SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________
AMENDMENT NO. 1 ON FORM 10-K/A
TO FORM 10-K
(mark one)
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended
September 28, 1996
___ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-10791
THERMOTREX CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 52-1711436
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10455 Pacific Center Court
San Diego, California 92121-4339
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619)
646-5300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of Exchange on which registered
Common Stock, $.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to the filing requirements for at least
the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
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The aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of November 22, 1996, was
approximately $304,566,000.
As of November 22, 1996, the Registrant had 19,170,568 shares of
Common Stock outstanding.
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ThermoTrex Corporation Amendment No. 1
on Form 10K/A to Annual Report on Form 10-K
for the fiscal year ended September 28, 1996
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Fiscal 1996 Annual Report to
Shareholders for the year ended September 28, 1996, are
incorporated by reference into Parts I and II.
Part III, Item 10. Directors and Executive
Officers of the Registrant.
Part III, Item 11. Executive Compensation.
Part III, Item 12. Security Ownership of Certain
Beneficial Owners and Management.
Part III, Item 13. Certain Relationships and
Transactions.
The information required under these items, originally to be
incorporated by reference from the Registrant's definitive proxy
statement to be filed with the Commission pursuant to Regulation
14A, not later than 120 days after the close of the fiscal year,
is contained in the following Attachment A, which is included
herein and made a part of this Annual Report on Form 10-K.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Amendment No. 1 on Form 10-K/A to be signed by the
undersigned, duly authorized.
THERMOTREX CORPORATION
By: /s/ Sandra L. Lambert
Sandra L. Lambert
Secretary
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ATTACHMENT A
DIRECTORS AND DIRECTOR COMPENSATION
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, is reported under the caption
"Stock Ownership." All of the nominees are currently Directors of
the Corporation.
Morton Collins Mr. Collins, 61, has been a Director of the
Corporation since 1991. Mr. Collins has
been a General Partner of DSV Partners III,
a venture capital limited partnership, since
1981 and a General Partner of DSV
Management, Ltd. since 1982. Since 1985,
DSV Management, Ltd. has been a General
Partner of DSV Partners IV, a venture
capital limited partnership. Mr. Collins is
also a director of Kopin Corporation, The
Liposome Company and Tandem Computers, Inc.
Peter O. Crisp Mr. Crisp, 64, has been a Director of the
Corporation since 1991. Mr. Crisp has been
a General Partner of Venrock Associates, a
venture capital investment firm, for more
than five years. Mr. Crisp is also a
Director of American Superconductor
Corporation, Apple Computer, Inc., Evans &
Sutherland Computer Corporation, Long Island
Lighting Company, Thermedics Inc., Thermo
Electron, Thermo Power Corporation and
United States Trust Corporation.
Paul F. Ferrari Mr. Ferrari, 66, a Director of the
Corporation since 1990, has been a
consultant to Thermo Electron since 1991.
Mr. Ferrari was a Vice President of Thermo
Electron from 1988 until his retirement at
the end of 1990; its Secretary from 1981 to
1990; and its Treasurer from 1967 to 1988.
Mr. Ferrari is also a director of General
Scanning Inc., Signal Technology Corporation
and Thermedics Inc.
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George N. Dr. Hatsopoulos, 70, has been a Director of
Hatsopoulos the Corporation since 1988. Dr. Hatsopoulos
has been the Chairman of the Board and Chief
Executive Officer of Thermo Electron since
1956 and its President from 1956 until
January 1997. Dr. Hatsopoulos is also a
director of Thermedics Inc., Thermo Ecotek
Corporation, Thermo Electron, Thermo
Fibertek Inc., Thermo Instrument Systems
Inc., Thermo Optek Corporation, Thermo Power
Corporation and ThermoQuest Corporation.
Dr. Hatsopoulos is the brother of Mr. John
N. Hatsopoulos, a Director and Vice
President and Chief Financial Officer of the
Corporation.
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John N. Mr. Hatsopoulos, 62, has been a Director of
Hatsopoulos the Corporation and its Vice President and
Chief Financial Officer since 1990. Mr.
Hatsopoulos has been President and Chief
Financial Officer of Thermo Electron since
January 1997 and 1988, respectively. Prior
to his appointment as President of Thermo
Electron, he was an Executive Vice President
from 1986 to 1997. Mr. Hatsopoulos is also
a director of Thermedics Inc., Thermo
Ecotek Corporation, Thermo Fibertek Inc.,
Thermo Instrument Systems Inc., Thermo Power
Corporation and Thermo TerraTech Inc. Mr.
