THERMEDICS INC, DEF 14A, 1995-04-28

THERMEDICS INC
DEF 14A, 1995-04-28
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES

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<PAGE>

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

Thermedics Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Thermedics Inc.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

Notes:

<PAGE>

[LOGO APPEARS HERE]

470 Wildwood Street
Post Office Box 2999
Woburn, MA 01888-2999

April 25, 1995

Dear Stockholder:

The enclosed Notice calls the 1995 Annual Meeting of the Stockholders of
Thermedics Inc. I respectfully request all Stockholders attend this meeting, if
possible.

Our Annual Report for the year ended December 31, 1994, 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, The First National Bank of Boston,
in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the Meeting, either in person or by Proxy.

I would appreciate your immediate attention to the mailing of this Proxy.

Yours very truly,

/s/ John W. Wood Jr.

John W. Wood Jr.
President and Chief Executive Officer
<PAGE>

[LOGO APPEARS HERE]

470 Wildwood Street
Post Office Box 2999
Woburn, Massachusetts 01888-2999

April 25, 1995

To the Holders of the Common Stock of
Thermedics Inc.

NOTICE OF ANNUAL MEETING

The 1995 Annual Meeting of the Stockholders of Thermedics Inc. (the
"Corporation") will be held on Monday, May 22, 1995, at 3:15 p.m. at the Hyatt
Regency Hotel, Hilton Head, South Carolina. The purposes of the Meeting are to
consider and take action upon the following matters:

1. Election of eight Directors.

2. A proposal recommended by the Board of Directors to amend the Directors
Stock Option Plan to change the formula for the award of stock options
to purchase common stock of the Corporation to its outside Directors and
also provide for the automatic grant of stock options to purchase common
stock of majority-owned subsidiaries of the Corporation to its outside
Directors.

3. Such other business as may properly be brought before the Meeting and
any adjournment thereof.

The transfer books of the Corporation will not be closed prior to the
Meeting, but, pursuant to appropriate action by the Board of Directors, the
record date for the determination of the Stockholders entitled to notice of and
vote at the Meeting is April 6, 1995.

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 stock 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
Clerk
<PAGE>

PROXY STATEMENT

The enclosed Proxy is solicited by the Board of Directors of Thermedics Inc.
(the "Corporation") for use at the 1995 Annual Meeting of the Stockholders (the
"Meeting") to be held on Monday, May 22, 1995, at 3:15 p.m., at the Hyatt
Regency Hotel, Hilton Head, South Carolina, and any adjournment thereof. The
mailing address of the executive office of the Corporation is 470 Wildwood
Street, P.O. Box 2999, Woburn, Massachusetts 01888-2999. This Proxy Statement
and the enclosed Proxy were first furnished to Stockholders of the Corporation
on or about April 27, 1995.

VOTING PROCEDURES

The Board of Directors intends to present to the Meeting the election of
eight Directors, constituting the entire Board of Directors, as well as one
other matter: a proposal to amend the Directors Stock Option Plan to change the
formula for the award of stock options to purchase common stock of the
Corporation to its outside Directors and also to provide for the automatic
grant of stock options to purchase common stock of majority-owned subsidiaries
of the Corporation to its outside Directors.

The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Corporation, $.10 par value ("Common Stock"),
entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you
plan to attend the Meeting in person, please sign and promptly return the
enclosed proxy card, which requires no postage if mailed in the United States.
All signed and returned proxies will be counted towards establishing a quorum
for the Meeting, regardless of how the shares are voted.

Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for Directors,
for the management proposal, and as the individuals named as proxy holders on
the proxy deem advisable on all other matters as may properly come before the
Meeting.

In order to be elected a Director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote
on the election. For all other matters to be voted upon at the Meeting 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 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 a proposal. 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 Clerk 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 6, 1995, consisted of
33,420,054 shares of Common Stock. Only Stockholders of record at the close of
business on April 6, 1995, are entitled to vote at the Meeting. Each share is
entitled to one vote.
<PAGE>

-- PROPOSAL 1 --

ELECTION OF DIRECTORS

Eight Directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death
or removal.

NOMINEES FOR DIRECTORS

Set forth below are the names of the persons nominated as Directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as Directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent corporation, Thermo Electron
Corporation ("Thermo Electron"), is reported under the caption "Stock
Ownership." All of the nominees are currently Directors of the Corporation.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
PETER O. CRISP Mr. Crisp, 62, has been a Director of the Corporation since
1983. Mr. Crisp has been a General Partner of Venrock
Associates, a venture capital investment firm, for more than
five years. Mr. Crisp is also a Director of American
Superconductor Corporation, Apple Computer, Inc., Evans &
Sutherland Computer Corporation, Long Island Lighting Company,
Thermo Electron, Thermo Power Corporation, ThermoTrex
Corporation, and United States Trust Corporation.
- ---------------------------------------------------------------------------------------
PAUL F. FERRARI Mr. Ferrari, 64, has been a Director of the Corporation since
1991. He has been a consultant to Thermo Electron since January
1991. Mr. Ferrari was a vice president of Thermo Electron from
1988 until his retirement at the end of 1990, its secretary from
1981 to 1990, and its treasurer from 1967 to 1988. He served as
the Corporation's Clerk from 1983 to 1990 and its Treasurer from
1983 to 1988. Mr. Ferrari is also a director of Signal
Technology Corporation and ThermoTrex Corporation.
- ---------------------------------------------------------------------------------------
GEORGE N. HATSOPOULOS Dr. Hatsopoulos, 68, has been a Director of the Corporation
since 1983. Dr. Hatsopoulos has been the Chairman of the Board,
President and Chief Executive Officer of Thermo Electron since
1956. Dr. Hatsopoulos is also a director of Bolt, Beranek &
Newman, Inc., Thermo Ecotek Corporation, Thermo Electron, Thermo
Fibertek Inc., Thermo Instrument Systems Inc., Thermo Power
Corporation, Thermo Process Systems Inc., and ThermoTrex
Corporation. Dr. Hatsopoulos is the brother of John N.
Hatsopoulos, a Director and the Vice President and Chief
Financial Officer of the Corporation.
- ---------------------------------------------------------------------------------------
JOHN N. HATSOPOULOS Mr. Hatsopoulos, 61, was appointed Chairman of the Board of
Directors in March 1995, and has served as the Corporation's
Chief Financial Officer since 1988 and its Vice President since
1986. He has been the Chief Financial Officer of Thermo Electron
since 1988 and an Executive Vice President of Thermo Electron
since 1986. Mr. Hatsopoulos is also a Director of Lehman
Brothers Funds, Inc., Thermo Ecotek Corporation, Thermo Fibertek
Inc., Thermo Instrument Systems Inc., Thermo Power Corporation,
Thermo Process Systems Inc. and ThermoTrex Corporation. Mr.
Hatsopoulos is the brother of Dr. George Hatsopoulos, a Director
of the Corporation.
- ---------------------------------------------------------------------------------------
</TABLE>

2
<PAGE>

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<TABLE>
<S> <C>
ROBERT C. HOWARD Mr. Howard, 64, has been a Director of the Corporation since
1983. Mr. Howard has been an executive vice president of Thermo
Electron since 1986. He is also a director of Thermo
Cardiosystems Inc., Thermo Ecotek Corporation, Thermo
Instruments Systems Inc., ThermoLase Corporation, Thermo Power
Corporation and ThermoTrex Corporation.
- ----------------------------------------------------------------------------------------
ARVIN H. SMITH Mr. Smith, 65, has been a Director of the Corporation since
1992. Mr. Smith has been executive vice president of Thermo
Electron since November 1991 and was senior vice president of
Thermo Electron from 1986 to 1991. Mr. Smith is also a director
of Thermo Instrument Systems Inc.
- ----------------------------------------------------------------------------------------
JOHN W. WOOD JR. Mr. Wood, 51, has been a Director of the Corporation since 1984.
Mr. Wood has been a vice president of Thermo Electron since
September 1994 and President and Chief Executive Officer of the
Corporation since 1984. Mr. Wood is also a director of Thermo
Cardiosystems Inc. and Thermo Voltek Corporation.
- ----------------------------------------------------------------------------------------
DR. NICHOLAS T. ZERVAS Dr. Zervas, 66, has been a Director of the Corporation since
1987. Dr. Zervas has been Chief of Neurosurgical Service,
Massachusetts General Hospital, since 1977. Dr. Zervas is also a
director of Thermo Cardiosystems Inc., Thermo Ecotek
Corporation, ThermoLase Corporation and ThermoTrex Corporation.
- ----------------------------------------------------------------------------------------
</TABLE>

COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS

The Board of Directors has established an Audit Committee and a Human
Resources Committee, each consisting solely of outside Directors. The present
members of the Audit Committee are Mr. Ferrari (Chairman), Mr. Crisp and Dr.
Zervas. 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. Crisp (Chairman), Mr.
Ferrari and Dr. Zervas. The Human Resources Committee reviews the performance
of senior members of management, recommends executive compensation and
administers the Corporation's stock option and other stock plans. The
Corporation does not have a nominating committee of the Board of Directors. The
Board of Directors met five times, the Audit Committee met twice and the Human
Resources Committee met twice during fiscal 1994. Each Director attended at
least 75% of all meetings of the Board of Directors and Committees on which he
served held during his tenure, except for Dr. Zervas who attended 70% of such
meetings.

COMPENSATION OF DIRECTORS

Effective January 1, 1995, Directors who are not employees of the
Corporation, of Thermo Electron or any other companies affiliated with Thermo
Electron (also referred to as "outside directors"), receive an annual retainer
of $4,000 and a fee of $1,000 per day for attending regular meetings of the
Board of Directors and $500 per day for participating in meetings of the Board
of Directors held by means of conference telephone and for participating in
certain meetings of committees of the Board of Directors. Prior to January 1,
1995, the annual retainer paid to outside Directors was $2,000. Directors are
also reimbursed for out-of-pocket expenses incurred in attending such meetings.
Payment of Directors' fees is made quarterly. Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Smith, Mr. Wood and Mr. Howard are all employees of Thermo
Electron and do not receive any cash compensation from the Corporation for
their services as Directors.

3
<PAGE>

Under the Deferred Compensation Plan for Directors (the "Deferred
Compensation Plan"), a Director has the right to defer receipt of his cash fees
until he ceases to serve as a Director, dies or retires from his principal
occupation. In the event of a change in control or proposed change in control
of the Corporation that is not approved by the Board of Directors, deferred
amounts become payable immediately. Either of the following is deemed to be a
change of control: (a) the occurrence, without the prior approval of the Board
of Directors, of the acquisition, directly or indirectly, by any person of 50%
or more of the outstanding Common Stock or the outstanding common stock of
Thermo 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 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 on the date of deferral 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 37,500 shares of Common Stock have been reserved for issuance
under the Deferred Compensation Plan. As of January 28, 1995, deferred units
equal to 15,709.85 shares of Common Stock were accumulated under the Deferred
Compensation Plan.

