THERMO CARDIOSYSTEMS INC, PRE 14A, 1996-04-09

THERMO CARDIOSYSTEMS INC
PRE 14A, 1996-04-09
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS

Previous: PIONEER FINANCE CORP, T-3, 1996-04-09

Next: AIRFUND INTERNATIONAL LIMITED PARTNERSHIP, 10-K/A, 1996-04-09

<PAGE>

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]
----------

Check the appropriate box:

[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only
(as Permitted by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement

[_] Definitive Additional Materials

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

Thermo Cardiosystems Inc.
-------------------------
(Name of Registrant as Specified in Charter)

__________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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

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

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:

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

[_] Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:

Notes:
<PAGE>

THERMO CARDIOSYSTEMS INC. LOGO

470 Wildwood Street
P.O. Box 2697
Woburn, Massachusetts 01888-2697

April ___, 1996

Dear Stockholder:

The enclosed Notice calls the 1996 Annual Meeting of the Stockholders of
Thermo Cardiosystems Inc. I respectfully request all Stockholders attend this
meeting, if possible.

Our Annual Report for the year ended December 31, 1995, is enclosed. I hope
you will read it carefully. Feel free to forward any questions you may have if
you are unable to be present at the Meeting.

Enclosed with this letter is a Proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the Meeting.
Whether or not you are able to attend the Meeting, I urge you to complete your
Proxy and return it to our transfer agent, American Stock Transfer and Trust
Company, in the enclosed addressed, postage-paid envelope, as a quorum of the
Stockholders must be present at the Meeting, either in person or by Proxy.

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

Yours very truly,

Victor L. Poirier
President and Chief Executive Officer
<PAGE>

THERMO CARDIOSYSTEMS INC. LOGO

470 Wildwood Street
P.O. Box 2697
Woburn, Massachusetts 01888-2697

April ___, 1996

To the Holders of the Common Stock of
THERMO CARDIOSYSTEMS INC.

NOTICE OF ANNUAL MEETING

The 1996 Annual Meeting of the Stockholders of Thermo Cardiosystems Inc.
(the "Corporation") will be held on Monday, May 20, 1996, at 11:00 a.m., at the
Turnberry Isle Resort & Club, 19999 West Country Club Drive, Aventura, Florida.
The purposes of the Meeting are to consider and take action upon the following
matters:

1. Election of eight Directors.

2. A proposal recommended by the Board of Directors to amend the
Corporation's Articles of Organization to increase the Corporation's
authorized common stock, $.10 par value per share, from 50 million
shares to 100 million shares.

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

The transfer books of the Corporation will not be closed prior to the
Meeting, but, pursuant to appropriate action by the Board of Directors, the
record date for the determination of the Stockholders entitled to notice of and
vote at the Meeting is April 1, 1996.

The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by Proxy at the
Meeting in order to constitute a quorum for the transaction of business. It is
important that your shares be represented at the Meeting regardless of the
number of shares you may hold. Whether or not you are able to be present in
person, please sign and return promptly the enclosed Proxy in the accompanying
envelope, which requires no postage if mailed in the United States.

This Notice, the Proxy and Proxy Statement enclosed herewith are sent to
you by order of the Board of Directors.

Sandra L. Lambert
Clerk
<PAGE>

PROXY STATEMENT

The enclosed Proxy is solicited by the Board of Directors of Thermo
Cardiosystems Inc. (the "Corporation") for use at the 1996 Annual Meeting of the
Stockholders (the "Meeting") to be held on Monday, May 20, 1996, at 11:00 a.m.
at the Turnberry Isle Resort & Club, 19999 West Country Club Drive, Aventura,
Florida, and any adjournment thereof. The mailing address of the executive
office of the Corporation is 470 Wildwood Street, P.O. Box 2697, Woburn,
Massachusetts 01888-2697. This Proxy Statement and the enclosed Proxy were first
furnished to Stockholders of the Corporation on or about April ___, 1996.

VOTING PROCEDURES

The Board of Directors intends to present to the Meeting the election of
eight Directors, constituting the entire Board of Directorss, as well as one
other matter: a proposal to amend the Corporation's Articles of Organization to
increase the Corporation's authorized common stock, $.10 par value ("Common
Stock"), from 50 million shares to 100 million shares. The representation in
person or by proxy of a majority of the outstanding shares of common stock of
the Corporation, $.10 par value ("Common Stock"), entitled to vote at the
Meeting is necessary to provide a quorum for the transaction of business at the
Meeting. Shares can only be voted if the Stockholder is present in person or is
represented by returning a properly signed Proxy. Each Stockholder's vote is
very important. Whether or not you plan to attend the Meeting in person, please
sign and promptly return the enclosed Proxy card, which requires no postage if
mailed in the United States. All signed and returned proxies will be counted
towards establishing a quorum for the Meeting, regardless of how the shares are
voted.

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

In order to be elected a Director, a nominee must receive the affirmative
vote of a majority of the shares of Common Stock present and entitled to vote on
the election. For the proposal to increase the authorized Common Stock, the
affirmative vote of a majority of the Corporation's outstanding Common Stock
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. With respect to the election of
directors, 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.
Broker "non-votes" on the proposal to increase the authorized Common Stock will
have the effect of a vote against the 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.

A Stockholder who returns a Proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the Secretary
of the Corporation received prior to the Meeting, by executing and returning a
later-dated Proxy or by voting by ballot at the Meeting.

