<PAGE>
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 (S) 240.14a-11(c) or (S) 240.14a-12
Thermo Fibergen Inc.
--------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Thermo Fibergen Inc.
--------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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 Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
8 Alfred Circle
Bedford, Massachusetts 01730
April 12, 2000
Dear Stockholder:
The enclosed Notice calls the 2000 Annual Meeting of the Stockholders of
Thermo Fibergen Inc. I respectfully request that all Stockholders attend this
meeting, if possible.
Our Annual Report for the year ended January 1, 2000, is enclosed. I hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the meeting.
Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting.
Whether or not you are able to attend the meeting, I urge you to complete your
proxy and return it to our transfer agent, American Stock Transfer & Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the meeting, either in person or by proxy.
I would appreciate your immediate attention to the mailing of this proxy.
Yours very truly,
/s/ Yiannis A. Monovoukas
YIANNIS A. MONOVOUKAS
President and Chief Executive Officer
<PAGE>
[LOGO]
8 Alfred Circle
Bedford, Massachusetts 01730
April 12, 2000
To the Holders of the Common Stock of
THERMO FIBERGEN INC.
NOTICE OF ANNUAL MEETING
The 2000 Annual Meeting of the Stockholders of Thermo Fibergen Inc. (the
"Corporation") will be held on Wednesday, May 17, 2000, at 2:00 p.m. at the
Marriott Long Wharf Hotel, 296 State Street, Boston, Massachusetts. The purpose
of the meeting is to consider and take action upon the following matters:
1. Election of six directors.
2. A proposal recommended by the Board of Directors to amend the
Corporation's equity incentive plan to restate the limitation on the
size of awards to any recipient in a year.
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 receive notice
of and to vote at the meeting is March 31, 2000.
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 promptly sign and return the enclosed proxy in the accompanying
envelope, which requires no postage if mailed in the United States.
This Notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.
SANDRA L. LAMBERT
Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Thermo
Fibergen Inc. (the "Corporation") for use at the 2000 Annual Meeting of the
Stockholders to be held on Wednesday, May 17, 2000, at 2:00 p.m. at the Marriott
Long Wharf Hotel, 296 State Street, Boston, Massachusetts, and any adjournment
thereof. The mailing address of the executive office of the Corporation is 8
Alfred Circle, Bedford, Massachusetts 01730. This proxy statement and the
enclosed proxy were first furnished to Stockholders of the Corporation on or
about April 17, 2000.
VOTING PROCEDURES
The board of directors intends to present to the meeting the election of
six directors, constituting the entire board of directors, and a proposal to
restate the limitation on the potential size of awards to any recipient in a
year under the Corporation's equity incentive plan.
The representation in person or by proxy of a majority of the outstanding
shares of common stock, $.01 par value, of the Corporation ("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. Votes of
Stockholders of record who are present at the meeting in person or by proxy,
abstentions and broker non-votes (as defined below) are counted as present or
represented at the meeting for purposes of determining whether a quorum exists.
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 plurality of the shares of Common Stock present or represented by
proxy and entitled to vote on the election. Withholding authority to vote for a
nominee for director will have no effect on the outcome of the vote. For the
management proposal, the affirmative vote of a majority of shares of Common
Stock present or represented by proxy and entitled to vote on the matter is
necessary for approval. Any instruction to abstain from voting on the management
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 management proposal. If you hold your shares of Common Stock
through a broker, bank or other representative, generally the broker or your
representative may only vote the Common Stock that it holds for you in
accordance with your instructions. However, if it has not timely received your
instructions, the broker or your representative may vote on certain matters for
which it has discretionary voting authority. If a broker or your representative
cannot vote on a particular matter because it does not have discretionary voting
authority, this is a "broker non-vote" on that matter. With regard to the
election of directors and the management proposal, broker non-votes will have no
effect on the outcome of either vote.
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 March 31, 2000, consisted of
14,161,100 shares of Common Stock. Only Stockholders of record at the close of
business on March 31, 2000 are entitled to vote at the meeting. Each share is
entitled to one vote.
<PAGE>
- PROPOSAL 1 -
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting, each to hold office until
his or her successor is elected and qualified or until his or her 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 Common Stock and of the
common stock of the Corporation's parent company, Thermo Fibertek Inc. ("Thermo
Fibertek"), a manufacturer of papermaking and paper-recycling equipment, and
Thermo Fibertek's parent company, Thermo Electron Corporation ("Thermo
Electron"), a provider of products and services in measurement instrumentation,
medical devices, power generation and resource recovery, is reported under the
caption "Stock Ownership." All of the nominees are currently directors of the
Corporation.
- --------------------------------------------------------------------------------
Anne T. Barrett Ms. Barrett, 70, has been a director of the Corporation
since July 1996. Ms. Barrett has been an independent
consultant on investor relations and communications
matters since her retirement from Thermo Electron in
November 1993. Prior to that time, Ms. Barrett was
director of corporate communications for Thermo Electron
for more than five years.
- --------------------------------------------------------------------------------
Francis L. McKone Mr. McKone, 65, has been a director of the Corporation
since March 1998. Mr. McKone is the chief executive
officer and chairman of the board of Albany
International Corp., a worldwide supplier of paper-
machine fabrics, positions he has held since 1993 and
1998, respectively. From 1984 to 1998, he was also
president of Albany International Corp. and from 1984 to
1993, he was that company's co-chief executive officer.
He is also a director of Albany International
Corporation and Thermo Fibertek Inc.
- --------------------------------------------------------------------------------
Yiannis A. Monovoukas Dr. Monovoukas, 39, has been president, chief executive
officer and a director of the Corporation since its
incorporation in February 1996. Dr. Monovoukas was a
corporate business analyst with Thermo Electron from
July 1995 to February 1996. From 1993 through June 1995,
Dr. Monovoukas was a graduate student at the Harvard
Business School.
- --------------------------------------------------------------------------------
Jonathan W. Painter Mr. Painter, 41, has been a director of the Corporation
since its incorporation in February 1996. Mr. Painter
has been executive vice president, operations, of Thermo
Fibertek since September 1997, was treasurer of Thermo
Electron from August 1994 through June 1997, and was
treasurer of Thermo Fibertek from October 1994 through
June 1997. Mr. Painter is also a director of Thermo
BioAnalysis Corporation.
- --------------------------------------------------------------------------------
William A. Rainville Mr. Rainville, 58, has been chairman of the board and a
director of the Corporation since its incorporation in
February 1996. Mr. Rainville has been president and
chief executive officer of Thermo Fibertek since its
inception in November 1991 and a director of Thermo
Fibertek since January 1992. Mr. Rainville has been the
chief operating officer, recycling and resource
recovery, of Thermo Electron since September 1998. He
was a senior vice president of Thermo Electron from
March 1993 through September 1998. Mr. Rainville is also
a director of Thermo Ecotek Corporation, Thermo
Fibertek, Thermo TerraTech Inc. and ThermoRetec
Corporation.
- --------------------------------------------------------------------------------
Roger D. Wellington Mr. Wellington, 73, has been a director of the
Corporation since April 1998. Mr. Wellington serves as
the president and chief executive officer of Wellington
Consultants, Inc. and of Wellington Associates Inc.,
international business consulting firms he founded in
1994 and 1989, respectively. Mr. Wellington is also a
director of Photoelectron Corporation and Thermo
Electron.
- --------------------------------------------------------------------------------
2
<PAGE>
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 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"). The present members
of the audit committee are Mr. McKone (Chairman) and Mr. Wellington. 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. McKone and Mr. Wellington (Chairman). The human
resources committee reviews the performance of senior members of management,
approves executive compensation and administers the Corporation's stock option
and other stock-based compensation plans. The Corporation does not have a
nominating committee of the board of directors. The board of directors met four
times, the audit committee met twice and the human resources committee met two
times during fiscal 1999. Each director attended at least 75% of all meetings of
the board of directors and committees on which he or she served that were held
during fiscal 1999.