In 1991, the Corporation adopted a directors stock option plan (the
"Directors Plan"). The Directors Plan provides for the grant of stock options
to purchase shares of Common Stock to outside Directors as additional
compensation for their service as Directors. In December 1994, the Board of
Directors approved amendments to the Directors Plan that are subject to
Stockholder approval at this meeting. The amendments are described under
Proposal 2 to this Proxy Statement. Prior to the amendment of the Plan,
eligible Directors were granted options to purchase Common Stock on a quarterly
basis according to the following formula: 200 shares for each meeting of the
Board of Directors held during the quarter and attended in person by the
recipient and 100 shares for each telephone meeting or committee meeting of the
Board of Directors held during the quarter in which the recipient participated.
The amendments to the plan would eliminate the grant of stock options based on
meeting attendance and substitute an annual grant of options to purchase 1,000
shares of Common Stock to each eligible Director. In addition, the Directors
Plan would provide for the automatic grant every five years of options to
purchase 1,500 shares of the common stock of a majority-owned subsidiary of the
Corporation that is "spunout" to outside investors.

The exercise price for options that have been granted to date under the
Directors Plan is determined by the average of the closing prices of the Common
Stock as reported on the American Stock Exchange for the five trading days
preceding and including the date of grant. Outstanding options are exercisable
six months after the date of grant and if granted prior to 1995, generally
expire seven years from the date of grant. An aggregate of 37,500 shares of
Common Stock has been reserved for issuance under the Directors Plan. As of
January 28, 1995, options to purchase 20,700 shares of Common Stock were
outstanding under the Directors Plan at an average exercise price of $9.97 per
share, no shares of Common Stock had been issued pursuant to the exercise of
options and no options to purchase shares of Common Stock had lapsed. Options
to purchase 16,800 shares of Common Stock were reserved and available for grant
under the Directors Stock Plan as of January 28, 1995.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

Mr. Ferrari serves as a member of the Human Resources Committee of the Board
of Directors. Mr. Ferrari served as the Clerk of the Corporation from 1983 to
1990 and as its Treasurer from 1983 to 1988.

4
<PAGE>

STOCK OWNERSHIP

The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Electron, the Corporation's parent
corporation, and of Thermo Cardiosystems Inc. and Thermo Voltek Corporation,
each a majority-owned subsidiary of the Corporation, as of January 28, 1995,
with respect to (i) each person who was known by the Corporation to own
beneficially more than 5% of the outstanding shares of common stock, (ii) each
Director, (iii) each executive officer named in the summary compensation table
under the heading "Executive Compensation" and (iv) all Directors and executive
officers as a group.

<TABLE>
<CAPTION>
THERMO THERMO
THERMEDICS ELECTRON THERMO VOLTEK
NAME (1) INC.(2) CORPORATION(3) CARDIOSYSTEMS INC.(4) CORP.(5)
-------- ---------- -------------- --------------------- --------
<S> <C> <C> <C> <C>
Thermo
ElectronCorporation(6). 17,857,320 N/A N/A N/A
FMR Corp.(7)............ 4,760,057 N/A N/A N/A
Peter O. Crisp.......... 42,424 41,496 15,000 0
Paul F. Ferrari......... 12,657 17,250 16,000 2,499
David H. Fine........... 107,391 36,394 5,342 0
George N. Hatsopoulos... 63,291 1,563,847 7,833 0
John N. Hatsopoulos..... 77,402 282,651 6,916 17,749
Robert C. Howard........ 11,459 91,598 22,500 0
John T. Keiser.......... 19,714 50,582 10,500 0
Victor L. Poirier....... 89,337 14,475 138,284 0
Louis S. Slaughter...... 95,562 19,242 0 0
Arvin H. Smith.......... 91,036 273,653 20,000 0
John W. Wood Jr......... 187,578 84,877 62,399 59,748
Nicholas T. Zervas...... 29,046 0 48,058 0
All Directors and
current executive
officers as a group (13
persons)............... 852,801 2,552,588 367,832 79,996
</TABLE>
- --------
(1) Shares of Common Stock of the Corporation and of the common stock of Thermo
Electron, Thermo Cardiosystems Inc. and Thermo Voltek Corporation
beneficially owned include shares owned by the indicated person, by that
person's spouse, by that person and his spouse, and by that person and his
spouse (or either of them) for the benefit of minor children. Except as
reflected in the footnotes to this table, all share ownership includes sole
voting and investment power.
(2) Shares of the Common Stock beneficially owned by Mr. Crisp, Mr. Ferrari,
Dr. Fine, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard, Mr. Keiser,
Mr. Poirier, Mr. Slaughter, Mr. Smith, Mr. Wood, Dr. Zervas and all
Directors and executive officers as a group include 6,250, 6,200, 82,100,
50,000, 50,000, 10,000, 15,000, 45,000, 90,700, 82,500, 115,200, 6,250 and
584,200 shares, respectively, that such person or group has the right to
acquire within 60 days of January 28, 1995 through the exercise of stock
options. Shares beneficially owned by Dr. Fine, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Howard, Mr. Keiser, Mr. Poirier, Mr. Slaughter, Mr.
Smith, Mr. Wood and all Directors and executive officers as a group include
789, 1,337, 1,348, 1,459, 921, 278, 524, 1,191, 1,090 and 9,841 full
shares, respectively, allocated through January 28, 1995, to their
respective accounts maintained pursuant to Thermo Electron's employee stock
ownership plan ("ESOP"). Shares beneficially owned by Mr. Crisp, Dr. Zervas
and all Directors and executive officers as a group include 5,879, 6,296
and 12,175 full shares, respectively, that had been allocated through
January 28, 1995, to their respective accounts maintained 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 January 28, 1995; all Directors and executive officers as
a group beneficially owned 2.56% of the Common Stock outstanding as of such
date.

(footnotes continued on following page)

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<PAGE>

(3) The shares of common stock of Thermo Electron shown in the table do not
reflect a three-for-two split of such stock to be effected on May 24, 1995
to shareholders of record as of April 26, 1995. Shares of the common stock
of Thermo Electron beneficially owned by Mr. Crisp, Mr. Ferrari, Dr. Fine,
Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard, Mr. Keiser, Mr.
Poirier, Mr. Slaughter, Mr. Smith, Mr. Wood and all Directors and executive
officers as a group include 2,500, 7,200, 31,270, 738,544, 230,100, 32,190,
37,850, 12,800, 19,000, 169,900, 71,400 and 1,397,279 shares, respectively,
that such person or group has the right to acquire within 60 days of
January 28, 1995 through the exercise of stock options. Shares beneficially
owned by Dr. Fine, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard, Mr.
Keiser, Mr. Poirier, Mr. Slaughter, Mr. Smith, Mr. Wood and all Directors
and executive officers as a group include 441, 924, 753, 1,245, 482, 225,
242, 657, 638, and 6,089 full shares, respectively, allocated to their
respective accounts maintained pursuant to the ESOP. Shares beneficially
owned by Mr. Crisp and all Directors and executive officers as a group
include 19,154 full shares allocated through January 28, 1995, to Mr.
Crisp's account maintained pursuant to Thermo Electron's deferred
compensation plan for directors. Except for Dr. Hatsopoulos, who
beneficially owned 3.06% of the Thermo Electron common stock outstanding as
of January 28, 1995, no Director or executive officer beneficially owned
more than 1% of such common stock outstanding as of such date; all
Directors and executive officers as a group beneficially owned
approximately 5.01% of the Thermo Electron common stock outstanding as of
January 28, 1995.
(4) Shares of the common stock of Thermo Cardiosystems Inc. beneficially owned
by Mr. Crisp, Mr. Ferrari, Dr. Fine, Mr. J. Hatsopoulos, Mr. Keiser, Mr.
Poirier, Mr. Smith, Mr. Wood, Dr. Zervas and all Directors and executive
officers as a group include 15,000, 15,000, 5,250, 5,389, 10,500, 110,959,
20,000, 57,183, 43,800 and 298,081 shares, respectively, that such person
or group has the right to acquire within 60 days of January 28, 1995
through the exercise of stock options. Shares beneficially owned by
Dr. Zervas and all Directors and executive officers as a group include
4,258 shares allocated through January 28, 1995 to Dr. Zervas' account
maintained pursuant to Thermo Cardiosystems Inc.'s Deferred Compensation
Plan for Directors. No Director or executive officer beneficially owned
more than 1% of the Thermo Cardiosystems Inc. common stock outstanding as
of January 28, 1995; all Directors and executive officers as a group
beneficially owned approximately 1.61% of such common stock outstanding on
such date.
(5) Shares of the common stock of Thermo Voltek Corp. beneficially owned by Mr.
Ferrari, Mr. J. Hatsopoulos, Mr. Wood and all Directors and executive
officers as a group include 2,499, 4,999, 55,749 and 63,247 shares,
respectively, that such person or group has the right to acquire within 60
days of January 28, 1995 through the exercise of stock options. The
Directors and executive officers of the Corporation did not individually or
as a group beneficially own more than 1% of the Thermo Voltek Corporation
common stock outstanding as of January 28, 1995.
(6) Shares of the Common Stock beneficially owned by Thermo Electron include
984,189 shares Thermo Electron or its subsidiaries have the right to
acquire within 60 days of January 28, 1995 pursuant to the conversion of
the Corporation's 6 1/2% subordinated convertible debentures due 1998 held
by Thermo Electron. Thermo Electron beneficially owned 51.90% of the Common
Stock outstanding as of January 28, 1995. Thermo Electron's address is 81
Wyman Street, Waltham, Massachusetts 02254-9046. As of January 28, 1995,
Thermo Electron had the power to elect all of the members of the
Corporation's Board of Directors.
(7) Information regarding the number of shares of Common Stock beneficially
owned by FMR Corp. is based on the most recent Schedule 13G received by the
Corporation, which reported such ownership as of December 31, 1994. The
address of FMR Corporation is 82 Devonshire Street, Boston, Massachusetts
02109-3614.

6
<PAGE>

DISCLOSURE OF CERTAIN LATE FILINGS

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 1994, except in the following instances.
The initial report of ownership for one of the Corporation's executive
officers, Mr. John T. Keiser, filed August 2, 1994, failed to include 921.3
shares of Common Stock allocated to his account under the Thermo Electron
employee stock ownership plan. This error was corrected in a filing on January
25, 1995. In addition, a Form 5 filed on behalf of the Corporation's chief
executive officer, Mr. John Wood Jr., was amended in October 1994 to report the
gift of 2,600 shares to his minor daughters in December 1993. In converting
Form 4 records of the Corporation from a manual system to a computer database,
it was discovered that the balance of the Corporation's 6 1/2% convertible
subordinated debentures due 1998 owned by Thermo Electron had been incorrectly
reported beginning with the Form 4 filed in May 1992. The balance was correctly
reported on the Form 4 filed by Thermo Electron in February 1995. In addition,
the Form 4 filed in December 1994 on behalf of Thermo Electron contained a
duplicate entry of a purchase of 4,500 shares on December 20, 1994, which was
corrected on February 14, 1995.