The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of April 1, 1996, consisted of
24,083,213 shares of Common Stock. Only Stockholders of record at the close of
business on April 1, 1996, are entitled to vote at the Meeting. Each share is
entitled to one vote.
<PAGE>

- PROPOSAL 1 -

ELECTION OF DIRECTORS

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

NOMINEES FOR DIRECTORS

Set forth below are the names of the persons nominated as Directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as Directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent corporation, Thermedics Inc.
("Thermedics") and Thermedics' parent corporation, Thermo Electron Corporation
("Thermo Electron"), is reported under the caption "Stock Ownership." All of the
nominees are currently Directors of the Corporation.

- --------------------------------------------------------------------------------
WALTER J. BORNHORST Dr. Bornhorst, 55, has been a Director of the
Corporation since 1988. Since 1994, Dr. Bornhorst
has been the Chairman of Z Corporation, a
developer of computer peripheral equipment. From
1985 to 1992, Dr. Bornhorst was Senior Vice
President of Thermo Electron. He is also a
director of Thermo Fibertek Inc.
- --------------------------------------------------------------------------------
RICHARD W. K. CHAPMAN Dr. Chapman, 51, has been appointed a Director of
the Corporation since 1995. He has been Chairman
of the Board of Directors of Thermo BioAnalysis
Corporation since its inception in February 1995,
President and Chief Executive Officer of
ThermoQuest Corporation, a subsidiary of Thermo
Instrument Systems Inc., since its inception in
1995, and President of Finnigan Corporation, a
subsidiary of ThermoQuest Corporation since 1992.
In addition, he has been a Vice President of
Thermo Instrument Systems Inc. since 1994. Dr.
Chapman is a director of ThermoQuest Corporation.
- --------------------------------------------------------------------------------
ELIAS P. GYFTOPOULOS Dr. Gyftopoulos, 68, has been a Director of the
Corporation since September 1994. He has been the
Ford Professor of Mechanical Engineering and of
Nuclear Engineering at the Massachusetts Institute
of Technology for more than five years. Dr.
Gyftopoulos is also a Director of Thermo Electron,
Thermo Instrument Systems Inc., ThermoLase
Corporation, Thermo Remediation Inc.,
ThermoSpectra Corporation and Thermo Voltek Corp.
- --------------------------------------------------------------------------------
ROBERT C. HOWARD Mr. Howard, 65, has been a Director of the
Corporation since 1988. Mr. Howard has been an
Executive Vice President of Thermo Electron since
1986. He is also a Director of Thermedics, Thermo
Instruments Systems Inc., ThermoLase Corporation,
Thermo Power Corporation and ThermoTrex
Corporation.
- --------------------------------------------------------------------------------

2
<PAGE>

- --------------------------------------------------------------------------------
LEONARD LASTER Dr. Laster, 67, has been a Director of the
Corporation since 1988. Dr. Laster has been the
Distinguished University Professor of Medicine &
Health Policy and Chancellor Emeritus of the
University of Massachusetts Medical Center since
1990. From 1987 to 1990, Dr. Laster was Chancellor
of, and a Professor at, the University of
Massachusetts Medical Center. Since 1992, Dr.
Laster has also been a consultant to the
Biomedical Research Foundation of Northwest
Louisiana. From 1978 to 1987 he was President of
Oregon Health Sciences University.
- --------------------------------------------------------------------------------
VICTOR L. POIRIER Mr. Poirier, 54, has been a Director of the
Corporation since 1991. Mr. Poirier has been
President of the Corporation since 1990 and Chief
Executive Officer of the Corporation since 1991.
Mr. Poirier was Executive Vice President and Chief
Operating Officer of the Corporation from August
1988 until 1990. Mr. Poirier has been a senior
vice president of Thermedics since 1985.
- --------------------------------------------------------------------------------
JOHN W. WOOD JR. Mr. Wood, 52, has been a Director of the
Corporation since 1988. Mr. Wood has been a senior
vice president of Thermo Electron since December
1995 and, before his promotion was a vice
president of Thermo Electron since September 1994
and President and Chief Executive Officer of
Thermedics since 1984. Mr. Wood is also a director
of Thermedics, Thermo Sentron Inc. and Thermo
Voltek Corp.
- --------------------------------------------------------------------------------
NICHOLAS T. ZERVAS Dr. Zervas, 67, has been a Director of the
Corporation since 1989. Dr. Zervas has been chief
of Neurological Service, Massachusetts General
Hospital, since 1977. Dr. Zervas is also a
director of Thermedics, ThermoLase Corporation and
ThermoTrex Corporation.
- --------------------------------------------------------------------------------

COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS

The Board of Directors has established an Audit Committee and a Human
Resources Committee, each consisting solely of outside Directors. The present
members of the Audit Committee are Dr. Laster (Chairman) and Dr. Zervas. The
Audit Committee reviews the scope of the audit with the Corporation's
independent public accountants and meets with them for the purpose of reviewing
the results of the audit subsequent to its completion. The present members of
the Human Resources Committee are Dr. Zervas (Chairman), Dr. Gyftopoulos and Dr.
Laster. The Human Resources Committee reviews the performance of senior members
of management, recommends executive compensation and administers the
Corporation's stock option and other stock-based compensation plans. The
Corporation does not have a nominating committee of the Board of Directors. The
Board of Directors met four 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 fiscal 1995.

