[THERMO PROCESS LOGO HERE]
September __, 1995
Dear Stockholder:
The enclosed Notice calls the 1995 Annual Meeting of the Stockholders
of Thermo Process Systems Inc. I respectfully request all Stockholders
attend this meeting, if possible.
Enclosed with this letter is a Proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the Meeting.
Whether or not you are able to attend the Meeting, I urge you to complete
your Proxy and return it to our transfer agent, American Stock Transfer and
Trust Company, in the enclosed addressed, postage-paid envelope, as a
quorum of the Stockholders must be present at the Meeting, either in person
or by Proxy.
I would appreciate your immediate attention to the mailing of this
Proxy.
Yours very truly,
JOHN P. APPLETON
President and
Chief Executive Officer
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[THERMO PROCESS LOGO HERE]
September __, 1995
To the Holders of the Common Stock of
THERMO PROCESS SYSTEMS INC.
NOTICE OF ANNUAL MEETING
The 1995 Annual Meeting of the Stockholders of Thermo
Process Systems Inc. (the "Corporation") will be held on Tuesday,
October 24, 1995, at 5:00 pm at the Westin Hotel, 70 Third
Avenue, Waltham, Massachusetts . The purposes of the Meeting are
to consider and take action upon the following matters:
1. Election of six Directors.
2. A proposal recommended by the Board of Directors to
amend the Corporation's Certificate of
Incorporation to change the Corporation's name to
"Thermo Terra Tech Inc."
3. 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 to provide for the
automatic grant of stock options to purchase common stock of
majority-owned subsidiaries of the Corporation to its outside
Directors.
4. Such other business as may properly be brought before
the Meeting and any adjournment thereof.
The transfer books of the Corporation will not be closed
prior to the Meeting, but, pursuant to appropriate action by the
Board of Directors, the record date for the determination of the
Stockholders entitled to notice of and vote at the Meeting is
September 5, 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
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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
Secretary
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PROXY STATEMENT
The enclosed Proxy is solicited by the Board of Directors of
Thermo Process Systems Inc. (the "Corporation") for use at the
1995 Annual Meeting of the Stockholders (the "Meeting") to be
held on Tuesday, October 24, 1995, at 5:00 pm at the Westin
Hotel, 70 Third Avenue, Waltham, Massachusetts, and a
adjournment thereof. The mailing address of the executive office
of the Corporation is 12068 Market Street, Livonia, Michigan
48150 . This Proxy Statement and the enclosed Proxy were first
furnished to Stockholders of the Corporation on or about
September ___, 1995.
VOTING PROCEDURES
The Board of Directors intends to present to the Meeting the
election of six Directors, constituting the entire Board of
Directors, as well as two other matters: a proposal to amend the
Corporation's Certificate of Incorporation to change the
Corporation's name to "Thermo Terra Tech Inc." and 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 the
Corporation's majority-owned subsidiaries created from time to
time to its outside Directors.
The representation in person or by proxy of a majority of
the outstanding shares of common stock of the Corporation, $.01
par value ("Common Stock"), entitled to vote at the Meeting is
necessary to provide a quorum for the transaction of business at
the Meeting. Shares can only be voted if the Stockholder is
present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether
or not you plan to attend the Meeting in person, please sign and
promptly return the enclosed proxy card, which requires no
postage if mailed in the United States. All signed and returned
proxies will be counted towards establishing a quorum for the
Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with
your instructions. You may specify your choice by marking the
appropriate box on the proxy card. If your proxy card is signed
and returned without specifying choices, your shares will be
voted for the management nominees for Directors, 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
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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. 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. 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 Stockholder who returns a proxy may revoke it at any time
before the Stockholder's shares are voted at the Meeting by
written notice to the Secretary of the Corporation received prior
to the Meeting, by executing and returning a later-dated proxy or
by voting by ballot at the Meeting.
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The outstanding stock of the Corporation entitled to vote
(excluding shares held in treasury by the Corporation) as of
September 5, 1995, consisted of __________ shares of Common
Stock. Only Stockholders of record at the close of business on
September 5, 1995, are entitled to vote at the Meeting. Each
share is entitled to one vote.
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--PROPOSAL 1--
ELECTION OF DIRECTORS
Six 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"), and
of its subsidiary, Thermo Remediation Inc. ("Thermo Remediation")
is reported under the caption "Stock Ownership." All of the
nominees are currently Directors of the Corporation . Dr. Warren
M. Rohsenow, a Director of the Corporation since 1986, has
declined to stand for re-election.
John P. Appleton John P. Appleton, 60, has been President,
Chief Executive Officer and a Director of
the Corporation since September 1993. Dr.
Appleton has been Chairman, Chief
Executive Officer and a Director of Thermo
Remediation since September 1993 and has
served as a Vice President of Thermo
Electron since 1975 in various managerial
capacities.
George N. Dr. Hatsopoulos, 68, has been a Director
Hatsopoulos of the Corporation since 1986. 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., Thermedics Inc.,
Thermo Ecotek Corporation, Thermo
Electron, Thermo Fibertek Inc., Thermo
Instrument Systems Inc., Thermo Power
Corporation and ThermoTrex Corporation.
Dr. Hatsopoulos is the brother of John N.
Hatsopoulos, a Director, a Vice President
and the Chief Financial Officer of the
Corporation.