Hatsopoulos is the brother of Dr. George N.
Hatsopoulos, a Director of the Corporation.
Robert C. Mr. Howard, 66, has been a Director of the
Howard Corporation since 1988 and Chairman of the
Board from 1988 to February 1996. Mr.
Howard has been an Executive Vice President
of Thermo Electron since 1986 until his
retirement in January 1997. He is also a
Director of Thermedics Inc., Thermo
Cardiosystems Inc., Thermo Instruments
Systems Inc., ThermoLase Corporation, Thermo
Power Corporation and Trex Medical
Corporation.
Firooz Rufeh Mr. Rufeh, 59, has been a Director of the
Corporation and its President and Chief
Executive Officer since 1988. Mr. Rufeh has
been Vice Chairman of the Board since
February 1996 and Chairman of the Board from
1988 to February 1996. Mr. Rufeh has been a
Vice President of Thermo Electron since
1986. Mr. Rufeh is also a director of
ThermoLase Corporation and Trex Medical
Corporation.
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Gary S. Mr. Weinstein, 39, has been Chairman of the
Weinstein Board, Chief Executive Officer and a
Director of the Corporation since February
1996. Mr. Weinstein has been a Managing
Director of Lehman Brothers Inc. from 1992
until February 1996, serving most recently
as Managing Director, head of Global
Syndicate and Equity Capital Markets since
March 1995. Prior to that appointment, Mr.
Weinstein served in various positions at
Lehman Brothers since joining the firm in
1988, including head of Equities in Europe,
head of Equity New Issues in North and South
America and head of Global Convertible
Securities. Mr. Weinstein is also a
director of ThermoLase Corporation and Trex
Medical Corporation.
Nicholas T. Dr. Zervas, 67, has been a Director of the
Zervas Corporation since 1992. Dr. Zervas has been
Chief of Neurological Service at
Massachusetts General Hospital since 1977.
Dr. Zervas is also a director of Thermedics
Inc., Thermo Cardiosystems Inc. and
ThermoLase Corporation.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee
and a Human Resources Committee, each consisting solely of
outside Directors. The present members of the Audit Committee are
Mr. Collins (Chairman), Mr. Crisp and Mr. Ferrari. The Audit
Committee reviews the scope of the audit with the Corporation's
independent public accountants and meets with them for the
purpose of reviewing the results of the audit subsequent to its
completion. The present members of the Human Resources Committee
are Mr. Crisp (Chairman), Mr. Collins and Dr. Zervas. The Human
Resources Committee reviews the performance of senior members of
management, recommends executive compensation and administers the
Corporation's stock-based compensation plans. The Corporation
does not have a nominating committee of the Board of Directors.
The Board of Directors met eleven times, the Audit Committee met
three times and the Human Resources Committee met five times
during fiscal 1996. Each Director attended at least 75% of all
meetings of the Board of Directors and Committees on which he
served held during fiscal 1996.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of any other companies affiliated with Thermo
Electron (also referred to as "outside Directors") receive an
annual retainer of $4,000 and a fee of $1,000 per day for
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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
outside Directors' fees is made quarterly. Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Howard, Mr. Rufeh and Mr. Weinstein are
all employees of Thermo Electron 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 meetings.
Deferred Compensation Plan for Directors
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 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 22,500 shares of Common Stock have been reserved for
issuance under the Deferred Compensation Plan. As of September
28, 1996, deferred units equal to 3,971.23 shares of Common
Stock were accumulated under the Deferred Compensation Plan.
Directors Stock Option 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 to outside Directors as
additional compensation for their service as Directors. Under
the Directors Plan, outside Directors are automatically granted
options to purchase 1,000 shares of Common Stock annually. In
addition, the Directors Plan provides for the automatic grant
every five years of options to purchase 1,500 shares of the
common stock of a majority-owned subsidiary of the Corporation
that is "spun out" to outside investors.
Prior to January 1, 1996, the Directors Plan provided for
the grant of stock options upon a Director's initial appointment.
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Outside Directors appointed before the amendment of the plan
received an option to purchase 21,600 shares of Common Stock upon
their initial appointment or election. Options granted prior to
1995 are immediately exercisable, subject to restrictions upon
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 or another Thermo Electron
company. Such repurchase rights lapse ratably over a five-year
period, commencing with the first anniversary of the grant date.
