<PAGE>
METRIKA SYSTEMS CORPORATION
5788 Pacific Center Boulevard
San Diego, California 92121
April 23, 1998
Dear Stockholder:
The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
Metrika Systems Corporation. I respectfully request that all Stockholders
attend this meeting, if possible.
Our Annual Report for the year ended January 3, 1998, is enclosed. I hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the meeting.
Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting.
Whether or not you are able to attend the meeting, I urge you to complete your
proxy and return it to our transfer agent, American Stock Transfer & Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the meeting, either in person or by proxy.
I would appreciate your immediate attention to the mailing of this proxy.
Yours very truly,
ERNESTO A. CORTE
President and Chief Executive Officer
<PAGE>
METRIKA SYSTEMS CORPORATION
5788 Pacific Center Boulevard
San Diego, California 92121
April 23, 1998
To the Holders of the Common Stock of
METRIKA SYSTEMS CORPORATION
NOTICE OF ANNUAL MEETING
The 1998 Annual Meeting of the Stockholders of Metrika Systems Corporation
(the "Corporation") will be held on Monday, June 1, 1998 at 10:45 a.m. at The
Hyatt Regency Scottsdale Resort at Gainey Ranch, 7500 East Doubletree Ranch
Road, Scottsdale, Arizona, 85258. The purpose of the Meeting is to consider and
take action upon the following matters:
1. Election of seven directors.
2. A proposal recommended by the board of directors to adopt an employees'
stock purchase plan and to reserve 50,000 shares of the Corporation's
Common Stock for issuance thereunder.
3. A proposal recommended by the board of directors to amend the
Corporation's equity incentive plan to increase the shares available
for issuance under the plan by 500,000 shares.
4. Such other business as may properly be brought before the Meeting and
any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
Meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to receive notice
of and to vote at the Meeting is April 3, 1998.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
Meeting in order to constitute a quorum for the transaction of business. It is
important that your shares be represented at the Meeting regardless of the
number of shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed proxy in the accompanying
envelope, which requires no postage if mailed in the United States.
This Notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.
SANDRA L. LAMBERT
Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Metrika
Systems Corporation (the "Corporation") for use at the 1998 Annual Meeting of
the Stockholders (the "Meeting") to be held on Monday, June 1, 1998, at 10:45
a.m. at The Hyatt Regency Scottsdale Resort at Gainey Ranch, Scottsdale,
Arizona, and any adjournment thereof. The mailing address of the executive
office of the Corporation is 5788 Pacific Center Boulevard, San Diego,
California, 92121. This proxy statement and the enclosed proxy were first
furnished to Stockholders of the Corporation on or about April 29, 1998.
VOTING PROCEDURES
The board of directors intends to present to the Meeting the election of
seven directors, constituting the entire board of directors, as well as two
other matters: a proposal to adopt an employees' stock purchase plan and to
reserve 50,000 shares of common stock of the Corporation, $.01 par value,
("Common Stock") for issuance under the employees' stock purchase plan and a
proposal to increase the number of shares available for issuance under the
Corporation's equity incentive plan by 500,000 shares.
The representation in person or by proxy of a majority of the outstanding
shares of Common Stock entitled to vote at the Meeting is necessary to provide a
quorum for the transaction of business at the Meeting. Shares can only be voted
if the Stockholder is present in person or is represented by returning a
properly signed proxy. Each Stockholder's vote is very important. Whether or not
you plan to attend the Meeting in person, please sign and promptly return the
enclosed proxy card, which requires no postage if mailed in the United States.
All signed and returned proxies will be counted towards establishing a quorum
for the Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for directors,
for the management proposals, and as the individuals named as proxy holders on
the proxy deem advisable on all other matters as may properly come before the
Meeting.
In order to be elected a director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote on
the election. For the management proposals the affirmative vote of a majority
of shares present in person or represented by proxy, and entitled to vote on the
matter, is necessary for approval. Withholding authority to vote for a nominee
for director or an instruction to abstain from voting on a 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 nominee or the proposal. With respect to the election of directors, the
management proposals, broker "non-votes" will not be treated as shares present
and entitled to vote on a voting matter and will have no effect on the outcome
of the vote. A broker "non-vote" occurs when a nominee holding shares for a
beneficial holder does not have discretionary voting power and does not receive
voting instructions from the beneficial owner.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the Secretary
of the Corporation received prior to the Meeting, by executing and returning a
later-dated proxy or by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of April 3, 1998, consisted of 8,255,329
shares of Common Stock. Only Stockholders of record at the close of business on
April 3, 1998, are entitled to vote at the Meeting. Each share is entitled to
one vote.
PROPOSAL 1
ELECTION OF DIRECTORS
Seven directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death or
removal.
1
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NOMINEES FOR DIRECTORS
Set forth below are the names of the persons nominated as directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent company, Thermo Instrument Systems
Inc. ("Thermo Instrument"), a manufacturer of analytical, environmental-
monitoring and process control instruments, and Thermo Instrument's parent
company, Thermo Electron Corporation ("Thermo Electron"), a provider of
diversified products and services for the biomedical, instrument, and
environmental markets, is reported under the caption "Stock Ownership." All of
the nominees are currently directors of the Corporation.
- --------------------------------------------------------------------------------
WILLARD R. BECRAFT Mr. Becraft, 71, has been a director of the Company
since May 1997. Mr. Becraft is a consultant in
advanced instrumentation and control technology
development. He was an executive vice president of
Northwest Instrument Systems, Inc., a business he co-
founded to develop specific instrumentation services
with applications in the environmental field, for
more than five years prior to his retirement in July
1996. Mr. Becraft spent more than 30 years of his
business career with the General Electric Company in
various management capacities, and was responsible
for managing research and development and product
development activities in instrumentation and
control, fusion energy, solar energy, jet engines and
spacecraft systems.
- --------------------------------------------------------------------------------
JOSEPH A. BAUTE Mr. Baute, 70, has been a director of the Company
since June 1997. Since 1993, Mr. Baute has been a
consultant to Markem Corporation, a manufacturer of
marking and printing machinery, specialty inks and
printing elements. Mr. Baute was also the chairman
and chief executive officer of Markem Corporation
from 1977 and 1979, respectively, until his
retirement in 1993. He is also a director of Cerion
Technology, Houghton-Mifflin Company and INSO
Corporation.
- --------------------------------------------------------------------------------
ERNESTO A. CORTE Mr. Corte, 59, has been a director of the
Corporation since February 11, 1998. Mr. Corte was
promoted to the position of chief executive officer
of the Corporation on February 11, 1998, and also
serves as president of the Corporation, a position he
has held since the Corporation's inception in
November 1996. Prior to his promotion, Mr. Corte also
served as chief operating officer from November 1996
to February 11, 1998. Mr. Corte has also served as
president of the Corporation's Gamma-Metrics
subsidiary, a manufacturer and marketer of on-line
raw materials analyzers, since its acquisition by
Thermo Instrument in 1993. Mr. Corte founded Gamma-
Metrics in 1980 and was chairman of the board, chief
executive officer and president of Gamma-Metrics
prior to its acquisition in 1993.
- --------------------------------------------------------------------------------
DENIS A. HELM Mr. Helm, 59, has been chairman of the board and a
director of the Corporation since its inception in
November 1996. He also served as chief executive
officer of the Corporation from November 1996 until
February 1998. Mr. Helm also serves as president of
Thermo Instrument's Thermo Environmental Instruments
Inc. subsidiary, a position he has held since 1981.
Thermo Environmental designs, manufactures and
distributes instruments and systems for detecting and
monitoring environmental pollutants. Mr. Helm has
also been a senior vice president of Thermo
Instrument since 1994 and was a vice president of
Thermo Instrument from 1986 until 1994.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
EARL R. LEWIS Mr. Lewis, 54, has been a director of the
Corporation since its inception in November 1996. Mr.
Lewis has been president and chief executive officer
of Thermo Instrument since March 1997 and January
1998, respectively, was chief operating officer of
Thermo Instrument from January 1996 to January 1998,
was executive vice president of Thermo Instrument
from January 1996 to March 1997, was a senior vice
president of Thermo Instrument from January 1994 to
January 1996, and was a vice president of Thermo
Instrument from March 1992 to January 1994. He has
been a vice president of Thermo Electron since
September 1996. Prior to Mr. Lewis' appointment as
chief executive officer of Thermo Instrument, he was
also chief executive officer of Thermo Optek
Corporation, a manufacturer of analytical instruments
that measure energy and light for the purposes of
materials analysis, characterization and preparation,
from its inception in August 1995 until January 1998,
and was the president of its predecessor, Thermo
Jarrell Ash Corporation, for more than five years
prior to that date. Mr. Lewis is a director of ONIX
Systems Inc., Thermo BioAnalysis Corporation, Thermo
Instrument, Thermo Optek Corporation, ThermoQuest
Corporation, ThermoSpectra Corporation and Thermo
Vision Corporation.
- --------------------------------------------------------------------------------
JOHN T. KEISER Mr. Keiser, 62, has been a director of the
Corporation since its inception in November 1996. Mr.
Keiser has been a vice president of Thermo Electron
since April 1997. Mr. Keiser was promoted to the
position of the president of Thermedics Inc., a
manufacturer of product quality-assurance systems,
security devices and biomedical products, in March
1998 and previously served as a senior vice president
of Thermedics from 1994 to March 1998. He also serves
as the president of Thermo Biomedical Inc., a wholly
owned subsidiary of Thermo Electron, a manufacturer
of medical equipment and instruments, since 1994. Mr.