EXECUTIVE COMPENSATION

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 four other most highly compensated executive officers
for the last three fiscal years.

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.

SUMMARY COMPENSATION TABLE
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(Table continued on following page)

7
<PAGE>

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
SECURITIES UNDERLYING
ANNUAL COMPENSATION AWARDS OF OPTIONS
NAME AND PRINCIPAL FISCAL -------------------- (NO. OF SHARES ALL OTHER
POSITION YEAR SALARY BONUS AND COMPANY)(1) COMPENSATION(2)
------------------ ------ ---------- --------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
John T. Keiser(4)....... 1994 $ 130,000 $ 54,000 15,000 (TMD) $ 6,750
Senior Vice President 3,000 (TCA)
9,300 (TMO)
1,500 (TSC)
- ------------------------------------------------------------------------------------------
Victor L. Poirier....... 1994 $ 135,000 $ 66,000 10,300 (TMO) $ 6,322
Senior Vice President 500 (TSC)
1993 $ 115,500 $ 55,000 15,000 (TMD) $ 6,745
50,000 (TCA)
1,000 (TMO)
1992 $ 112,115 $ 40,000 7,500 (TMD) $ 8,590(5)
24,000 (TCA)
1,500 (TMO)
2,000 (TFT)
- ------------------------------------------------------------------------------------------
Louis S. Slaughter...... 1994 $ 150,000 $ 82,000 1,600 (TMD) $ 6,750
Vice President 7,000 (TMO)
1,000 (TSC)
1993 $ 145,000 $ 80,000 75,300 (TMD) $13,125(5)
3,750 (TMO)
1992 $ 140,000 $ 52,000 30,000 (TMD) $ 9,819
3,000 (TMO)
4,000 (TFT)
- ------------------------------------------------------------------------------------------
David H. Fine........... 1994 $ 114,500 $ 67,500 4,100 (TMD) $ 4,463
Vice President 20,800 (TMO)
1,000 (TSC)
1993 $ 110,750 $ 67,000 70,500 (TMD) $ 8,265(5)
900 (TMO)
1992 $ 106,600 $ 45,000 7,500 (TMD) $ 6,546
1,050 (TMO)
2,000 (TFT)
</TABLE>
- --------
(1) In addition to grants of options to purchase Common Stock of the
Corporation (designated in the table as TMD), executive officers of the
Corporation have been granted options to purchase common stock of Thermo
Electron and certain of its other subsidiaries as part of Thermo Electron's
stock option program. Options have been granted during the last three
fiscal years to the chief executive officer and the other named executive
officers in the following Thermo Electron companies: Thermo Cardiosystems
Inc. (designated in the table as TCA), Thermo Electron (designated in the
table as TMO), Thermo Fibertek Inc. (designated in the table as TFT) and
ThermoSpectra Corporation (designated in the table as TSC). Shares of the
common stock of Thermo Electron shown in the table do not reflect a three-
for-two split of such shares to be effected on May 24, 1995 to shareholders
of record on April 26, 1995.
(2) Represents the amount of matching contributions made by the individual's
employer on behalf of executive officers participating in the Thermo
Electron 401(k) plan.
(3) Mr. Wood is a vice president of Thermo Electron and the president and chief
executive officer of Thermo Voltek Corp., as well as the president and
chief executive officer of the Corporation. Reported in the table under
"Annual Compensation" and "All Other Compensation" are the total amounts
paid to Mr.

(footnotes continued on following page)

8
<PAGE>

Wood for his service in all capacities to Thermo Electron companies. The
Human Resources Committee of the Board of Directors of the Corporation
reviewed total annual compensation to be paid to Mr. Wood from all sources
within the Thermo Electron organization and approves the allocation of a
percentage of annual compensation (salary and bonus) for the time he devotes
to the affairs of the Corporation. For 1994, 65% of Mr. Wood's annual
compensation was allocated to the Corporation. Prior to 1994, all of Mr.
Wood's annual compensation was paid by the Corporation.
(4) Mr. Keiser was appointed a senior vice president of the Corporation on July
28, 1994 and since July 1, 1994 has served as the president of Thermo
Biomedical, a subsidiary of Thermo Electron. Prior to July 1, 1994 he
served as a vice president of Thermo Instrument Systems Inc., another
majority-owned subsidiary of Thermo Electron. Reported in the table under
"Annual Compensation" and "All Other Compensation" are the total amounts
paid in 1994 to Mr. Keiser for his service in all capacities to Thermo
Electron companies. The Human Resources Committee of the Board of Directors
of the Corporation reviewed total annual compensation paid to Mr. Keiser in
1994 from all sources within the Thermo Electron organization and approved
the allocation of a percentage of annual compensation (salary and bonus)
for the time he devotes to the affairs of the Corporation. For 1994, 5% of
Mr. Keiser's annual compensation was allocated to the Corporation.
(5) In addition to the matching contributions referred to in footnote (2), this
amount includes $2,044, $2,775 and $2,775, representing the market value of
75 shares of Thermo Electron common stock received by Mr. Poirier, Mr.
Slaughter and Dr. Fine, respectively, in recognition of managerial
achievements, voted by managers of Thermo Electron at annual management
conferences.

9
<PAGE>

STOCK OPTIONS GRANTED DURING FISCAL 1994

The following table sets forth information concerning individual grants of
stock options made during fiscal 1994 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 1994.

OPTION GRANTS IN FISCAL 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
NUMBER OF PERCENT OF TOTAL APPRECIATION FOR OPTION
SECURITIES OPTIONS GRANTED TERM
UNDERLYING TO EMPLOYEES IN EXERCISE PRICE EXPIRATION ---------------------------
NAME OPTIONS GRANTED(1) FISCAL YEAR PER SHARE DATE 5% 10%
---- ------------------ ---------------- -------------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
John W. Wood Jr.(4)..... 5,400 (TMD) 1.9% $12.43 3/10/06 $ 53,419 $ 143,536
John T. Keiser(5)....... 15,000 (TMD) 5.3% $13.23 7/28/06 $ 157,938 $ 424,371
3,000 (TCA) 3.1%(2) $19.30 7/28/06 $ 46,080 $ 123,815
7,500 (TMO) 1.0%(2) $40.25 7/19/06 $ 240,249 $ 645,538
1,800 (TMO) 0.2%(2) $40.25 7/19/01 $ 29,494 $ 68,735
1,500 (TSC) 0.2%(2) $10.00 10/25/01 $ 6,107 $ 14,231
Victor L. Poirier....... 300 (TMO) 0.0%(2) $40.25 7/19/01 $ 4,916 $ 11,456
10,000 (TMO)(3) 1.4%(2) $45.10 11/28/06 $358,931 $ 964,431
500 (TSC) 0.1%(2) $10.00 10/25/01 $ 2,036 $ 4,744
Louis S. Slaughter...... 1,600 (TMD) 0.6% $12.43 3/10/06 $ 15,828 $ 42,529
7,000 (TMO)(3) 1.0%(2) $45.10 11/28/06 $251,252 $ 675,102
1,000 (TSC) 0.2%(2) $10.00 10/25/01 $ 4,071 $ 9,487
David H. Fine........... 4,100 (TMD) 1.4% $12.43 3/10/06 $ 40,559 $ 108,981
800 (TMO) 0.1%(2) $40.25 7/19/01 $ 13,109 $ 30,549
20,000 (TMO)(3) 2.8%(2) $45.10 11/28/06 $ 717,862 $ 1,928,862
1,000 (TSC) 0.2%(2) $10.00 10/25/01 $ 4,071 $ 9,487
</TABLE>
- --------

(1) All of the options granted during the fiscal year are immediately
exercisable at the date of grant, except options to purchase the common
stock of ThermoSpectra Corporation (designated in the table as TSC), which
generally are not exercisable until that company's stock is publicly
traded. However, 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 the granting corporation or any other
Thermo Electron company. The granting corporation may exercise its
repurchase rights within six months after the termination of the optionee's
employment. For publicly traded companies, the repurchase rights 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 granting corporation or another Thermo
Electron company. For companies whose shares are not publicly traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. The granting corporation may permit the holders of such options
to exercise options and to satisfy tax withholding obligations by
surrendering shares equal in fair market value to the exercise price or
withholding obligation.
(2) These options were granted under stock option plans maintained by Thermo
Electron or its subsidiaries other than the Corporation and accordingly are
reported as a percentage of total options granted to employees of Thermo
Electron and its subsidiaries.
(3) Options to purchase 10,000, 7,000 and 20,000 shares of the common stock of
Thermo Electron granted to Mr. Poirier, Mr. Slaughter and Dr. Fine,
respectively, are subject to the same terms as described in footnote (1),
except that the repurchase rights of the granting corporation generally do
not lapse until the tenth anniversary of the grant date. In the event of
the employee's death or involuntary termination prior to the tenth
anniversary of the grant date, the repurchase rights of the granting
corporation shall

(footnotes continued on following page)

10
<PAGE>

be deemed to have lapsed ratably over a five-year period commencing with the
fifth anniversary of the grant date.
(4) Mr. Wood was appointed a vice president of Thermo Electron on September 2,
1994, and from time to time after that date has been, and in the future may
be, granted options to purchase common stock of Thermo Electron and its
subsidiaries other than the Corporation. These options are not reported in
the table as they are granted as compensation for service to other Thermo
Electron companies in capacities other than in his capacity as chief
executive officer of the Corporation.
(5) Mr. Keiser was appointed a senior vice president of the Corporation on July
28, 1994. Prior to that date he served as a vice president of Thermo
Instrument Systems Inc. and had been granted options to purchase 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 a capacity
other than as senior vice president of the Corporation.

STOCK OPTIONS EXERCISED DURING FISCAL 1994

The following table reports certain information regarding stock option
exercises during fiscal 1994 and outstanding stock options held at the end of
fiscal 1994 by the Corporation's chief executive officer and the other
executive officers. No stock appreciation rights were exercised or were
outstanding during fiscal 1994.