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John N. Hatsopoulos Mr. Hatsopoulos, 61, has been a Director
of the Corporation since 1986 and its Vice
President and Chief Financial Officer
since 1988 . He has been
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., Thermedics Inc.,
Thermo Ecotek Corporation, Thermo Fibertek
Inc., Thermo Instrument Systems Inc.,
Thermo Power Corporation and ThermoTre
Corporation. Mr. Hatsopoulos
brother of Dr. George N. Hatsopoulos, a
Director of the Corporation.
Donald E. Noble Mr. Noble, 80, has been a Director of the
Corporation since 1986 and served as
Chairman of the Board from 1992 to
November 1994. From 1959 to 1980, Mr.
Noble served as the chief executive
officer of Rubbermaid Incorporated, first
with the title of President and then as
the Chairman of the Board. Mr. Noble is
also a director of Thermo Electron, Thermo
Fibertek Inc. and Thermo Power
Corporation.
William A. Mr. Rainville, 53, has been a Director of
Rainville the Corporation since February 1993 and
Chairman of the Board since November 1994.
Mr. Rainville has been President and Chief
Executive Officer of Thermo Fibertek Inc.
since its inception in 1991 and a director
of that company since January 1992. From
1984 until January 1993, Mr. Rainville was
the President and Chief Executive Officer
of Thermo Electron Web Systems Inc.
subsidiary of Thermo Electron and the
predecessor of Thermo Fibertek Inc. He
has been a Senior Vice President of Thermo
Electron since March 1993 and a Vice
President since 1986. Mr. Rainville is
also a director of Thermo Fibertek Inc.
and Thermo Remediation.
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Polyvios C. Mr. Vintiadis, 58, has been a Director of
Vintiadis the Corporation since September 1992. Mr.
Vintiadis has been the Chairman and Chief
Executive Officer of Towermarc
Corporation, a real estate development
company, since 1984. Prior to joining
Towermarc Corporation, Mr. Vintiadis was a
principal of Morgens, Waterfall &
Vintiadis, Inc., a financial services
firm, with whom he remains associated.
For more than 20 years prior to that time,
Mr. Vintiadis was employed by Arthur D.
Little & Company, Inc. Mr. Vintiadis is
also a director of Thermo Instrument
Systems Inc.
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. Vintiadis (Chairman) and Mr. Noble. 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.
Noble (Chairman), Dr. Rohsenow and Mr. Vintiadis. 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 six times, the Audit Committee met
twice and the Human Resources Committee met three times during
fiscal 1995. Each Director attended at least 75% of all meetings
of the Board of Directors and Committees on which he served held
during his tenure.
Compensation of Directors
Directors who are not employees of the Corporation, of
Thermo Electron or of any other companies affiliated with Thermo
Electron (also referred to as "outside directors"), receive an
annual retainer of $4,000 and a fee of $1,000 per day for
attending regular meetings of the Board of Directors and $500 per
day for participating in meetings of the Board of Directors held
by means of conference telephone and for participating in certain
meetings of committees of the Board of Directors. Directors are
also reimbursed for out-of-pocket expenses incurred in attending
such meetings. Payment of Directors' fees is made quarterly.
Dr. Appleton, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos and Mr.
Rainville are all employees of Thermo Electron and do not receive
any cash compensation from the Corporation for their services as
Directors.
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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 54,000 shares of Common Stock have been reserved for
issuance under the Deferred Compensation Plan. As of July 1,
1995, deferred units equal to 31,838 full shares of Common Stock
were accumulated under the Deferred Compensation Plan.
The Corporation's directors stock option plan (the
"Directors Plan") provides for the grant of stock options to
purchase shares of Common Stock to outside Directors as
additional compensation for their service as Directors. In
February 1995, the Board of Directors approved amendments to the
Directors Plan that are subject to stockholder approval at the
Annual Meeting of Stockholders. Prior to the amendment of the
Directors Plan, eligible Directors were automatically granted
1,000 shares annually upon the close of business on the date of
the Corporation's Annual Meeting of Stockholders and were also
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 retain the annual award of 1,000 options (although
the terms of the award would be modified), but would eliminate
the quarterly award of stock options based on meeting attendance.
As amended the Directors Plan would also provide for
automatic grant every five years of options to purchase 1,500
shares of the common stock of any 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
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after the date of grant and, if granted prior to 1995, generally
expire seven years from the date of grant. An aggregate of
75,000 shares of Common Stock has been reserved for issuance
under the Directors Plan. As of July 1, 1995, options to purchase
16,700 shares of Common Stock were outstanding under the
Directors Plan at an average exercise price of $8.44 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 58,300 shares of Common
Stock were reserved and available for grant under the Directors
Plan as of July 1, 1995.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo Electron and
Thermo Remediation , as of July 1, 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.
Thermo Thermo Thermo
Name (1) Process Electron Remediation
-------- Systems Inc.(2) Corporation(3) Inc. (4)
------------------------------------------
Thermo Electron 14,428,751(5) N/A 8,775,187(6)
Corporation
John P. Appleton 216,895 107,421 63,000
George N. Hatsopoulos 55,326 2,333,620 7,500
John N. Hatsopoulos 62,212 387,646 40,182
Donald E. Noble 45,984 32,982 9,000
Jeffrey L. Powell 82,921 27,505 111,000
William A. Rainville 60,000 201,101 24,000
Warren M. Rohsenow 45,034 681 0
Bruce J. Taunt 43,762 2,494 18,000
Polyvios C. Vintiadis 6,809 0 0
All Directors and 631,995 3,208,550 287,682
executive officers as a
group (10 persons)
-------------
(1) Shares of Common Stock of the Corporation and of the common
stock of Thermo Electron and Thermo Remediation beneficially
owned include shares owned by the indicated person, by that
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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 Common Stock beneficially owned by Dr. Appleton,
Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Noble, Mr.