These options expire on the seventh anniversary of the grant
date, unless the Director dies or otherwise ceases to serve as a
Director of the Corporation or any other Thermo Electron company
prior to that date. The grant of options upon a Director's
appointment was discontinued on December 31, 1995, pursuant to
the terms of the plan, as amended.
Pursuant to the amended Directors Plan, outside Directors
receive an annual grant of options to purchase 1,000 shares of
Common Stock at the close of business on the date of each Annual
Meeting of Stockholders of the Corporation to each outside
Director then holding office. 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
another Thermo Electron company prior to the first anniversary of
the grant date.
In addition, under the amended Directors Plan, outside
Directors are automatically granted options to purchase 1,500
shares of common stock of each majority-owned subsidiary that is
"spun out" to outside investors. The grant occurs on the close
of business on the date of the first Annual Meeting of
Stockholders next following the subsidiary's spinout, which is
the first to occur of either an initial public offering of the
subsidiary's common stock or a sale of such stock to third
parties in an arms-length transaction. The options granted vest
and become exercisable on the fourth anniversary of the date of
grant, unless prior to such date the subsidiary's common stock is
registered under Section 12 of the Securities Exchange Act of
1934, as amended ("Section 12 Registration"). In the event that
the effective date of Section 12 Registration occurs before the
fourth anniversary of the grant date, the option will become
exercisable 90 days after the effective date 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 or another Thermo Electron
company. In the event of Section 12 Registration, the
restrictions and repurchase rights shall lapse or be deemed to
lapse at the rate of 25% per year, starting with the first
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anniversary of the grant date. These options expire after five
years.
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 paid per share
by third parties in an arms-length transaction prior to the
option grant. An aggregate of 225,000 shares of Common Stock has
been reserved for issuance under the Directors Plan.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo Electron, and
ThermoLase Corporation ("ThermoLase") and Trex Medical
Corporation ("Trex Medical"), each a majority-owned subsidiary of
the Corporation, as of December 28, 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 and nominee for 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.
While certain Directors and executive officers of the
Corporation are also Directors and executive officers of Thermo
Electron or its subsidiaries other than the Corporation, all such
persons disclaim beneficial ownership of the shares of Common
Stock owned by Thermo Electron.
<TABLE>
<CAPTION>
Thermo
ThermoTrex Electron Trex
Name (1) Corporation Corporation ThermoLase Medical
(2) (3) (4) (5)
<S> <C> <C> <C> <C>
Thermo Electron 9,847,540 N/A N/A N/A
Corporation (6)
Morton Collins 24,513 0 13,504 2,164
Peter O. Crisp 43,094 98,696 68,889 14,845
Paul F. Ferrari 28,400 45,603 24,623 3,075
George N. Hatsopoulos 48,476 3,527,279 31,125 41,188
John N. Hatsopoulos 23,844 566,768 63,503 40,983
Robert C. Howard 35,554 194,493 70,181 43,174
Hal Kirshner 93,321 117,824 62,086 285,000
Anthony J. Pellegrino 807,021 115,875 408,582 147,512
Firooz Rufeh 100,541 133,286 260,694 93,600
Brett A. Spivey 70,932 19,548 41,749 21,810
Kenneth Y. Tang 79,516 26,204 354,318 48,706
Gary S. Weinstein 110,000 160,412 168,044 315,000
Nicholas T. Zervas 28,156 0 86,737 1,500
All Directors and 1,513,768 5,160,986 1,742,335 1,069,557
current executive
officers as a group (15 persons)
</TABLE>
(1) Except as reflected in the footnotes to this table, shares
of Common Stock of the Corporation and of the common stock of
Thermo Electron, ThermoLase and Trex Medical beneficially owned
consist of shares owned by the indicated person, and all share
ownership includes sole voting and investment power.
(2) Shares of the Common Stock beneficially owned by each
Director and executive officer and by all Directors and executive
officers as a group exclude 9,847,540 shares beneficially owned
by Thermo Electron, as to which shares each Director and
executive officer and all members of such group disclaim
beneficial ownership. Shares of the Common Stock beneficially
owned by Mr. Collins, Mr. Crisp, Mr. Ferrari, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Howard, Mr. Kirshner, Mr. Pellegrino, Mr.