AGGREGATED OPTION EXERCISES IN FISCAL 1994 AND FISCAL 1994 YEAR-END OPTION
VALUES
- --------------------------------------------------------------------------------

NO. OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SHARES AT FISCAL YEAR-END(1) IN-THE-MONEY OPTIONS($)
ACQUIRED VALUE --------------------------------- --------------------------
NAME COMPANY ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ -------------------- ----------- -------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Wood Jr.(2)..... Thermedics -- -- 115,200 0 152,772 0
Thermo Cardiosystems 1,000 $ 14,520 64,000 0 812,480 0
Thermedics Detection -- -- 0 35,000 0 0(3)
Thermo Voltek -- -- 55,749 0 21,043 0
Thermo Ecotek -- -- 3,000 0 0(3) 0
Thermo Electron -- -- 34,700 0 481,338 0
Thermo Fibertek -- -- 4,000 0 36,500 0
ThermoTrex -- -- 4,500 0 40,725 0
- ---------------------------------------------------------------------------------------------------------------------------------
John T. Keiser(4)....... Thermedics -- -- 15,000 0 0 0
Thermo Cardiosystems -- -- 3,000 0 0 0
ThermoSpectra -- -- 0 1,500 0 0(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Victor L. Poirier....... Thermedics -- -- 45,000 0 220,200 0
Thermo Cardiosystems 38,241 $626,961 110,959 0 747,755 0
Thermedics Detection -- -- 0 5,000 0 0(3)
Thermo Ecotek -- -- 2,500 0 0(3) 0
Thermo Electron -- -- 12,800(5) 0 29,866 0
Thermo Fibertek -- -- 2,000 0 18,250 0
ThermoSpectra 0 500 0 0(3)
ThermoTrex -- -- 1,800 0 16,290 0
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(Table continued on following page)

11
<PAGE>

<TABLE>
<CAPTION>
NO. OF UNEXERCISED OPTIONS
AT FISCAL YEAR-END(1)(2)
---------------------------
SHARES
ACQUIRED VALUE
NAME COMPANY ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE
- --------------------- ------------------------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Louis S. Slaughter... Thermedics 28,200 $215,715 28,200 0
Thermedics Detection -- -- 0 50,000
Thermo Ecotek -- -- 1,000 0
Themo Electron 8,400 $194,943 19,000(5) 0
Thermo Fibertek -- -- 4,000 0
Thermo Process Systems -- -- 15,000 0
ThermoSpectra -- -- 0 1,000
ThermoTrex -- -- 720 0
- ------------------------------------------------------------------------------------------------
David H. Fine........ Thermedics 67,500 $372,046 82,100 0
Thermo Cardiosystems 6,000 $ 91,620 5,250 0
Thermedics Detection -- -- 0 62,500
Thermo Ecotek -- -- 1,000 0
Themo Electron 1,500 $ 39,750 31,270(5) 0
Thermo Fibertek -- -- 2,000 0
Thermo Instrument Systems 5,601 $107,539 0 0
ThermoSpectra -- -- 0 1,000
ThermoTrex -- -- 1,800 0

<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS($)
--------------------------
NAME EXERCISABLE UNEXERCISABLE
- --------------------- ------------ -------------
<S> <C> <C>
Louis S. Slaughter... 316,256 0
0 0(3)
0(3) 0
207,029 0
36,500 0
0 0
0 0(3)
6,516 0

David H. Fine........ 232,777 0
74,918 0
0 0(3)
0(3) 0
241,983 0
18,250 0
0 0
0 0(3)
16,290 0
</TABLE>
- --------
(1) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable on the date of grant, except options to purchase
the common stock of Thermedics Detection Inc. and ThermoSpectra
Corporation, which generally are not exercisable until that company's
stock is publicly traded. The shares acquired upon exercise of the options
reported in the table are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be employed by
such corporation or any other Thermo Electron company. The granting
corporation may exercise its repurchase rights within six months after the
termination of the optionee's employment. For publicly traded companies,
the repurchase rights generally lapse ratably over a five- to ten-year
period, depending on the option term, which may vary from seven to twelve
years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company. For companies whose shares
are not publicly traded, the repurchase rights lapse in their entirety on
the ninth anniversary of the grant date.
(2) Mr. Wood was appointed a vice president of Thermo Electron on September 2,
1994 and holds options to purchase common stock of Thermo Electron and its
subsidiaries other than the Corporation granted after that date. These
options are not reported in the table as they were granted as compensation
for service to other Thermo Electron companies other than in his capacity
as chief executive officer of the Corporation.
(3) No public market existed for the shares underlying these options as of
December 31, 1994. Accordingly, no value in excess of exercise price has
been attributed to these options.
(4) Mr. Keiser was appointed a senior vice president of the Corporation on
July 28, 1994. Prior to that date he served as a vice president of Thermo
Instrument Systems Inc. and holds options to purchase common stock of
Thermo Electron and its subsidiaries other than the Corporation granted
prior to that date. These options are not reported in the table as they
were granted as compensation for service to other than as senior vice
president of the Corporation.
(5) Options to purchase 10,000, 7,000 and 20,000 shares of the common stock of
Thermo Electron granted to Mr. Poirier, Mr. Slaughter and Dr. Fine,
respectively, are subject to the same terms as described in footnote (1),
except that the repurchase rights of the granting corporation generally do
not lapse until the tenth anniversary of the grant date. In the event of
the employee's death or involuntary termination prior to the tenth
anniversary of the grant date, the repurchase rights of the granting
corporation shall be deemed to have lapsed ratably over a five-year period
commencing with the fifth anniversary of the grant date.

12
<PAGE>

SEVERANCE AGREEMENTS

In 1988, Thermo Electron entered into severance agreements with several of
its key employees, including key employees of the Corporation and other
majority-owned subsidiaries. These agreements provide severance benefits if
there is a change of control of Thermo Electron that is not approved by the
Board of Directors of Thermo Electron and the employee's employment with Thermo
Electron or the majority-owned subsidiary is terminated, for whatever reason,
within one year thereafter. For purposes of the agreement a change of control
exists upon (i) the acquisition of 50% or more of the outstanding common stock
of Thermo Electron by any person without the prior approval of the board of
directors of Thermo Electron, (ii) the failure of the board of directors of
Thermo Electron, within two years after any contested election of directors or
tender or exchange offer not approved by the board of directors, to be
constituted of a majority of directors holding office prior to such event or
(iii) any other event that the board of directors of Thermo Electron determines
constitutes an effective change of control of Thermo Electron. Each of the
recipients of these agreements would receive a lump-sum benefit at the time of
a qualifying severance equal to the highest total cash compensation paid to the
employee by Thermo Electron or the majority-owned subsidiary in any 12-month
period during the three years preceding the severance event. A qualifying
severance exists (i) if the employment of the executive officer is terminated
for any reason within one year after a change in control of Thermo Electron or
(ii) a group of directors of Thermo Electron consisting of directors of Thermo
Electron on the date of the severance agreement or, if an election contest or
tender or exchange offer for Thermo Electron's common stock has occurred, the
directors of Thermo Electron immediately prior to such election contest or
tender or exchange offer, and any future directors who are nominated or elected
by such directors, determines that any other termination of the executive
officer's employment should be treated as a qualifying severance. The benefits
to be provided are limited so that the payments would not constitute so-called
"excess parachute payments" under applicable provisions of the Internal Revenue
Code of 1986. Assuming that severance benefits would have been payable under
these agreements as of December 31, 1994, Mr. Wood would have received
approximately $290,000.

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 Committee of the Board of Directors of its parent
corporation, Thermo Electron. The executive compensation program presently
consists of annual base salary ("salary"), short-term incentives in the form of
annual cash bonuses, and long-term incentives in the form of stock options.

The Committee believes that the compensation of executive officers should
reflect the scope of their responsibilities, the success of the Corporation,
and the contributions of each executive to that success. In addition, the
Committee believes that base salaries should approximate the mid-point of
competitive salaries derived from market surveys and that short-term and long-
term incentive compensation should reflect the performance of the Corporation
and the contributions of each executive.

External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's compensation for
its executives is assessed by comparing it to market data provided by its
compensation consultant and by participating in annual executive compensation
surveys, primarily "Project 777", an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's Index, but do not necessarily correspond to the companies included in
the Corporation's peer group index, the Dow Jones Diversified Technology
Industry Group Index.

13
<PAGE>

Principles of internal equity are also central to the Committee's
compensation policies. Compensation considered for the Corporation's officers,
whether cash or stock-based incentives, is also evaluated by comparing it to
compensation of other executives within the Thermo Electron organization with
comparable levels of responsibility for comparably sized business units.

The process for determining each of these elements for the Corporation's
executive officers is outlined below. 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 approach the mid-
point of competitive data. The salary increases in 1994 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 minus one to three times the median potential bonus. The value
within the range (the bonus multiplier) is determined at the end of each year
by the Committee in its discretion. The Committee exercises its discretion by
evaluating each executive's performance using a methodology developed by its
parent corporation, Thermo Electron, and applied throughout the Thermo Electron
organization. The methodology incorporates measures of operating returns,
designed to measure profitability, contributions to shareholder value, and
earnings growth, and includes an 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, but are measures of corporate and divisional performance that are
evaluated using graphs developed by Thermo Electron designed to reward
performance that is perceived as above average and to penalize performance that
is perceived as below average. The relative weighting of these achievements
varies depending on the executive's role and responsibilities within the
organization. The bonuses for named executive officers approved by the
Committee with respect to 1994 performance in each instance exceeded the median
potential bonus.

STOCK OPTION PROGRAM

The primary goal of the Corporation is to excel in the creation of long-term
value for the Stockholders. The principal incentive tool used to achieve this
goal is the periodic award to key employees of options to purchase common stock
of the Corporation and other Thermo Electron companies.

The Committee and management believe that awards of stock options to purchase
the shares of both the Corporation and other companies within the Thermo
Electron group of companies accomplish many objectives. The grant of options to
key employees encourages equity ownership in the Corporation, and closely
aligns management's interests to the interests of all the Stockholders. The
emphasis on stock options also results in management's compensation being
closely linked to stock performance. In addition, because they are subject to
vesting periods of varying durations and to forfeiture if the employee leaves
the Corporation prematurely, stock options are an incentive for key employees
to remain with the Corporation long-term.

14
<PAGE>

The Committee believes stock option awards in the parent corporation, Thermo
Electron, and the other majority-owned subsidiaries of Thermo Electron, are an
important tool in providing incentives for performance within the entire
organization.

In determining awards, the Committee considers the average annual value of
all options to purchase shares of the Corporation and other companies within
the Thermo Electron organization that vest in the next five years. (Values are
established using a modified Black-Scholes option pricing model.) As a
guideline, the Committee strives to maintain the aggregate amount of awards to
all employees over a five-year period below 10% of the Corporation's
outstanding common stock, although other factors such as unusual transactions
and acquisitions and standards for awards of comparably situated companies may
affect the number of awards granted.

Awards are not made annually in conjunction with the annual review of cash
compensation, but are made periodically. In 1994, the Committee granted options
to purchase Common Stock of the Corporation based on their holdings of such
stock throughout the year and in connection with the appointment of a new
officer. In general, the Committee considers total compensation of executives,
actual and anticipated contributions of each executive, as well as the value of
previously awarded options as described above, in determining option awards.
The option awards made with respect to the common stock of the Corporation's
parent, Thermo Electron, or its subsidiaries, are determined by the human
resources committees of the board of directors of the applicable granting
company using a similar analysis.