COMPENSATION OF DIRECTORS

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

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

3
<PAGE>

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
Thermedics or 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
Thermedics or Thermo Electron to constitute a majority of the Board of Directors
at any time within two years following any such event. Amounts deferred pursuant
to the Deferred Compensation Plan are valued at the end of each quarter as units
of the Corporation's Common Stock. When payable, amounts deferred may be
disbursed solely in shares of Common Stock accumulated under the Deferred
Compensation Plan. A total of 50,000 shares of Common Stock have been reserved
for issuance under the Deferred Compensation Plan. As of January 1, 1996,
deferred units equal to 5,560.61 shares of Common Stock were accumulated under
the Deferred Compensation Plan.

In 1991, the Corporation adopted a directors stock option plan (the
"Directors Plan"), which was amended in 1995. The Directors Plan provides for
the grant of stock options to purchase shares of Common Stock of the Corporation
to outside Directors as additional compensation for their service as Directors.
Under the Directors Plan, outside Directors are automatically granted options to
purchase 1,000 shares of the Common Stock annually at the close of business on
the date of each Annual Meeting of the Stockholders of the Corporation. Options
evidencing annual grants may be exercised at any time from and after the six-
month anniversary of the grant date of the option and prior to the expiration of
the option on the third anniversary of the grant date. Shares acquired upon
exercise of the options are subject to repurchase by the Corporation at the
exercise price if the recipient ceases to serve as a Director of the Corporation
or any other Thermo Electron company prior to the first anniversary of the grant
date.

The exercise price for options granted under the Directors Plan is the
average of the closing prices of the common stock as reported on the American
Stock Exchange (or other principal market on which the common stock is then
traded) for the five trading days preceding and including the date of grant, or,
if the shares are not then traded, at the last price per share paid by third
parties in an arms-length transaction prior to the option grant. Options to
purchase _______ shares of Common Stock were reserved and available for grant
under the Directors Plan as of January 1, 1996.

STOCK OWNERSHIP

The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermedics, the Corporation's parent company, and of
Thermo Electron, Thermedics' parent company, as of January 1, 1996, with respect
to (i) each person who was known by the Corporation to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each Director, (iii)
each executive officer named in the summary compensation table under the heading
"Executive Compensation" and (iv) all Directors and current executive officers
as a group.

4
<PAGE>

THERMO THERMO
CARDIOSYSTEMS THERMEDICS ELECTRON
NAME (1) INC. (2) INC. (3) CORPORATION (4)
-------- ------------- ---------- ---------------
<S> <C> <C> <C>
Thermedics Inc. (5).................... 12,525,110 N/A N/A
Walter J. Bornhorst.................... 12,600 0 9,603
Richard W. K. Chapman.................. 0 0 54,321
Kurt A. Dasse.......................... 35,455 12,064 10,589
Elias P. Gyftopoulos................... 9,000 4,500 46,380
Robert C. Howard....................... 12,500 11,587 134,593
Leonard Laster......................... 25,555 0 0
Victor L. Poirier...................... 105,779 89,337 33,227
Betty A. Silverstein-Russell........... 86,174 13,455 9,650
John W. Wood, Jr....................... 44,699 191,088 154,674
Nicholas T. Zervas..................... 30,505 24,843 0
All Directors and current executive....
officers as a group (12 persons).. 406,155 443,364 935,111
</TABLE>
- ------
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children and all share ownership includes sole voting
and investment power.

(2) Shares of the common stock beneficially owned by Dr. Bornhorst, Dr. Dasse,
Dr. Gyftopoulos, Dr. Laster, Mr. Poirier, Ms. Silverstein-Russell, Mr.
Wood, Dr. Zervas and all Directors and executive officers as a group
include 12,500, 28,300, 9,000, 23,900, 77,900, 78,150, 39,483, 7,800 and
319,033 shares, respectively, that such person or group has the right to
acquire within 60 days of January 1, 1996 through the exercise of stock
options. Shares beneficially owned by Dr. Laster, Dr. Zervas and all
Directors and executive officers as a group include 1,155, 4,405 and 5,560
full shares, respectively, that had been allocated through January 1, 1996,
to their respective accounts maintained under the Corporation's Deferred
Compensation Plan for Directors. No Director or executive officer
beneficially owned more than 1% of the Common Stock outstanding as of
January 1, 1996; all Directors and executive officers as a group
beneficially owned 1.7% of the Common Stock outstanding as of such date.

(3) Shares of the common stock of Thermedics beneficially owned by Dr. Dasse,
Dr. Gyftopoulos, Mr. Howard, Mr. Poirier, Ms. Silverstein-Russell, Mr.
Wood, Dr. Zervas and all Directors and executive officers as a group
include 12,000, 4,500, 10,000, 45,000, 12,000, 120,100, 7,650 and 280,250
shares, respectively, that such person or group had the right to acquire
within 60 days after January 1, 1996, through the exercise of stock
options. Shares of the common stock of Thermedics beneficially owned by Dr.
Dasse, Mr. Howard, Mr. Poirier, Mr. Wood and all Directors and executive
officers as a group include 64, 1,587, 278, 1,218 and 5,655 shares,
respectively, allocated through January 1, 1996, to their respective
accounts maintained pursuant to Thermo Electron's employee stock ownership
plan (the "ESOP"). The trustees of the ESOP, who have investment power
over its assets, are Mr. John N. Hatsopoulos and Mr. Peter Pantazelos.
Shares beneficially owned by Dr. Zervas and all Directors and executive
officers as a group include 6,693 shares allocated through January 1, 1996,
to Dr. Zervas' account maintained pursuant to that corporation's Deferred
Compensation Plan for Directors. Shares beneficially owned by Mr. Wood
include 1,300 shares each held in two trusts of which Mr. Wood's spouse is
the trustee. No Director or executive officer beneficially owned more that
1% of the common stock of Thermedics outstanding as of January 1, 1996; all
Directors and executive officers as a group beneficially owned
approximately 1.3% of such common stock outstanding as of such date.

