electron in each of the last two fiscal years for the time
he devoted to his responsibilities to these companies. The
annual cash compensation (salary and bonus) reported in the
table for Mr. Lewis represents the amount paid by the
Corporation and all other sources solely for Mr. Lewis'
services as its chief executive officer. For calendar 1996
and 1995, approximately 40% and 85%, respectively, of Mr.
Lewis' salary and bonus earned in all capacities throughout
the Thermo Electron organization was paid by the Corporation
for his services as chief executive officer. In addition,
Mr. Lewis has been granted options to purchase shares of the
common stock of Thermo Electron and certain of its
subsidiaries other than the Corporation from time to time by
Thermo Electron or such other subsidiaries. These options
are not reported in this table as they were granted as
compensation for service to other Thermo Electron companies
in capacities other than in his capacity as the chief
executive officer of the Corporation.
(4) In addition to the matching contribution referred to in
footnote (2), such amount includes $4,800, which represents
the amount of compensation attributable to an interest-free
loan provided to Mr. Lewis pursuant to the Corporation's
stock holding assistance plan. See "Relationship with
Affiliates - Stock Holding Assistance Plan."
(5) Dr. Rosenthal was appointed president of the Corporation in
April 1997. He was appointed an executive vice president
and chief operating officer of the Corporation in December
1996. Prior to that date, he was a senior vice president of
the Corporation.
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 officers. 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
Number of Total Annual Rates of Stock
Securities Options Exercise Price Appreciation for
Underlying Granted to Price Expira- Option Term (2)
Options Employees in Per tion
Name Granted (1) Fiscal Year Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earl R. Lewis 225,000 (TOC) 12.1% $12.00 04/11/08 $2,148,750 $5,773,500
(3)
2,000 (TFG) 0.4% (4) $10.00 09/12/08 $ 15,920 $42,760
2,000 (TLT) 0.6% (4) $10.00 03/11/08 $ 15,920 $42,760
2,000 (TSR) 0.4% (4) $14.00 03/11/08 $ 22,280 $59,880
Robert J. 112,500 (TOC) 6.0% $12.00 04/11/08 $1,074,375 $2,886,750
Rosenthal
150 (TMO) 0.01% (4) $42.79 05/22/99 $ 1,011 $2,124
10,000 (TMQ) 0.4% (4) $13.00 02/08/08 $ 103,500 $278,000
Kristine A. 75,000 (TOC) 4.0% $12.00 04/11/08 $ 716,250 $1,924,500
Langdon
5,000 (TMQ) 0.2% (4) $13.00 02/08/08 $ 51,750 $ 139,000
</TABLE>
14
PAGE
<PAGE>
(1) All of the options granted during 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
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
another 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 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) Mr. Lewis has been granted options to purchase shares of the
common stock of Thermo Electron and its subsidiaries other
than the Corporation. These options are not reported in the
table as they were granted as compensation for service to
other Thermo Electron companies in capacities other than Mr.
Lewis' capacity as chief executive officer of the
Corporation.
(4) These options were granted under stock option plans
15
PAGE
<PAGE>
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 officers. 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
Shares Options at Fiscal Value of
Acquired Year-End Unexercised
on Value (Exercisable/ In-the-Money
Name Company Exercise Realized Unexercisable) (1) Options
<S> <C> <C> <C> <C> <C>
Earl R. Lewis Thermo Optek -- -- 225,000 /0 $0/--
(2)
Thermo -- -- 2,000 /0 $ 1,500/--
Fibergen
ThermoLyte -- -- 0 /2,000 --/$0(5)
(5)
Thermo Sentron -- -- 2,000 /0 $0/--
Robert J. Thermo Optek -- -- 112,500 /0 $0/--
Rosenthal
Thermo -- -- 30,900 /0(3) $390,976/--
Electron
Thermo -- -- 2,000 /0 $6,250/--
BioAnalysis
Thermo -- -- 60,890 /0 $1,064,971/--
Instrument
ThermoQuest -- -- 10,000 /0 $0/--
ThermoSpectra -- -- 2,500 /0 $4,688/--
Kristine A. Therm Optek -- -- 75,000 /0 $0/--
Langdon (4)
ThermoQuest -- -- 5,000 /0 $0/--
ThermoSpectra -- -- 400/0 $750/--
</TABLE>
(1) All of the options reported outstanding at the end of the
fiscal year were immediately exercisable as of fiscal
year-end, 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 granting corporation at the exercise price if the
optionee ceases to be employed by such corporation or
another 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 generally 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) Mr. Lewis 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
16
PAGE
<PAGE>
Thermo Electron companies in capacities other than in his
capacity as chief executive officer of the Corporation.