1994 CEO COMPENSATION

Cash compensation for Mr. John W. Wood Jr. is reviewed by both the Committee
and the human resources committee of the board of directors of Thermo Electron,
due to his responsibilities as both the Corporation's chief executive officer
and as a vice president of Thermo Electron, the Corporation's parent. Each
committee evaluates Mr. Wood's performance and proposed compensation using a
process similar to that used for the other executive officers of the
Corporation. At the Thermo Electron level, Mr. Wood is evaluated on his
performance related to the Corporation, as well as other operating units of
Thermo Electron for which he is responsible, weighted in accordance with the
amount of time and effort devoted to each operation. Approximately 65% of Mr.
Wood's bonus for 1994 performance was attributable to his responsibilities at
the Corporation. The Corporation's Committee then reviews the analysis and
determinations of the Thermo Electron committee, makes an independent
assessment of Mr. Wood'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. Wood's
compensation to be paid by the Corporation.

In December 1994, the Committee conducted its review of Mr. Wood's proposed
salary for 1995 and bonus for 1994 performance. In addition to the evaluation
of Mr. Wood's performance as described above, the Committee also considered the
ten-year return to stockholders of the Corporation. The Corporation achieved a
compound annual return to stockholders of 16% per year over the last ten years.
The Committee considered Mr. Wood's contributions and leadership in achieving
this return in its determination. The Committee concurred in the recommendation
made by the Thermo Electron committee and agreed to an allocation of 65% of Mr.
Wood's total cash compensation for 1994 to the Corporation, based on his
relative responsibilities at the Corporation and Thermo Electron.

In 1994, the Committee also approved stock option awards to Mr. Wood with
respect to the Corporation's Common Stock. The Committee annually considers an
award of stock options to executive officers of the Corporation, which are
generally based upon the number of shares of Common Stock held by the executive
during the year, as an incentive for executives to buy and hold Common Stock.
The award of stock options to Mr. Wood in 1994 was made under this program.

15
<PAGE>

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". The annual cash compensation
paid to individual executives does not approach the $1 million threshold, and
it is believed that the 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).

Mr. Peter O. Crisp (Chairman)
Mr. Paul F. Ferrari
Dr. Nicholas T. Zervas

16
<PAGE>

COMPARATIVE PERFORMANCE GRAPH

The Securities and Exchange Commission requires that the Corporation include
in this Proxy Statement a line-graph presentation comparing cumulative, five-
year shareholder returns for the Corporation's Common Stock with a broad-based
market index and either a nationally recognized industry standard or an index
of peer companies selected by the Corporation. The Corporation has compared its
performance with the American Stock Exchange Market Value Index and the Dow
Jones Total Return Index for the Diversified Technology Industry Group.

COMPARISON OF 1989-1994 TOTAL RETURN AMONG THERMEDICS INC.,
THE AMERICAN STOCK EXCHANGE MARKET VALUE INDEX AND THE
DOW JONES TOTAL RETURN INDEX FOR THE DIVERSIFIED TECHNOLOGY INDUSTRY GROUP
- --------------------------------------------------------------------------------

[CHART GOES HERE]

- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- -----------------------------------------------------------------------------------
TMD 100 56 52 66 127 107
- -----------------------------------------------------------------------------------
AMEX 100 82 105 106 126 115
- -----------------------------------------------------------------------------------
DJ DIV 100 107 127 110 129 133
</TABLE>
- --------------------------------------------------------------------------------

The total return for the Corporation's Common Stock (TMD), the American Stock
Exchange Market Value Index (AMEX) and the Dow Jones Total Return Index for the
Diversified Technology Industry Group (DJ DIV) assumes the reinvestment of
dividends, although dividends have not been declared on the Corporation's
Common Stock. The American Stock Exchange Market Value Index tracks the
aggregate performance of equity securities of companies listed on the American
Stock Exchange ("AMEX"). The Corporation's Common Stock is traded on the AMEX
under the ticker symbol "TMD."

17
<PAGE>

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. The
Corporation has created Thermo Cardiosystems Inc. as a publicly held subsidiary
and the Corporation has acquired the majority interest in a previously
unaffiliated public company, Thermo Voltek Corporation. From time to time,
Thermo Electron and its subsidiaries will create other majority-owned
subsidiaries as part of its spinout strategy. (The Corporation and the other
Thermo Electron subsidiaries are hereinafter referred to as the "Thermo
Subsidiaries".)

Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries have adopted the Thermo Electron Corporate Charter (the
"Charter") to define the relationships and delineate the nature of such
cooperation among themselves. The purpose of the Charter is to ensure that (1)
all of the companies and their stockholders are treated consistently and
fairly, (2) the scope and nature of the cooperation among the companies, and
each company's responsibilities, are adequately defined, (3) each company has
access to the combined resources and financial, managerial and technological
strengths of the others, and (4) Thermo Electron and the Thermo Subsidiaries,
in the aggregate, are able to obtain the most favorable terms from outside
parties.

To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members,
coordinating the access of Thermo Electron and the Thermo Subsidiaries (the
"Thermo Group") to external financing sources, ensuring compliance with
external financial covenants and internal financial policies, assisting in the
formulation of long-range financial 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 is also responsible for ensuring that members comply with
internal policies and procedures. 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. A subsidiary's participation in the Charter will
terminate in the event the subsidiary ceases to be controlled by Thermo
Electron or ceases to comply with the Charter or the policies and procedures
applicable to the Thermo Group. A withdrawal from the Charter automatically
terminates the corporate services agreement and tax allocation agreement (if
any) in effect between the withdrawing company and Thermo Electron. The
withdrawal from participation does not terminate outstanding commitments to
third parties made by the withdrawing company, or by Thermo Electron or other
members of the Thermo Group, prior to the withdrawal. However, a withdrawing
company is required to continue to comply with all policies and procedures
applicable to the Thermo Group and to provide certain administrative functions
mandated by Thermo Electron so long as the withdrawing company is controlled by
or affiliated with Thermo Electron.

18
<PAGE>

As provided in the Charter, the Corporation and Thermo Electron have entered
into a Corporate Services Agreement (the "Services Agreement") under which
Thermo Electron's corporate staff provides certain administrative services,
including certain legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns, centralized cash
management and financial and other services to the Corporation. Prior to
January 1, 1995, the Corporation was assessed an annual fee equal to 1.25% of
the Corporation's revenues for these services. Effective January 1, 1995, the
fee has been reduced to 1.2% of the Corporation's revenues. The fee is reviewed
annually and may be changed by mutual agreement of the Corporation and Thermo
Electron. In addition, the Corporation utilized data processing and contract
administration services of two majority-owned subsidiaries of Thermo Electron,
which are charges based on actual usage. During fiscal 1994, the Corporation
was charged $1,964,000 for these services. Management believes that the service
fees charged by Thermo Electron and its subsidiaries are reasonable and that
the terms of the agreements providing for such services are representative of
the expenses the Corporation would have incurred on a stand-alone basis. For
items such as employee benefit plans, insurance coverage and other identifiable
costs, Thermo Electron charges the Corporation based on charges attributable to
the Corporation. The Services Agreement automatically renews for successive
one-year terms, unless canceled by the Corporation upon 30 days' prior notice.
In addition, the Services Agreement terminates automatically in the event the
Corporation ceases to be a member of the Thermo Group or ceases to be a
participant in the Charter. In the event of a termination of the Services
Agreement, the Corporation will be required to pay a termination fee equal to
the fee that was paid by the Corporation for services under the Services
Agreement for the nine-month period prior to termination. Following
termination, Thermo Electron may provide certain administrative services on an
as-requested basis by the Corporation or as required in order to meet the
Corporation's obligations under Thermo Electron's policies and procedures.
Thermo Electron will charge the Corporation a fee equal to the market rate for
comparable services if such services are provided to the Corporation following
termination.

From time to time, the Corporation may transact business in the ordinary
course with other companies in the Thermo Group. All such transactions are on
terms comparable to those the Corporation would receive from unaffiliated
parties.

As of December 31, 1994, $9,972,000 of the Corporation's cash equivalents
were invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Corporation in effect lends excess cash to Thermo Electron,
which Thermo Electron collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market funds,
commercial paper and other marketable securities, in the amount of at least
103% of such obligation. The Corporation's funds subject to the repurchase
agreement are readily convertible into cash by the Corporation and have a
maturity of three months or less. The repurchase agreement earns a rate based
on the Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.

Thermo Electron owned of record approximately 51% of the Corporation's
outstanding Common Stock on January 28, 1995. Thermo Electron intends for the
foreseeable future to maintain at least 50% ownership of the Corporation. This
may require the purchase by Thermo Electron of additional shares of the
Corporation's Common Stock from time to time as the number of outstanding
shares issued by the Corporation increases. These purchases may be made either
in the open market or directly from the Corporation.

Prior to 1994, the Corporation performed supervisory management services with
respect to International Technidyne Corporation ("ITC"), a subsidiary of Thermo
Electron, in exchange for a fee of $150,000 per year, plus an incentive fee.
Effective January 2, 1994, in lieu of the management fee, two executive
employees of the Corporation allocate a portion of their salary and bonus for
the time they devote to Thermo Electron in connection with certain management
responsibilities relating to ITC and Thermo Electron's other biomedical
businesses. In 1994, the portion allocated to Thermo Electron was $84,000.

19
<PAGE>

The Corporation has an exclusive license from Thermo Electron to produce and
market the drug-detection products that resulted from research and development
work funded by Thermo Electron, in exchange for payment of royalties to Thermo
Electron on the sales of such products. Royalties paid under this agreement
totaled $64,000 in 1994.

Effective July 15, 1994, Thermo Electron sold 124,800 shares of the common
stock of Thermo Voltek Corp., a majority-owned subsidiary of the Corporation,
to the Corporation in exchange for 66,265 newly issued shares of the Common
Stock of the Corporation. The number of shares of Common Stock to be delivered
to Thermo Electron was determined by multiplying the number of shares of Thermo
Voltek Corp. common stock by $7.50 (the closing price for such stock on such
date) and dividing the result by $14.125 (the closing price for the Common
Stock on such date).

Pursuant to international distribution agreements, the Corporation has
appointed Arabian Business Machine Co. ("ABM") and Olayan Financing Company
("OFC") as its exclusive distributors of the Corporation's drug- and
explosives-detection products in certain Middle East countries. ABM and OFC are
affiliates of Competrol Real Estate Limited ("Competrol") and Olayan America
Corporation ("OAC"). Ms. Hutham S. Olayan, a Director of Thermo Electron, is
the President and a Director of both Competrol and OAC, which are indirectly
controlled by Suliman S. Olayan, Ms. Olayan's father. During 1994 the
Corporation paid an aggregate of $451,000 pursuant to these distributor
agreements.