Compensation of Directors
Cash Compensation
Outside directors receive an annual retainer of $2,000 and a fee of $1,000
per meeting for attending regular meetings of the board of directors and $500
per meeting 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. Monovoukas, Mr. Painter and Mr. Rainville are all employees of
Thermo Electron companies and do not receive any cash compensation from the
Corporation for their services as directors. Directors are also reimbursed for
out-of-pocket expenses incurred in attending such meetings.
Deferred Compensation Plan
Under the Corporation's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of his
cash fees until he ceases to serve as a director, dies or retires from his
principal occupation. In the event of a change of control or proposed change of
control of the Corporation that is not approved by the board of directors,
deferred amounts become payable immediately. Any of the following are deemed to
be a change of control: (i) the acquisition by any person of 40% or more of the
outstanding common stock or voting securities of Thermo Electron; (ii) the
failure of the Thermo Electron board of directors to include a majority of
directors who are "continuing directors", which term is defined to include
directors who were members of Thermo Electron's board on July 1, 1999, or who
subsequent to that date were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior to such transaction and
(b) no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
Amounts deferred pursuant to the Deferred Compensation Plan are valued at the
end of each quarter as units of Common Stock. When payable, amounts deferred may
be disbursed solely in shares of Common Stock accumulated under the Deferred
Compensation Plan. As of January 1, 2000, a total of 25,000 shares of Common
Stock were reserved for issuance under the Deferred Compensation Plan and
deferred units equal to approximately 3,097 shares of Common Stock were
accumulated under the Deferred Compensation Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan (the "Directors Plan")
provides for the grant of stock options to purchase shares of Common Stock to
outside directors as additional compensation for their service as directors.
Under the Directors Plan, outside directors are automatically granted options to
purchase 1,000 shares of Common Stock annually, commencing with the annual
meeting of the Stockholders to be held in 2000. The annual grant is 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 are immediately exercisable at any time from and after the grant
date of the option and expire on the third anniversary of the grant date.
3
<PAGE>
The exercise price for options granted under the Directors Plan is the
average of the closing prices of the Common Stock as reported on the American
Stock Exchange (or other principal market on which the Common Stock is then
traded) for the five trading days immediately preceding and including the date
of grant, or, if the shares are not then traded, at the last price per share
paid by third parties in an arms-length transaction prior to the option grant.
As of January 31, 2000, options to purchase 45,000 shares of Common Stock had
been granted to directors and were outstanding under the Directors Plan, no
options had lapsed or been exercised, and options to purchase 155,000 shares of
Common Stock were available for future grant.
Stock Ownership Policy for Directors
The human resources committee of the board of directors (the "Committee")
has 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 within a three-year period.
The chief executive officer of the Corporation is required to comply with a
separate stock holding policy established by the Committee, which is described
in "Committee Report on Executive Compensation - Stock Ownership Policy."
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as of the common stock of Thermo Fibertek, the Corporation's parent
company, and Thermo Electron, Thermo Fibertek's parent company, as of January
31, 2000, with respect to (i) each director, (ii) the chief executive officer
and (iii) all directors and current executive officers as a group. In addition,
the following table sets forth the beneficial ownership of Common Stock as of
January 31, 2000, with respect to each person who was known by the Corporation
to own beneficially more than 5% of the outstanding shares of Common Stock.
While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, all such persons disclaim beneficial ownership of the
shares of Common Stock owned by Thermo Electron.
<TABLE>
<CAPTION>
Thermo Thermo Thermo Electron
Name(1) Fibergen Inc.(2) Fibertek Inc.(3) Corporation (4)
------ ---------------- ---------------- ---------------
<S> <C> <C> <C>
Thermo Electron Corporation(5)............. 10,435,100 N/A N/A
Anne T. Barrett............................ 21,000 1,000 3,410
Francis L. McKone.......................... 1,783 3,825 1,000
Yiannis A. Monovoukas...................... 134,450 112,200 18,473
Jonathan W. Painter........................ 21,000 115,594 32,030
William A. Rainville(6).................... 78,000 692,424 361,499
Roger D. Wellington........................ 12,413 17,250 55,795
All directors and current executive
officers as a group (8 persons)......... 300,646 1,107,686 1,144,269
</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 Common Stock beneficially owned by Ms. Barrett, Dr. Monovoukas,
Mr. Painter, Mr. Rainville, Mr. Wellington and all directors and current
executive officers as a group include 20,000, 120,000, 20,000, 75,000,
11,000 and 278,000 shares, respectively, that such person or group had the
right to acquire within 60 days of January 31, 2000, through the exercise
of stock options. Shares beneficially owned by Mr. McKone, Mr. Wellington
and by all directors and current executive officers as a group include
1,683, 1,413 and 3,096 shares, respectively, allocated through January 1,
2000, to their respective accounts maintained under the Deferred
Compensation Plan. None of the directors or the chief executive officer
beneficially owned more than 1% of the Common Stock outstanding as of
January 31, 2000; all directors and current executive officers as a group
beneficially owned 2.11% of the Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Fibertek beneficially owned by Dr.
Monovoukas, Mr. Painter, Mr. Rainville, Mr. Wellington and all directors
and current executive officers as a group include 109,200, 98,900, 550,000,
8,250 and 908,850 shares, respectively, that such person or group had the
right to acquire
4
<PAGE>
within 60 days of January 31, 2000, through the exercise of stock options.
Shares of the common stock of Thermo Fibertek beneficially owned by Mr.
Painter include 15 shares held in a custodial account for the benefit of a
minor child. Shares beneficially owned by Mr. McKone and by all directors
and current executive officers as a group include 2,825 shares allocated
through January 1, 2000, to Mr. McKone's account maintained under the
Thermo Fibertek deferred compensation plan for directors. Except for Mr.
Rainville, who beneficially owned 1.12% of the common stock of Thermo
Fibertek outstanding as of January 31, 2000, none of the directors or the
chief executive officer beneficially owned more than 1% of the common stock
of Thermo Fibertek outstanding as of January 31, 2000; all directors and
current executive officers as a group beneficially owned 1.80% of Thermo
Fibertek common stock outstanding as of such date.
(4) Shares of the common stock of Thermo Electron beneficially owned by Dr.
Monovoukas, Mr. Painter, Mr. Rainville, Mr. Wellington and all directors
and current executive officers as a group include 16,248, 25,015, 294,630,
24,673 and 924,286 shares, respectively, that such person or group had the
right to acquire within 60 days of January 31, 2000, through the exercise
of stock options. Shares of the common stock of Thermo Electron
beneficially owned by Mr. Painter and all directors and current executive
officers as a group include 590 and 3,087 shares, respectively, allocated
through January 31, 2000, to their respective accounts maintained pursuant
to Thermo Electron's employee stock ownership plan (the "ESOP"). Shares of
the common stock of Thermo Electron beneficially owned by Mr. Wellington
and by all directors and current executive officers as a group include
26,342 shares allocated through January 1, 2000, to Mr. Wellington's
account maintained under Thermo Electron's deferred compensation plan for
directors. Shares beneficially owned by Ms. Barrett include 1,510 shares
held by a trust of which Ms. Barrett and her spouse are the trustees. None
of the directors or the chief executive officer beneficially owned more
than 1% of the Thermo Electron common stock outstanding as of January 31,
2000; all directors and current executive officers as a group did not
beneficially own more than 1% of the Thermo Electron common stock
outstanding as of such date.