Powell, Mr. Rainville, Dr. Rohsenow, Mr. Taunt, Mr.
Vintiadis and all Directors and executive officers as a
group include 215,000, 40,000, 40,000 6,200, 63,000 60,000,
6,200, 42,000, 4,300 and 481,700 shares, respectively, that
such person or group has the right to acquire within 60 days
of July 1, 1995 through the exercise of stock options.
Shares beneficially owned by Mr. J. Hatsopoulos and all
Directors and executive officers as a group include 12,500
shares that Mr. J. Hatsopoulos has the right to acquire
within 60 days after July 1, 1995 through the exercise of a
stock purchase warrant acquired in connection with a private
placement of securities by the Corporation and one of the
Corporation's subsidiaries on terms identical to terms
granted to unaffiliated investors. Shares beneficially
owned by Dr. Appleton, Dr. G. Hatsopoulos, Mr. J
Hatsopoulos, Mr. Powell, Mr. Taunt and all Directors and
executive officers as a group include 161, 167, 170, 86, 20
and 762 full shares, respectively, allocated through June
30, 1995 to accounts maintained pursuant to Thermo
Electron's Employee Stock Ownership Plan ("ESOP"). Shares
beneficially owned by Mr. Noble, Dr. Rohsenow and Mr.
Vintiadis and all Directors and executive officers as a
group include 16,744, 12,584, 2,509 and 31,837 full shares,
respectively, allocated through July 1, 1995 to their
respective accounts maintained under the Corporation's
Deferred Compensation Plan for Directors. Except for Dr.
Appleton, who beneficially owned approximately 1.25 % of the
Common Stock outstanding as of July 1, 1995, no Director or
executive officer beneficially owned more than 1% of the
Common Stock outstanding as of July 1, 1995; all Directors
and executive officers as a group beneficially owned 3.64%
of the Common Stock outstanding as of such date.
(3) The shares of common stock of Thermo Electron shown in the
table reflect a three-for-two split of such stock effected
on May 24, 1995. Shares of the common stock of Thermo
Electron beneficially owned by Dr. Appleton, Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Noble, Mr. Powell , Mr.
Rainville, Mr. Taunt and all Directors and executive
officers as a group include 61,573, 1,102,200, 297,880,
3,750, 25,850, 136,175, 1,875, and 1,694,428 shares,
respectively, that such person or members of the group has
the right to acquire within 60 days of July 1, 1995 through
the exercise of stock options. Shares beneficially owned by
Dr. Appleton, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
Powell, Mr. Taunt and all Directors and executive officers
as a group include 850, 1,386, 1,130, 236, 42 and 4,368 full
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shares, respectively, allocated through June 30, 1995 to
accounts maintained pursuant to the ESOP. Shares
beneficially owned by Mr. Noble and all Directors and
executive officers as a group each include 26,955 shares
allocated through July 1, 1995, to Mr. Noble's account
maintained pursuant to Thermo Electron's Deferred
Compensation Plan for Directors. Except for Dr. G.
Hatsopoulos, who beneficially owned 2.81% of the Thermo
Electron common stock outstanding as of July 1, 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 3.86 % of the Thermo Electron common
stock outstanding as of July 1, 1995.
(4) The shares of common stock of Thermo Remediation shown in
the table reflect a three-for-two split of such stock
effected on March 31, 1995. Shares beneficially owned by
Dr. Appleton, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
Noble, Mr. Powell, Mr. Rainville, Mr. Taunt and all
Directors and executive officers as a group include 63,000,
7,500, 22,500, 4,500, 111,000, 22,500, 18,000 and 264,000
shares, respectively, that such person or group has the
right to acquire within 60 days after July 1, 1995 through
the exercise of stock options. No Director or executive
officer beneficially owned more than 1% of the common stock
of Thermo Remediation outstanding as of July 1, 1995; all
Directors and executive officers as a group beneficially
owned 2.34% of such common stock outstanding as of such
date.
(5) Includes 495,160 shares of Common Stock that Thermo Electron
or its majority-owned subsidiaries have the right to acquire
within 60 days of July 1, 1995 through the conversion of the
Corporation's 6-1/2% convertible subordinated debentures due
1997. Thermo Electron owned 80.85% of the Common Stock
outstanding as of July 1, 1995. Thermo Electron's address
is 81 Wyman Street, Waltham, Massachusetts 02254-9046. As
of July 1, 1995, Thermo Electron had the power to elect all
of the members of the Corporation's Board of Directors.
(6) Includes 167,411 shares of the common stock of Thermo
Remediation which Thermo Electron has the right to acquire
within 60 days of July 1, 1995 through the conversion of
Thermo Remediation's 4.875% convertible subordinated
debentures d ue 2000, and 8,581,376 of such shares which the
Corporation owns or has the right to acquire within 60 days
through the conversion of Thermo Remediation's 3.875%
subordinated convertible notes due 2000.
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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 fiscal 1995,
except in the following instances. The initial report of
ownership for one of the Corporation's executive officers, Mr.