(4) The shares of the common stock of Thermo Electron shown in the table
reflect a three-for-two split of such stock effected in May 1995 effected
in the form of a 50% stock dividend. Shares of the common stock of

5
<PAGE>

Thermo Electron beneficially owned by Dr. Chapman, Dr. Dasse, Dr.
Gyftopoulos, Mr. Howard, Mr. Poirier, Ms. Silverstein-Russell, Mr. Wood and
all Directors and executive officers as a group include 53,423, 8,125,
5,250, 40,185, 29,700, 8,125, 133,998 and 6441,811 shares, respectively,
that such person or group has the right to acquire within 60 days of
January 1, 1996 through the exercise of stock options. Shares of the common
stock of Thermo Electron beneficially owned by Dr. Dasse, Mr. Howard, Mr.
Poirier, Mr. Wood and all Directors and executive officers as a group
include 48, 1,963, 337, 1,052 and 5,444 full shares, respectively,
allocated to accounts maintained pursuant to Thermo Electron's ESOP. The
trustees of the ESOP, who have investment power over its assets, are Mr.
John N. Hatsopoulos and Mr. Peter Pantazelos. No Director or executive
officer beneficially owned more than 1% of the common stock of Thermo
Electron outstanding as of January 1, 1996; all Directors and executive
officers as a group beneficially owned approximately 1.1% of the Thermo
Electron common stock outstanding as of such date.

(5) As of January 1, 1996, Thermedics beneficially owned 52% of the outstanding
Common Stock. Thermedics' address is 470 Wildwood Street, P.O. Box 2999,
Woburn, Massachusetts 01888-2999.

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 1995, except in the following instances. Dr.
Walter J. Bornhorst, a Director of the Corporation, reported the receipt in
September 1993 of a gift of 100 shares on an amendment to his Form 5 for 1995,
filed in April 1995. An obligation to sell 3,000 shares beneficially owned by
Thermo Electron pursuant to its directors stock option plan, which should have
been reported on its Form 4 for July 1994, was not reported until April 1996.

EXECUTIVE COMPENSATION

NOTE: All share amounts reported below have, in all cases, been adjusted as
applicable to reflect a three-for-two stock split effected in May 1995 with
respect to the common stock of Thermo Electron.

SUMMARY COMPENSATION TABLE

The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid to the Corporation's chief
executive officer and its two other most highly compensated executive officers
for the last three fiscal years. No other executive officer of the Corporation
met the definition of "highly compensated" within the meaning of the Securities
and Exchange Commission's executive compensation disclosure rules.

The Corporation is required to appoint certain executive officers and full-
time employees of Thermo Electron as executive officers of the Corporation, in
accordance with the Thermo Electron Corporate Charter. The compensation for
these executive officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's affairs is
provided to the Corporation under the Corporate Services Agreement between the
Corporation and Thermo Electron. Accordingly, the compensation for these
individuals is not reported in the following table.

6
<PAGE>

SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------------ ------------
SECURITIES UNDERLYING
NAME AND FISCAL OPTIONS (NO. OF SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AND COMPANY)(1) COMPENSATION(2)
------------------ ------ ------ ----- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
Victor L. Poirier 1995 $141,000 $113,000 3,700 (TCA) $6,750
President and Chief 10,500 (TMO)
Executive 5,000 (TLZ)
Officer 1994 $135,000 $ 66,000 15,450 (TMO) $6,322
500 (THS)
1993 $115,500 $ 55,000 50,000 (TCA) $6,745
15,000 (TMD)
1,500 (TMO)

- -------------------------------------------------------------------------------------------------------------------
Kurt A. Dasse 1995 $103,000 $ 51,500 2,300 (TCA) $5,198
Senior Vice President 7,000 (TMO)
1994 $ 97,000 $ 25,000 -- $4,459
1993 $ 94,000 $ 21,000 20,000 (TCA) $5,268
7,500 (TMD)
- -------------------------------------------------------------------------------------------------------------------
Betty A. 1995 $103,000 $ 51,000 2,400 (TCA) $5,197
Silverstein-Russell 7,000 (TMO)
Senior Vice President 1994 $ 97,000 $ 24,000 -- $4,473
1993 $ 94,000 $ 24,000 25,000 (TCA) $5,436
7,500 (TMD)

- -------------------------------------------------------------------------------------------------------------------

</TABLE>
(1) In addition to grants of options to purchase Common Stock of the
Corporation (designated in the table as TCA), 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 in the following Thermo Electron companies: Thermedics
(designated in the table as TMD), Thermo Electron (designated in the table
as TMO), ThermoLase Corporation (designated in the table as TLZ) and
ThermoSpectra Corporation (designated in the table as THS).