(5) As of January 31, 2000, Thermo Electron, primarily through its majority-
owned subsidiary Thermo Fibertek, beneficially owned approximately 73.69%
of the outstanding Common Stock. Thermo Electron's address is 81 Wyman
Street, Waltham, Massachusetts 02454-9046. As of January 31, 2000, Thermo
Electron had the power to elect all of the members of the Corporation's
board of directors.
(6) As of January 31, 2000, Mr. Rainville also beneficially owned 1,500
redemption rights issued by the Corporation. Each of these rights, issued
in a public offering in September 1996, permits the holder to sell one
share of Common Stock back to the Corporation during certain periods in the
future at a price of $12.75 per share.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's directors and executive officers,
and beneficial owners of more than 10% of the Common Stock, such as Thermo
Electron, to file with the Securities and Exchange Commission initial reports of
ownership and periodic reports of changes in ownership of the Corporation's
securities. Based upon a review of such filings, all Section 16(a) filing
requirements applicable to such persons were complied with during 1999, except
in the following instances. Thermo Electron filed one Form 4 late, reporting a
total of 12 transactions associated with the cancellation, grant, exercise and
lapse of options to purchase Common Stock granted to employees under its stock
option program.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation during the last three fiscal
years for services to the Corporation in all capacities awarded to, earned by or
paid to the Corporation's chief executive officer. 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
5
<PAGE>
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. See "Relationship with Affiliates." Accordingly, the
compensation for these individuals is not reported in the following table.
<TABLE>
<CAPTION>
Summary Compensation Table
- -------------------------------------------------------------------------------------------------------------------
Long Term
Compensation
------------
Securities
Name and Fiscal Annual Compensation Underlying All Other
-------------------
Principal Position Year Salary Bonus Options (1) Compensation (2)
------------------ ---- ------ ----- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Yiannis A. Monovoukas 1999 $136,000 $72,000 500 (TMO) $5,625
President and Chief 1998 $130,000 $48,500 40,000 (TFG) $5,625
Executive Officer 4,098 (TMO)
2,000 (MKA)
2,000 (ONX)
4,000 (RGI)
2,000 (TDX)
79,200 (TFT)
999 (THI)
1,023 (TKN)
2,000 (TRIL)
1997 $120,000 $64,000 400 (TMO) $5,344
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options granted by the Corporation are designated in the table as "TFG."
In addition, Dr. Monovoukas has also been granted options to purchase the
common stock of the following Thermo Electron companies during the last
three fiscal years as part of Thermo Electron's stock option program:
Thermo Electron (designated in the table as TMO), Metrika Systems
Corporation (designated in the table as MKA), ONIX Systems Inc. (designated
in the table as ONX), The Randers Killam Group Inc. (designated in the
table as RGI), Thermedics Detection Inc. (designated in the table as TDX),
Thermo Fibertek (designated in the table as TFT), Thermo Instrument Systems
Inc. (designated in the table as THI), ThermoTrex Corporation (designated
in the table as TKN) and Thermo Trilogy Corporation (designated in the
table as TRIL). Certain options reported in the proxy statement for prior
years have been assumed by parent companies in connection with mergers
effected as part of Thermo Electron's reorganization and have been restated
in the table as options in the parent companies.
(2) Represents the amount of matching contributions made by the Corporation on
behalf of Dr. Monovoukas in connection with his participation in the Thermo
Electron 401(k) plan.
Stock Options Granted During Fiscal 1999
The following table sets forth information concerning individual grants of
stock options made during fiscal 1999 to the Corporation's chief executive
officer. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1999.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1999
- --------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Annual Rates of Stock
Underlying Options Granted to Exercise Price Appreciation for
Granted and Employees in Price Per Expiration Option Term (2)
Name Company (1) Fiscal Year Share Date 5% 10%
---- ----------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Yiannis A. Monovoukas 500 (TMO) 0.02% (3) $14.81 09/22/04 $2,050 $4,521
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The options granted during the fiscal year are immediately exercisable as
of the end of the fiscal year. The shares acquired upon exercise are
subject to repurchase by the granting company at the exercise price if the
optionee ceases to be employed by such company or any other Thermo Electron
company. The granting company may exercise its repurchase rights within six
months after the termination of the optionee's
6
<PAGE>
employment. The repurchase rights lapse ratably over a one-year period and
have a five-year option term, provided that the optionee continues to be
employed by the granting company or another Thermo Electron company. The
granting company 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. Please see
footnote (1) under the Summary Compensation Table on page 6 for the company
abbreviations used in this table.
(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
applicable company, the optionee's continued employment or service as a
director through the option period and the date on which the options are
exercised.
(3) These options were granted under stock option plans maintained by Thermo
Electron companies other than the Corporation and, accordingly, are
reported as a percentage of total options granted to employees of Thermo
Electron and its subsidiaries.
Stock Options Exercised During Fiscal 1999 and Fiscal Year-End Option Values
The following table reports certain information regarding stock option
exercises during fiscal 1999 and outstanding stock options held at the end of
fiscal 1999 by the Corporation's chief executive officer. No stock appreciation
rights were exercised or were outstanding during fiscal 1999.
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1999 And Fiscal 1999 Year-End Option Values
- -------------------------------------------------------------------------------------------------------------
Number of Value of
Securities Unexercised In-
Underlying The-Money
Unexercised Options at
Shares Options at Fiscal Fiscal Year-
Acquired Year-End End
on (Exercisable/ (Exercisable/
Name Company (1) Exercise Value Realized (2) Unexercisable)(2) Unexercisable)
---- ----------- --------- ------------------ ----------------- --------------
<S> <C> <C> <C> <C> <C>
Yiannis A. Monovoukas (TFG) -- -- 120,000 /0 $325,360 /--
(TMO) -- -- 16,248 /0 $ 570 /--
(MKA) -- -- 2,000 /0 $ 0 /--
(ONX) -- -- 2,000 /0 $ 0 /--
(RGI) -- -- 4,000 /0 $ 1,000 /--
(TDX) -- -- 2,000 /0 $ 0 /--
(TBA) -- -- 2,000 /0 $ 16,750 /--
(TFT) -- -- 109,200 /0 $ 77,700 /--
(THI) -- -- 999 /0 $ 0 /--
(TLT) -- -- 0 /2,000 -- /$0 (3)
(TOC) -- -- 6,000 /0 $ 5,430 /--
(TMQ) -- -- 4,000 /0 $ 0 /--
(TSR) -- -- 2,000 /0 $ 1,000 /--
(TRIL -- -- 0 /2,000 -- /$0 (3)
(TKN) -- -- 1,023 /0 $ 56.27 /--
(TXM) -- -- 2,000 /0 $ 0 /--
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All of the options reported outstanding at the end of the fiscal year are
immediately exercisable as of the fiscal year-end, except options to
purchase the common stock of ThermoLyte Corporation and Thermo Trilogy
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 or (ii) nine years after the grant
date. Generally, the shares acquired upon exercise of the options reported
in the table are subject to repurchase by the granting company at the
exercise price if the optionee ceases to be employed by, or
7
<PAGE>
ceases to serve as a director of, such company or any other Thermo Electron
company. The granting company may exercise its repurchase rights within six
months after the termination of the optionee's employment or the cessation
of directorship, as the case may be. For publicly-traded companies, the
repurchase rights generally lapse ratably over a two- to ten-year period,
depending on the option term, which may vary from five to twelve years,
provided that the optionee continues to be employed by or serve as a
director of the granting company 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. The granting
company 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. Please see footnote
(1) under the Summary Compensation Table on page 6 for the company
abbreviations used in this table in addition to the following company
abbreviations: Thermo BioAnalysis Corporation (designated in the table as
TBA), ThermoLyte Corporation (designated in the table as TLT), Thermo Optek
Corporation (designated in the table as TOC), ThermoQuest Corporation
(designated in the table as TMQ), Thermo Sentron Inc. (designated in the
table as TSR) and Trex Medical Corporation (designated in the table as
TXM).