Bruce J. Taunt, failed to include 20.2 shares of Common Stock
allocated to his account under the Thermo Electron ESOP, and
failed to include 160 shares of Common Stock beneficially held by
trust. These deficiencies were corrected in an amendment to his
Form 3 on January 25, 1995, except for the trust holdings which
were reported on his Form 5 filed in May 1995. In addition, the
1994 Form 5 filed on behalf of Mr. John N. Hatsopoulos, a
Director and the Chief Financial Officer of the Corporation,
failed to report three gifts of shares of Common Stock
aggregating 4,000 shares. The gifts were reported in an
amendment to Mr. Hatsopoulos' Form 5 filed on October 12, 1994.
Thermo Electron reported purchases of the Corporation's 6-1/2%
Convertible Subordinated Debentures late on two occasions. It
reported the purchase in March 1994 of $1,150,000 principal
amount of such debentures in May 1994 on its Form 5 and another
purchase in March 1995 of $365,000 principal amount of such
debentures in an amendment filed seven days late. In addition,
in converting Form 4 records of the Corporation from a manual
system to a computer database, it was discovered that Thermo
Electron failed to report the sale in August 1992 of $250,000
principal amount of the Corporation's 6-1/2% Convertible
Subordinated Debentures . The sale was reported on the Form 5
filed by Thermo Electron in May 1995.
EXECUTIVE COMPENSATION
The following table summarizes compensation for services to
the Corporation in all capacities awarded to, earned by or paid
to the Corporation's chief executive officer and its two other
most highly compensated executive officers for the last three
fiscal years. No other executive officers of the Corporation who
held office during fiscal 1995 met the definition of "highly
compensated" within the meaning of the Securities and Exchange
Commission's executive compensation disclosure rules for such
period.
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
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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.
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Summary Compensation Table
Long Term
Annual Compensation Compensation
Securities
Underlying
Awards of
Options of All Other
Name and Fiscal Shares and Compen-
Principal Position Year Salary Bonus Company)(1) sation(2)
John P. Appleton(3) 1995 $146,250 $100,000(3) 30,000(TPI) $11,171
President and
Chief Executive
Officer 1994 $ 75,533 $ 80,000(3) 185,000(TPI)
63,000(THN) $11,115
Jeffrey L. Powell 1995 $108,000 $ 63,500 10,000(TPI) $ 6,828
Vice President 15,000(THN)
15,150(TMO)
1994 $101,600 $ 46,675(4) 13,000(TPI) $ 4,484
96,000(THN)
3,750(TMO)
1993 $ 97,963 $ 26,000 15,000(TPI) $ 5,746
3,375(TMO)
Bruce J. Taunt(5) 1995 $ 91,000 $ 28,000 4,000(TPI) $ 5,203
Vice President, 3,000(THN)
Finance and
Administration
(1) Options to purchase Common Stock of the Corporation awarded
to executive officers are followed by the designation "TPI".
In addition, 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 named executive
officers in the following Thermo Electron companies: Thermo
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Electron (designated in the table as TMO) and Thermo
Remediation (designated in the table as THN). The shares of
common stock of Thermo Electron and Thermo Remediation shown
in the table reflect a three-for-two split of each such
stock effected on May 24, 1995 and March 31, 1995,
respectively. Dr. Appleton has served as an officer of
Thermo Electron since 1975 and has been granted options to
purchase shares of the common stock of Thermo Electron and
certain of its subsidiaries other than the Corporation from
time to time by Thermo Electron or such other subsidiaries.
These options are not reported in this table as they were
granted as compensation for service to other Thermo Electron
companies in capacities other than in his capacity as the
president and chief executive officer of the Corporation.
(2) Represents the amount of matching contributions made on
behalf of the executive officers participating in Thermo
Electron's 401(k) plan.
(3) Dr. Appleton was appointed President and Chief Executive
Officer of the Corporation effective September 1, 1993. Dr.
Appleton is also a vice president of Thermo Electron.
Reported in the table under "Annual Compensation" are the
total amounts paid to Dr. Appleton for his service in all
capacities to Thermo Electron companies since September 1,
1993. The Human Resources Committee of the Board of
Directors of the Corporation reviews total annual cash
compensation to be paid to Dr. Appleton from all sources
within the Thermo Electron organization and approves the
allocation of a percentage of annual cash compensation
(salary and bonus) for the time he devotes to the affairs of
the Corporation. For fiscal 1995 and 1994, 85% and 23%,
respectively, of Dr. Appleton's annual compensation was
allocated to the Corporation. Bonuses paid to Dr. Appleton
reflect compensation decisions based on calendar year
performance, in accordance with Thermo Electron's
compensation practices for its officers.
(4) In fiscal 1994, the Corporation changed its compensation
practices to make compensation decisions based on fiscal
year performance rather than calendar year performance. As
a consequence, the bonus paid to Mr. Powell in fiscal 1994
related to a 15-month period from January 3, 1993 through
April 2, 1994.
(5) Mr. Taunt was appointed an executive officer of the
Corporation on November 1, 1994.
Stock Options Granted During Fiscal 1995
The following table sets forth information concerning
individual grants of stock options made during fiscal 1995 to the
Corporation's chief executive officer and the other named
executive officers . It has not been the Corporation's policy in
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the past to grant stock appreciation rights, and no such rights
were granted during fiscal 1995.
Dr. Appleton has served as a vice president of Thermo
Electron since 1975 and from time to time has been granted
options to purchase common stock of Thermo Electron and certain
of its subsidiaries other than the Corporation and Thermo
Remediation. These options are not reported in this table as
they were granted as compensation for service to other Thermo
Electron companies in capacities other than in his capacity as
the chief executive officer of the Corporation.