In January 1994, Thermo Electron entered into an Asset and Stock Purchase
Agreement (the "Agreement") with Baker Hughes Incorporated ("Baker Hughes") for
the acquisition of certain business operations of Baker Hughes (the "Acquired
Business Operations") for an aggregate purchase price of approximately
$134,000,000 (the "Total Purchase Price"). In March 1994, the Corporation was
assigned certain rights and assumed certain liabilities of Thermo Electron (the
"Assignment and Assumption") under the Agreement. Pursuant to the Assignment
and Assumption, the Corporation acquired certain of the Acquired Business
Operations from Baker Hughes for a cash purchase price of $41,900,000 and the
assumption of certain liabilities related to such operations. The price paid by
the Corporation was generally determined by prorating the Total Purchase Price
on the basis of the revenues attributable to the portion of the Acquired
Business Operations, and was approved by the Corporation's Board of Directors.
In March 1994, Thermo Electron also entered into a similar arrangement with
another of its publicly held subsidiaries pursuant to which that subsidiary
acquired the remainder of the Acquired Business Operations from Baker Hughes
for the balance of the Total Purchase Price and the assumption of certain
liabilities related to such operations.

Pursuant to a subcontract entered into in October 1993, the Corporation's
Thermedics Detection subsidiary performs research and development services for
Coleman Research Corporation ("Coleman"), which is the prime contractor under a
contract with the U.S. Department of Energy. Coleman is a wholly-owned
subsidiary of Thermo Electron and was acquired by Thermo Electron in March
1995. Coleman paid Thermedics Detection $196,783 for services rendered in 1994.

20
<PAGE>

-- PROPOSAL 2 --

PROPOSAL TO AMEND THE DIRECTORS STOCK OPTION PLAN

The Board of Directors has approved amendments to the Corporation's Directors
Stock Option Plan (the "Directors Plan") that would change the formula for
granting stock options to purchase Common Stock to its outside Directors and
would also provide for the automatic grant of stock options to purchase common
stock of majority-owned subsidiaries of the Corporation to its outside
Directors, subject to Stockholder approval at this meeting.

In December 1994, as part of a review of director compensation, the Board of
Directors adopted amendments to the Directors Plan, subject to Stockholder
approval. The amendments would first change the formula by which stock options
to purchase Common Stock are automatically granted to outside Directors. The
formula, as amended, would substitute the annual grant of stock options to
purchase 1,000 shares of Common Stock to each eligible outside Director as of
the close of business on the date of the Annual Meeting of Stockholders for the
meeting attendance grants previously awarded quarterly to outside Directors
under the Directors Plan. The amendments would also provide for the automatic
grant to its outside Directors of stock options to purchase 1,500 shares of
common stock of majority-owned subsidiaries of the Corporation spunout from
time to time.

The review of director compensation was conducted in conjunction with an
overall review of director compensation for Thermo Electron and its majority-
owned subsidiaries. The purpose of the review was to evaluate compensation
practices for the entire Thermo Electron family of companies, compare total
cash compensation to comparable market data and ensure consistent and
internally equitable compensation practices among the companies within the
Thermo Electron family. For administrative simplicity, the Directors determined
that an annual award of stock options would best serve the interests of the
Corporation, in lieu of the quarterly determination and award of stock options
based on attendance at meetings of the Board of Directors and its committees.
In addition, the Directors approved the award of a fixed number of stock
options in majority-owned subsidiaries that may be spunout from time to time as
part of the corporate spinout strategy of the Corporation and Thermo Electron.

The spinout of business units represents an integral part of the
Corporation's strategy, and the Corporation believes it is desirable and in the
best interests of the Corporation and its Stockholders that the outside
Directors of the Corporation have a personal equity interest in future spinout
companies of the Corporation and other majority owned subsidiaries, such as
Thermo Cardiosystems Inc. and Thermo Voltek Corp. The Board of Directors
believes that the award of stock options to key personnel and Directors in its
spinout companies created from time to time serves to motivate individuals to
contribute significantly to the Corporation's future growth and success and to
align the long-term interest of these individuals to those of all the
Stockholders of the Corporation. Consistent with its incentive structure for
key employees and executives of the Corporation, it is recommended that outside
Directors be awarded stock options in the spinout companies by amending the
Directors Plan.

SUMMARY OF THE AMENDMENTS TO THE DIRECTORS PLAN

The full text of the Directors Plan as amended and restated is set forth in
Appendix A, to which reference is made. A brief description of the amendments
to the Directors Plan follows (the "Amendments"), but is qualified in its
entirety by reference to the full text of the plan. Except as amended, the
Directors Plan will continue in full force and effect. A brief description of
the material terms of the Directors Plan that are not affected by the
Amendments are summarized under the heading "Other Terms of the Directors
Plan." The closing price of the Common Stock on April 6, 1995, was $15.625 per
share.

ANNUAL GRANT OF CORPORATION OPTIONS

The Amendments will discontinue as of January 1, 1995, the quarterly grant of
stock options to purchase Common Stock of the Corporation based on attendance
by outside Directors at meetings of the Board of

21
<PAGE>

Directors or its committees. In lieu of such options, options to purchase 1,000
shares of Common Stock will be granted annually to each eligible Director as of
the close of business on the date of the Corporation's Annual Meeting of
Stockholders, beginning with the Annual Meeting to which this proxy statement
relates. Options may be exercised at any time from and after the six-month
anniversary of the grant date of the option and prior to the expiration of the
option on the third anniversary of the grant date. Options will be subject to
restrictions on resale and to the repurchase by the Corporation of the shares
subject to option at the exercise price if the Director ceases to serve as a
director of the Corporation, Thermo Electron or any subsidiary of Thermo
Electron, for any reason other than death, within one year from the date of
grant. The option exercise price shall be determined by the average closing
price of the Common Stock on the American Stock Exchange for the five trading
days preceding and including the date of the Annual Meeting of Stockholders.

GRANT OF SUBSIDIARY OPTIONS

The Amendments also provide that options to purchase shares of the common
stock of majority-owned subsidiaries of the Corporation will be granted
automatically to eligible outside Directors at the close of business on the
first Annual Meeting of Stockholders following the spinout of the subsidiary
(referred to as the "Spinout Subsidiary"), and at the close of business on the
date of every fifth Annual Meeting of Stockholders thereafter during the
continuation of the plan. A "spinout" shall be the first to occur of either a
public offering of the subsidiary's common stock or a private placement of such
stock primarily to third parties in an arms-length transaction. At the close of
business on the date of the applicable Annual Meeting of Stockholders, options
to purchase 1,500 shares of common stock of the Spinout Subsidiary will be
granted to each eligible outside Director holding office immediately following
the meeting. In addition, Thermo Cardiosystems Inc. and Thermo Voltek Corp.
shall be deemed to be Spinout Subsidiaries and stock option grants made in
accordance with the plan commencing with the Corporation's 1995 Annual Meeting
of Stockholders. A Director who is also a director of a Spinout Subsidiary will
not be eligible to receive options to purchase stock of that subsidiary under
the Directors Plan, although he or she will be eligible for options granted
under a comparable formula plan adopted by the subsidiary. The exercise price
for options will be determined by the average of the closing prices reported by
the American Stock Exchange (or other principal market on which such common
stock is then traded) for the five trading days immediately preceding the date
on which the option is granted or, if the shares are not then traded, at the
last price paid per share by independent investors in an arms-length private
placement of common stock prior to the option grant under the Directors Plan.
Options to purchase the common stock of a Spinout Subsidiary will vest and be
exercisable upon the fourth anniversary of the grant date, unless the common
stock underlying the option grant is registered under Section 12 of the
Securities Exchange Act of 1934, as amended ("Section 12 Registration") prior
to such date. Section 12 Registration is normally a prerequisite to the public
trading of a security. In the event that the effective date of Section 12
Registration occurs prior to the fourth anniversary of the grant date, then the
option will become immediately exercisable and the shares acquired upon
exercise will be subject to restrictions on transfer and the right of the
Corporation to repurchase such shares at the exercise price in the event the
Director ceases to serve as a Director of the Corporation, Thermo Electron or
any subsidiary of Thermo Electron. In such event, the restrictions and
repurchase rights shall lapse or be deemed to have lapsed at the rate of 25%
per year, starting with the first anniversary of the grant date, provided the
Director has continuously served as a Director of the Corporation, Thermo
Electron or any subsidiary of Thermo Electron since the grant date. The option
will expire on the fifth anniversary of the grant date, unless the Director
dies or otherwise ceases to serve as a Director of the Corporation, Thermo
Electron or any subsidiary of Thermo Electron prior to that date.

OTHER TERMS OF THE DIRECTORS PLAN

A brief description of the other principal features of the Directors Plan
that are not affected by the Amendments follows, but it is qualified in its
entirety by reference to the full text set forth in Appendix A.

22
<PAGE>

ELIGIBILITY; ADMINISTRATION

Directors of the Corporation who are not employees of the Corporation or any
subsidiary or parent corporation of the Corporation are eligible to participate
in the Directors Plan. The Directors Plan is administered by the Board of
Directors of the Corporation (the "Board"). All questions of interpretation of
the Directors Plan or of any options granted pursuant to the Plan are
determined by the Board.

TERMS AND CONDITIONS OF OPTIONS

The exercise price for options is determined by the average of the closing
prices reported by the American Stock Exchange (or other principal exchange in
which the Common Stock is then traded) for the five trading days immediately
preceding and including the date the option is granted or, if the shares
underlying the
option are not so traded, at the last price paid per share by third parties in
an arms-length transaction with the Corporation or the applicable subsidiary
prior to the option grant. The exercise price of options granted under the
Directors Plan must be paid in full by check or by the delivery of shares of
Common Stock (or shares of the common stock of the applicable subsidiary) that
have a fair market value on the exercise date equal to the exercise price of
the option. Stock options granted under the plan are non-statutory stock
options. If a Director dies or otherwise ceases to serve as a Director of the
Corporation, Thermo Electron or any subsidiary of Thermo Electron, or the
Corporation is liquidated, the options will terminate. Options are evidenced by
a written agreement and are subject to transfer restrictions that lapse as to
all of the shares on the first anniversary of the grant date, as to annual
grants of options to purchase Common Stock of the Corporation, and ratably over
a four-year period as to options to purchase common stock of Spinout
Subsidiaries of the Corporation, as described above under the caption "Grant of
Subsidiary Options". Option holders will be permitted to tender shares of
Common Stock (or shares of the common stock of the applicable subsidiary) to
satisfy withholding tax obligations, if any.