(2) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer. The amounts shown represent the
difference between the option exercise price and the market price on the
date of exercise, which is the amount that would have been realized if the
shares had been sold immediately upon exercise.
(3) 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.
Executive Retention Agreements
Thermo Electron has entered into agreements with certain executive officers
and key employees of Thermo Electron and its subsidiaries that provide severance
benefits if there is a change in control of Thermo Electron and their employment
is terminated by Thermo Electron "without cause" or by the individual for "good
reason," as those terms are defined therein, within 18 months thereafter. For
purposes of these agreements, a change in control exists upon (i) the
acquisition by any person of 40% or more of the outstanding common stock or
voting securities of Thermo Electron; (ii) the failure of the Thermo Electron
board of directors to include a majority of directors who are "continuing
directors," which term is defined to include directors who were members of
Thermo Electron's board on the date of the agreement or who subsequent to the
date of the agreement were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior to such transaction and
(b) no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement with
Dr. Monovoukas. This agreement provides that in the event Dr. Monovoukas'
employment is terminated under the circumstances described above, he would be
entitled to a lump sum payment equal to the sum of (a) one times his highest
annual base salary in any 12 month period during the prior five-year period,
plus (b) one times his highest annual bonus in any 12 month period during the
prior five-year period. In addition, Dr. Monovoukas would be provided benefits
for a period of one year after such termination substantially equivalent to the
benefits package he would have been otherwise entitled to receive if he was not
terminated. Further, all repurchase rights of Thermo Electron and its
subsidiaries shall lapse in their entirety with respect to all options that Dr.
Monovoukas holds in Thermo Electron and its subsidiaries, including the
Corporation, as of the date of the change in control. Finally, Dr. Monovoukas
would be entitled to a cash payment equal to $15,000 to be used toward
outplacement services.
Assuming that the severance benefits would have been payable as of January
1, 2000, the lump sum salary and bonus payment under such agreement to Dr.
Monovoukas would have been approximately $200,000. In the event that payments
under this agreement are deemed to be so called "excess parachute payments"
under the applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Dr.
8
<PAGE>
Monovoukas would be entitled to receive a gross-up payment equal to the amount
of any excise tax payable by him with respect to such payment plus the amount of
all other additional taxes imposed on him attributable to the receipt of such
gross-up payment.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
Decisions on compensation for the Corporation's executive officers are made
by the human resources committee of the board of directors (the "Committee").
The Committee follows guidelines established by the human resources committee of
the board of directors of its ultimate parent company, Thermo Electron. The
compensation policies followed by the Committee are designed to reward and
motivate executives in achieving long-term value for Stockholders and other
business objectives, to attract and retain dedicated, talented individuals to
accomplish the Corporation's objectives, to recognize individual contributions
as well as the performance of the Corporation and its subsidiaries, and to
encourage stock ownership by executives through stock-based compensation and
stock retention programs in order to link executive and Stockholder interests.
The Committee evaluates the competitiveness of its compensation practices
through the use of market surveys and competitive analyses prepared by its
outside compensation consultants. Internal fairness of compensation within the
organization is also an important element of the Committee's compensation
philosophy. Compensation of executives is also evaluated by comparing it to the
compensation of other executives within the Thermo Electron organization who
have responsibility to manage businesses of comparable size and complexity.
The compensation program of the Corporation consists of annual cash
compensation and long-term incentive compensation. Annual cash compensation is
composed of base salary and performance-based incentive compensation ("bonus"),
which is reviewed and determined annually. Long-term incentive compensation can
be in the form of stock-based compensation such as stock options and restricted
stock awards. The process for determining the components of executive
compensation for the executive officers is described below. In fiscal 1999, the
only executive officer whose compensation was paid by the Corporation was Dr.
Monovoukas. All of the other executive officers are full-time employees of
Thermo Electron and their compensation is paid by Thermo Electron.
Components of Executive Compensation
Annual Cash Compensation
Annual cash compensation consists of base salary and performance-based
incentive compensation ("bonus"). The cash bonus paid to an executive varies
from year to year based on the performance of the Corporation and the executive.
The Committee assesses the competitiveness of annual cash compensation by
establishing for each executive position at the beginning of each fiscal year a
base salary and reference bonus for the position that together are intended to
approximate the mid-point of competitive total annual cash compensation for
organizations that are of comparable size and complexity as the Corporation.
Base Salary. Generally, executive salaries are adjusted to reflect
competitive salary levels or other considerations, such as geographic or
regional market data, industry trends or internal fairness within the
Corporation. The Committee may also adjust individual salaries to reflect the
assumption of increased responsibilities.
Performance-based Incentive Compensation ("Bonus"). The amount of
incentive compensation actually earned by an executive from year to year varies
with the performance of the Corporation and the executive. The Committee
evaluates performance (1) by formulae using financial measures of profitability
and contribution to Stockholder value and (2) by subjectively evaluating the
executive's contribution to the achievement of the Corporation's long-term
objectives. In fiscal 1999, the formulae used by the Committee measured return
on net assets, return on sales and earnings improvement over a three-year period
for the Corporation and, to a lesser extent, the Corporation's parent companies.
The financial measures are not financial targets that are met, not met or
exceeded, but assess the financial performance relative to the financial
performance of comparable companies and are designed to penalize below-average
performance and reward above-average performance. The relative weighting of the
financial measures and subjective evaluation varies depending on the executive's
role and responsibilities within the organization.
9
<PAGE>
Long-term Incentive Compensation
The primary goal of the Corporation and its parent companies 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 stock-
based compensation in shares of Common Stock of the Corporation and common stock
of other Thermo Electron companies.
The Committee and management believe that awards of stock-based
compensation in both the Corporation and other companies within the Thermo
Electron group of companies accomplish many objectives. The grant of stock-based
compensation 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-based compensation also results in
management's compensation being closely linked to stock performance. In
addition, because the employee's rights in stock-based compensation vest over
periods of varying durations and are subject to forfeiture if the employee
leaves the Corporation prematurely, stock-based compensation is an incentive for
key employees to remain with the Corporation long-term. The Committee believes
stock-based compensation awards in its parent companies, Thermo Electron and
Thermo Fibertek, are an important tool in providing incentives for performance
within the entire organization.
In determining awards, the Committee considers for each executive officer
the annual value of stock-based compensation in the Corporation and other
companies within the Thermo Electron organization that vest in the next year and
compares this value to competitive data. Awards are reviewed annually in
conjunction with the annual review of cash compensation and additional awards
are made periodically as deemed appropriate by the Committee. The Committee
uses a modified Black-Scholes option pricing model to determine the value of an
award. In determining the appropriate number of outstanding awards, the
Committee considers such factors as the total compensation of the executive, the
actual and anticipated contributions of the executive (which includes a
subjective assessment by the Committee of the executive's future potential
within the organization), size of the company, its stage of development, and its
growth strategy, as well as the aggregate awards and compensation practices of
comparable companies. In addition, the Committee considers the aggregate amount
of outstanding awards granted to all employees to monitor the number of
outstanding awards under the Corporation's stock-based compensation programs.
Stock Ownership Policy
The Committee has established a stock holding policy for the chief
executive officer of the Corporation that requires him to own a multiple of his
compensation in shares of the Corporation's Common Stock. The multiple is one
times his base salary and reference bonus for the fiscal year in which
compliance is achieved. The chief executive officer has three years from the
adoption of the policy to achieve this ownership level.
In order to assist the chief executive officer 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 the chief executive
officer to enable him to purchase shares of Common Stock in the open market.
Any loans are required to be repaid upon the earlier of demand or the tenth
anniversary of the date of the loan, unless otherwise determined by the
Committee. No loans were outstanding under this program in 1999. See
"Relationship with Affiliates - Stock Holding Assistance Plan."