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Option Grants in Fiscal 1995
Percent Potential
of Realizable
Total Value at
Number of Options Exer- Assumed Annual
Securities Granted cise Expira Rates of Stock
Name Underlying to Price - Price
Options Employe Per tion Appreciation
Granted (1) es in Share Date for Option
Fiscal Term
Year 5% 10%
John P. 30,000(TPI) 4.6% $ 8.10 2/16/07 $193,393 $519,638
Appleton
Jeffrey L. 10,000(TPI) 1.5% $ 8.10 2/16/07 $ 64,464 $173,213
Powell 15,000(THN) 16.5% $11.43 2/16/07 $136,450 $366,634
150(TMO) 0.01%(2) $26.83 7/19/01 $ 1,638 $ 3,818
15,000(TMO)(3) 1.4% (2) $30.07 11/28/06 $358,971 $964,538
Bruce J. 4,000(TPI) 0.6% $ 8.10 2/16/07 $ 25,786 $ 69,285
Taunt 3,000(THN) 3.3% $11.43 2/16/07 $ 27,290 $ 73,327
(1) In addition to the grant of options to purchase Common Stock
of the Corporation (designated in the table as TPI), options
have been granted during fiscal 1995 to the named executive
officers to purchase the common stock of Thermo Electron
(designated in the table as TMO) and Thermo Remediation
(designated in the table as THN). All of the options
granted during the fiscal year are immediately exercisable
at the date of grant. 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 another Thermo
Electron company. The granting corporation may exercise its
repurchase rights within six months after the termination of
the optionee's employment. The repurchase rights 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
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Corporation or another Thermo Electron company. 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. The
shares of common stock of Thermo Electron and Thermo
Remediation shown in the table reflect a three-for-two split
of each such stock effected on May 24, 1995 and March 31,
1995, respectively.
(2) These options were granted under stock option plans
maintained by Thermo Electron and accordingly are reported
as a percentage of total options granted to employees of
Thermo Electron and its subsidiaries.
(3) Options to purchase 15,000 shares of the common stock of
Thermo Electron granted to Mr. Powell 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.
Stock Options Exercised During Fiscal 1995
The following table reports certain information regarding
stock option exercises during fiscal 1995 and outstanding stock
options held at the end of fiscal 1995 by the Corporation's chief
executive officer and the other named executive officers. No
stock appreciation rights were exercised or were outstanding
during fiscal 1995.
Aggregated Option Exercises In Fiscal 1995 And
Fiscal 1995 Year-End Option Values
Number of Value Of
Unexrcsd Unexrcsd
Options In-the
Shares at Fiscal Money
Acqrd Value Year-end Options
Name Company on Rlzd. (Exrcsbl/ (Exrcsbl/
Exrcs Unexrcsbl) Unexrcsbl)
(1)
John P. Thermo Process -- -- 215,000/0(3) $ 19,500/0
Appleton (2)
Thermo Rmdtion -- -- 63,000/0 $387,450/0
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Jeffrey L. Thermo Process 2,160 $13,651 73,800/0(4) $126,328/0
Powell
Thermo Rmdtion -- $ -- 111,000/0 $615,150/0
Thermo Electron 3,375 $63,686 25,650/0(5)$197,808/0
Thermo Fbrtk -- -- 2,000/0 $ 21,000/0
Bruce J. Thermo Process -- -- 42,000/0(4) $ 49,960/0
Taunt
Thermo Rmdtion -- -- 18,000/0 $ 97,200/0
Thermo Electron -- -- 1,875/0 $ 21,747/0
(1) All of the options reported outstanding at the end of the
fiscal year were immediately exercisable at the date of
grant. However, 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. 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.
(2) Dr. Appleton has served as a vice president of Thermo
Electron since 1975 and holds unexercised options to
purchase common stock of Thermo Electron and certain of its
subsidiaries other than the Corporation and Thermo
Remediation. These options are not reported here as they
were granted as compensation for service to other Thermo
Electron companies in capacities other than in his capacity
as the chief executive officer of the Corporation.
(3) In addition to the terms described in footnote (1) above,
shares acquired upon exercise of these options are
restricted from resale until Dr. Appleton's retirement.
(4) Of these options awarded to Mr. Powell and Mr. Taunt,
options to purchase 15,000 shares each are subject to the
following terms in addition to those described in footnote
(1): In the event of the optionee's voluntary resignation
or discharge for cause prior to February 8, 1998, all of the
shares acquired upon exercise of these options are subject
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to repurchase by the Corporation at the exercise price. In
addition, all shares acquired upon the exercise of these
options are subject to restrictions on resale until February
8, 1998.
(5) Options to purchase 15,000 shares of the common stock of
Thermo Electron granted to Mr. Powell 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.
Severance And Other Agreements
Thermo Electron has entered into severance agreements with
several key employees, including Dr. Appleton. 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 one of its majority-owned subsidiaries is terminated,
for whatever reason, within one year thereafter. For purposes of
the agreements, 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. The benefit under these agreements is stated as an
initial percentage which was established by the Board of
Directors of Thermo Electron and was generally based upon the
employee's age and length of service with Thermo Electron at the
time of severance. Benefits are to be paid over a five-year
period. The benefit to be paid in the first year is determined
by applying this percentage to the employee's highest annual
total remuneration in any 12-month period during the preceding
three years. This benefit is reduced by 10% in each of the
succeeding four years in which benefits are paid. The initial
percentage to be so applied to Dr. Appleton is 40.1%. Assuming
severance benefits would have been payable under such agreements
as of July 1, 1995, Dr. Appleton would have received
approximately $100,000 in the first year thereof from Thermo
Electron.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation
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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.