(2) Represents the amount of matching contributions made by the individual's
employer on behalf of executive officers participating in the Thermo
Electron 401(k) plan.

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 the past to grant stock appreciation rights, and no such
rights were granted during fiscal 1995.

7
<PAGE>

OPTION GRANTS IN FISCAL 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

PERCENT OF TOTAL POTENTIAL REALIZABLE VALUE

NUMBER OF SECURITIES OPTIONS GRANTED EXERCISE AT ASSUMED ANNUAL RATES OF

UNDERLYING OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION STOCK PRICE APPRECIATION

NAME GRANTED (1) FISCAL YEAR SHARE DATE FOR OPTION TERM
---- -------------------- ---------------- --------- ---------- --------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>

Victor L. Poirier 3,700 (TCA) 5.2% $26.10 3/20/02 $ 39,331 $ 91,612
500 (TMO) 0.06% (2) $37.27 5/23/98 $ 2,935 $ 6,170
10,000 (TMO) 1.2% (2) $45.40 9/22/07 $361,300 $970,800
5,000 (TLZ) 0.5% (2) $22.75 11/28/07 $ 90,550 $243,250
- ----------------------------------------------------------------------------------------------------------------------------------
Kurt A. Dasse 2,300 (TCA) 3.2% (2) $26.10 3/20/02 $ 24,449 $ 56,948
7,000 (TMO) 0.8% (2) $45.40 9/22/07 $252,910 $679,560
- ----------------------------------------------------------------------------------------------------------------------------------
Betty A. 2,400 (TCA) 3.4% (2) $26.10 3/20/02 $ 25,512 $ 59,242
Silverstein-Russell 7,000 (TMO) 0.8% (2) $45.40 9/22/07 $252,910 $679,560

- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>
(1) 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 such corporation or
any other Thermo Electron company. The granting corporation may exercise
its repurchase rights within six months after the termination of the
optionee's employment. For publicly traded companies, the repurchase rights
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. An option to purchase 500 shares of Thermo Electron common stock
granted to Mr. Poirier as a part of Thermo Electron's stock option program
has a three-year term, and the repurchase rights lapse in their entirety on
the second anniversary of the grant date. The granting corporation may
permit the holders of options to exercise options and to satisfy tax
withholding obligations by surrendering shares equal in fair market value
to the exercise price or withholding obligation.

(2) These options were granted under stock option plans maintained by Thermo
Electron or its subsidiaries other than the Corporation and accordingly are
reported as a percentage of total options granted to employees of those
companies.

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.

8
<PAGE>

AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FISCAL 1995 YEAR-END OPTION
VALUES
- --------------------------------------------------------------------------------

NO. OF UNEXERCISED VALUE OF
SHARES OPTIONS AT FISCAL UNEXERCISED
ACQUIRED ON VALUE YEAR-END (EXERCISABLE/ IN-THE-MONEY
NAME COMPANY EXERCISE REALIZED UNEXERCISABLE) (1) OPTIONS
---- ------- ----------- -------- ---------------------- ------------
<S> <C> <C> <C> <C> <C>
Victor L. Poirier Thermo Cardiosystems 36,759 $ 1,870849 77,900/0 $4,848,209/--
Thermedics -- -- 45,000/0 $ 883,950/--
Thermedics Detection -- -- 0/5,000 --/-- (3)
Thermo Ecotek -- -- 2,500/0 $ 26,875/--
Thermo Electron -- -- 29,700/0 (2) $ 524,935/--
Thermo Fibertek -- -- 3,000/0 $ 54,000/--
ThermoLase -- -- 5,000/0 $ 15,625/--
ThermoSpectra -- -- 500/0 $ 2,813/--
ThermoTrex 1,440 $ 46,872 360/0 $ 16,398/--
- ----------------------------------------------------------------------------------------------------------------------------------
Kurt A. Dasse Thermo Cardiosystems 51,700 $2,555,272 28,300/0 $1,744,745/--
Thermedics -- -- 12,000/0 $ 243,975/--
Thermo Electron -- -- 8,125/0 $ 83,539/--
Thermo Trex -- -- 900/0 $ 40,995/--
- ----------------------------------------------------------------------------------------------------------------------------------
Betty A. Thermo Cardiosystems 10,700 $ 252,306 78,150/0 $5,280,964/--
Silverstein-Russell Thermedics -- -- 12,000/0 $ 243,975/--
Thermo Electron -- -- 8,125/0 $ 83,530/--

- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable, except for Thermo Detection, which generally are
not exercisable until such company's stock is publicly traded. The shares
acquired upon exercise of the options reported in the table are subject to
repurchase by the granting corporation at the exercise price if the
optionee ceases to be employed by such corporation or any other Thermo
Electron company. The granting corporation may exercise its repurchase
rights within six months after the termination of the optionee's
employment. For companies whose shares are not publicly traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. For publicly traded companies, the repurchase rights generally
lapse ratably over a five- to ten-year period, depending on the option
term, which may vary from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another Thermo Electron
company. Certain options granted as a part of Thermo Electron's stock
option program have three-year terms, and the repurchase rights lapse in
their entirety on the second anniversary of the grant date.

(2) Options to purchase 15,000 shares of the common stock of Thermo Electron
granted to Mr. Poirier 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.