Rufeh, Dr. Spivey, Dr. Tang, Mr. Weinstein, Dr. Zervas and all
Directors and executive officers as a group include 17,710,
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27,800, 27,650, 36,600, 21,000, 31,320, 73,000, 134,500, 66,000,
67,969, 63,318, 100,000, 26,200 and 713,467 shares,
respectively, that such person or group has the right to acquire
within 60 days of December 28, 1996 through the exercise of stock
options. Shares beneficially owned by Mr. Collins, Mr. Crisp, Dr.
Zervas and all Directors and executive officers as a group
include 164, 1,850, 1,956 and 3,970] full shares, respectively,
that had been allocated through December 28, 1996, to their
respective accounts maintained under the Corporation's Deferred
Compensation Plan for Directors. Shares beneficially owned by
Mr. Ferrari include 750 shares held in trust. Shares
beneficially owned by Dr. G. Hatsopoulos include 160 shares held
by Dr. G. Hatsopoulos' spouse. Shares beneficially owned by Mr.
Pellegrino include 10,408 shares held in a trust of which Mr.
Pellegrino's spouse is the trustee for the benefit of Mr.
Pellegrino's minor child. Shares beneficially owned by Dr. Tang
include 2,025 shares held by Dr. Tang's daughter. As of
December 28, 1996, no Director or executive officer beneficially
owned more than 1.0% of the Common Stock outstanding as of
December 28, 1996, other than Mr. Pellegrino, who beneficially
owned approximately 4.1% of the Common Stock; all Directors and
executive officers as a group beneficially owned 7.6% 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 in May
1996. Shares of the common stock of Thermo Electron beneficially
owned by Mr. Crisp, Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr.
Howard, Mr. Kirshner, Mr. Pellegrino, Mr. Rufeh, Dr. Spivey, Dr.
Tang, Mr. Weinstein and all Directors and executive officers as a
group include 9,375, 1,499,500, 429,685, 47,361, 116,025,
115,875, 90,560, 13,853, 23,850, 160,075 and 2,613,733
shares, respectively, that such person or group has the right to
acquire within 60 days of December 28, 1996 through the exercise
of stock options. Shares beneficially owned by Dr. G.
Hatsopoulos, Mr. J. Hatsopoulos, Mr. Howard and all Directors and
executive officers as a group include 2,317, 1,934, 3,040 and
8,615 full shares, respectively, allocated to their respective
accounts maintained pursuant to Thermo Electron's Employee Stock
Ownership Plan. Shares beneficially owned by Mr. Crisp and all
Directors and executive officers as a group include 44,677 full
shares, allocated through September 28, 1996 to Mr. Crisp's
account maintained pursuant to Thermo Electron's deferred
compensation plan for directors. Shares beneficially owned by Mr.
Ferrari include 7,312 shares held in a trust for the
benefit of Mr. Ferrari and 13,062 shares held in a trust for
the benefit of Mr. Ferrari's spouse. Shares beneficially owned by
Dr. G. Hatsopoulos include 89,601 shares held by Dr. G.
Hatsopoulos' spouse, 168,700 shares held by a QTIP Trust for Dr.
G. Hatsopoulos' spouse and 399,937 shares held by a family trust
of which Dr. G. Hatsopoulos' spouse is trustee. As of December
28, 1996, no Director or executive officer beneficially owned
more than 1% of the outstanding Thermo Electron common stock,
other than Dr. G. Hatsopoulos, who beneficially owned 2.3% of
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such common stock; all directors and executive officers as a
group beneficially owned approximately 3.4% of the Thermo
Electron common stock outstanding as of December 28, 1996.
(4) Shares of the common stock of ThermoLase beneficially owned
by Mr. Collins, Mr. Crisp, Mr. Ferrari, Dr. G. Hatsopoulos, Mr.
J. Hatsopoulos, Mr. Howard, Mr. Kirshner, Mr. Pellegrino, Mr.
Rufeh, Dr. Spivey, Dr. Tang, Mr. Weinstein, Dr. Zervas and all
Directors and executive officers as a group include 13,504,
22,508, 22,508, 28,800, 53,800, 43,200, 36,400, 72,000, 44,240,
32,000, 304,000, 100,000, 67,068 and 9,22,028 shares,
respectively, that such person or group has the right to acquire
within 60 days of December 28, 1996 through the exercise of stock
options. Shares beneficially owned by Mr. Crisp include 11,446
shares owned by Mr. Crisp's spouse, as to which shares Mr.