Principles of internal equity are also central to the
Committee's compensation policies. Compensation considered for
the Corporation's officers, whether cash or stock-based
incentives, is also evaluated by comparing it to compensation of
other executives within the Thermo Electron organization with
comparable levels of responsibility for comparably sized business
units.
The process for determining each of these elements for the
Corporation's executive officers is outlined below.
Base Salary
Base salaries are intended to approximate the mid-point of
competitive salaries for similar organizations of comparable size
and complexity to the Corporation. Executive salaries are
adjusted gradually over time and only as necessary to meet this
objective. Increases in base salary may be moderated by other
considerations, such as geographic or regional market data,
industry trends or internal fairness within the Corporation and
Thermo Electron. It is the Committee's intention that over time
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the base salaries for the Chief Executive Officer and its other
named executive officer will approach the mid-point of
competitive data. The salary increases in fiscal 1995 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 fiscal 1995 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
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aligns management's interests to the interests of all the
Stockholders. The emphasis on stock options also results in
management's compensation being closely linked to stock
performance. In addition, because they are subject to vesting
periods of varying durations and to forfeiture if the employee
leaves the Corporation prematurely, stock options are an
incentive for key employees to remain with the Corporation
long-term. The Committee believes stock option awards in its
subsidiary, Thermo Remediation and its 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
determining awards from time to time, 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 . The option awards made with respect
to the common stock of the Corporation's parent, Thermo Electron,
and its subsidiary, Thermo Remediation, were determined by the
human resources committee of the board of directors of each such
company using a similar analysis.
Policy on Deductibility of Compensation
The Committee has also considered the application of Section
162(m) of the Internal Revenue Code to the Corporation
compensation practices. Section 162(m) limits the tax deduction
available to public companies for annual compensation paid to
senior executive 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).
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Ceo Compensation
Cash compensation for Dr. Appleton 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. Each committee evaluates Dr. Appleton's
performance and proposed compensation using a process similar to
th at used for the other executive officers of the Corporation.
At the Thermo Electron level, Dr. Appleton 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. The Corporation's Committee then reviews
the analysis and determinations of the Thermo Electron committee,
makes an independent assessment of Dr. Appleton'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 Dr. Appleton's
compensation to be paid by the Corporation.
In December 1994, the Committee conducted its review of Dr.
Appleton's proposed salary for calendar 1995 and bonus for
calendar 1995 performance. The Committee concurred in the
recommendations made by the Thermo Electron committee and agreed
to an allocation of 70% of Dr. Appleton's total cash compensation
for calendar year 1994 to the Corporation, based on his relative
responsibilities at the Corporation (including management of the
former Thermo Terra Tech joint venture - see "Relationship With
Affiliates") and Thermo Electron. Because Dr. Appleton's bonus
for calendar 1994 performance is paid in calendar 1995, 70% of
such bonus has been allocated to the Corporation. The Committee
believes that the total cash compensation for Dr. Appleton for
calendar 1994 tends to be below the competitive norm for a
similarly sized company with performance comparable to that of
the Corporation, and prefers that a significant portion of total
compensation be awarded in the form of long-term incentive
compensation, such as stock options.
Mr. Donald E. Noble (Chairman)
Dr. Warren M. Rohsenow
Mr. Polyvios C. Vintiadis
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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 a peer group of companies
consisting of Ecology & Environmental Inc., Groundwater
Technology Inc., International Technology Inc., Safety Kleen
Corp. and Roy F. Weston Inc.
Comparison of 1990-1995 Total Return Among Thermo Process Systems
Inc.,
the American Stock Exchange Market Value Index
and the Corporation's Peer Group
[graph appears here]
3/31/90 3/28/91 3/27/92 4/1/93 3/31/94 3/31/95
TPS 100 68 51 57 53 54
AMEX 100 99 109 117 122 128
PEER GROUP 100
The total return for the Corporation's Common Stock (TPS),
the American Stock Exchange Market Value Index (AMEX) and the
Corporation's Peer Group (PEER GROUP) assumes the reinvestment of
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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 "TPS".
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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, the Corporation has created Thermo Remediation as a
majority-owned publicly held subsidiary. F rom 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
establishing internal policies and procedures. The cost of the
services provided by Thermo Electron to the Thermo Subsidiaries
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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.
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, certain employee
benefit administration, tax advice and preparation of tax
returns, centralized cash management and certain 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. During
fiscal 1995, Thermo Electron assessed the Corporation $ 1,653,000
in fees under the Services Agreement. Management believes that
the charges under the Services Agreement are reasonable and that
the terms of the Services Agreement are 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
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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 April 1, 1995, $30,802,000 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.
The Corporation leases or subleases two office and
manufacturing facilities from Thermo Electron. The total rental
payments made to Thermo Electron during fiscal year 1995 under
these agreements was $537,000.
The Corporation and Thermo Electron entered into a
development agreement under which Thermo Electron agreed to fund
up to $4,000,000 of the direct and indirect costs of the
Corporation's development of soil-remediation centers. In
exchange for this funding, the Corporation granted Thermo
Electron a royalty equal to approximately 3% of net revenues from
soil-remediation services performed at the centers developed
under this agreement. The royalty payments may cease if the
amounts paid by the Corporation yield a certain internal rate of
return to Thermo Electron on the funds advanced to the
Corporation under this agreement. The Corporation paid Thermo
Electron royalties of $432,000 in fiscal 1995.