(3) No public market existed for the shares underlying these options as of
December 31, 1995. Accordingly, no value in excess of exercise price has
been attributed to these options.

SEVERANCE AGREEMENTS

In 1988, Thermo Electron entered into severance agreements with several of
its key employees, including key employees of the Corporation and other
majority-owned subsidiaries. These agreements provide severance benefits if
there is a change of control of Thermo Electron that is not approved by the
Board of Directors of Thermo Electron and the employee's employment with Thermo
Electron or the majority-owned subsidiary is terminated, for

9
<PAGE>

whatever reason, within one year thereafter. For purposes of the agreement a
change of control exists upon (i) the acquisition of 50% or more of the
outstanding common stock of Thermo Electron by any person without the prior
approval of the board of directors of Thermo Electron, (ii) the failure of the
board of directors of Thermo Electron, within two years after any contested
election of directors or tender or exchange offer not approved by the board of
directors, to be constituted of a majority of directors holding office prior to
such event or (iii) any other event that the board of directors of Thermo
Electron determines constitutes an effective change of control of Thermo
Electron. Each of the recipients of these agreements would receive a lump-sum
benefit at the time of a qualifying severance equal to the highest total cash
compensation paid to the employee by Thermo Electron or the majority-owned
subsidiary in any 12-month period during the three years preceding the severance
event. A qualifying severance exists (i) if the employment of the executive
officer is terminated for any reason within one year after a change in control
of Thermo Electron or (ii) a group of directors of Thermo Electron consisting of
directors of Thermo Electron on the date of the severance agreement or, if an
election contest or tender or exchange offer for Thermo Electron's common stock
has occurred, the directors of Thermo Electron immediately prior to such
election contest or tender or exchange offer, and any future directors who are
nominated or elected by such directors, determines that any other termination of
the executive officer's employment should be treated as a qualifying severance.
The benefits to be provided are limited so that the payments would not
constitute so-called "excess parachute payments" under applicable provisions of
the Internal Revenue Code of 1986. Assuming that severance benefits would have
been payable under these agreements as of January 1, 1996, Mr. Wood would have
received approximately $340,000.

COMMITTEE REPORT ON EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

All decisions on compensation for the Corporation's executive officers are
made by the Human Resources Committee of the Board of Directors (the
"Committee"). In reviewing and establishing total cash compensation and stock-
based compensation for executives, the Committee follows guidelines established
by the Human Resources Committee of the Board of Directors of its parent
corporation, Thermo Electron. The executive compensation program presently
consists of annual base salary ("salary"), short-term incentives in the form of
annual cash bonuses, and long-term incentives in the form of stock options.

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

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

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.

10
<PAGE>

BASE SALARY

Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the other named executive officers will approach the mid-
point of competitive data. The salary increases in 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 zero 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 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 measures of operating returns used in the Committee's determinations in
calendar 1995 measured return on net assets, growth in income and growth in
earnings per share, and the Committee's determinations also included 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. The relative weighting of these
achievements varies depending on the executive's role and responsibilities
within the organization.

The bonuses for named executive officers approved by the Committee with
respect to 1994 performance in each instance exceeded the median potential
bonus.

STOCK OPTION PROGRAM

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

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

In determining awards, the Committee considers the average annual value of
all options to purchase shares of the Corporation and other companies within the
Thermo Electron organization that vest in the next five years. (Values are
established using a modified Black-Scholes option pricing model.) As a
guideline, the Committee

11
<PAGE>

strives to maintain the aggregate amount of awards to purchase shares of Common
Stock 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.

In 1995, the Committee granted options to purchase Common Stock of the
Corporation to the chief executive officer and the other named executive
officers based on their holding of such stock and vested rights to acquire such
stock throughout the year, which the Committee considers each year. Other
discretionary 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 (which includes a subjective
assessment by the Committee of the value of the executive's future potential
within the organization), as well as the value of previously awarded options as
described above. The option awards made with respect to the common stock of the
Corporation's parent, Thermo Electron, or its subsidiaries, are made as part of
Thermo Electron's overall stock option program and are determined by the human
resources committee of the board of directors of the applicable granting 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's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance based". The annual cash compensation paid
to individual executives does not approach the $1 million threshold, and it is
believed that 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).

1995 CEO COMPENSATION

The salary and bonus of Mr. Poirier are established using the same criteria
as for the salaries and bonuses for the Corporation's other named executive
officers. The Committee determined Mr. Poirier's compensation as reported, and
among other factors, considered his achievement in transitioning the Corporation
to commercial sales and profitability following the U.S. Food and Drug
Administration commercial approval in 1994 for the Corporation's heart assist
device. The Committee believes, nonetheless, that while the total cash
compensation for Mr. Poirier in 1995 tends to be below the competitive norm for
a similarly sized company in the medical devices industry, his total
compensation exceeds the competitive norm since a significant portion of his
total compensation has been awarded as long-term incentive compensation in the
form of stock options.

In 1995, the Committee also approved stock option awards to Mr. Poirier
with respect to the Corporation's Common Stock. The Committee annually
considers an award of stock options to executive officers of the Corporation,
which are generally based upon the number of shares of Common Stock and
unexercised, vested stock options held by the executive during the year, as an
incentive for executives to buy and hold Common Stock. The award of stock
options to purchase shares of Common Stock to Mr. Poirier in 1995 was made under
this program. The awards of stock options to purchase shares of the
Corporation's parent, Thermo Electron, or its subsidiaries, to Mr. Poirier in
1995 were made as part of Thermo Electron's overall stock option program and
were determined by the human resources committee of the board of directors of
the applicable granting company using an analysis similar to that used for all
executives as described under "Stock Option Program."