Crisp disclaims beneficial ownership. Shares beneficially owned
by Dr. G. Hatsopoulos include 32 shares held by his spouse.
Shares beneficially owned by Mr. Ferrari include 2,115 shares
held in a trust of which Mr. Ferrari is a trustee.
Shares beneficially owned by Mr. Pellegrino include 2,082 shares
held in a trust of which Mr. Pellegrino's spouse is the trustee
for the benefit of his minor child. Shares beneficially owned
by Dr. Tang include 3,878 shares held by Dr. Tang's daughter.
As of December 28, 1996, no Director or executive officer
beneficially owned more than 1% of the common stock outstanding
of ThermoLase, other than Mr. Pellegrino, who beneficially owned
1.0% of such common stock; all Directors and executive officers
as a group beneficially owned approximately 4.2% of the
ThermoLase common stock outstanding as of such date.
(5) Shares of the common stock of Trex Medical beneficially
owned by Mr. Collins, Mr. Crisp, Mr. Ferrari, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Howard, Mr. Kirshner, Mr. Pellegrino, Mr.
Rufeh, Dr. Spivey, Dr. Tang, Mr. Weinstein, Dr. Zervas and all
Directors and executive officers as a group include 1,500, 2,500,
40,000, 40,000, 40,000, 150,000, 40,000, 40,000, 15,000, 40,000,
300,000, 1,500 and 723,000 shares, respectively, that
such person or group has the right to acquire within 60 days of
December 28, 1996 through the exercise of stock options. Shares
beneficially owned by Mr. Ferrari consist of 1,075 shares held
in a trust of which Mr. Ferrari is the trustee. Shares
beneficially owned by Mr. Rufeh include 53,600 shares owned by
the Rufeh Family Trust of which Mr. Rufeh is the trustee. As of
December 28, 1996, no Director or executive officer beneficially
owned more than 1% of the outstanding common stock of Trex
Medical, other than Mr. Weinstein, who beneficially owned 1.07%
of such common stock; all Directors and executive officers as a
group owned 3.6% of such outstanding common stock as of
such date.
(6) Thermo Electron beneficially owned 51.3 % of the Common
Stock outstanding as of December 28, 1996. Thermo Electron's
address is 81 Wyman Street, Waltham, Massachusetts 02254-9046. As
of December 28, 1996, Thermo Electron had the power to elect all
of the members of the Corporation's Board of Directors.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's Directors and executive officers, and
beneficial owners of more than 10% of the Common Stock, such as
Thermo Electron, to file with the Securities and Exchange
commission initial reports of ownership and periodic reports of
changes in ownership of the Corporation's securities. Based upon
a review of such filings, all Section 16(a) filing requirements
applicable to such persons were complied with during fiscal 1996,
except in the following instances. Mr. Anthony J. Pellegrino
failed to report a charitable gift of 2,500 shares on July 9,
1996 on his Form 5 for the fiscal year ended September 28, 1996.
In addition, Thermo Electron, the beneficial owner of more than
10% of the Common Stock, filed Forms 4 for the months of March
1996, May 1996, July 1996 and August 1996 late by eight days, two
days, 35 days and 28 days, respectively. These Forms 4 reported
a total of 23 transactions consisting of the exercise of options
to purchase shares of Common Stock from Thermo Electron by its
employees in transactions ranging in size from 85 to 900 shares,
and two transactions consisting of the lapse of such options to
purchase 180 and 135 shares without exercise. Thermo Electron's
Form 4 for the month of July 1996 was filed eight days late, and
reported the purchase of 50,000 shares of Common Stock.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation for services to
the Corporation in all capacities awarded to, earned by or paid
to the Corporation's chief executive officer, its former chief
executive officer, and its four other most highly compensated
executive officers (the "named executive officers") for the last
full fiscal year from October 1, 1995 to September 28, 1996
("fiscal 1996") and for the nine-month period from January 1,
1995 to September 30, 1995 ("fiscal 1995"), reflecting a change
in the Corporation's fiscal year-end to the 52 or 53 week period
ending on the Saturday nearest September 30, and for two
preceding full fiscal years ("fiscal 1994" and "fiscal 1993").