Keiser was president of the Eberline Instrument
division of Thermo Instrument Systems Inc., a
majority-owned subsidiary of Thermo Electron, from
1985 to July 1994. The Eberline Instrument division
manufactures radiation-detection and counting
instrumentation and radiation-monitoring systems. Mr.
Keiser is also a director of Thermedics Inc.,
Thermedics Detection Inc., Thermo Cardiosystems Inc.
and Trex Medical Corporation.
- --------------------------------------------------------------------------------
ARVIN H. SMITH Mr. Smith, 68, has been a director of the
Corporation since its inception in November 1996. Mr.
Smith has been the chairman of the board of Thermo
Instrument since March 1997, and previously served as
chief executive officer and president of Thermo
Instrument from 1986 to January 1998 and March 1997,
respectively. Mr. Smith is also chairman of the board
of Thermo Power Corporation, a majority-owned
subsidiary of Thermo Electron that manufactures
traffic-control systems and industrial refrigeration
equipment. Mr. Smith has also been an executive vice
president of Thermo Electron since 1991 and a senior
vice president of Thermo Electron from 1986 to 1991.
Mr. Smith is also a director of ONIX Systems Inc.,
Thermo BioAnalysis Corporation, Thermo Instrument,
Thermo Optek Corporation, Thermo Power Corporation,
ThermoQuest Corporation, ThermoSpectra Corporation
and Thermo Vision Corporation.
- --------------------------------------------------------------------------------
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The board of directors has established an audit committee and a human
resources committee, each consisting solely of outside directors. The present
members of the audit committee are Mr. Baute and Mr. Becraft (Chairman). 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. Baute (Chairman) and Mr. Becraft. 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 three times, the audit committee met once and the human resources committee
met twice during fiscal 1997. Each director attended at least 75% of all
meetings of the board of directors and committees on which he served held during
fiscal 1997.
3
<PAGE>
COMPENSATION OF DIRECTORS
CASH COMPENSATION
Directors who are not employees of the Corporation, of Thermo Electron or
of any other companies affiliated with Thermo Electron (also referred to as
"outside directors") receive an annual retainer of $2,000 and a fee of $1,000
per day for attending regular meetings of the board of directors and $500 per
day for participating in meetings of the board of directors held by means of
conference telephone and for participating in certain meetings of committees of
the board of directors. Payment of directors' fees is made quarterly. Mr.
Corte, Mr. Helm, Mr. Lewis, Mr. Keiser and Mr. Smith are all employees of Thermo
Electron or its subsidiaries and do not receive any cash compensation from the
Corporation for their services as directors. Directors are also reimbursed for
out-of-pocket expenses incurred in attending such meetings.
DEFERRED COMPENSATION PLAN
Under the Deferred Compensation Plan for directors (the "Deferred
Compensation Plan"), a director has the right to defer receipt of his cash fees
until he ceases to serve as a director, dies or retires from his principal
occupation. In the event of a change in control or proposed change in control of
the Corporation that is not approved by the board of directors, deferred amounts
become payable immediately. Either of the following is deemed to be a change of
control: (a) the acquisition, without the prior approval of the board of
directors, directly or indirectly, by any person of 50% or more of the
outstanding Common Stock or the outstanding common stock of Thermo Instrument or
25% or more of the outstanding common stock of Thermo Electron; or (b) the
failure of the persons serving on the board of directors immediately prior to
any contested election of directors or any exchange offer or tender offer for
the Common Stock or the common stock of Thermo Instrument or Thermo Electron to
constitute a majority of the board of directors at any time within two years
following any such event. Amounts deferred pursuant to the Deferred Compensation
Plan are valued at the end of each quarter as units of the Corporation's Common
Stock. When payable, amounts deferred may be disbursed solely in shares of
Common Stock accumulated under the Deferred Compensation Plan. A total of 12,500
shares of Common Stock have been reserved for issuance under the Deferred
Compensation Plan. As of March 1, 1998, deferred units equal to 66.4 shares of
Common Stock were accumulated under the Deferred Compensation Plan.
STOCK-BASED COMPENSATION
Directors of the Corporation are also eligible for the grant of stock
options under the Corporation's equity incentive plan. The equity incentive
plan is administered by the human resources committee of the board of directors,
which determines the turn and terms of stock-based awards to be granted. To
date, only nonqualified stock options have been granted under this plan. In
1997, options to purchase 10,000 shares of the Common Stock were granted to each
of the non-executive directors of the Corporation at an exercise price of $15.00
per share. These options may be exercised at any time prior to the expiration
of the option on the seventh anniversary of the grant date. Shares acquired
upon exercise of the options are subject to restrictions on transfer and right
of the Corporation to repurchase such shares at the exercise price if the
director ceases to serve as a director of the Corporation or any other Thermo
Electron company. The restrictions and repurchase rights lapse or are deemed to
have lapsed 20% per year, starting with the first anniversary of the grant date,
provided the director has continuously served as a director of the Corporation
or any other Thermo Electron company since the grant date.
STOCK OWNERSHIP POLICIES FOR DIRECTORS
During 1997, the human resources committee of the board of directors (the
"Committee") established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1999 Annual Meeting of Stockholders. The chief executive officer of the
Corporation is required to comply with a separate stock holding policy
established by the Committee in 1997 which is described in "Committee Report on
Executive Compensation - Stock Ownership Policies."
In addition, the Committee adopted a policy requiring directors to hold
shares of the Corporation's Common Stock equal to one-half of their net option
exercises over a period of five years. The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting the number of shares that could have been traded to exercise the
option and the number of shares that could have been surrendered to satisfy tax
withholding obligations attributable to the exercise of the option. This policy
is also applicable to executive officers and is described in "Committee Report
on Executive Compensation - Stock Ownership Policies."
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Instrument, the Corporation's parent company,
and of Thermo Electron, Thermo Instrument's parent company, as of March 1, 1998,
with respect to (i) each director, (ii) each executive officer named in the
summary
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compensation table under the heading "Executive Compensation" and (iii) all
directors and executive officers as a group. In addition, the following table
sets forth the beneficial ownership of Common Stock, as of March 1, 1998, with
respect to each person who was known by the Corporation to own beneficially more
than 5% of the outstanding shares of Common Stock.
While certain directors and executive officers of the Corporation are also
directors and executive officers of Thermo Electron or its subsidiaries other
than the Corporation, all such persons disclaim beneficial ownership of the
shares of common stock beneficially owned by Thermo Electron
<TABLE>
<CAPTION>
METRIKA SYSTEMS THERMO INSTRUMENT THERMO
Name (1) CORPORATION (2) SYSTEMS INC.(3) ELECTRON (4)
---------- --------------- ----------------- ------------
<S> <C> <C> <C>
Thermo Electron Corporation (5) 5,000,000 N/A N/A
Joseph A. Baute 10,533 0 0
Willard R. Becraft 11,033 0 0
Ernesto A. Corte 41,800 60,701 21,620
Denis A. Helm 26,000 197,644 163,353
John T. Keiser 12,000 154,212 175,283
Werner G. Kramer 31,000 6,378 0
Earl R. Lewis 20,000 203,726 84,037
Arvin H. Smith 10,000 539,583 519,038
All directors and executive
officers as a group (10 persons) 189,866 1,269,834 1,776,158
</TABLE>
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.
(1) Shares of the Common Stock beneficially owned by Mr. Baute, Mr. Becraft,
Mr. Corte, Mr. Helm, Mr. Keiser, Mr. Kramer, Mr. Lewis, Mr. Smith and all
directors and executive officers as a group include 10,000, 10,000, 35,000,
25,000, 12,000, 30,000, 20,000, 10,000 and 164,500 shares, respectively,
that such person or group has the right to acquire within 60 days of March
1, 1998, through the exercise of stock options. Shares of the Common Stock
beneficially owned by Mr. Baute, Mr. Becraft and all directors and
executive officers as a group include 33, 33 and 66 full shares allocated
to their respective accounts under the Corporation's Deferred Compensation
Plan for Directors. No director or executive officer beneficially owned
more than 1% of the Common Stock outstanding as of March 1, 1998; all
directors and executive officers as a group beneficially owned 2.29% of the
Common Stock outstanding as of such date.
(2) The shares of the common stock of Thermo Instrument shown in the table
reflect a five-for-four split of such stock distributed in October 1997 in
the form of a 25% stock dividend. Shares of the common stock of Thermo
Instrument beneficially owned by Mr. Corte, Mr. Helm, Mr. Keiser, Mr.
Kramer, Mr. Lewis, Mr. Smith and all directors and executive officers as a
group include 58,593, 140,625, 70,312, 6,263, 172,085, 292,968, and 829,908
shares, respectively, that such person or group had the right to acquire
within 60 days after March 1, 1998, through the exercise of stock options.
Shares of the common stock of Thermo Instrument beneficially owned by Mr.
Smith and all directors and executive officers as a group include 663 and
1,819 shares, respectively, allocated through March 1, 1998, to their
respective accounts maintained pursuant to Thermo Electron's employee stock
ownership plan, of which the trustees, who have investment power over its
assets, are executive officers of Thermo Electron (the "ESOP"). Shares of
the common stock of Thermo Instrument beneficially owned by Mr. Helm
include a total of 5,264 shares held in custodial accounts for the benefit
of four minor children. Shares of the common stock of Thermo Instrument
beneficially owned by Mr. Lewis include 2,987 shares held by his spouse.
No director or executive officer beneficially owned more than 1% of the
common stock of Thermo Instrument outstanding as of March 1, 1998; all
directors and executive officers as a group beneficially owned 1.04% of the
common stock of Thermo Instrument outstanding as of such date.