CHANGE IN CONTROL PROVISIONS

If there is a "Change in Control" of the Corporation or its parent
corporation, Thermo Electron, as defined in the Directors Plan, any stock
options that are not then exercisable and fully vested will become fully
exercisable and vested; and the restrictions applicable to shares purchased
upon exercise of options will lapse and such shares will be free of
restrictions and fully vested. Generally, a "Change in Control" occurs if (1)
any person other than Thermo Electron 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
Electron, without the prior approval of the Board of Directors, or the board of
directors of Thermo Electron, as the case may be, (2) during any two-year
period the individuals who constituted the Board of Directors or the board of
directors of Thermo Electron at the beginning of such period no longer
represent a majority of such board, or (3) the Board of Directors or the board
of directors of Thermo Electron determines that any other event constitutes an
effective change in control of the Corporation or Thermo Electron.

AMENDMENT AND TERMINATION

The Directors Plan remains in full force and effect until suspended or
discontinued by the Board. The Board may at any time or times amend or review
the Directors Plan, provided that no amendment that is not approved by the
Stockholders of the Corporation shall be effective if it would cause the
Directors 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 Directors Plan or any agreement evidencing options granted
under the Directors Plan may adversely affect the rights of any recipient of
any option previously granted without such recipient's consent.

SHARES SUBJECT TO THE DIRECTORS PLAN

The number of shares of the Common Stock that have been reserved for issuance
under the Directors Plan is 37,500 shares. If the Amendments to the Directors
Plan are approved by the Stockholders at this Meeting, an additional 25,000
shares of the common stock of each Spinout Subsidiary will also be reserved

23
<PAGE>

for transfer upon exercise of options granted thereunder. Options and shares
that are forfeited or otherwise reacquired by the Corporation will again be
available for the grant of options under the Directors Plan. If the outstanding
shares of Common Stock or the outstanding shares of the common stock of any
Spinout Subsidiary are increased, decreased or exchanged for a different number
or kind of shares or other securities through merger, consolidation, stock
split, stock dividend, reverse stock split or other distribution, an
appropriate proportionate adjustment may be made in the maximum number or kind
of shares reserved for issuance under the Directors Plan.

The proceeds received by the Corporation from exercises under the Directors
Plan will be used for the general purposes of the Corporation. Shares issued
under the Directors Plan may be authorized but unissued shares, or shares
reacquired by the Corporation and held in its treasury.

EFFECTIVE DATE

The Amendments will be effective as of January 1, 1995, if approved by the
Stockholders of the Corporation at this meeting.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the principal current Federal income tax
consequences of stock options granted under the Directors Plan. It does not
describe all Federal tax consequences under the Directors Plan, nor does it
describe state, local or foreign tax consequences.

The stock options granted under the Directors Plan are non-statutory stock
options and therefore no income will be realized by the optionee at the time
the option is granted. Generally, at exercise, ordinary income will be 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. The
Corporation receives a tax deduction for the same amount, and, upon disposition
of the shares, appreciation or depreciation after the date of exercise will be
treated as either short-term or long-term capital gain depending on how long
the shares have been held.

NEW PLAN BENEFITS

Only the outside Directors of the Corporation are eligible to participate in
the Directors Plan. The following table sets forth, to the extent determinable,
the number of shares of the common stock of the Corporation and its majority-
owned subsidiaries that will be granted under the Directors Plan in the first
year the Amendments are in effect to the "non-executive Director Group" if the
amendments are approved by the Stockholders. Named executive officers and other
employee groups are not set forth in the table as such persons and groups are
not eligible to receive options under the Directors Plan.

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF SHARES COMPANY
----------------- ---------------- ---------------- --------------------
<S> <C> <C> <C>
Non-Executive Director
Group (3 persons)...... (1) 3,000 Thermedics
(1) 4,500 Thermo Cardiosystems
(1) 4,500 Thermo Voltek
</TABLE>
- --------
(1) Because the exercise price of options to be granted under the Directors
Plan will reflect the market value of the underlying stock at the time of
the grant, the dollar value of such options is not currently determinable.
- --------------------------------------------------------------------------------

RECOMMENDATION

The Board of Directors believes that the Amendments to the Directors Plan
will enable the Corporation to ensure the continued services and contributions
of its outside Directors and to attract and retain other highly qualified
individuals to serve as outside Directors from time to time. Accordingly, the
Board of

24
<PAGE>

Directors believes that the proposal is in the best interest of the Corporation
and its Stockholders and recommends that the Stockholders vote "FOR" the
approval of the Amendments to the Directors Plan to change the formula for the
grant of stock options to outside Directors and to provide for the automatic
grant to outside Directors of options to purchase common stock of the
Corporation's majority-owned subsidiaries. If not otherwise specified, Proxies
will be voted FOR approval of this proposal. Thermo Electron, which
beneficially owned approximately 50% of the outstanding Common Stock as of
April 6, 1995, has sufficient votes to approve the proposal and 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 1995. Arthur Andersen LLP has acted as
independent public accountants for the Corporation since 1983. 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 three outside Directors, the purpose of
which is to review the scope and results of the audit.

OTHER ACTION

Management is not aware at this time of any other matters that will be
presented for action at the Meeting. Should any such matters be presented, the
Proxies grant power to the Proxy holders to vote shares represented by the
Proxies in the discretion of such Proxy holders.

STOCKHOLDER PROPOSALS

Proposals of Stockholders intended to be presented at the 1996 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 28, 1995.

SOLICITATION STATEMENT

The cost of this solicitation of Proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit Proxies personally, by telephone 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.

Woburn, Massachusetts
April 25, 1995

25
<PAGE>

APPENDIX A

THERMEDICS INC.

DIRECTORS STOCK OPTION PLAN

AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1995

1. PURPOSE

The purpose of this Directors Stock Option Plan (the "Plan") of Thermedics
Inc. (the "Company") is to encourage ownership in the Company by outside
directors of the Company whose services are considered essential to the
Company's growth and progress and to provide them with a further incentive to
become directors and to continue as directors of the Company. The Plan is
intended to be a nonstatutory stock option plan.

2. ADMINISTRATION

The Board of Directors, or a Committee (the "Committee") consisting of two or
more directors of the Company appointed by the Board of Directors, shall
supervise and administer the Plan. Grants of stock options under the Plan and
the amount and nature of the options to be granted shall be automatic in
accordance with Section 5. However, all questions of interpretation of the Plan
or of any stock options granted under it shall be determined by the Board of
Directors or the Committee and such determination shall be final and binding
upon all persons having an interest in the Plan.

3. PARTICIPATION IN THE PLAN

Directors of the Company who are not employees of the Company or any
subsidiary or parent of the Company shall be eligible to participate in the
Plan. Directors who receive grants of stock options in accordance with this
Plan are sometimes referred to herein as "Optionees."

4. STOCK SUBJECT TO THE PLAN

The maximum number of shares that may be issued under the Plan shall be
thirty-seven thousand five hundred (37,500) shares of the Company's $.10 par
value Common Stock (the "Common Stock"), and twenty-five thousand (25,000)
shares of the common stock of each Spinout Subsidiary (as defined in Section
5(B)) as of the date of the Annual Meeting of Stockholders on which options to
purchase such common stock are first granted to eligible Directors as provided
in Section 5(B), each subject to adjustment as provided in Section 9. Shares to
be issued upon the exercise of options granted under the Plan may be either
authorized but unissued shares or shares held by the Company in its treasury.
If any option expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for options thereafter to be granted.

5. TERMS AND CONDITIONS

A. Annual Stock Option Grants

Each Director of the Company who meets the requirements of Section 3 and who
is holding office immediately following the Annual Meeting of Stockholders,
commencing with the Annual Meeting of Stockholders held in calendar year 1995,
shall be granted an option to purchase 1,000 shares of Company common stock at
the close of business on the date of such Annual Meeting. Options granted under
this Subsection B shall be exercisable as to 100% of the shares subject to the
option as set forth in Section 5(C)(1), but shares acquired upon exercise are
subject to repurchase by the Company at the exercise price in the event that
the Optionee ceases to serve as a director of the Company, Thermo Electron
Corporation ("Thermo Electron") or any subsidiary of Thermo Electron, prior to
the first anniversary of the grant date, for any reason other than death.

A-1
<PAGE>

B. Subsidiary Stock Option Grants

Each Director of the Company who meets the requirements of Section 3 and this
Section 5(B), from time to time in accordance with this Section 5(B), shall be
granted an option to purchase shares of the common stock of each majority-owned
subsidiary of the Company, the common stock of which shall have become publicly
traded or a portion of which shall have been sold primarily to third parties in
a private placement or other arms-length transaction (such transaction being
referred to herein as a "Spinout Transaction", and such subsidiary being
referred to herein as a "Spinout Subsidiary"), upon the following terms and
conditions.

Each eligible Director who is not a Director of the Spinout Subsidiary shall
be granted an option to purchase 1,500 shares of common stock of the Spinout
Subsidiary as of the close of business on the date of the Company's Annual
Meeting of Stockholders that first occurs after the Spinout Transaction, and
also as of the close of business on the date of every fifth Annual Meeting of
Stockholders of the Company that occurs thereafter during the duration of this
Plan.

Options granted under this Section 5(B) shall vest and be exercisable as to
100% of the shares of common stock subject to the option on the fourth
anniversary of the grant date of the option, unless, prior to such anniversary,
the underlying common stock shall have been registered under Section 12 of the
Securities and Exchange Act of 1934, as amended (referred to herein as "Section
12 Registration"). From and after 90 days after the effective date of Section
12 Registration, options granted hereunder shall be immediately exercisable as
to 100% of the shares subject to the option, subject to the right of the
Company to repurchase the shares at the exercise price in the event the
Optionee ceases to serve as a director of the Company, or any subsidiary of the
Company or Thermo Election during the option term. The right of the Company to
so repurchase the shares shall lapse as to one-fourth of the shares granted on
each of the first, second, third and fourth anniversaries of the grant date of
the option, provided the Optionee has remained continuously a director of the
Company, Thermo Electron or any subsidiary of Thermo Electron since the grant
date. In all other respects, the option shall be subject to the general terms
and conditions applicable to all option grants as set forth below in Section
5(C), including the determination of the exercise price of such option.

No Director, who is otherwise eligible under Section 3, shall be eligible
under this Section 5(B) to receive grants of stock options in Spinout
Subsidiaries, if such Director also serves as a director of such Spinout
Subsidiary.

In the event any subsidiary shall become a "Spinout Subsidiary" as defined
herein, then there shall be immediately reserved for transfer hereunder, on the
date options to purchase common stock of the Spinout Subsidiary are first
granted to eligible Directors and without further action required by the Board
of Directors or Stockholders of the Company, twenty-five thousand (25,000)
shares of the common stock of such Spinout Subsidiary.