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deduction
available to public companies for annual compensation paid to certain executive
officers in excess of $1 million unless the compensation qualifies as
"performance-based" or is otherwise exempt under Section 162(m). The Committee
considers the potential effect of Section 162(m) in designing its compensation
program, but reserves the right to use its independent judgment to approve
nondeductible compensation, while taking into account the financial effects such
action may have on the Corporation. From time to time, the Committee reexamines
the Corporation's compensation practices and the potential effect of Section
162(m).
1999 CEO Compensation
The compensation of Dr. Monovoukas is established using the criteria
described above. The Committee approved a salary increase for Dr. Monovoukas
for fiscal 1999 that reflected the competitive assessment of Dr. Monovoukas'
compensation combined with a recognition of the growth in the size and
complexity of the Corporation. In determining Dr. Monovoukas' performance-
based incentive compensation for fiscal 1999, the
10
<PAGE>
Committee considered the financial performance of the Corporation and, to a
lesser extent, its parent company, Thermo Fibertek, using the measures described
above for all executive officers under "Components of Executive Compensation -
Annual Cash Compensation - Performance-based Incentive Compensation." However,
based on the stage of development of the Corporation, the Committee weighted its
subjective evaluation of Dr. Monovoukas' performance more heavily than it did
for other executives within the Thermo Electron organization. The Committee's
subjective evaluation included, among other things, the progress achieved in
demonstrating the efficacy of the Corporation's technology and the introduction
of new products.
Awards to Dr. Monovoukas of stock-based compensation in Common Stock are
reviewed and determined periodically by the Committee using the criteria
described above under the caption "Long-term Incentive Compensation." No awards
of stock-based compensation were made by the Committee to Dr. Monovoukas in
fiscal 1999.
Due to Dr. Monovoukas' position as a chief executive officer of a majority-
owned subsidiary of Thermo Electron, from time to time he may receive awards to
purchase shares of the common stock of majority-owned subsidiaries of Thermo
Electron as part of Thermo Electron's stock option program. No awards of stock
options were made to Dr. Monovoukas under this program in fiscal 1999. The
award to purchase 500 shares of common stock of Thermo Electron granted to Dr.
Monovoukas in fiscal 1999 was made by the Thermo Electron human resources
committee under a program which awards options to certain eligible employees
annually based on the number of shares of the common stock of Thermo Electron
held by the employee, as an incentive to buy and hold shares of Thermo Electron
common stock. This program has been discontinued for future periods.
Roger D. Wellington (Chairman)
Francis L. McKone
11
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this Proxy Statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation's Common
Stock was first publicly traded on September 13, 1996 as part of a unit ("Unit")
consisting of one share of Common Stock and one right to have the share of
Common Stock redeemed by the Corporation during certain periods in the future at
a price of $12.75 per share (a "Redemption Right") and, as a result, the
following graph commences as of such date. From September 13, 1996 to December
13, 1996, the Common Stock was traded in Units. Beginning on December 13, 1996,
the Common Stock and the Redemption Rights began to trade separately from each
other. The following graph approximates the price of the Common Stock in the
absence of the Redemption Rights by subtracting from the closing price of the
Units on their first day of trading the closing price of the Redemption Rights
on their first day of separate trading. The Corporation has compared its
performance with the American Stock Exchange Market Value Index and the Dow
Jones Total Return Index for the Paper Products Industry Group as of the last
trading day of the Corporation's fiscal year.
Comparison of Total Return Among Thermo Fibergen Inc.,
the American Stock Exchange Market Value Index and the Dow Jones Total Return
Index
for the Paper Products Industry Group from September 13, 1996 to December 31,
1999
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
9/13/96 12/27/96 1/2/98 12/31/98 12/31/99
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TFG 100 93 86 80 111
- ----------------------------------------------------------------------------------
AMEX 100 102 124 126 163
- ----------------------------------------------------------------------------------
DJ Paper 100 96 105 104 135
- ----------------------------------------------------------------------------------
</TABLE>
The total return for the Corporation's Common Stock (TFG), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index
for the Paper Products Industry Group (DJ PAPER) 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 "TFG."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has, from time to time, caused certain subsidiaries to sell
minority interests to investors, resulting in several majority-owned, private
and publicly-held subsidiaries. Thermo Fibertek has created the Corporation as a
majority-owned, publicly-held subsidiary. The Corporation and such other
majority-owned Thermo Electron subsidiaries are hereinafter referred to as the
"Thermo Subsidiaries."
12
<PAGE>
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, including the Corporation, have adopted the Thermo Electron
Corporate Charter (the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the Charter is to
ensure that (1) all of the companies and their stockholders are treated
consistently and fairly, (2) the scope and nature of the cooperation among the
companies, and each company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial, managerial and
technological strengths of the others, and (4) Thermo Electron and the Thermo
Subsidiaries, in the aggregate, are able to obtain the most favorable terms from
outside parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of long-
range planning and providing other banking and credit services. Pursuant to the
Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
the Thermo Subsidiaries.
The Charter currently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo Electron have
entered into a corporate services agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and financial and other services to the Corporation. The
Corporation was assessed an annual fee equal to 0.8% of the Corporation's
revenues for these services for fiscal 1999. The annual fee will remain at 0.8%
of the Corporation's revenues for fiscal 2000. The fee is reviewed annually and
may be changed by mutual agreement of the Corporation and Thermo Electron.
During fiscal 1999, Thermo Electron assessed the Corporation $69,000 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. 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
13
<PAGE>
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.
At year-end 1998, $6,707,000 of the Corporation's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this agreement,
the Corporation in effect lent excess cash to Thermo Electron, which Thermo
Electron collateralized with investments principally consisting of corporate
notes, U.S. government-agency securities, commercial paper, money market funds
and other marketable securities, in the amount of at least 103% of such
obligation. The Corporation's funds subject to the repurchase agreement were
readily convertible into cash by the Corporation. The repurchase agreement
earned a rate based on the 90-day Commercial Paper Composite Rate plus 25 basis
points, set at the beginning of each quarter.
Effective June 1999, the Corporation and Thermo Electron commenced use of a
new domestic cash management arrangement. Under the new arrangement, amounts
advanced to Thermo Electron by the Corporation for domestic cash management
purposes bear interest at the 30-day Dealer Commercial Paper Rate plus 50 basis
points, set at the beginning of each month. Thermo Electron is contractually
required to maintain cash, cash equivalents, and/or immediately available bank
lines of credit equal to at least 50% of all funds invested under this cash
management arrangement by all Thermo Electron subsidiaries other than wholly
owned subsidiaries. The Corporation has the contractual right to withdraw its
funds invested in the cash management arrangement upon 30 days' prior notice. At
year-end 1999, the Corporation had invested $5,087,000 under this arrangement.
In addition, under the new domestic cash management arrangement, amounts
borrowed from Thermo Electron for domestic cash management purposes bear
interest at the 30-day Dealer Commercial Paper Rate plus 150 basis points, set
at the beginning of each month. The Corporation has no borrowings under this
arrangement at year-end 1999.
As of January 1, 2000, $377,000 was owed to the Corporation by Thermo
Electron and its other subsidiaries for taxes, net of amounts owed to Thermo
Electron and its other subsidiaries for amounts due under the Services Agreement
and related administrative charges, for other products and services, and for
miscellaneous items. The largest amount due to the Corporation from Thermo
Electron and its other subsidiaries since January 3, 1999 was $377,000. These
amounts do not bear interest and are expected to be paid to the Corporation in
the normal course of business.