(3) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Corte, Mr. Helm, Mr. Keiser, Mr. Lewis, Mr. Smith and all directors and
executive officers as a group include 20,000, 105,322, 134,397, 84,037,
228,411, and 1,277,639 full shares, respectively, that such person or group
has the right to acquire within 60 days of March 1, 1998, through the
exercise of stock options. Shares of the common stock of Thermo Electron
beneficially owned by Mr. Smith and all directors and executive officers as
a group include 1,717 and 5,179 full shares, respectively, allocated to
accounts maintained pursuant to the ESOP. No director or executive officer
beneficially owned more than 1% of the common stock of Thermo Electron
outstanding
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as of March 1, 1998; all directors and executive officers as a group
beneficially owned approximately 1.11% of the Thermo Electron common stock
outstanding as of such date.
(4) As of March 1, 1998, Thermo Electron, through its majority-owned subsidiary
Thermo Instrument, beneficially owned 60.5% of the outstanding Common
Stock. Thermo Electron's address is 81 Wyman Street, Waltham,
Massachusetts 02254-9046. As of March 1, 1998, Thermo Electron had the
power to elect all of the members of the Corporation's board of directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and beneficial owners of more
than 10% of the Common Stock, such as Thermo Electron to file with the
Securities and Exchange Commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities. Based upon a
review of such filings, all Section 16(a) filing requirements applicable to such
persons were complied with during 1997, except in the following instances.
Thermo Electron filed an amended Form 3 late and one Form 4 late, reporting one
transaction associated with the grant of options to purchase Common Stock
granted to employees under its stock option program.
EXECUTIVE COMPENSATION
NOTE: All share amounts reported below have, in all cases, been adjusted
as applicable to reflect a (i) five-for-four stock split distributed in October
1997 with respect to the common stock of Thermo Instrument in the form of a 25%
stock dividend.
SUMMARY COMPENSATION TABLE
The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer and its two other most highly compensated executive officers
for the last two fiscal years. No other executive officer of the Corporation
met the definition of "highly compensated" within the meaning of the Securities
and Exchange Commission's executive compensation disclosure rules.
The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for these
individuals is not reported in the following table.
6
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<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
-----------------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND FISCAL ---------------------- OPTIONS (NO. OF SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY) (1) COMPENSATION (2)
------------------ ------ ------ ----- ----------------------- ----------------
<S> <C> <C> <C> <C> <C>
Denis A. Helm (3) 1997 $ 15,500 $ 9,200 25,000 (MKA) $7,125
Chief Executive Officer
Ernesto A. Corte (4) 1997 $163,530 $55,000 35,000 (MKA) $7,508 (5)
President and 20,000 (TMO)
Chief Operating Officer 1996 $163,530 $37,000 7,500 (TOC) $6,750
5,000 (TMQ)
Werner G. Kramer (4) (6) 1997 282,325 DM 48,055 DM 30,000 (MKA) --
Executive Vice President 1996 282,000 DM 0 7,500 (TOC)
5,000 (TMQ)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options granted by the Corporation are designated in the table as "MKA."
In addition, the named executive officers have been granted options to
purchase shares of the common stock of Thermo Electron companies from time
to time as part of Thermo Electron's stock option program. Options have
been granted to the named executive officers during the last two fiscal
years in the following Thermo Electron companies: Thermo Electron
(designated in the table as TMO), Thermo Optek Corporation (designated in
the table as TOC) and ThermoQuest Corporation (designated in the table as
TMQ).
(2) Represents the amount of matching contributions made by the individual's
employer on behalf of named executive officers participating in the Thermo
Electron 401(k) plan.
(3) Mr. Helm was appointed chief executive officer of the Corporation at its
inception in November 1996 and served in that position until February 11,
1998. Mr. Helm has also served as a senior vice president of Thermo
Instrument since 1994, as a vice president of Thermo Instrument from 1986
through 1994 and as president of Thermo Instrument's Thermo Environmental
Inc. subsidiary since 1981. A portion or all of Mr. Helm's annual cash
compensation (salary and bonus) has been paid by Thermo Instrument in each
of the last two fiscal years for the time he devoted to his
responsibilities to this company. The annual cash compensation (salary and
bonus) reported in the table for Mr. Helm represents the amount paid by the
Corporation for Mr. Helm's services as its chief executive officer. For
fiscal 1997 and 1996, approximately 10% and 0%, respectively, of Mr. Helm's
salary and bonus earned in all capacities throughout the Thermo Electron
organization was paid by the Corporation for his services as chief
executive officer. In addition, Mr. Helm has been granted options to
purchase shares of the common stock of Thermo Electron and certain of its
subsidiaries other than the Corporation from time to time by Thermo
Electron or such other subsidiaries. These options are not reported in
this table as they were granted as compensation for service to other Thermo
Electron companies in capacities other than in his capacity as the chief
executive officer of the Corporation.
(4) Compensation amounts for Messrs. Corte and Kramer for 1996 include
compensation received by each from Thermo Instrument prior to the
Corporation's inception in November 1996.
(5) In addition to the matching contribution referred to in footnote (2), such
amount includes $383, which represents the amount of compensation
attributable to an interest-free loan provided to Mr. Corte pursuant to the
Corporation's stock holding assistance plan. See "Relationship with
Affiliates - Stock Holding Assistance Plan."
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<PAGE>
(6) Mr. Kramer is a citizen of Germany and all compensation received by him is
paid in deutschemarks. If his salary had been translated into U.S. dollars
using the average exchange rates for 1997 and 1996, Mr. Kramer would have
received an annual salary of $163,325 and $187,474, respectively, for
fiscal 1997 and 1996 and an annual bonus of $27,800 and $0, respectively,
for the same years.
STOCK OPTIONS GRANTED DURING FISCAL 1997
The following table sets forth information concerning individual grants of
stock options made during fiscal 1997 to the Corporation's chief executive
officer and the other named executive officers. It has not been the
Corporation's policy in the past to grant stock appreciation rights, and no such
rights were granted during fiscal 1997.
<TABLE>
<CAPTION>
STOCK OPTIONS GRANTED IN FISCAL 1997
- -----------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION
UNDERLYING EMPLOYEES IN PRICE PER EXPIRATION FOR OPTION TERM OPTIONS (2)
NAME GRANTED (1) FISCAL YEAR SHARE DATE 5% 10%
- ---- ----------- ----------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Denis A. Helm (3) 25,000 (MKA) 13.70% $15.00 5/23/09 $298,500 $ 802,000
- -----------------------------------------------------------------------------------------------------------------
Ernesto A. Corte 35,000 (MKA) 19.20% $15.00 5/23/09 $417,900 $1,122,800
20,000 (TMO) 1.40% (4) $39.39 9/24/09 $627,000 $1,684,600
- -----------------------------------------------------------------------------------------------------------------
Werner G. Kramer 30,000 (MKA) 16.40% $15.00 5/23/09 $358,200 $ 962,400
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All of the options granted during the fiscal year are immediately
exercisable as of the end of the fiscal year. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be employed by
such corporation or another Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months after the
termination of the optionee's employment. The repurchase rights generally
lapse ratably over a five- to ten-year period, depending on the option
term, which may vary from seven to twelve years, provided the optionee
continues to be employed by the Corporation or another Thermo Electron
company. The granting corporation may permit the holder of options to
exercise options and to satisfy tax withholding obligations by surrendering
shares equal in fair market value to the exercise price or withholding
obligation.
(2) The amounts shown in this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the common stock of the
granting corporation, the optionee's continued employment through the
option period and the date on which the options are exercised.
(3) Mr. Helm has been granted options to purchase shares of the common stock of
Thermo Electron and its subsidiaries other than the Corporation. These
options are not reported in the table as they were granted as compensation
for service to other Thermo Electron companies in capacities other than in
his capacity as chief executive officer of the Corporation.
(4) 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.
8
<PAGE>
STOCK OPTIONS EXERCISED DURING FISCAL 1997 AND FISCAL YEAR-END VALUES
The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options held at the end of
fiscal 1997 by the Corporation's chief executive officer and the other named
executive officers. No stock appreciation rights were exercised or were
outstanding during fiscal 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL 1997 YEAR-END OPTION VALUES
- -----------------------------------------------------------------------------------------------------------------------
NUMBER OF
UNEXERCISED
OPTIONS AT
FISCAL VALUE OF
SHARES YEAR-END UNEXERCISED
ACQUIRED ON VALUE (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE REALIZED (1) UNEXERCISABLE) (2) OPTIONS
- ------------------- ------------------ ------------ --------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Denis A. Helm (3) Metrika Systems -- -- 25,000 /-- $ 9,375 /--
- -----------------------------------------------------------------------------------------------------------------------
Ernesto A. Corte Metrika Systems -- -- 35,000 /-- $ 13,125 /--
Thermo Electron -- -- 20,000 /-- $ 75,960 /--
Thermo Instrument -- -- 58,593 /-- $1,322,936 /--
Thermo Optek -- -- 7,500 /-- $ 35,850 /--
ThermoQuest -- -- 5,000 /-- $ 25,000 /--
ThermoSpectra -- -- 500 /-- $ 32 /--
- -----------------------------------------------------------------------------------------------------------------------
Werner G. Kramer Metrika Systems -- -- 30,000 /-- $ 11,250 /--
Thermo Instrument 862 $11,706 6,263 /-- $ 130,498 /--
Thermo Optek -- -- 7,500 /-- $ 35,850 /--
ThermoQuest -- -- 5,000 /-- $ 25,000 /--
ThermoSpectra -- -- 700 /-- $ 44 /--
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
(2) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of the end of the fiscal year. In all cases,
the shares acquired upon exercise of the options reported in the table are
subject to repurchase by the granting corporation at the exercise price if
the optionee ceases to be employed by such corporation or another Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. The repurchase rights generally lapse ratably over a five- to
ten-year period, depending on the option term, which may vary from seven to
twelve years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company. The granting corporation
may permit the holder of such options to exercise options and to satisfy
tax withholding obligations by surrendering shares equal in fair market
value to the exercise price or withholding obligation.