The Corporation is required to appoint certain executive
officers and full-time employees of Thermo Electron as executive
officers of the Corporation, in accordance with the Thermo
Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's
affairs is provided to the Corporation under the Corporate
Services Agreement between the Corporation and Thermo Electron.
Accordingly, the compensation for these individuals is not
reported in the following table.
Summary Compensation Table
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<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Securities
Underlying
Options
Name and (No. of
Principal Fiscal Annual Compensation Shares and All Other
Position Year Salary Bonus Company) (3) Compensation
(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gary S. 1996 $145,833 $200,000(2) 100,000 (TKN) $10,256(6)
Weinstein (5)
Chief Executive 100,000 (TLZ)
Officer 300,000 (TXM)
Firooz Rufeh (7) 1996 $185,750 $100,000(2) -- $6,750
President and
Former Chief
Executive 1995 $136,500 (1) $118,000 -- $7,058
Officer
1994 $175,000 $153,000 -- $6,423
1993 $169,200 $116,000 30,000 (TKN) $6,746
480,000 (TLZ)
--
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Hal Kirshner (8) 1996 $192,500 $200,000(2) 150,000 (TXM) $5,344
President and
Chief
Executive,
Officer, Trex 150 (TMO)
Medical 2,000 (TBA)
Corporation 2,000 (TFG)
2,000 (TLT)
6,000 (TOC)
6,000 (TMQ)
2,000 (TSR)
1995 $150,000 (1) $200,000 -- $7,005
1994 $200,000 $180,000 15,000 (TMO) $6,750
1993 $200,000 $175,000 22,000 (TKN) $2,249
36,400 (TLZ)
9,000 (TMO)
Kenneth Y. Tang 1996 $156,500 $50,000(2) 40,000 (TXM) $6,975
(9) Senior Vice
President 1995 $114,000 (1) $45,000 -- $6,578
1994 $145,000 $50,000 -- $6,750
1993 $138,000 $38,000 15,000 (TKN) $6,868
304,000 (TLZ)
10,350 (TMO)
Brett A. Spivey 1996 $123,750 $42,000(2) 15,000 (TXM) $7,094
Vice President
1995 $90,000 (1) $40,000 -- $6,968
1994 $116,000 $36,000 -- $6,701
1993 $111,000 $33,000 30,000 (TKN) $6,208
32,000 (TLZ)
6,750 (TMO)
</TABLE>
(1) Annual compensation for executive officers is reviewed and
determined on a calendar year basis, even though the
Corporation's fiscal year ends in September. The Corporation
changed its fiscal year-end to September from December in 1995,
and as a consequence, the salary data for fiscal 1995 reflects
salary paid during the nine-month period from January 1, 1995 to
September 30, 1995. Salary data for subsequent fiscal years
represents salary paid during the Corporation's full fiscal year.
(2) The bonus amount presented for fiscal 1995 represents the
bonus paid for performance during calendar 1995. Bonuses have
not yet been determined for calendar 1996; therefore, the bonus
amounts shown for fiscal 1996 are estimates.
(3) Options to purchase Common Stock of the Corporation awarded
to the named executive officers are followed by the designation
"TKN." Mr. Weinstein and Mr. Rufeh have been granted certain
options to purchase common stock of Thermo Electron and certain
of its subsidiaries other than the Corporation and its
subsidiaries, ThermoLase (designated in the table as "TLZ") and
Trex Medical (designated in the table as "TXM"), from time to
time by Thermo Electron or its other subsidiaries. These options
are not reported here as they were granted as compensation for
service to the other Thermo Electron companies in capacities
other than in their capacities as officers of the Corporation.
The named executive officers of the Corporation have been granted
options to purchase common stock of Thermo Electron and certain
its other subsidiaries as part of Thermo Electron's stock option
program in their capacities as officers of the Corporation.
Options have been granted during the period covered by the table
to the named executive officers in the following Thermo Electron
companies: Thermo Electron (designated in the table as TMO),
Thermo BioAnalysis Corporation (designated in the table as TBA),
Thermo Fibergen Inc. (designated in the table as TFG), ThermoLyte
Corporation (designated in the table as TLT), Thermo Optek
Corporation (designated in the table as TOC), ThermoQuest
Corporation (designated in the table as TMQ) and Thermo Sentron
Inc. (designated in the table as TSR). The shares of common
stock of Thermo Electron reported in the table reflect a
three-for-two stock split effected in May 1996.