Dr. Nicholas T. Zervas (Chairman)
Dr. Elias P. Gyftopoulos
Dr. Leonard Laster

12
<PAGE>

COMPARATIVE PERFORMANCE GRAPH

The Securities and Exchange Commission requires that the Corporation
include in this Proxy Statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a broad-
based market index and either a nationally recognized industry standard or an
index of peer companies selected by the Corporation. The Corporation has
compared its performance with the American Stock Exchange Market Value Index and
a peer group of companies consisting of Abiomed Inc., Datascope Corp., Boston
Scientific Corp., Thoratec Labs Corp., Baxter International, Inc., Medtronic,
Inc. and St. Jude Medical, Inc.

COMPARISON OF 1990-1995 TOTAL RETURN AMONG THERMO CARDIOSYSTEMS INC.,
THE AMERICAN STOCK EXCHANGE MARKET VALUE INDEX AND PEER GROUP.
--------------------------------------------------------------

[CHART APPEARS HERE]

The total return for the Corporation's Common Stock (TCA), the American
Stock Exchange Market Value Index (AMEX) and the Peer Group (PEER GRP) assumes
the reinvestment of dividends, although dividends have not been declared on the
Corporation's Common Stock. The American Stock Exchange Market Value Index
tracks the aggregate performance of equity securities of companies listed on the
American Stock Exchange. The Corporation's Common Stock is traded on the
American Stock Exchange under the ticker symbol "TCA."

13
<PAGE>

RELATIONSHIP WITH AFFILIATES

Thermo Electron has adopted a strategy of selling a minority interest in
subsidiary companies to outside investors as an important tool in its future
development. As part of this strategy, Thermo Electron and certain of its
subsidiaries have created several privately and publicly held subsidiaries, and
Thermedics Inc. has created the Corporation and Thermo Sentron Inc. as publicly
held, majority-owned subsidiaries and has acquired the majority interest in a
previously unaffiliated public company, Thermo Voltek Corp. From time to time,
Thermo Electron and its subsidiaries will create other majority-owned
subsidiaries as part of its spinout strategy. (The Corporation and such other
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
establishes certain internal policies and procedures applicable to members of
the Thermo Group. The cost of the services provided by Thermo Electron to the
Thermo Subsidiaries is covered under existing corporate services agreements
between Thermo Electron and each of the Thermo Subsidiaries.

The Charter presently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter may
be amended at any time by agreement of the participants. Any Thermo Subsidiary,
including the Corporation, can withdraw from participation in the Charter upon
30 days' prior notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo Electron or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the Charter
automatically terminates the corporate services agreement and tax allocation
agreement (if any) in effect between the withdrawing company and Thermo
Electron. The withdrawal from participation does not terminate outstanding
commitments to third parties made by the withdrawing company, or by Thermo
Electron or other members of the Thermo Group, prior to the withdrawal. However,
a withdrawing company is required to continue to comply with all policies and
procedures applicable to the Thermo Group and to provide certain administrative
functions mandated by Thermo Electron so long as the withdrawing company is
controlled by or affiliated with Thermo Electron.

As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain

14
<PAGE>

administrative services, including certain legal advice and services, risk
management, employee benefit administration, tax advice and preparation of tax
returns, centralized cash management and financial and other services to the
Corporation. The Corporation was assessed an annual fee equal to 1.2% and 1.25%
of the Corporation's revenues for these services for calendar 1995 and for the
two-year period beginning calendar 1993, respectively. Beginning January 1,
1996, the fee has been reduced to 1.0% 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
$487,000 in fees under the Services Agreement. Management believes that the
charges under the Services Agreement are reasonable and that the terms of the
Services Agreement are fair to the Corporation. For items such as employee
benefit plans, insurance coverage and other identifiable costs, Thermo Electron
charges the Corporation based on charges attributable to the Corporation. The
Services Agreement automatically renews for successive one-year terms, unless
canceled by the Corporation upon 30 days' prior notice. In addition, the
Services Agreement terminates automatically in the event the Corporation ceases
to be a member of the Thermo Group or ceases to be a participant in the Charter.
In the event of a termination of the Services Agreement, the Corporation will be
required to pay a termination fee equal to the fee that was paid by the
Corporation for services under the Services Agreement for the nine-month period
prior to termination. Following termination, Thermo Electron may provide certain
administrative services on an as-requested basis by the Corporation or as
required in order to meet the Corporation's obligations under Thermo Electron's
policies and procedures. Thermo Electron will charge the Corporation a fee equal
to the market rate for comparable services if such services are provided to the
Corporation following termination.

The Corporation subleases office and research facilities from Thermedics
and pays to Thermedics a pro rata amount based on the actual square footage
occupied by the Corporation, at a rate approximately equal to Thermedics' rent
per square foot under its prime lease. This sublease expires in 1999. The
Corporation paid approximately $134,000 to Thermedics in sublease payments
during 1995. In 1995, the Corporation also paid Thermedics approximately
$________, representing the Corporation's portion of certain services shared
with Thermedics at the subleased facilities.