(3) Mr. Helm also holds other unexercised options to purchase common stock of
Thermo Electron and its subsidiaries other than the Corporation. These
options are not reported here as they were granted as compensation for
service to other Thermo Electron companies in capacities other than in his
capacity as chief executive officer of the Corporation.
9
<PAGE>
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
All decisions on compensation for the Corporation's executive officers are
made by the human resources committee of the board of directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the human resources committees of the board of directors of its parent
companies, Thermo Electron and Thermo Instrument. The executive compensation
program presently consists of annual base salary ("salary"), short-term
incentives in the form of annual cash bonuses, and long-term incentives in the
form of stock options (collectively referred to as "total compensation").
The Committee believes that the total compensation of executive officers
should reflect the scope of their responsibilities, the success of the
Corporation, and the contributions of each executive to that success. In
addition, the Committee believes that base salaries should approximate the mid-
point of competitive salaries derived from market surveys and that short-term
and long-term incentive compensation should reflect the performance of the
Corporation and the contributions of each executive.
ESTABLISHING COMPETITIVENESS
External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's total compensation
for its executives is assessed by comparing it to market data provided by
compensation consultants and by participating in annual executive compensation
surveys, primarily "Project 777," an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's 500 Index, but do not necessarily correspond to the companies included in
the Corporation's peer group index, the Dow Jones Total Return Index for the
Diversified Technology Industry Group.
Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total compensation of other executives within the Thermo Electron
organization with comparable levels of responsibility for comparably sized
business units.
The process for determining each of these elements for the Corporation's
executive officers is outlined below. For its review of the compensation of
other officers of the Corporation, the Committee follows a substantially similar
process.
BASE SALARY
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the other named executive officers will approximate the
mid-point of competitive data. The salary increases in 1997 for the chief
executive officer and the other named executive officers generally reflect this
practice of gradual increases and moderation.
CASH BONUS
The Committee establishes a median potential bonus for each executive by
using the market data on total cash compensation from the same executive
compensation surveys as used to determine salaries. Specifically, the median
potential bonus plus the salary of an executive officer is approximately equal
to the mid-point of competitive total cash compensation for a similar position
and level of responsibility in businesses having comparable sales and complexity
to the Corporation. The actual bonus awarded to an executive officer may range
from zero to three times the median potential bonus. The value within the range
(the bonus multiplier) is determined at the end of each year
10
<PAGE>
by the Committee in its discretion. The Committee exercises its discretion by
evaluating each executive's performance using a methodology developed by its
company corporation, Thermo Electron, and applied throughout the Thermo Electron
organization. The methodology incorporates measures of operating returns which
are designed to measure profitability and contributions to shareholder value and
are measures of corporate and divisional performance that are evaluated using
graphs developed by Thermo Electron intended to reward performance that is
perceived as above average and to penalize performance that is perceived as
below average. The measures of operating returns used in the Committee's
determinations in fiscal 1997 measured return on net assets, growth in income,
and return on sales, and the Committee's determinations also included a
subjective evaluation of the contributions of each executive that are not
captured by operating measures but are considered important to the creation of
long-term value for the Stockholders. These measures of achievements are not
financial targets that are met, not met or exceeded. The relative weighting of
the operating measures and subjective evaluation varies among the executives,
depending on their roles and responsibilities within the organization.
The bonuses for named executive officers approved by the Committee with
respect to fiscal 1997 performance in each instance exceeded the median
potential bonus.
STOCK OPTION PROGRAM
The primary goal of the Corporation and its parent 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 options
to purchase common stock of the Corporation and other Thermo Electron companies.
The Committee and management believe that awards of stock options to
purchase the shares of both the Corporation and other companies within the
Thermo Electron group of companies accomplish many objectives. The grant of
options to key employees encourages equity ownership in the Corporation, and
closely aligns management's interests to the interests of all the Stockholders.
The emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees to
remain with the Corporation long-term. The Committee believes stock option
awards in its parent companies, Thermo Electron and Thermo Instrument, and the
other majority-owned subsidiaries of Thermo Electron and Thermo Instrument, are
an important tool in providing incentives for performance within the entire
organization.
In determining awards, the Committee considers for each officer the annual
value of all options to purchase shares of the Corporation and other companies
within the Thermo Electron organization that vest in the next year and compares
the individual's total compensation using this value to competitive data. The
Committee uses a modified Black-Scholes option pricing model to determine the
value of an option award. In addition, the Committee considers the aggregate
amount of net awards to purchase shares of Common Stock granted to all employees
over the last five years to monitor the number of aggregate awards to all
employees. In reviewing the aggregate number of awards, the Committee considers
such factors as the size of the company, its stage of development, and its
growth strategy, as well as the aggregate awards and option practices of
comparably situated companies.
The Committee periodically awards options based on its assessment of the
total compensation of executives, actual and anticipated contributions of each
executive (which includes a subjective assessment by the Committee of the value
of the executive's future potential within the organization), as well as the
value of previously awarded options, as described above. Such discretionary
awards of options to purchase the Common Stock were made by the Committee in
1997 to the named executive officers in connection with the Corporation's
initial public offering.
STOCK OWNERSHIP POLICIES
The Committee established a stock holding policy for executive officers of
the Corporation in 1997 that required executive officers to own a multiple of
their compensation in shares of ownership of the Corporation's Common Stock.
For the chief executive officer, the multiple was one times his base salary and
reference bonus for the calendar year. For all other officers, the multiple was
one times the officer's base salary. The Committee
11
<PAGE>
deemed it appropriate to permit officers to achieve these ownership levels over
a three-year period. The policy was amended in 1998 to apply only to the chief
executive officer.
In order to assist officers in complying with the policy, the Committee
also adopted in 1997 a stock holding assistance plan under which the Corporation
was authorized to make interest-free loans to officers to enable them to
purchase shares of the Common Stock in the open market. The loans are required
to be repaid upon the earlier of demand or the fifth anniversary of the date of
the loan, unless otherwise authorized by the Committee. During 1997, Mr. Corte,
the Corporation's then president and chief operating officer, promoted to chief
executive officer on February 11, 1998, received a loan in the principal amount
of $51,907.85 under this plan, of which amount $51,907.85 was outstanding as of
April 23, 1998. This plan was also amended in 1998 to apply only to the chief
executive officer. See "Relationship with Affiliates - Stock Holding Assistance
Plan."
The Committee also has adopted a policy requiring its executive officers to
hold shares of the Corporation's Common Stock acquired upon the exercise of
stock options granted by the Corporation. Under this policy, executive officers
are required to hold one-half of their net option exercises over a period of
five years. The net option exercise is determined by calculating the number of
shares acquired upon exercise of a stock option, after deducting the number of
shares that could have been traded to exercise the option and the number of
shares that could have been surrendered to satisfy tax withholding obligations
attributable to the exercise of the options.
POLICY ON DEDUCTIBILITY OF COMPENSATION
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance-based" or is otherwise exempt under
Section 162(m). The annual compensation paid to individual executives does not
approach the $1 million threshold, and it is believed that stock incentive plans
of the Corporation qualify as "performance-based." Therefore, the Committee does
not believe any further action is necessary in order to comply with Section
162(m). From time to time, the Committee will reexamine the Corporation's
compensation practices and the effect of Section 162(m).
1997 CEO COMPENSATION
The cash compensation for Mr. Denis A. Helm is reviewed by both the
Committee and the human resources committee of the board of directors of Thermo
Instrument due to his responsibilities as both the Corporation's chief executive
officer and as a senior vice president of Thermo Instrument, the Corporation's
parent company. Each committee evaluates Mr. Helm's performance and proposed
compensation using a process similar to those used for the other executive
officers of the Corporation. At the Thermo Instrument level, Mr. Helm is
evaluated on his performance relative to the Corporation, as well as other
operating units of Thermo Instrument for which he is responsible, weighted in
accordance with the amount of time and effort devoted to each operation. The
Corporation's Committee then reviews the analysis and determinations of the
Thermo Instrument committee, makes an dependent assessment of Mr. Helm's
performance as it relates to the Corporation using criteria similar to that used
for the other executive officers of the Corporation, and then agrees to an
appropriate allocation of Mr. Helm's compensation to be paid by the Corporation.
In December 1997, the Committee conducted its review of Mr. Helm's proposed
salary for calendar 1998 and bonus for calendar 1997 performance. The Committee
concurred in the recommendation made by the Thermo Electron committee and agreed
to an allocation of 10% of Mr. Helm's total cash compensation (salary and bonus)
for calendar 1997 to the Corporation, based on his relative responsibilities at
the Corporation and Thermo Instrument.
The Committee awarded to Mr. Helm options to purchase 25,000 shares of the
Common Stock in fiscal 1997. This award was determined in a manner consistent
with awards to other officers, as described above under the caption "Stock
Option Program".