(3) Options to purchase 15,750 shares of the common stock of
Thermo Electron granted to Dr. Rosenthal 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 employee'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) Ms. Langdon became an employee of the Corporation on April
1, 1994 and was named president of Thermo Vision
Corporation, a wholly owned subsidiary of the Corporation,
in January 1995. Prior to that date, she had been employed
by Thermo Electron, and had been granted options to purchase
shares of common stock of Thermo Electron and its
subsidiaries other than the Corporation as compensation for
her service to Thermo Electron. These options are not
reported in the table as they were granted as compensation
for service to other Thermo Electron companies and prior to
her service to the Corporation.
(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 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
17
PAGE
<PAGE>
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
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
18
PAGE
<PAGE>
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
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
19
PAGE
<PAGE>
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 option awards. The option awards made in 1996 to the
named executive officers 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.
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,
Mr. Lewis, the Corporation's chief executive officer, received a
loan in the principal amount of $194,029.50 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
20
PAGE
<PAGE>
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
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).
1996 CEO Compensation
Cash compensation for Mr. Earl R. Lewis is reviewed by both
the Committee and the human resources committees of the board of
directors of Thermo Electron and Thermo Instrument due to his
responsibilities as the Corporation's chief executive officer, as
the chief operating officer of Thermo Instrument and as a vice
president of Thermo Electron. Each committee evaluates Mr.
Lewis' performance and proposed compensation using a process
similar to that used for the other executive officers of the
Corporation. At the Thermo Instrument and Thermo Electron level,
Mr. Lewis is evaluated on his performance related to the
Corporation, as well as other operating units of Thermo
Instrument and Thermo Electron for which he is responsible,
weighted in accordance with the amount of time and effort devoted
to each operation. The Corporation's Committee then reviews the
analysis and determinations of the Thermo Electron committee,
makes an independent assessment of Mr. Lewis' performance as it
relates to the Corporation using criteria similar to that used
for the other executive officers of the Corporation, and then
agrees to an appropriate allocation of Mr. Lewis' compensation to
be paid by the Corporation.
In December 1996, the Committee conducted its review of Mr.
Lewis' proposed salary for 1997 and bonus for 1996 performance.
The Committee concurred in the recommendation made by the Thermo
Electron committee and agreed to an allocation of 40% of Mr.
Lewis' total cash compensation for 1996 to the Corporation, based
on his relative responsibilities at the Corporation, Thermo
21
PAGE
<PAGE>
Instrument and Thermo Electron.
Awards to Mr. Lewis of options to purchase shares of the
Corporation's Common Stock are reviewed and determined
periodically by the Committee using criteria similar to that used
for the other executive officers of the Corporation. The
Committee awarded to Mr. Lewis 225,000 options to purchase shares
of the Corporation's Common Stock in fiscal 1996. In addition to
stock option awards by the Committee, Mr. Lewis may receive
awards to purchase shares of the Common Stock of Thermo Electron
or its other 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. The stock option awards to Mr.
Lewis in fiscal 1996 with respect to shares of the following
companies were awarded under this program: Thermo Fibergen Inc.,
ThermoLyte Corporation and Thermo Sentron Inc.
Robert A. McCabe (Chairman)
Stephen R. Levy
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 June 7,
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 Thermo Optek Corporation,
the American Stock Exchange Market Value Index and the Dow Jones
Total Return Index
for the Diversified Technology Industry Group from June 7, 1996
to December 27, 1996.
[GRAPH APPEARS HERE]
06/07/96 12/27/96
TOC 100 82
AMEX 100 97
DJ DTC 100 115
The total return for the Corporation's Common Stock (TOC),
the American Stock Exchange Market Value Index (AMEX) and the Dow
22
PAGE
<PAGE>
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
"TOC."