In February 1995, the Corporation acquired all of the
outstanding capital stock of Engineering, Technology and
Knowledge Corporation and its subsidiary, Elson T. Killam
Associate Inc. ("Killam") from Nord Est S.A., a French industrial
company, for $12,566,000 in cash and a zero coupon promissory
note with a then-present value of $22,300,000. In a related
transaction, certain members of Killam's senior management
exchanged options to purchase Killam's common stock for options
to purchase the Corporation's Common Stock and canceled other
options in exchange for cash payments in the aggregate amount of
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$1,922,000. The Corporation borrowed the cash portion of the
purchase price, including cash used to collateralize the
promissory note delivered to Nord Est S.A., from Thermo Electron
through the issuance of a $38,000,000 promissory note that bears
interest at the Commercial Paper Composite Rate as announced from
time to time by Merrill Lynch Capital Markets plus 25 basis
points and is due June 1, 1997. As of April 1, 1995, the
Corporation owed Thermo Electron an aggregate of $56,116,000.
Effective April 2, 1995, the Corporation agreed to dissolve
the Thermo Terra Tech joint venture with Thermo Instrument
Systems Inc. ("THI"), another subsidiary of Thermo Electron, and
to purchase the businesses originally contributed to the joint
venture by THI and formerly operated by the joint venture from
THI for $34,267,000 in cash. The purchase price was based on the
Corporation's determination (as approved by its Board of
Directors) of the fair market value of the businesses, and the
terms of the agreement for the purchase were determined by arms'
length negotiation among the parties. As a result of this
transaction, the Corporation increased its ownership in the
businesses operated by the joint venture from 51% to 100%. The
Corporation borrowed the purchase price from Thermo Electron
through the issuance of a $35,000,000 promissory note that bears
interest at the Commercial Paper Composite Rate as announced from
time to time by Merrill Lynch Capital Markets plus 25 basis
points and is due May 13, 1997.
Thermo Electron owned approximately 80.85% of the
Corporation's outstanding Common Stock on July 1, 1995.
- PROPOSAL 2 -
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE CORPORATION
The Corporation's Board of Directors has proposed an
amendment to the Corporation's Certificate of Incorporation to
change the name of the Corporation to "Thermo Terra Tech Inc."
and has recommended that the Stockholders approve the amendment.
The Board of Directors has recommended this change in the
Corporation's name to more accurately reflect the Corporation's
principal business. If the name change is approved by the
Stockholders, the Corporation's ticker symbol on the American
Stock Exchange will be changed to "TTT".
Amendment to the Certificate of Incorporation
It is proposed that the name change be effected by amending
Article First of the Corporation's Certificate of Incorporation
to read as follows:
"The name by which the corporation shall be known is Thermo
Terra Tech Inc."
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Recommendation
The Board of Directors believes that the name change to
Thermo Terra Tech Inc. is in the best interests of the
Corporation and its Stockholders and recommends that the
Stockholders vote FOR adoption of the proposed name change. If
not otherwise specified, proxies will be voted FOR approval of
this proposal. Thermo Electron, which beneficially owned
approximately ___% of the outstanding Common Stock as of
September 5, 1995, has sufficient votes to approve the proposed
name change and has indicated its intention to vote for the
proposal.
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- PROPOSAL 3 -
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 of the Corporation 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 created from time to time 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 reduce the size of the initial grant
of options to purchase shares of Common Stock from 40,000 to
16,000 shares for new Directors appointed in 1995, to 8,000
shares for new Directors appointed in 1996, and eliminate
entirely the initial grant in 1997. In addition, the formula, as
amended, would eliminate the meeting attendance grants previously
awarded quarterly to outside Directors under the Directors Plan,
and 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. In connection with the
revision of the option program for Directors, it was also agreed
to discontinue the quarterly determination and award of stock
options based on attendance at meetings of the Board of Directors
and its committees, effective as of January 1, 1995. 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 potential future spinout companies of
the Corporation . The Board of Directors believes that the award
of stock options to key personnel and Directors in its spinout
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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 its key
employees and executives of the Corporation, it is recommended
that provision be made for the award of stock options to outside
Directors in potential future 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
September 5, 1995, was $_____ per share.
Initial Grant of Corporation Options
New Directors presently are automatically awarded options to
purchase 40,000 shares of Common Stock upon their appointment or
election. The Amendments would reduce this amount to 16,000
shares for new Directors appointed in 1995, and further reduce
the size of the grant to new Directors by 8,000 shares each year
thereafter until 1997, when the initial grant would be eliminated
entirely. 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 fifth anniversary of
the grant date (rather than the seventh anniversary as is
currently the case). 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.
The restriction and repurchase rights shall lapse in equal
installments of 8,000 shares starting with the first anniversary
o f the gran t 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
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.
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
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of the Board of Directors or its committees. The annual award of
options to purchase 1,000 shares of Common Stock to each eligible
Director as of the close of business on the date of the
Corporation's Annual Meeting of Stockholders would be retained,
although the terms of the award would be modified . 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 (reduced
from the present seven year term). 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 date of 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 Remediation shall be deemed to
be a spinout subsidiary and stock option grants will be made in
accordance with the Directors 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
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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 Amendment follows,
but it is qualified in its entirety by reference to the full text
set forth in Appendix A.
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 intended to be non-statutory stock options.
If a Director dies or otherwise ceases to serve as a Director of
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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 has been
reserved for issuance under the Directors Plan is 75,000 shares.