12
<PAGE>
Joseph A. Baute (Chairman)
Willard R. Becraft
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation's Common
Stock has been publicly traded only since June 20, 1997 and, as a result, the
following graph commences as of such date. The Corporation has compared its
performance with the American Stock Exchange Market Value Index and the Dow
Jones Total Return Index for the Diversified Technology Industry Group as of the
last trading day of the Corporation's fiscal year.
COMPARISON OF TOTAL RETURN AMONG METRIKA SYSTEMS CORPORATION,
THE AMERICAN STOCK EXCHANGE COMPOSITE INDEX AND THE DOW JONES TOTAL RETURN
INDEX FOR THE DIVERSIFIED TECHNOLOGY INDUSTRY GROUP FROM JUNE 20, 1997 TO
JANUARY 2, 1998
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
-------------------------------------------
6/20/97 1/2/98
-------------------------------------------
<S> <C> <C>
MKA 100 99
-------------------------------------------
AMEX COMP. 100 109
-------------------------------------------
DJ DTC 100 96
</TABLE>
The total return for the Corporation's Common Stock (MKA), the American
Stock Exchange Composite Index (AMEX COMP.) and the Dow Jones Total Return Index
for the Diversified Technology Industry Group (DJ DTC) assumes the reinvestment
of dividends, although dividends have not been declared on the Corporation's
Common Stock. The American Stock Exchange Composite 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 "MKA."
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created several privately and publicly held subsidiaries, and
Thermo Instrument has created the Corporation and other subsidiaries as publicly
held, majority-owned subsidiaries and privately held majority-owned
subsidiaries. From time to time, Thermo Electron and its subsidiaries will
create other majority-owned subsidiaries as part of its spinout strategy. (The
Corporation and such other majority-owned Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries.")
13
<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
each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, employee
benefit administration, tax advice and preparation of tax returns, centralized
cash management and certain financial and other services to the Corporation. The
Corporation was assessed an annual fee equal to 1.0% of the Corporation's
revenues for these services in fiscal 1996 and 1997. The annual fee has been
reduced to 0.8% of the Corporation's total revenues for fiscal 1998. The fee is
reviewed annually and may be changed by mutual agreement of the Corporation and
Thermo Electron. During fiscal 1997, Thermo Electron assessed the Corporation
$567,000 in fees under the Services Agreement. Management believes that the
charges under the Services Agreement are reasonable and that the terms of the
Services Agreement are fair to the Corporation. For items such as employee
benefit plans, insurance coverage and other identifiable costs, Thermo Electron
charges the Corporation based on charges attributable to the Corporation. The
Services Agreement automatically renews for successive one-year terms, unless
canceled by the Corporation upon 30 days' prior notice. In addition, the
Services Agreement terminates automatically in the event the Corporation ceases
to be a member of the Thermo Group or ceases to be a participant in the Charter.
In the event of a termination of the Services Agreement, the Corporation will be
required to pay a
14
<PAGE>
termination fee equal to the fee that was paid by the Corporation for services
under the Services Agreement for the nine-month period prior to termination.
Following termination, Thermo Electron may provide certain administrative
services on an as-requested basis by the Corporation or as required in order to
meet the Corporation's obligations under Thermo Electron's policies and
procedures. Thermo Electron will charge the Corporation a fee equal to the
market rate for comparable services if such services are provided to the
Corporation following termination.
From time to time, the Corporation may transact business with other
companies in the Thermo Group.
The Corporation leases approximately 54,900 square feet of its 110,000
square foot facility in Erlangen, Germany on a month-to-month basis to another
Thermo Instrument company. The Thermo Instrument company is responsible for
paying to the Corporation its pro rata share of occupancy expenses, including
utilities and taxes, associated with the facility which payments in 1997
amounted to $472,000 in the aggregate.
In 1997, the Corporation paid a ten percent (10%) sales commission totaling
$83,000 to Thermo Sentron Inc., a majority-owned subsidiary of Thermedics Inc.,
which is in turn a majority-owned subsidiary of Thermo Electron, for assisting
in the sale by the Corporation of its products in Australia.
In 1997, the Corporation purchased several x-ray source components for
$267,000 from Kevex X-Ray Inc., a wholly owned subsidiary of ThermoSpectra
Corporation, which in turn is a majority-owned subsidiary of Thermo Instrument.
The Corporation, along with certain other Thermo Subsidiaries, participates in a
notional pool arrangement with Barclays Bank, which includes a $150 million
credit facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide
credit support for overdraft obligations of other participants. As of January
3, 1998, the Corporation had a negative cash balance of approximately $569,608,
based on an exchange rate of $1.65/(Pounds) 1.00 as of January 3, 1998. For
1997, the average annual interest rate earned on GBP deposits by participants in
this credit arrangement was approximately 6.5% and the average annual interest
rate paid on overdrafts was approximately 7.2%.
The Corporation, along with certain other Thermo Subsidiaries, participates
in a notional pool arrangement with Barclays Bank, which includes a $150 million
credit facility. Only European-based Thermo Subsidiaries participate in this
arrangement. Under this arrangement the Bank notionally combines the positive
and negative cash balances held by the participants to calculate the net
interest yield/expense for the group. The benefit derived from this arrangement
is then allocated based on balances attributable to the respective participants.
Thermo Electron guarantees all of the obligations of each participant in this
arrangement. In addition, funds on deposit under this arrangement provide
credit support for overdraft obligations of other participants. As of January
3, 1998, the Corporation had a negative cash balance of approximately $569,608,
based on an exchange rate of $1.65/(Pounds)1.00 as January 3, 1998. For 1997,
the average annual interest rate earned on GBP deposits by participants in this
credit arrangement was approximately 6.5% and the average annual interest rate
paid on GBP overdrafts was approximately 7.2%.
As of January 3, 1998, the Corporation owed Thermo Electron and its other
subsidiaries an aggregate of $4,184,000 for amounts due under the Corporate
Services Agreement and related administrative charges, for other products and
services, and for miscellaneous items. The largest amount of net indebtedness
owed by the Corporation to Thermo Electron and its other subsidiaries since
December 29, 1996 was $4,184,000. These amounts do not bear interest and are
expected to be paid in the normal course of business.
STOCK HOLDING ASSISTANCE PLAN
In 1997, the Corporation adopted a stock holding policy which 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 Corporation also adopted a stock holding assistance plan under which
it may make interest-free loans to the chief executive officer, to enable such
employees to purchase the Common Stock in the open market. During 1997, Mr.
Corte received a loan in the principal amount of $51,907.85 under this plan to
15
<PAGE>
purchase 3,200 shares of the Common Stock, of which amount $51,907.85 was
outstanding as of the date of April 23, 1998. The loan to Mr. Corte is
repayable upon the earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the human resources committee of the
Corporation's board of directors.
--PROPOSAL 2--
PROPOSAL TO ADOPT AN EMPLOYEES' STOCK PURCHASE PLAN
AND RESERVE 50,000 SHARES FOR ISSUANCE THEREUNDER
The board of directors has approved an employees' stock purchase plan (the
"Stock Purchase Plan") and reserved 50,000 shares of the Corporation's Common
Stock for issuance thereunder, subject to Stockholder approval. The board of
directors is recommending that the Stockholders approve the Stock Purchase Plan
and the reservation of shares at this Meeting. The purpose of the Stock
Purchase Plan is to grant options to purchase shares of Common Stock of the
Corporation to eligible employees of the Corporation. The board of directors
believes that the Stock Purchase Plan is an important incentive in attracting
and retaining key personnel, and motivating individuals to contribute
significantly to the Corporation's future growth and success, and in aligning
the long-term interest of these individuals with those of the Corporation's
Stockholders. Accordingly, the board of directors acted to adopt the Stock
Purchase Plan subject to Stockholder approval.
SUMMARY OF THE STOCK PURCHASE PLAN
The full text of the Stock Purchase Plan is set forth in Attachment A to
this proxy statement. A description of the principal features of the Stock
Purchase Plan follows, but it is qualified in its entirety by reference to the
full text.
PARTICIPATION; ADMINISTRATION
All full-time employees and part-time employees working at least 20 hours
per week and who have been employed for at least six months by the Corporation
are eligible to participate in the Stock Purchase Plan, unless they own more
than 5% of the Common Stock of the Corporation. At the present time, only
employees of U.S. based subsidiaries of the Corporation are eligible to
participate in the plan. For purposes of determining the term of employment,
employees are credited with years of continuous employment with Thermo Electron
or its other subsidiaries immediately prior to joining the Corporation. Options
to purchase shares of Common Stock of the Corporation may be granted from time
to time at the discretion of the board of directors, which also determines the
date upon which such options are exercisable. The number of employees
potentially eligible to participate in the Stock Purchase Plan is approximately
230 persons.
CONTRIBUTIONS
A participating employee may purchase stock only through payroll
deductions. Eligible employees are also permitted to participate in the Thermo
Electron employees' stock purchase plan, which has substantially the same terms
as the Stock Purchase Plan. The aggregate amount which may be contributed under
the Thermo Electron employees' stock purchase plan and the Corporation's Stock
Purchase Plan may not exceed 10% of the employee's gross salary or wages during
the year. The board of directors may fix the aggregate amount that may be
contributed to the Stock Purchase Plan each year in its discretion within such
limitation. Employees are allowed to decrease, but not increase, the
percentage of wages contributed once during the Stock Purchase Plan year. An
employee may suspend his or her contributions, but then is not permitted to
contribute again for the remainder of the Stock Purchase Plan year.