As of December 30, 1995, $4,379,000 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.

Thermedics beneficially owned approximately 55% of the Corporation's
outstanding Common Stock on January 1, 1996. In January 1996, Thermedics
acquired 529,965 shares of the Corporation's Common Stock, or approximately 2.2%
of the Corporation's outstanding Common Stock, from Thermo Electron in exchange
for shares of common stock of Thermedics. The Corporation intends for the
foreseeable future to maintain at least 50% ownership of the Corporation. This
may require the purchase by Thermedics of additional shares of the Corporation's
Common Stock from time to time as the number of outstanding shares issued by the
Corporation increases. These purchases may be made either in the open market or
directly from the Corporation.

During 1995, the Corporation paid Thermo Electron's Tecomet division
$1,153,850 for metal fabrication services rendered in connection with the
manufacture of the heart assist devices sold by the Corporation.

15
<PAGE>

-- PROPOSAL 2--

PROPOSAL TO INCREASE AUTHORIZED COMMON STOCK

The Board of Directors has determined that it is advisable to increase the
Corporation's authorized Common Stock from 50 million shares to 100 million
shares, and has voted to recommend that the Stockholders adopt an amendment to
the Corporation's Articles of Organization effecting the proposed increase.

As of January 1, 1996, approximately 24.1 million shares of Common Stock
were issued and outstanding (excluding treasury shares) and approximately an
additional 1.9 million shares were reserved for issuance upon the conversion of
existing securities and exercise of options granted under the Corporation's
various stock-based plans. Accordingly, a total of approximately 24 million
shares of Common Stock are available for future issuance.

The Board of Directors believes it continues to be in the best interest of
the Corporation to have sufficient additional authorized but unissued shares of
Common Stock available in order to provide flexibility for corporate action in
the future. Management believes that the availability of additional authorized
shares for issuance from time to time in the Board of Directors' discretion in
connection with possible acquisitions of other companies, future financings,
investment opportunities, stock splits or dividends or for other corporate
purposes is desirable in order to avoid repeated separate amendments to the
Corporation's Articles of Organization and the delay and expense incurred in
holding special meetings of the Stockholders to approve such amendments. There
are at present no specific understandings, arrangements or agreements with
respect to any future acquisitions that would require the Corporation to issue
any new shares of its Common Stock. The Board of Directors believes that the
currently available unissued shares do not provide sufficient flexibility for
corporate action in the future.

No further authorization by vote of the Stockholders will be solicited for
the issuance of the additional shares of Common Stock proposed to be authorized,
except as might be required by law, regulatory authorities or rules of the
American Stock Exchange or any stock exchange on which the Corporation's shares
may then be listed. The issuance of additional shares of Common Stock could
have the effect of diluting existing stockholder earnings per share, book value
per share and voting power. The Stockholders of the Corporation do not have any
preemptive right to purchase or subscribe for any part of any new or additional
issuance of the Corporation's securities.

Thermedics, which owned approximately 52% of the outstanding voting stock
of the Corporation on April 1, 1996, has sufficient votes to approve the
amendment and has indicated its intention to vote for the approval of the
amendment.

________________________________________________________________________________

The affirmative vote of a majority of the Common Stock outstanding and
entitled to vote at the Meeting is required to approve the amendment to the
Corporation's Articles of Organization to effect the proposed increase in the
Corporation's authorized shares. The Board of Directors considers this
amendment to be advisable and in the best interests of the Corporation and its
Stockholders and recommends that you vote FOR approval of the amendment. If not
otherwise specified, Proxies will be vote FOR approval of this amendment.

____________________________________________________________________________

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 1988.
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.

16
<PAGE>

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 1997 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the Proxy Statement and form of Proxy relating to
that meeting no later than December ___, 1996.

SOLICITATION STATEMENT

The cost of this solicitation of Proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit Proxies personally, by telephone or telegram. Brokers,
nominees, custodians and fiduciaries are requested to forward solicitation
materials to obtain voting instructions from beneficial owners of stock
registered in their names, and the Corporation will reimburse such parties for
their reasonable charges and expenses in connection therewith.

Woburn, Massachusetts
April ___, 1996

AA960590068

17
<PAGE>

FORM OF PROXY

THERMO CARDIOSYSTEMS INC.

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 20, 1996

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Victor L. Poirier, 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 Cardiosystems Inc., a Massachusetts
corporation (the "Company"), to be held on Monday, May 20, 1996, at 11:00 a.m.,
and at any adjournment or postponement thereof , and to vote all shares of
common stock of the Company standing in the name of the undersigned on April 1,
1996, 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 proposals set forth
below if no instruction to the contrary is indicated or if no instruction is
given.

1. Election of Directors.

NOMINEES: Walter J. Bornhorst, Richard W. K. Chapman, Elias P. Gyftopoulos,
Robert C. Howard, Leonard Laster, Victor L. Poirier, John W. Wood Jr., Nicholas
T. Zervas

FOR [ ] WITHHELD [ ]

FOR all nominees listed at right, except authority to vote withheld for the
following nominees (if any):

______________________________________

FOR AGAINST ABSTAIN
2. Approve an amendment to the Articles of [ ] [ ] [ ]
Organization of the Company to increase
the authorized common stock from 50
million shares to 100 million shares.

3. 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, TRUSTEES, 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, ALL SHOULD SIGN)

AA960990048