(4) 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 or, as to Mr.
Pellegrino and Mr. Kirshner for fiscal 1993, the LORAD 401(k)
plan.
(5) Mr. Weinstein was appointed the Corporation's Chief
Executive Officer effective as of February 26, 1996. He is also
a vice president of Thermo Electron. Reported in the table under
12
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<PAGE>
"Annual Compensation" and "All Other Compensation" are total
amounts paid to Mr. Weinstein for his service in all capacities
to Thermo Electron companies. The Human Resources Committee of
the Board of Directors of the Corporation reviews total annual
compensation to be paid to Mr. Weinstein from all sources within
the Thermo Electron organization and approves the allocation of a
percentage of annual compensation (salary and bonus) for the time
he devotes to the affairs of the Corporation. For fiscal 1996,
50% of Mr. Weinstein's annual compensation was allocated to the
Corporation.
(6) Represents the amount of compensation attributable to an
interest-free loan provided to Mr. Weinstein pursuant to the
Corporation's Stock Holding Assistance Plan. See "Relationship
with Affiliates - Stock Holding Assistance Plan."
(7) Prior to January 1997, Mr. Rufeh served as a vice president
of Thermo Electron, as well as the president of the Corporation.
He also served as the chief executive officer of the Corporation
until February 1996. Reported in the table under "Annual
Compensation" and "All Other Compensation" are total amounts paid
to Mr. Rufeh for his service in all capacities to Thermo Electron
companies. The Human Resources Committee of the Board of
Directors of the Corporation reviews total annual compensation to
be paid to Mr. Rufeh from all sources within the Thermo Electron
organization and approves the allocation of a percentage of
annual compensation (salary and bonus) for the time he devotes to
the affairs of the Corporation. For 1996, 1995, 1994 and 1993,
75%, 65% , 80% and 81%, respectively, of Mr. Rufeh's annual
compensation was allocated to the Corporation.
(8) Mr. Pellegrino and Mr. Kirshner were first appointed
executive officers of the Corporation in November 1992 in
connection with the acquisition of LORAD Corporation by the
Corporation. The salary and bonus for each of Mr. Pellegrino and
Mr. Kirshner are determined by employment agreements entered into
with the Corporation at the time LORAD Corporation was acquired.
Mr. Pellegrino also serves as a Director of ThermoQuest
Corporation, a majority owned subsidiary of Thermo Electron.
Options granted to Mr. Pellegrino in his capacity as a Director
of ThermoQuest are not included in the table as they were granted
for service in a capacity other than in his capacity as an
officer of the Corporation.
(9) Dr. Tang is a senior vice president of the Corporation.
Reported in the table under "Annual Compensation" and "All Other
Compensation" are total amounts paid to Dr. Tang for his service
in all capacities to Thermo Electron companies. The Human
Resources Committee of the Board of Directors of the Corporation
reviews total annual compensation to be paid to Dr. Tang from all
sources within the Thermo Electron organization and approves the
allocation of a percentage of annual compensation (salary and
bonus) for the time he devotes to the affairs of the Corporation.
For 1996, 1995 and 1994, 100%, 90% and 80%, respectively, of Dr.
13
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<PAGE>
Tang's annual compensation was allocated to the Corporation.
Prior to 1994, all of Dr. Tang's annual compensation was
allocated to the Corporation.
Stock Options Granted During Fiscal 1996
Mr. Weinstein and Mr. Rufeh have been granted options to
purchase common stock of Thermo Electron and certain of its
subsidiaries from time to time as compensation for service to
other Thermo Electron companies in capabilities other than in his
capacity as chief executive officer of the Corporation.
Accordingly, options granted by Thermo Electron companies other
than the Corporation and its subsidiaries have not been reported
here. It has not been the Corporation's policy in the past to
grant stock appreciation rights, and no such rights were granted
during fiscal 1996.