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 as a publicly held,
majority-owned subsidiary. 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
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
23
PAGE
<PAGE>
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
the Corporation. The Corporation was assessed an annual fee equal
to 1.0% of the Corporation's revenues for these services in
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 $3,506,000
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
24
PAGE
<PAGE>
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 will 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 October 1995, Thermo Electron purchased $10,000,000
principal amount of the Corporation's 5% Convertible Subordinated
Debentures due 2000, at par and on terms indentical to those
offered to unaffiliated investors.
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 leases office and manufacturing space to
ThermoSpectra Corporation ("ThermoSpectra"), a majority-owned
subsidiary of Thermo Instrument, and Nicolet Biomedical Inc.
("Nicolet Biomedical"), a wholly owned subsidiary of Thermo
Electron, pursuant to an arrangement whereby the Corporation
charges ThermoSpectra and Nicolet Biomedical their allocated
share of the occupancy expenses of the Corporation's principal
Wisconsin facility, based on the space ThermoSpectra and Nicolet
Biomedical utilize. The Corporation recorded operating lease
income of $913,000 in 1996 from these affiliates. These leases
are effective until December 31, 1998, but may be terminated by
ThermoSpectra and Nicolet Biomedical upon 30 days' prior notice
25
PAGE
<PAGE>
to the Corporation.
The Corporation purchases and sells products in the ordinary
course of business with other subsidiaries of Thermo Electron.
In 1996, the Corporation sold a total of $28,155,000 of products
to Thermo Electron subsidiaries and purchased a total of
$8,680,000 of products from such companies.
During 1996, the Corporation acquired various businesses
from Thermo Instrument. In April 1996, the Corporation acquired
the Mattson Instruments and Unicam Divisions of Analytical
Technology, Inc. for $36,558,000 in cash. In November 1996, the
Corporation acquired Applied Research Laboratories S.A., V.G.
Elemental and four related sales offices for an aggregate of
$55,196,000 in cash and the assumption of $16,593,000 in debt.
The purchase price paid by the Corporation is subject to a
post-closing adjustment to be negotiated with the former owner of
these businesses.
The Corporation's cash equivalents are invested in a
repurchase agreement with Thermo Electron, pursuant to which the
Corporation in effect lends cash to Thermo Electron, which Thermo
Electron collateralizes with investments principally consisting
of corporate notes, United States government agency securities,
money market funds, commercial paper, and other marketable
securities, in the amount of at least 103% of such obligation.
The Corporation's funds subject to the repurchase agreement will
be readily convertible into cash by the Corporation and have an
original maturity of three months or less. 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 such employees to purchase the
Common Stock in the open market. During 1996, Mr. Lewis received
a loan in the principal amount of $194,029.50 under this plan to
purchase 15,000 shares of the Common Stock. The loan to Mr.
Lewis 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
26
PAGE
<PAGE>
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
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 2,065
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
27
PAGE
<PAGE>
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.
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
28
PAGE
<PAGE>
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
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 $9.31.
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 92% 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
29
PAGE
<PAGE>
proposal.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as
independent public accountants for fiscal 1997. 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.
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.
30
PAGE
<PAGE>
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.
Franklin, Massachusetts
April 29, 1997
31
PAGE
<PAGE>
Attachment AA-34
THERMO OPTEK CORPORATION
EMPLOYEES' STOCK PURCHASE PLAN
1. Definitions. As used in this Employees' Stock Purchase
Plan of Thermo Optek 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
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 Thermo Optek 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
32
PAGE
<PAGE>
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.
(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
33
PAGE
<PAGE>
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
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
34
PAGE
<PAGE>
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 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
35
PAGE
<PAGE>
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
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
36
PAGE
<PAGE>
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
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
37
PAGE
<PAGE>
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.
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
-------- -------
38
PAGE
<PAGE>
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.
39
PAGE
<PAGE>
FORM OF PROXY
THERMO OPTEK 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 John N. Hatsopoulos, Earl R.
Lewis 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 Thermo Optek 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.
FOR WITHELD
1 ELECTION OF DIRECTORS OF THE COMPANY (see [ ] [ ]
reverse).
FOR all nominees listed at right, except
authority to vote withheld for the
following nominees: (if any)
Nominees: George N. Hatsopoulos, Stephen
R. Levy, Earl R. Lewis, Robert A. McCabe
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.
40
PAGE
<PAGE>
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
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.