TERMS OF OPTIONS
The exercise price is fixed on the grant date and is 95% of the fair market
value for the Common Stock on such date. On the exercise date, participants may
elect to use their accumulated payroll deductions to purchase shares at the
exercise price. Participants must agree not to resell the shares so purchased
for a period of six months following the exercise date. The options are
nontransferable, and except in the case of death of the employee, may not be
exercised if the employee is not still employed by the Corporation at the
exercise date. If an employee dies,
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his or her beneficiary may withdraw the accumulated payroll deduction or use
such deductions to purchase shares on the exercise date. A participant may elect
to discontinue participation at any time prior to the exercise date and to have
his or her accumulated payroll deduction refunded together with interest on such
amount as fixed by the board of directors from time to time.
SHARES SUBJECT TO THE STOCK PURCHASE PLAN
The number of shares that are reserved for issuance under the Stock
Purchase Plan will be 50,000 shares of the Corporation's Common Stock, subject
to adjustment for stock splits and similar events. The proceeds received by the
Corporation from exercise under the Stock Purchase Plan will be used for the
general purposes of the Corporation. Shares issued under the Stock Purchase
Plan may be authorized but unissued or shares reacquired by the Corporation and
held in its treasury.
AMENDMENT AND TERMINATION
The Stock Purchase Plan shall remain in full force and effect until
suspended or discontinued by the board of directors. The board of directors may
at any time or times amend or review the Stock Purchase Plan for any purpose
which may at any time be permitted by law, or may at any time terminate the
Stock Purchase Plan, provided that no amendment that is not approved by the
Stockholders shall be effective if it would cause the Stock Purchase Plan to
fail to satisfy the requirements of Rule 16b-3 (or any successor rule) of the
Securities Exchange Act of 1934, as amended. No amendment of the Stock Purchase
Plan may adversely affect the rights of any recipient of any option previously
granted without such recipient's consent.
EFFECTIVE DATE OF THE STOCK PURCHASE PLAN
The Stock Purchase Plan will become effective as of November 1, 1998,
provided that it is approved by the Stockholders at this Meeting.
FEDERAL INCOME TAX ASPECTS
Federal income tax is not imposed upon an employee in the year an option is
granted or the year the shares are purchased pursuant to the exercise of the
option granted under the Stock Purchase Plan. Federal income tax generally is
imposed upon an employee when he or she sells or otherwise disposes of the
shares acquired pursuant to the Stock Purchase Plan. When an employee sells or
disposes of the shares, if such sale or disposition occurs more than two years
from the grant date and more than one year from the exercise date, then Federal
income tax assessed at ordinary rates will be imposed upon the amount by which
the fair market value of the shares on the date of grant or disposition,
whichever is less, exceeds the amount paid for the shares. In addition, the
difference between the amount received by the employee at the time of sale and
the employee's tax basis in the shares, which is equal to the amount paid on
exercise of the option plus the amount recognized as ordinary income, will be
recognized as a capital gain or loss. The Corporation will not be allowed a
deduction under these circumstances for Federal income tax purposes. If the
employee sells or disposes of the shares sooner than two years from the grant
date or one year from the exercise date, then the employee's entire gain (the
difference between the fair market value at disposition and the amount paid for
the shares) will be taxed as ordinary income, and the Corporation would be
entitled to a deduction equal to that amount.
The closing price per share on the American Stock Exchange of the Common
Stock on April 22, 1998 was $16.88.
RECOMMENDATION
The board of directors believes that adoption of the Stock Purchase Plan
and the reservation of shares thereunder is important for the Corporation to
attract and retain key employees and to be able to continue to offer them the
opportunity to participate in the ownership and growth of the Corporation
through an employees' stock purchase plan. In addition, the board of directors
believes the Stock Purchase Plan is in the best interest of the Corporation and
its Stockholders and recommends that the Stockholders vote FOR the approval of
the Stock Purchase Plan and the reservation of 50,000 shares of Common Stock
thereunder. Thermo Electron, through its
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majority-owned subsidiary Thermo Instrument, beneficially owned of record
approximately 60.5% of the outstanding voting stock of the Corporation on
April 3, 1998, has indicated its intention to vote for the proposal.
The affirmative vote of a majority of the Common Stock present and entitled
to vote on this proposal is required to approve the adoption of the Stock
Purchase Plan and the reservation of 50,000 shares of Common Stock thereunder.
The board of directors believes that the adoption of the Stock Purchase Plan is
in the best interest of the Corporation and its Stockholders and recommends that
you vote FOR approval of the Stock Purchase Plan and the reservation of the
shares. If not otherwise specified, proxies will be voted FOR approval of this
proposal.
- PROPOSAL 3-
PROPOSAL TO INCREASE THE SHARES AVAILABLE FOR ISSUANCE UNDER THE CORPORATION'S
EQUITY INCENTIVE PLAN
The Board of Directors has approved an amendment to the Corporation's
equity incentive plan (the "Equity Incentive Plan") that would increase the
number of shares of Common Stock available for issuance under the Equity
Incentive Plan by 500,000 shares. The increase in shares is being recommended to
the Stockholders for their approval at the Meeting.
The Equity Incentive Plan was first approved by the Stockholders in 1997.
As of March 1, 1998 and before giving effect to the proposed increase, options
to purchase 296,000 shares of Common Stock were outstanding under the Equity
Incentive Plan, no options to purchase shares of Common Stock had been exercised
and options to purchase 2,000 shares had lapsed or been cancelled. As of March
1, 1998, options to purchase 4,000 shares were available for future grant under
the Equity Incentive Plan.
The Board of Directors believed that the shares available for future grant
under the Equity Incentive Plan were not sufficient to fund the Corporation's
stock-based incentive program and increased the number of shares reserved for
future grant by 500,000 shares in April 1998, subject to Stockholder approval.
It has been the Committee's objective to award net options to purchase up to 12%
of the outstanding Common Stock over a five-year period. The options outstanding
and the shares remaining available for future grant under the Equity Incentive
Plan represent approximately 3.7 % of the outstanding Common Stock as of April
3, 1998. After giving effect to the increase, the options outstanding and shares
available for future grant would represent approximately 9.7% of the outstanding
Common Stock. The Board of Directors believes that it is in the Corporation's
best interest to be able to continue to grant stock-based incentives to its key
employees, executive officers and directors.
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 does not have the
authority under the Equity Incentive Plan to reprice outstanding option awards
or to grant stock appreciation rights. The Board may delegate any or 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 Securities Exchange Act of 1934, as
amended (the Exchange Act").
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,
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selected by the Board, are eligible to participate in the Equity Incentive Plan.
Approximately 230 persons are eligible to participate in the existing plan of
the Corporation.
SHARES SUBJECT TO THE INCENTIVE PLAN; USE OF PROCEEDS
The number of shares of the Common Stock currently reserved for future
issuance under the Equity Incentive Plan, before giving effect to the proposed
increase, is 4,000 shares, and if the increase is approved, the number of shares
reserved for future issuance under the plan would increase to 504,000 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 will be 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 Board to grant a variety of stock and
stock-based awards in such form or in such combinations as may be approved by
the Board. 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 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. The Board may not, however, grant in
excess of 1% 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 of 1986, as amended
(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 Board, 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 will be fixed by the Board. The Board will also
determine 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 Board. The Board 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 Board or, if the
Board so determines, by delivery of shares of Common Stock held by the option
holder for at least six months (unless the Board 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 Board, 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 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 exercised 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.
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RESTRICTED STOCK AND UNRESTRICTED STOCK
The Board 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 Board, but may not be
less than the par value of those shares. In addition, the Board may not grant
in excess of 10% of the shares reserved under the Equity Incentive Plan in the
form of restricted stock.
Generally, if a participant who holds shares of restricted stock fails to
satisfy such restrictions or other conditions as may be determined by the Board
(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 Board as specifically set forth in the instrument evidencing
the award. The Board 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 Board 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 Board
deems to be in the best interests of the Corporation.
DEFERRED STOCK
The Board 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 place on such date or dates and on
such conditions as the Board specifies. The Board 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 Board 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 Board shall determine.
LOANS AND SUPPLEMENTAL GRANTS
The Board 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 Board, 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 Board shall determine. In
connection with any award, the Board 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 Board, provided that the purchase price of Common
Stock shall not be less than its par value. The Board 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 Board 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, a "Change of
Control" occurs if (1)
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any person other than Thermo Electron or Thermo Instrument becomes the
beneficial owner of 50% or more of the outstanding Common Stock of the
Corporation, or any person becomes the beneficial owner of 25% or more of the
outstanding Common Stock of Thermo Instrument or Thermo Electron, without the
prior approval of the Board, or the board of directors of Thermo Instrument or
Thermo Electron, as the case may be, (2) during any two-year period the
individuals who constituted the Board or the board of directors of Thermo
Instrument or Thermo Electron at the beginning of such period no longer
represent a majority of such board or (3) the Board or the board of directors of
Thermedics or Thermo Electron determines that any other event constitutes an
effective change in control of the Corporation.
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 Board 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 Board may also make appropriate adjustments to avoid distortions in the
operation of the Equity Incentive Plan.
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 or of any
federal tax law or regulation relating to incentive stock options.
STOCK WITHHOLDING
In the case of an award under which Common Stock may be delivered, the
Board 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 current 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 state, local or foreign tax consequences.
INCENTIVE STOCK OPTIONS
No taxable income is realized 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 realize ordinary
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. Any further gain
realized 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.