In March 1999, the Corporation purchased 250,000 shares of Common Stock
from Thermo Electron for an aggregate of $2,227,000. The purchase price was the
fair market value of the shares of Common Stock. The fair market value of such
shares was determined based on the average of the closing prices of the Common
Stock as reported on the American Stock Exchange, Inc. for the five trading days
preceding March 18, 1999, the date the parties entered into a definitive stock
purchase agreement. Thermo Electron had previously purchased the shares of
Common Stock in open market transactions for an aggregate purchase price of
approximately $1,970,000.
On January 31, 2000, Thermo Electron announced a reorganization plan
involving itself and certain of its subsidiaries, including the Corporation.
Thermo Electron announced that it plans to spin off its equity interest in
Thermo Fibertek as a dividend to Thermo Electron's shareholders. When the
spinoff is completed, Thermo Fibertek will no longer be a subsidiary of Thermo
Electron and will have its own entirely separate and independent board of
directors and management team. The completion of this transaction is subject to
a number of conditions, including a favorable ruling by the Internal Revenue
Service regarding the tax treatment of the spinoff and final action by the board
of directors of Thermo Electron. The Corporation will remain a subsidiary of
Thermo Fibertek after the spinoff.
Stock Holding Assistance Plan
The human resources committee of the Corporation's board of directors (the
"Committee") established a stock holding policy that requires its chief
executive officer to acquire and hold a minimum number of shares of Common
Stock. In order to assist the chief executive officer in complying with the
policy, the Committee also adopted a stock holding assistance plan under which
the Corporation may make interest-free loans to the chief executive officer, to
enable him to purchase Common Stock in the open market. Loans will be repayable
upon the earlier of demand or the tenth anniversary of the date of the loan,
unless otherwise determined by the Committee. No such loans were outstanding in
1999.
14
<PAGE>
- PROPOSAL 2-
PROPOSAL TO AMEND THE CORPORATION'S EQUITY INCENTIVE PLAN TO RESTATE
THE LIMITATION ON THE SIZE OF POTENTIAL AWARDS
The Board of Directors has approved an amendment to the Corporation's
equity incentive plan (the "Equity Incentive Plan") and is recommending the
amendment to the Stockholders for their approval. The amendment would restate
the limitation on the size of awards to a recipient in any calendar year as a
fixed number of shares, 500,000 shares, and not as a percentage of the
outstanding shares.
Reasons for the Amendment
The Equity Incentive Plan has contained a limitation on the potential size
of awards to a recipient in any calendar year since its adoption in order for
awards under the plan to qualify as "performance-based" under Section 162(m) of
the Internal Revenue Code. Section 162(m) limits the tax deduction available to
public companies for annual compensation paid to certain executive officers in
excess of $1 million unless the compensation qualifies as "performance-based" or
is otherwise exempt from Section 162(m). The Board of Directors has approved an
amendment to the Equity Incentive Plan to restate the limitation on the size of
an award or any combination of awards to a recipient in a calendar year as
500,000 shares of Common Stock. The limitation was previously stated as 5% of
the outstanding shares of Common Stock, calculated as of the beginning of the
fiscal year. If the amendment is not approved, the limitation on the size of
awards to a recipient in any calendar year will continue to be stated as 5% of
the outstanding shares, however, future grants under the Equity Incentive Plan
may not qualify for the deduction. The limitation of 500,000 shares is less
than 5% of the outstanding shares.
Summary of the Equity Incentive Plan
The following summary of the terms of the Equity Incentive Plan is
qualified in its entirety by reference to the plan.
Administration; Eligible Participants. The Equity Incentive Plan is
administered by the Board of Directors of the Corporation (the "Board"). The
Board has full power to select, from among the persons eligible for awards, the
individuals to whom awards will be granted, to make any combination of awards to
any participant, and to determine the specific terms of each award, including
terms and conditions relating to events of merger, consolidation, dissolution
and liquidation, change of control, acceleration of vesting or lapse of
restrictions, vesting, forfeiture, other restrictions, dividends and interest on
deferred amounts. The Board also has the power to waive compliance by
participants with the terms and conditions of awards, to cancel awards with the
consent of participants and to accelerate the vesting or lapse of any
restrictions of any award. The Board has delegated all of its responsibilities
under the Equity Incentive Plan to a committee appointed by the Board consisting
of two or more "non-employee" directors within the meaning of Rule 16b-3 (or any
successor rule) under the Exchange Act or "outside directors" within the meaning
of Section 162(m) of the Internal Revenue Code (the "Committee").
Employees and directors of, and consultants to, the Corporation and its
subsidiaries, or other persons who are expected to make significant
contributions to the growth and success of the Corporation and its subsidiaries,
selected by the Committee, are eligible to participate in the Equity Incentive
Plan. Approximately 47 employees are eligible to participate in the existing
Equity Incentive Plan.
Shares Subject to the Equity Incentive Plan; Use of Proceeds. As of
January 1, 2000, the number of shares of the Common Stock reserved for issuance
under the Equity Incentive Plan was 186,500 shares. The number of shares
reserved under the Equity Incentive Plan is subject to adjustment for stock
splits and similar events. Awards and shares that are forfeited, reacquired by
the Corporation, satisfied by a cash payment by the Corporation or otherwise
satisfied without the issuance of Common Stock are not counted against the
maximum number of reserved shares under the plan.
The proceeds received by the Corporation from transactions under the Equity
Incentive Plan are used for the general purposes of the Corporation. Shares
issued under the Equity Incentive Plan may be authorized but unissued shares, or
shares reacquired by the Corporation and held in its treasury.
Types of Awards; Limitations on Awards. The Equity Incentive Plan permits
the Committee to grant a variety of stock and stock-based awards in such form or
in such combinations as may be approved by the Committee. Without limiting the
foregoing, the types of awards may include stock options, restricted and
unrestricted shares, rights to receive cash or shares on a deferred basis or
based on performance, cash payments
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sufficient to offset the federal, state and local ordinary income taxes of
participants resulting from transactions under the Equity Incentive Plan, and
loans to participants in connection with awards. In addition, if approved by the
Stockholders at this meeting, the Committee may not award more than 500,000
shares of Common Stock to a recipient in a calendar year under any award or
combination of awards. The Equity Incentive Plan previously provided that the
Committee may not grant in excess of 5% of the outstanding shares of Common
Stock (calculated as of the beginning of a calendar year) to any recipient under
any award or combination of awards granted during a calendar year.
Stock Options. Awards under the Equity Incentive Plan may be in the form
of stock options, which entitle the recipient, on exercise, to purchase shares
of Common Stock at a specified exercise price. Stock options granted under the
plan may be either stock options that qualify as incentive stock options
("incentive stock options") under Section 422 of the Internal Revenue Code, or
stock options that are not intended to meet such requirements ("non-statutory
options"). The exercise price of each option is determined by the Committee,
but may not be less than 85% of the fair market value per share of Common Stock
on the date of grant.
The term of each option is fixed by the Committee. The Committee also
determines at what time each option may be exercised. Options may be made
exercisable in installments, and the exercisability of options may be
accelerated by the Committee. The Committee may, in its discretion, provide
that upon exercise of any option, instead of receiving shares free from
restrictions under the Equity Incentive Plan, the option holder will receive
shares of restricted stock or deferred stock awards.
The exercise price of options granted under the Equity Incentive Plan must
be paid in full by check or other instrument acceptable to the Committee or, if
the Committee so determines, by delivery of shares of Common Stock held by the
option holder for at least six months (unless the Committee expressly approves a
shorter period) and that have a fair market value on the exercise date equal to
the exercise price of the option, by delivery of a promissory note from the
option holder to the Corporation payable on terms acceptable to the Committee,
by delivery of an unconditional and irrevocable undertaking by a broker to
deliver sufficient funds to the Corporation to pay the exercise price, or some
combination of these methods.