If the Amendments to the Directors Plan are approved by the
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Stockholders at this Meeting, an additional 25,000 shares of the
common stock of each Spinout Subsidiary created from time to time
will also be reserved 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
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 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
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groups are not set forth in the table as such persons and groups
are not eligible to receive options under the Directors Plan.
Name and Position Dollar Value Number of Spinout
($) Shares Subsidiary
Non-Executive Director (1) 4,500 Thermo
Group (3 persons) Remediation
__________________
(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.
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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 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 purchase Common Stock of the Corporation 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 created from time to
time. If not otherwise specified, Proxies will be voted FOR
approval of this proposal. Thermo Electron, which beneficially
owned approximately __% of the outstanding Common Stock as of
September 5 , 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 1996. Arthur Andersen
LLP has acted as independent public accountants for the
Corporation since its inception in 1986. Representatives of that
firm are expected to be present at the Meeting, will have the
opportunity to make a statement if they desire to do so and will
be available to respond to questions. The Board of Directors has
established an Audit Committee, presently consisting of two
outside Directors, the purpose of which is to review the scope
and results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters
that will be presented for action at the Meeting. Should any such
matters be presented, the Proxies grant power to the Proxy
holders to vote shares represented by the Proxies in the
discretion of such Proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the
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 April 16, 1996.
SOLICITATION STATEMENT
The cost of this solicitation of Proxies will be borne by
the Corporation. Solicitation will be made primarily by mail, but
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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.
Livonia, Michigan
September ___, 1995
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APPENDIX A
THERMO PROCESS SYSTEMS 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 Thermo Process Systems Inc. (the "Company") is to encourage
ownership in the Company by non-management 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.
4. Stock Subject to the Plan
The maximum number of shares which may be issued under the
Plan shall be seventy-five thousand (75,000) 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
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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 shall be granted an option to
purchase 1,000 shares of the Common Stock of the Company at the
close of business on the date of such Annual meeting. Options
granted under this Subsection A 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 if an Optionee
ceases to serve as a director of the Company, Thermo Electron
Corporation or any subsidiary of Thermo Electron Corporation,
prior to the first anniversary of the grant date, for any reason
other than death or disability.
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. For purposes of
this Section 5(B), options to purchase common stock of Thermo
Remediation Inc., a majority owned subsidiary of the Corporation,
shall first be granted as of the close of business on the date of
the Company's 1995 Annual Meeting of Stockholders.
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
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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
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the common stock is principally traded for 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 the Company's Common Stock (the
"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
Director 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 Director a certificate for the number of shares
then being purchased, registered in the name of the Director 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 Board of Directors or Committee will have the right to
require that the person exercising an option under the Plan remit
to the Company an amount sufficient to satisfy applicable
federal, state and local tax withholding requirements, or make
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other arrangements satisfactory to the Company with regard to
such requirements, if any, prior to the delivery of any Common
Stock. If and to the extent that such withholding is required,
the Board of Directors or Committee may permit the person
exercising an option under the Plan to elect at such time and in
such manner as the Board of Directors or Committee may provide to
have the Company hold back from the shares to be delivered, or to
deliver to the Company, Common Stock having a value calculated to
satisfy the withholding requirement.
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 ("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.
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.
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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 shares
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.
13. Change in Control
A. Impact of Event
In the event of a "Change in Control" as defined in Section
13(B), 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.
A-6
PAGE
<PAGE>
(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.
B. Definition of "Change in Control"
"Change in Control" means any one of the following events:
(i) when, any Person 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 Corporation
("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
A-7
PAGE
<PAGE>
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 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 on the date 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 State of
Delaware.
<PAGE>
FORM OF PROXY
THERMO PROCESS SYSTEMS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned hereby appoints John P. Appleton, John N. Hatsopoulos
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 Thermo Process
Systems Inc., a Delaware corporation (the "Company"), to be held
Tuesday, October 24, 1995, at 5:00 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 September 5, 1995, with all of
the powers the undersigned would possess if personally present at such
meeting:
(Continued and to be signed on reverse side.)
Please mark your
[ x ] votes as in this
example.
The shares represented by this Proxy will be voted "FOR" the proposal set
forth below if no instruction to the contrary is indicated or if no
instruction is given.
FOR WITHHELD
1. Election of [ ] [ ]
directors of
the Company
(See reverse)
FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any):
--------------------------------------------------------------------------
Nominees: John P. Appleton
George N. Hatsopoulos
John N. Hatsopoulos
Donald E. Noble
William A. Rainville
Polyvios C. Vintiadis
FOR AGAINST ABSTAIN
2. Approve amendment to the Company's [ ] [ ] [ ]
Certificate of Incorporation to change the
name of the Company to "Thermo Terra
Tech Inc."
FOR AGAINST ABSTAIN
3. Approve amendment to Directors Stock Option [ ] [ ] [ ]
Plan to change the formula for the award of
stock options to outside Directors.
4. In their discretion on such other matters as may properly come before
the Meeting.
Copies of the Notice of Meeting and of the Proxy Statement have been
received by the undersigned.
PLEASE PROMPTLY DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S)_____________________________________ DATE_________________
(Note: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEE, ETC. SHOULD SO INDICATE WHEN SIGNING,
GIVING FULL TITLE AS SUCH. IF SIGNER IS A CORPORATION, EXECUTE
IN FULL CORPORATE NAME BY AUTHORIZED OFFICER. IF MORE PERSONS,