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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 realized by the optionee at the time the option is
granted. Generally, at exercise, ordinary income is realized by the optionee in
an amount equal to the difference between the option 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, and at disposition, 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 (stock subject to forfeiture provisions)
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. A restriction only
as to the time stock can be resold is not a substantial risk of forfeiture, and
therefore is not considered restricted stock under this provision of the Equity
Incentive Plan. 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 realize ordinary 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),
minus any amount paid for such stock. If the shares subject to such election
are forfeited, the recipient will not be entitled to any deduction, refund or
ordinary loss for tax purposes with respect to the forfeited shares. 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 when the forfeiture period expires (or upon 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 realized 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 will 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.
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NEW PLAN BENEFITS
The Corporation is required to set forth in tabular format, to the extent
determinable, the number of shares of the Common Stock of the Corporation that
have been authorized to be granted as part of the proposed increse in the number
of shares under the Equity Incentive Plan to the chief executive officer, the
other named executive officers, all current executive officers as a group, all
current directors who are not executive officers as a group and all employees,
including all current officers who are not executive officers as a group. No
such options have been granted to any of such persons or groups. Grants are
conditioned upon Stockholder approval of the increase in the number of shares
available under the Equity Incentive Plan.
RECOMMENDATION
The Board of Directors believes that the amendment to the Equity Incentive
Plan will provide the Corporation with the ability to continue to provide
incentive compensation for employees and others who are expect to make
significant contributions to the future growth and success of the Corporation,
to reward such individuals for such contributions and to encourage such
individuals to take into account the long-term interests of the Corporation and
its Stockholders through ownership of the Corporation's Common Stock.
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 of the Equity Incentive Plan.
Thermo Electron, through its majority-owned subsidiary Thermo Instrument
which benefically owned of record approximately 60.5% of the outstanding voting
stock of the Corporation on April 3, 1998, 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 1998. 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. The board of directors has established an
audit committee, presently consisting of two outside directors, the purpose of
which is to review the scope and results of the audit.
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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 presented at the 1999 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the proxy statement and form of proxy relating to
that meeting no later than December 29, 1998.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, facsimile
transmission or telegram. Brokers, nominees, custodians and fiduciaries are
requested to forward solicitation materials to obtain voting instructions from
beneficial owners of stock registered in their names, and the Corporation will
reimburse such parties for their reasonable charges and expenses in connection
therewith.
San Diego, California
April 23, 1998
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ATTACHMENT A
METRIKA SYSTEMS CORPORATION
EMPLOYEES' STOCK PURCHASE PLAN
1. DEFINITIONS. As used in this Employees' Stock Purchase Plan of Metrika
-----------
Systems Corporation, the following terms shall have the meanings respectively
assigned to them below:
(a) BASE COMPENSATION means annual or annualized base compensation, exclusive
of overtime, bonuses, contributions to employee benefit plans, or other
fringe benefits, sales commissions, moving expense reimbursements or other
special payments.
(b) BENEFICIARY means the person designated as beneficiary on the Participant's
Membership Agreement or, if no such beneficiary is named, the person to
whom the Option is transferred by will or under the applicable laws of
descent and distribution.
(c) BOARD means the board of directors of the Company.
(d) CODE means the Internal Revenue Code of 1986, as amended.
(e) COMPANY MEANS Metrika Systems Corporation, a Delaware corporation.
(f) COMPANY STOCK means the common stock, $.01 par value, of the Company.
(g) ELIGIBLE EMPLOYEE means any U.S.-based employee of the Corporation who is
eligible under the provisions of Section 7 to receive an Option as of a
particular Grant Date.
(h) ENROLLMENT AGREEMENT means an agreement whereby a Participant authorizes
the Company to withhold payroll deductions from his or her Gross
Compensation.
(i) EXERCISE DATE means a date not more than one year after a Grant Date, as
determined by the Board, on which Options must be exercised by Eligible
Employees.
(j) GRANT DATE means a date specified by the Board on which Options are to be
granted to Eligible Employees.
(k) GROSS COMPENSATION means Base Compensation plus sales commissions, overtime
pay and cash bonuses.
(l) MARKET VALUE means, as of a particular date, the last sale price of the
Company Stock if such stock is reported on the American Stock Exchange, or
if not so reported, the average of bid and asked prices of the Company
Stock last quoted by NASDAQ in the over-the-counter market on such date, as
the case may be.
(m) OPTION means an option to purchase shares of Stock granted under the Plan.
(n) OPTION SHARES means shares of Stock purchasable under an Option, which
shares may not be transferred by the Participant until at least six months
after the Exercise Date.
(o) PARTICIPANT means an Eligible Employee to whom an Option is granted and
who authorizes the Company to withhold payroll deductions by completing an
Enrollment Agreement.
(p) PLAN means this Employees' Stock Purchase Plan of the Company, as amended
from time to time.
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(q) RELATED CORPORATION means any corporation which is a parent corporation of
the Company, as defined in Section 425(e) of the Code, and any corporation
controlled by that parent corporation or the Company.
(r) RULE 16B-3 means Rule 16b-3 and any successor rule promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended.
(s) SECTION 423 means Section 423 of the Code.
2. PURPOSE OF THE PLAN. The Plan is intended to encourage ownership of
-------------------
Company Stock by employees of the Company and to provide additional
incentive for the employees to promote the success of the business of the
Company. It is intended that the Plan shall be an "employee stock purchase
plan" within the meaning of Section 423.
3. TERM OF THE PLAN. The Plan shall become effective on November 1, 1998. No
----------------
option shall be granted under the Plan after November 2, 2008.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Board,
--------------------------
which annually shall determine whether to grant Options under the Plan,
shall specify which dates shall be Grant Dates and Exercise Dates, and shall
fix the respective maximum percentages of each Participant's Gross
Compensation which may be withheld for the purpose of purchasing shares of
Company Stock; provided, that, the maximum aggregate percentage of each
--------
Participant's Gross Compensation which may be withheld for the purpose of
purchasing shares of stock under this Plan and all other employees stock
purchase plans (as defined in Section 423(b) of the Code) administered by a
Related Corporation and in which Eligible Employees may participate shall
not exceed ten percent of the Participant's Gross Compensation. The Board
shall have authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms of
Options granted under the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan.
The Board may appoint a committee, consisting of "non-employee directors"
as defined in Rule 16b-3, to administer the Plan and may, in its sole and
absolute discretion, delegate any or all of the functions specified herein
regarding administration of the Plan to such committee.
5. TERMINATION AND AMENDMENT OF PLAN. The Board may terminate or amend the
---------------------------------
Plan at any time; provided, however, that no amendment, unless approved by
the holders of a majority of the issued and outstanding shares of Company
Stock shall be effective if it would cause the Plan to fail to satisfy the
requirements of Rule 16b-3. No termination of or amendment to the Plan may
adversely affect the rights of a Participant with respect to any Option held
by the Participant as of the date of such termination or amendment.
6. SHARES OF STOCK SUBJECT TO THE PLAN. No more than an aggregate of 50,000
-----------------------------------
shares of Company Stock may be issued or delivered pursuant to the exercise
of Options granted under the Plan, subject to adjustments made in accordance
with Section 9.8. Option Shares may be either shares of Company Stock which
are authorized but unissued or shares of Company Stock held by the Company
in its treasury. If an Option expires or terminates for any reason without
having been exercised in full, the unpurchased Option Shares shall become
available for other Options granted under the Plan. The Company shall, at
all times during which Options are outstanding, reserve and keep available
shares of Company Stock sufficient to satisfy such Options, and shall pay
all fees and expenses incurred by the Company in connection therewith. In
the event of any capital change in the outstanding Company Stock as
contemplated by Section 9.8, the number of shares of Company Stock reserved
and kept available by the Company shall be appropriately adjusted.
7. PERSONS ELIGIBLE TO RECEIVE OPTIONS. Each employee of the Company shall be
-----------------------------------
granted an Option on each Grant Date on which such employee meets all of the
following requirements:
(a) The employee has completed at least six months of continuous employment
for the Company or a Related Corporation. Employment shall include any
leave of absence for military service, illness or
2
<PAGE>
other bona fide purpose which does not exceed the longer of 90 days or the
period during which the absent employee's reemployment rights are
guaranteed by statute or contract.
(b) The employee is customarily employed by the Company for more than 20
hours per week and for more than five months per calendar year.
(c) The employee will not, after grant of the Option, own stock possessing
five percent or more of the total combined voting power or value of
all classes of stock of the Company or of any Related Corporation. For
purposes of this paragraph (c), the rules of Section 425(d) of the
Code shall apply in determining the stock ownership of the employee,
and stock which the employee may purchase under outstanding options
shall be treated as stock owned by the employee.
(d) Upon grant of the Option, the employee's rights to purchase stock
under all employee stock purchase plans (as defined in Section 423(b)
of the Code) of the Company and its Related Corporations will not
accrue at a rate which exceeds $25,000 of fair market value of the
Stock (determined as of the Grant Date for such Option) for each
calendar year in which such Option is outstanding at any time. The
accrual of rights to purchase Stock shall be determined in accordance
with Section 423(b) (8) of the Code.
8. DATES FOR GRANTING OPTIONS. Options shall be granted on each date
--------------------------
designated by the Board as a Grant Date.
9. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
9.1. GENERAL. All Options granted on a particular Grant Date shall comply
--------
with the terms and conditions set forth in Sections 9.3 through 9.12,
and each Option shall be identical except as to the number of shares of
Company Stock purchasable under the Option, which shall be determined in
accordance with Section 9.2.
9.2. NUMBER OF SHARES. The maximum number of shares of Company Stock which a
----------------
Participant shall be permitted to purchase shall be equal to the amount
of the Participant's Gross Compensation permitted to be withheld for
purchasing Company Stock during the period running from the Grant Date
to the Exercise Date, divided by the purchase price determined in
accordance with Section 9.3. The number of shares which a Participant is
permitted to purchase may be further limited by the amount of payroll
deductions actually withheld as of the Exercise Date.