Incentive stock options must meet certain additional requirements in order
to qualify as incentive stock options under the Internal Revenue Code.
Incentive stock options may be granted only to employees of the Corporation and
its subsidiaries. The exercise price of an incentive stock option or any option
intended to qualify as performance-based compensation under Section 162(m) of
the Internal Revenue Code may not be less than 100% of the fair market value of
the shares on the date of grant. An incentive stock option may not be granted
under the Equity Incentive Plan after the tenth anniversary of the date the
Board adopted the Equity Incentive Plan and the latest date on which an
incentive stock option may be exercisable is ten years from the date of its
grant. In addition, the Internal Revenue Code limits the value of shares
subject to incentive stock options that may become exercisable annually by any
option holder in a given year, and requires a shorter exercise period and a
higher minimum exercise price in the case of Stockholders owning more than ten
percent (10%) of the Corporation's Common Stock.
Restricted Stock and Unrestricted Stock. The Committee may also award
shares of Common Stock subject to such conditions and restrictions as it may
determine ("restricted stock"). The purchase price of shares of restricted
stock shall be determined by the Committee, but may not be less than the par
value of those shares.
Generally, if a participant who holds shares of restricted stock fails to
satisfy certain restrictions or other conditions as may be determined by the
Committee (such as continuing employment for a given period) prior to the lapse
or waiver of the restrictions, the Corporation will have the right to require
the forfeiture or repurchase of the shares in exchange for an amount, if any,
determined by the Committee as specifically set forth in the instrument
evidencing the award. The Committee may at any time waive such restrictions or
accelerate the date or dates on which the restrictions will lapse. Prior to the
lapse of restrictions on shares of restricted stock, the recipient will have all
the rights of a Stockholder with respect to the shares, including voting and
dividend rights, subject only to the conditions and restrictions generally
applicable to restricted stock or specifically set forth in the instrument
evidencing the award.
The Committee may also grant shares that are free from any restrictions
under the Equity Incentive Plan ("unrestricted stock"). Unrestricted stock may
be issued in recognition of services or in such other circumstances that the
Committee deems to be in the best interests of the Corporation.
Deferred Stock. The Committee may also make deferred stock awards under
the Equity Incentive Plan which entitle the recipient to receive shares of
Common Stock in the future. Delivery of Common Stock will take
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place on such date or dates and on such conditions as the Committee specifies.
The Committee may at any time accelerate the date on which delivery of all or
any part of the Common Stock will take place or otherwise waive any restrictions
on the award.
Performance Awards. The Committee may also grant performance awards
entitling the recipient to receive shares of Common Stock or cash in such
combinations as it may determine following the achievement of specified
performance goals. Payment of the performance award may be conditioned on
achievement of individual or Corporation performance goals over a fixed or
determinable period or on such other conditions as the Committee shall
determine.
Loans and Supplemental Grants. The Committee may authorize a loan from the
Corporation to a participant either on or after the grant of an award to the
participant. Loans, including extensions, may be for any term specified by the
Committee, may be either secured or unsecured, and may be with or without
recourse against the participant in the event of default. Each loan shall be
subject to such terms and conditions and shall bear such rate of interest, if
any, as the Committee shall determine. In connection with any award, the
Committee may, at the time such award is made or at a later date, provide for
and make a cash payment to the participant in an amount equal to (a) the amount
of any federal, state and local income tax on ordinary income for which the
participant will be liable with respect to the award, plus (b) an additional
amount on a grossed-up basis necessary to make him or her whole after payment of
the amount described in (a).
Payment of Purchase Price. Except as otherwise provided in the Equity
Incentive Plan, the purchase price of Common Stock or other rights acquired or
granted pursuant to such plan shall be determined by the Committee, provided
that the purchase price of Common Stock shall not be less than its par value.
The Committee may determine the method of payment for Common Stock acquired
pursuant to the Equity Incentive Plan and may determine that all or any part of
the purchase price has been satisfied by past service rendered by the recipient
of an award. The Committee may, upon the request of a participant, defer the
date on which payment under any award will be made.
Change in Control Provisions. Unless otherwise provided in the agreement
evidencing an award, if there is a "Change in Control" of the Corporation as
defined in the Equity Incentive Plan, any stock options that are not then
exercisable and fully vested will become fully exercisable and vested; the
restrictions applicable to restricted stock awards will lapse and shares issued
pursuant to such awards will be free of restrictions and fully vested; and
deferral and other limitations and conditions that related solely to the passage
of time or continued employment or other affiliation will be waived and removed
but other conditions will continue to apply unless otherwise provided in the
instrument evidencing the awards or by agreement between the participant and the
Corporation. Generally, any of the following events shall be considered a
"Change in Control": (i) the acquisition by any person of 40% or more of the
outstanding common stock or voting securities of Thermo Electron; (ii) the
failure of the Thermo Electron board of directors to include a majority of
directors who are "continuing directors", which term is defined to include
directors who were members of Thermo Electron's board on July 1, 1999 or who
subsequent to that date were nominated or elected by a majority of directors who
were "continuing directors" at the time of such nomination or election; (iii)
the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving Thermo Electron or the sale or other
disposition of all or substantially all of the assets of Thermo Electron unless
immediately after such transaction (a) all holders of Thermo Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same proportions as their ownership immediately prior to such transaction and
(b) no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
Nature of Rights as Stockholder Under the Equity Incentive Plan. Except as
specifically provided by the Equity Incentive Plan, the receipt of an award will
not give a participant rights as a Stockholder. The participant will obtain
such rights, subject to any limitations imposed by the plan or the instrument
evidencing the award, upon actual receipt of Common Stock.
Adjustments for Stock Dividends, etc. The Committee will make appropriate
adjustments to the maximum number of shares of Common Stock that may be
delivered under the Equity Incentive Plan, and under outstanding awards, to
reflect stock dividends, stock splits and similar events. The Committee may
also make appropriate adjustments to avoid distortions in the operation of the
Equity Incentive Plan in the event of any recapitalization, merger or
consolidation involving the Corporation, any transaction in which the
Corporation becomes a subsidiary
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of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Corporation or any similar transaction, as determined by
the Committee.
Amendment and Termination. The Equity Incentive Plan shall remain in full
force and effect until terminated by the Board. The Board may at any time or
times amend or review the Equity Incentive Plan or any outstanding award for any
purpose which may at the time be permitted by law, or may at any time terminate
the plan as to any further grants of awards. No amendment of the Equity
Incentive Plan or any outstanding award may adversely affect the rights of a
participant as to any previously granted award without his or her consent.
Stockholder approval of amendments shall be required only as is necessary to
satisfy the then-applicable requirements of Rule 16b-3 (or any successor rule),
of stock exchanges, of Section 162(m) of the Internal Revenue Code, or of any
federal tax law or regulation relating to stock options or awards.
Stock Withholding. In the case of an award under which Common Stock may be
delivered, the Committee may permit the participant or other appropriate person
to elect to have the Corporation hold back from the shares to be delivered, or
to deliver to the Corporation, shares of Common Stock having a value sufficient
to satisfy any federal, state and local withholding tax requirements.
Federal Income Tax Consequences
The following is a summary of the principal United States federal income
tax consequences of transactions under the Equity Incentive Plan. It does not
describe all federal tax consequences under the Equity Incentive Plan, nor does
it describe any state, local or foreign tax consequences.
Incentive Stock Options. No taxable income is recognized by the optionee
upon the grant or exercise of an incentive stock option. However, the exercise
of an incentive stock option may result in alternative minimum tax liability for
the optionee. If no disposition of shares issued to an optionee pursuant to the
exercise of an incentive stock option is made by the optionee within the later
of two years from the date of grant or one year after the transfer of such
shares to the optionee, then upon the later sale of such shares, for federal
income tax purposes, any amount realized in excess of the exercise price will be
taxed to the optionee as a long-term capital gain and any loss sustained will be
a long-term capital loss, and no deduction will be allowed to the Corporation.