C. General Terms and Conditions Applicable to All Grants

1. Except as otherwise provided in Section 5(B), options shall be exercisable
at any time from and after the six-month anniversary of the grant date and
prior to the date which is the earliest of:

(a) three years after the grant date for options granted under Section
5(A) and five years after the grant date for options granted under Section
5(B), (b) three months after the later of the date (i) the Optionee either
ceases to meet the requirements of Section 3 or (ii) otherwise ceases to
serve as a director of the Company, Thermo Electron or any subsidiary of
Thermo Electron (six months in the event the Optionee ceases to meet the
requirements of this Subsection by reason of his death), or (c) the date of
dissolution or liquidation of the Company.

2. The exercise price at which Options are granted hereunder shall be the
average of the closing prices reported by the national securities exchange on
which the common stock is principally traded for

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<PAGE>

the five trading days immediately preceding and including the date the option
is granted or, if such security is not traded on an exchange, the average last
reported sale price for the five-day period on the NASDAQ National Market List,
or the average of the closing bid prices for the five-day period last quoted by
an established quotation service for over-the-counter securities, or if none of
the above shall apply, the last price paid for shares of the Common Stock by
independent investors in a private placement; provided, however, that such
exercise price per share shall not be lower than the par value per share or
less than 50% of the fair market value of the Common Stock until such time as
the Company elects to be subject to Rule 16b-3 as amended by SEC Rel. No. 33-
28869.

3. All options shall be evidenced by a written agreement substantially in
such form as shall be approved by the Board of Directors or Committee,
containing terms and conditions consistent with the provisions of this Plan.

6. EXERCISE OF OPTIONS

A. Exercise/Consideration

An option may be exercised in accordance with its terms by written notice of
intent to exercise the option, specifying the number of shares of stock with
respect to which the option is then being exercised. The notice shall be
accompanied by payment in the form of cash or shares of common stock of the
Company (as to options to purchase Company Common Stock) or the Spinout
Subsidiary (as to options to purchase common stock of the Spinout Subsidiary,
but only if the common stock is then publicly traded) (the shares so tendered
referred to herein as "Tendered Shares") with a then current market value equal
to the exercise price of the shares to be purchased; provided, however, that
such Tendered Shares shall have been acquired by the Optionee more than six
months prior to the date of exercise (unless such requirement is waived in
writing by the Company). Against such payment the Company shall deliver or
cause to be delivered to the Optionee a certificate for the number of shares
then being purchased, registered in the name of the Optionee or other person
exercising the option. If any law or applicable regulation of the Securities
and Exchange Commission or other body having jurisdiction in the premises shall
require the Company or the Director to take any action in connection with
shares being purchased upon exercise of the option, exercise of the option and
delivery of the certificate or certificates for such shares shall be postponed
until completion of the necessary action, which shall be taken at the Company's
expense.

B. Tax Withholding

The Company shall have the right to deduct from payments of any kind
otherwise due to the Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the Optionee may elect
to satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of common stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of common stock already
owned by the Optionee. The shares so delivered or withheld shall have a fair
market value equal to such withholding obligation. The fair market value of the
shares used to satisfy such withholding obligation shall be determined by the
Company as of the date that the amount of tax to be withheld is to be
determined. Notwithstanding the foregoing, no election to use shares for the
payment of withholding taxes shall be effective unless made in compliance with
any applicable requirements of Rule 16b-3.

7. TRANSFERABILITY

Options shall not be transferable, otherwise than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined in the Internal Revenue Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder (a "Qualified Domestic Relations
Order"). Options may be exercised during the life of the Optionee only by the
Optionee or a transferee pursuant to a Qualified Domestic Relations Order.

A-3
<PAGE>

8. LIMITATION OF RIGHTS TO CONTINUE AS A DIRECTOR

Neither the Plan, nor the quantity of shares subject to options granted under
the Plan, nor any other action taken pursuant to the Plan, shall constitute or
be evidence of any agreement or understanding, express or implied, that the
Company will retain a Director for any period of time, or at any particular
rate of compensation.

9. CHANGES IN COMMON STOCK

If the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number or kind of shares or other securities, or if
additional shares or new or different shares or other securities are
distributed with respect to such shares of Common Stock or other securities,
through merger, consolidation, sale of all or substantially all of the assets
of the Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other distribution with respect
to such shares of Common Stock, or other securities, an appropriate
proportionate adjustment may be made in the maximum number or kind of shares
reserved for issuance under the Plan. No fractional shares will be issued under
the Plan on account of any such adjustments.

10. LIMITATION OF RIGHTS IN OPTION STOCK

The Optionees shall have no rights as stockholders in respect of shares as to
which their options shall not have been exercised, certificates issued and
delivered and payment as herein provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan or the written
agreement evidencing options granted hereunder.

11. STOCK RESERVED

The Company shall at all times during the term of the options reserve and
keep available such number of shares of the Common Stock as will be sufficient
to permit the exercise in full of all options granted under this Plan and shall
pay all other fees and expenses necessarily incurred by the Company in
connection therewith.

12. SECURITIES LAWS RESTRICTIONS

A. Investment Representations

The Company may require any person to whom an option is granted, as a
condition of exercising such option, to give written assurances in substance
and form satisfactory to the Company to the effect that such person is
acquiring the Common Stock subject to the option for his or her own account for
investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems necessary
or appropriate in order to comply with federal and applicable state securities
laws.

B. Compliance with Securities Laws

Each option shall be subject to the requirement that if, at any time, counsel
to the Company shall determine that the listing, registration or qualification
of the shares subject to such option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of, or in
connection with, the issuance or purchase of shares thereunder, such option may
not be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition shall
have been effected or obtained on conditions acceptable to the Board of
Directors. Nothing herein shall be deemed to require the Company to apply for
or to obtain such listing, registration or qualification, or to satisfy such
condition.

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<PAGE>

13. CHANGE IN CONTROL

13.1 IMPACT OF EVENT

In the event of a "Change in Control" as defined in Section 13.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides:

(a) Any stock options awarded under the Plan that were not previously
exercisable and vested shall become fully exercisable and vested.

(b) Shares purchased upon the exercise of options subject to restrictions
and to the extent not fully vested, shall become fully vested and all such
restrictions shall lapse so that shares issued pursuant to such options
shall be free of restrictions.

13.2 DEFINITION OF "CHANGE IN CONTROL"

"Change in Control" means any one of the following events: (i) when any
Person other than Thermo Electron Corporation ("Thermo Electron") is or becomes
the beneficial owner (as defined in Section 13(d) of the Exchange Act and the
Rules and Regulations thereunder), together with all Affiliates and Associates
(as such terms are used in Rule 12b-2 of the General Rules and Regulations of
the Exchange Act) of such Person, directly or indirectly, of 50% or more of the
outstanding Common Stock of the Company, or the beneficial owner of 25% or more
of the outstanding common stock of Thermo Electron, without the prior approval
of the Prior Directors of the Company or Thermo Electron, as the case may be,
(ii) the failure of the Prior Directors to constitute a majority of the Board
of the Company or of the Board of Directors of Thermo Electron, as the case may
be, at any time within two years following any Electoral Event, or (iii) any
other event that the Prior Directors shall determine constitutes an effective
change in the control of the Company or Thermo Electron. As used in the
preceding sentence, the following capitalized terms shall have the respective
meanings set forth below:

(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term is defined in
Rule 405 under the Securities Act of 1933 and any "group" (within the
meaning of such term in Rule 13d-5 under the Exchange Act);

(b) "Prior Directors" shall mean the persons sitting on the Company's or
Thermo Electron's Board of Directors, as the case may be, immediately prior
to any Electoral Event (or, if there has been no Electoral Event, those
persons sitting on the applicable Board of Directors on the date of this
Agreement) and any future director of the Company or Thermo Electron who
has been nominated or elected by a majority of the Prior Directors who are
then members of the Board of Directors of the Company or Thermo Electron,
as the case may be; and

(c) "Electoral Event" shall mean any contested election of Directors, or
any tender or exchange offer for the Company's or Thermo Electron's Common
Stock, not approved by the Prior Directors, by any Person other than the
Company, Thermo Electron or a subsidiary of Thermo Electron.

14. AMENDMENT OF THE PLAN

The provisions of Sections 3 and 5 of the Plan shall not be amended more than
once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, or the rules thereunder.
Subject to the foregoing, the Board of Directors may at any time, and from time
to time, modify or amend the Plan in any respect, except that if at any time
the approval of the Stockholders of the Company is required as to such
modification or amendment under Rule 16b-3, the Board of Directors may not
effect such modification or amendment without such approval.

The termination or any modification or amendment of the Plan shall not,
without the consent of an Optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the Optionees affected,
the Board of Directors may amend outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to
amend or modify the terms and

A-5
<PAGE>

provisions of the Plan and of any outstanding option to the extent necessary to
ensure the qualification of the Plan under Rule 16b-3.

15. EFFECTIVE DATE OF THE PLAN

The Plan shall become effective when adopted by the Board of Directors, but
no option granted under the Plan shall become exercisable until six months
after the Plan is approved by the Stockholders of the Company.

16. NOTICE

Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Secretary of the Company and shall become
effective when it is received.

17. GOVERNING LAW

The Plan and all determinations made and actions taken pursuant hereto shall
be governed by the laws of the Commonwealth of Massachusetts.

A-6
<PAGE>

THERMEDICS INC.

P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R OF THE COMPANY
O
X
Y The undersigned hereby appoints John N. Hatsopoulos, John W. Wood, Jr.
and Jonathan W. Painter, or any one of them acting 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 Thermedics Inc., a
Massachusetts corporation (the "Company"), to be held on Monday, May 22, 1995
at 3:15 p.m., 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 6, 1995, with all of the powers the undersigned would possess if
personally present at such meeting.

Copies of the Notice of Meeting and of the Proxy Statement have been
received by the undersigned.

--------------
SEE REVERSE
(Continued and to be signed on reverse side.) SIDE
--------------
<PAGE>

Please mark +
[X] votes as in +
this example. ++++++

The shares represented by this Proxy will be voted "FOR" the proposals set forth
below if no instruction to the contrary is indicated or if no instruction is
given.

1. Election of Directors.

Nominees: Peter O. Crisp, Paul F. Ferrari, George N. Hatsopoulos, John N.
Hatsopoulos, Robert C. Howard, Arvin H. Smith, John W. Wood Jr. and Nicholas T.
Zervans.

FOR WITHHELD
ALL [_] FROM ALL [_]
NOMINEES NOMINEES

[_]________________________________________
For all nominees except as noted above

FOR AGAINST ABSTAIN
2. Approve amendment to Directors
Stock Option Plan to change the [_] [_] [_]
formula for the award of stock
options to outside Directors and
provide for the automatic grant of
stock options to outside Directors.

3. In their discretion on such other matters as may properly
come before the Meeting.

MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE AT LEFT

(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.)

Signature:_____________________________________ Date: ____________________