9.3. PURCHASE PRICE. The purchase price of Option Shares shall be 95 percent
--------------
of the Market Value of Company Stock as of the Grant Date. If the Grant
Date shall fall on a Saturday, Sunday or other legal holiday, the Market
Value shall be determined as of the trading day immediately preceding
the Grant Date.
9.4. RESTRICTIONS ON TRANSFER. Options may not be transferred otherwise than
------------------------
by will or under the laws of descent and distribution, or pursuant to a
qualified domestic relations order. An Option may not be exercised by
anyone other than the Participant during the lifetime of the
Participant. Option Shares may not be sold or otherwise transferred by
the Participant until at least six months after the Exercise Date. The
Company shall have the right to place a legend on all stock certificates
representing Option Shares setting forth the restriction on
transferability of such shares.
9.5. EXPIRATION. Each Option shall expire at the close of business on the
-----------
Exercise Date or on such earlier date as may result from the operation
of Section 9.6.
9.6. TERMINATION OF EMPLOYMENT OF PARTICIPANT. If a Participant ceases for
----------------------------------------
any reason, voluntary or involuntary (other than death or retirement),
to be continuously employed by the Company or a Related Corporation, his
or her Option shall immediately expire, and the Participant's
accumulated payroll deductions shall be returned by the Company with
interest pursuant to Section 9.12. For purposes of this Section 9.6, a
Participant shall be deemed to be employed throughout any leave of
absence for military service, illness or other bona fide purpose which
does not exceed the longer of ninety days or the period during which the
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<PAGE>
Participant's reemployment rights are guaranteed by statute or by
contract. If the Participant does not return to active employment prior
to the termination of such period, his or her employment shall be deemed
to have ended on the 91st day of such leave of absence.
9.7 RETIREMENT OR DEATH OF PARTICIPANT. If a Participant retires or dies,
----------------------------------
the Participant or, in the case of death, his or her Beneficiary, shall
be entitled to withdraw the Participant's accumulated payroll deductions
with interest pursuant to Section 9.12, or to purchase shares on the
Exercise Date to the extent that the Participant would have been so
entitled had he or she continued to be employed by the Company. The
number of shares purchasable shall be limited by the amount of the
participant's accumulated payroll deductions as of the date of his or her
retirement or death. Accumulated payroll deductions shall be applied by
the Company toward the purchase of shares unless the Participant or
Beneficiary withdraws such funds prior to the Exercise Date.
9.8 CAPITAL CHANGES AFFECTING THE STOCK. In the event that, between the
-----------------------------------
Grant Date and the Exercise Date of an Option, a stock dividend is paid
or becomes payable in respect of Company Stock or there occurs a split-up
or contraction in the number of shares of Company Stock, the number of
shares for which the Option may thereafter be exercised and the price to
be paid for each such share shall be proportionately adjusted. In the
event that, after the Grant Date, there occurs a reclassification or
change of outstanding shares of Company Stock or a consolidation or
merger of the Company with or into another corporation or a sale or
conveyance, substantially as a whole, of the property of the Company, the
Participant shall be entitled on the Exercise Date to receive shares of
stock or other securities equivalent in kind and value to the shares of
stock he or she would have held if he or she had exercised the Option in
full immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance and had continued to hold such shares
(together with all other shares and securities thereafter issued in
respect thereof) until the Exercise Date. In the event that there is to
occur a recapitalization involving an increase in the par value of
Company Stock which would result in a par value exceeding the exercise
price under an outstanding Option, the Company shall notify the
Participant of such proposed recapitalization immediately upon its being
recommended by the Board to the Company's shareholders, after which the
Participant shall have the right to exercise his or her Option prior to
such recapitalization; if the Participant fails to exercise the Option
prior to recapitalization, the exercise price under the Option shall be
appropriately adjusted. In the event that, after the Grant Date, there
occurs a dissolution or liquidation of the Company, except pursuant to a
transaction to which Section 425(a) of the Code applies, each Option to
purchase Company Stock shall terminate, but the Participant holding such
Option shall have the right to exercise his or her Option prior to such
dissolution or liquidation.
9.9. PAYROLL DEDUCTIONS. Any Eligible Employee, who wishes to authorize
------------------
payroll deductions for the purchase of Option Shares under the Plan,
must complete and return to the human resources department of the
Company prior to the Grant Date an Enrollment Agreement indicating the
total percentage (which shall be a full integer between one and the
maximum determined by the Board in accordance with Section 4 hereof) of
his or her Gross Compensation which is to be withheld each pay period.
Prior to the Exercise Date, the Participant shall be permitted only once
to do each of the following during any plan year: (a) withdraw
accumulated payroll deductions, (b) discontinue payroll deductions, or
(c) decrease, but not increase, the percentages of Gross Compensation
withheld. The Participant may not recommence payroll deductions at any
time prior to the Exercise Date.
9.10. EXERCISE OF OPTIONS. On the Exercise Date the Participant shall be
-------------------
deemed to have exercised his or her Option to purchase the maximum
number of Option Shares purchasable by his or her accumulated payroll
deductions, provided that:
(a) The number of Option Shares of Company Stock purchasable shall not
exceed the number of shares the Participant is entitled to
purchase pursuant to Section 9.2.
(b) If the total number of Option Shares of Company Stock which all
Participants elect to purchase, together with any Option Shares of
Company Stock already purchased under the Plan, exceeds the total
number of shares of Company Stock which may be purchased under the
Plan pursuant to Section 6, the number of shares of Company Stock
which each Participant is permitted to purchase shall be decreased
pro rata based on the Participant's accumulated payroll deductions
--------
with respect to Company Stock in relation to all accumulated
payroll deductions currently being withheld under the Plan with
respect to Company Stock.
4
<PAGE>
(c) If the number of Option Shares purchasable includes a fraction,
such number shall be adjusted to the next smaller whole number and
the purchase price shall be adjusted accordingly.
(d) Notwithstanding the foregoing, a Participant may notify the
Company's human resources department at least 30 days prior to an
Exercise Date, by completing an Enrollment/Change Agreement, that
he or she elects not to exercise his or her Option and desires to
withdraw his or her accumulated payroll deductions withheld under
the Plan, as provided in Section 9.9.
9.11. DELIVERY OF STOCK. Within a reasonable time after the Exercise Date,
-----------------
the Company shall deliver or cause to be delivered to the Participant a
certificate or certificates for the number of shares purchased by the
Participant. If any law or applicable regulation of the Securities and
Exchange Commission or other body having jurisdiction in the premises
shall require that the Company or the Participant take any action in
connection with the shares being purchased under the Option, delivery
of the certificate or certificates for such shares shall be postponed
until the necessary action shall have been completed, which action
shall be taken by the Company at its own expense, without unreasonable
delay. The Participant shall have no rights as a shareholder in respect
of shares for which he or she has not received a certificate.
9.12. RETURN OF ACCUMULATED PAYROLL DEDUCTIONS. In the event that the
----------------------------------------
Participant or the Beneficiary is entitled to the return of accumulated
payroll deductions, whether by reason of voluntary withdrawal,
termination of employment, retirement, death, or in the event that
accumulated payroll deductions exceed the price of Option Shares
purchased, such amount, together with interest thereon at the rate
fixed by the Board of Directors (which rate for a particular plan year
running from Grant Date to Exercise Date shall be fixed annually by the
Board of Directors prior to the commencement of such period), shall be
returned within a reasonable time by the Company to the Participant or
the Beneficiary, as the case may be; provided, however, that interest
-------- --------
shall not be paid on any amount returned which is less than the
purchase price of one Option Share of Company Stock for which such
payroll deductions were withheld.
5
<PAGE>
FORM OF PROXY
METRIKA SYSTEMS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 1, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Ernesto A. Corte, John N. Hatsopoulos and
Melissa F. Riordan, or any one of them in the absence of the others, as
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name of the undersigned, to represent the undersigned at the Annual
Meeting of the Stockholders of Metrika Systems Corporation, a Delaware
corporation (the "Company"), to be held on Monday, June 1, 1998, at 10:45 a.m.
at The Hyatt Regency Scottsdale Resort at Gainey Ranch, Scottsdale, Arizona, and
at any adjournment or postponement thereof, and to vote all shares of common
stock of the Company standing in the name of the undersigned on April 3, 1998,
with all of the powers the undersigned would possess if personally present at
such meeting:
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE>
Please mark your
[ x ] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [ ] WITHHELD [ ]
______________________________________
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any)
NOMINEES: Willard R. Becraft, Joseph A. Baute, Ernesto A. Corte, Denis A. Helm,
Earl R. Lewis, John T. Keiser, Arvin H. Smith.
<TABLE>
<S> <C>
2. Approve management proposal to adopt the
Corporation's employees' stock purchase plan and FOR AGAINST ABSTAIN
reserve 50,000 shares of the common stock for [ ] [ ] [ ]
issuance thereunder.
3. Approve management proposal to amend the
Corporation's equity incentive plan to increase the FOR AGAINST ABSTAIN
shares available for issuance under the plan by [ ] [ ] [ ]
500,000 shares.
</TABLE>
4. In their discretion on such other matters as may properly come before the
Meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS SET FORTH
ABOVE IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION IS
GIVEN.
Copies of the Notice of Meeting and of the Proxy Statement have been received
by the undersigned.
SIGNATURE(S)_______________________________________ DATE_________________
NOTE: This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should
sign.