If the shares of Common Stock acquired upon the exercise of an incentive
stock option are disposed of prior to the expiration of the two- and one-year
holding periods described above, generally the optionee will recognize ordinary
compensation income in the year of disposition in an amount equal to the excess
(if any) of the fair market value of the shares at exercise (or, if less, the
amount realized on an arms-length sale of such shares) over the exercise price
thereof, and the Corporation will be entitled to deduct such amount, subject to
the limitations of Section 162(m) of the Internal Revenue Code. Any further
gain recognized will be taxed as short- or long-term capital gain and will not
result in any deduction by the Corporation. Special rules will apply where all
or a portion of the exercise price of the incentive stock option is paid by
tendering shares of Common Stock.
If any incentive stock option is exercised at a time when it no longer
qualifies for the tax treatment described above, the option is treated as a non-
statutory stock option. Generally, an incentive stock option will not be
eligible for the tax treatment described above if it is exercised more than
three months following termination of employment (one year following termination
of employment by reason of permanent and total disability), except in certain
cases where the incentive stock option is exercised after the death of an
optionee.
Non-statutory Options. With respect to non-statutory stock options granted
under the Equity Incentive Plan, no income is recognized by the optionee at the
time the option is granted. Generally, at exercise, ordinary compensation
income is recognized by the optionee in an amount equal to the difference
between the exercise price and the fair market value of the shares on the date
of exercise, and the Corporation receives a tax deduction for the same amount,
subject to the limitations of Section 162(m) of the Internal Revenue Code. At
disposition of the shares, appreciation or depreciation after the date of
exercise is treated as either short- or long-term capital gain or loss depending
on how long the shares have been held.
Restricted Stock. A recipient of restricted stock that is subject to a
risk of forfeiture generally will be subject to tax at ordinary income rates on
the fair market value of the stock at the time the stock is either transferable
or is no longer subject to forfeiture, less any amount paid for such stock.
However, a recipient who so elects under Section 83(b) of the Internal Revenue
Code ("Section 83(b)") within 30 days of the date of issuance of the restricted
stock will recognize ordinary compensation income on the date of issuance equal
to the fair market value of the shares of restricted stock at that time
(measured as if the shares were unrestricted and could be sold immediately),
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minus any amount paid for such stock. The Corporation generally will be
entitled to a deduction equal to the amount that is taxable as ordinary income
to the recipient, subject to the limitations of Section 162(m) of the Internal
Revenue Code.
Upon sale of the shares after the forfeiture period has expired, the
appreciation or depreciation after the shares become transferable or free from
risk of forfeiture (or, if a Section 83(b) election was made, since the shares
were issued) will be treated as long- or short-term capital gain or loss. The
holding period to determine whether the recipient has long- or short-term
capital gain or loss begins just after the forfeiture period expires (or just
after the earlier issuance of the shares, if the recipient elected immediate
recognition of income under Section 83(b)). If restricted stock is received in
connection with another award under the Equity Incentive Plan (for example, upon
exercise of an option), the income and the deduction, if any, associated with
such award may be deferred in accordance with the rules described above for
restricted stock.
Deferred Stock. The recipient of a deferred stock award will generally be
subject to tax at ordinary income rates on the fair market value of the stock on
the date that the stock is distributed to the participant. The capital gain or
loss holding period for such stock will also commence on such date. The
Corporation generally will be entitled to a deduction equal to the amount that
is taxable as ordinary income to the employee. If a right to deferred stock is
received under another award (for example, upon exercise of an option), the
income and deduction, if any, associated with such award may be deferred in
accordance with the rules described above for deferred stock.
Performance Awards. The recipient of a performance award will generally be
subject to tax at ordinary income rates on any cash received and the fair market
value of any Common Stock issued under the award, and the Corporation will
generally be entitled to a deduction equal to the amount of ordinary income
recognized by the recipient. Any cash received under a performance award will
be included in income at the time of receipt. The fair market value of any
Common Stock received will also generally be included in income (and a
corresponding deduction will generally be available to the Corporation) at the
time of receipt. The capital gain or loss holding period for any Common Stock
distributed under a performance award will begin when the recipient recognizes
ordinary income in respect of that distribution.
Loans and Supplemental Grants. Generally speaking, bona fide loans made
under the Equity Incentive Plan will not result in taxable income to the
recipient or in a deduction to the Corporation. However, any such loan made at
a rate of interest lower than certain rates specified under the Internal Revenue
Code may result in an amount (measured, in general, by reference to the
difference between the actual rate and the specified rate) being included in the
borrower's income and deductible by the Corporation. Forgiveness of all or a
portion of a loan may also result in income to the borrower and a deduction for
the Corporation. If outright cash grants are given in order to facilitate the
payment of award-related taxes, the grants will be includable as ordinary income
by the recipient at the time of receipt and will in general be deductible by the
Corporation.
Recommendation
The Board of Directors believes that the amendment to the Equity Incentive
Plan will ensure compliance with Section 162(m) and allow the Corporation to
maintain the deductibility of compensation for future grants under the Equity
Incentive Plan. Accordingly, the Board of Directors believes that the proposal
is in the best interests of the Corporation and its Stockholders and recommends
that the Stockholders vote FOR the approval of the amendment to the Equity
Incentive Plan. If not otherwise specified, Proxies will be voted FOR approval
of the amendment to the Equity Incentive Plan.
Thermo Electron, through its majority-owned subsidiary Thermo Fibertek,
which beneficially owned of record approximately 73.69% of the outstanding
voting stock of the Corporation on March 31, 2000 has indicated its intention to
vote for the proposal.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 2000. Arthur Andersen LLP has acted as independent
public accountants for the Corporation since its inception in 1996.
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.
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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 included in the proxy statement
and form of proxy relating to the 2001 Annual Meeting of the Stockholders of the
Corporation and to be presented at such meeting must be received by the
Corporation for inclusion in the proxy statement and form of proxy no later than
December 16, 2000. Notices of Stockholder proposals submitted outside the
processes of Rule 14a-8 of the Exchange Act (relating to proposals to be
presented at the meeting but not included in the Corporation's proxy statement
and form of proxy), will be considered untimely, and thus the Corporation's
proxy may confer discretionary voting authority on the persons named in the
proxy with regard to such proposals, if received after February 28, 2001.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, facsimile
transmission or telegram. Brokers, nominees, custodians and fiduciaries are
requested to forward solicitation materials to obtain voting instructions from
beneficial owners of stock registered in their names, and the Corporation will
reimburse such parties for their reasonable charges and expenses in connection
therewith.
Bedford, Massachusetts
April 12, 2000
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FORM OF PROXY
THERMO FIBERGEN INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 17, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints William A. Rainville, Yiannis A. Monovoukas
and Theo Melas-Kyriazi, 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 Fibergen Inc., a Delaware corporation (the
"Company"), to be held on Wednesday, May 17, 2000 at 2:00 p.m. at the Marriott
Long Wharf Hotel, 296 State Street, Boston, Massachusetts, 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 March 31, 2000, with all
of the powers the undersigned would possess if personally present at such
meeting:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE>
Please mark your
[ x ] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [ ] WITHHELD [ ]
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any): ______________________________________
Nominees: Anne T. Barrett, Francis L. McKone, Yiannis A. Monovoukas, Jonathan
W. Painter, William A. Rainville and Roger D. Wellington.
2. Approve a management proposal to amend the Corporation's equity incentive
plan to restate the limitation on the potential size of awards to any
recipient in a year in compliance with Section 162 (m) of the Internal
Revenue Code, as amended.
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.
PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
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.