Options Grants in Fiscal 1996
<TABLE>
<CAPTION>
Options Grants in Fiscal 1996
Percent
of
Total
Options
Granted Potential Realizable
Number of to Value at Assumed
Securities Employees Exercise Annual Rates of Stock
Underlying in Price Expirat Price Appreciation
Options Fiscal Per ion for
Name Granted(1) Year Share Date Option Term
5% 10%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary S. 100,000 (TKN) 73.6% $41.98 3/29/03$1,709,000 $3,983,000
Weinstein 100,000 (TLZ) 21.3%(3) $26.95 2/23/03$1,097,000 $2,557,000
100,000 (TXM) 5.7%(3) $11.00 3/26/08 $875,000 $2,352,000
100,000 (TXM) 5.7%(3) $11.00 2/28/08 $875,000 $2,352,000
100,000 (TXM) 5.7%(3) $11.00 3/11/08 $875,000 $2,352,000
Firooz -- -- -- -- -- --
Rufeh
Anthony J. 40,000 (TXM) 2.3%(3) $11.00 3/26/08 $350,000 $940,800
Pellegino
Hal 150 (TMO) 0.01%(3) $42.79 5/22/99 $1,011 $2,124
Kirschner 2,000 (TBA) 0.2%(3) $10.00 3/11/08 $15,920 $42,760
2,000 (TFG) 0.4%(3) $10.00 9/12/08 $15,920 $42,760
2,000 (TLT) 0.6%(3) $10.00 3/11/08 $15,920 $42,760
6,000 (TOC) 0.2%(3) $12.00 4/9/08 $57,300 $153,960
6,000 (TMQ) 0.2%(3) $13.00 3/11/08 $62,100 $166,800
PAGE
<PAGE>
2,000 (TSR) 0.4%(3) $14.00 3/11/08 $22,280 $59,880
150,000 (TXM) 8.5%(3) $11.00 3/26/08$1,312,500 $3,528,000
Kenneth Y. 40,000 (TXM) 2.3%(3) $11.00 3/26/08 $350,000 $940,800
Tang
Brent A. 15,000 (TXM) 0.9%(3) $11.00 2/28/08 $131,250 $352,800
Spivey
</TABLE>
(1) The shares of common stock of Thermo Electron shown in the
table reflect a three-for-two stock split effected in May 1996.
All of the options granted during the fiscal year are immediately
exercisable, except options to purchase ThermoLyte Corporation
(designated in the table as TLT), which are not exercisable until
the earlier of (i) 90 days after the effective date of the
registration of that company's common stock under Section 12 of
the Securities Exchange Act of 1934 (the "Exchange Act") and (ii)
nine years after the grant date. In all cases, the shares
acquired upon exercise are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be
employed by the 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. For publicly traded companies, the repurchase rights
generally lapse ratably over a five- to ten- year period,
depending on the option term, which may vary from seven to twelve
years, provided that the optionee continues to be employed by the
Corporation or another Thermo Electron company. For companies
that are not publicly traded, the repurchase rights lapse in
their entirety on the ninth anniversary of the grant date.
Certain options granted as 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. 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.
14
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<PAGE>
(2) The amounts shown on this table represent hypothetical gains
that could be achieved for the respective options if exercised at
the end of the option term. These gains are based on assumed
rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted to their
expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock
option exercises will depend on the future performance of the
common stock of the granting corporation, the optionee's
continued employment through the option period and the date on
which the options are exercised.
(3) These options were granted under stock option plans
maintained by Thermo Electron and accordingly are reported as a
percentage to total options granted to employees of Thermo
Electron and its public subsidiaries.
Stock Options Exercised During Fiscal 1996 and Fiscal Year-End
Values
The following table reports certain information regarding
stock option exercises during fiscal 1996 and outstanding stock
options of the Thermo Electron companies held at the end of
fiscal 1996 by the named executive officers. No stock
appreciation rights were exercised or were outstanding during
fiscal 1996.
Aggregated Option Exercises In Fiscal 1996 And Fiscal
1996 Year-End Option Valued
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1996 And Fiscal 1996 Year-End Option Valued
No. of
Unexercised
Options at
Shares Fiscal Value of
Acquired Year-end Unexercised
on Value (Exercisable/ In-the-Money
Name Company Exercise Realized Unexercisable) Options
(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Gary S. ThermoTrex -- -- 100,000 /0 $0 /--
Weinstein
ThermoLase -- -- 100,000 /0 $0 /--
Trex Medical -- -- 300,000 /0 $2,775,000 /--
Firooz Rufeh ThermoTrex -- -- 66,000 /0 $1,760,550 /--
(2)
ThermoLase 435,760 $13,167,520 44,240 /0 $923,510 /--
Trex Medical -- -- 40,000 /0 $370,000 /--
Anthony J. ThermoTrex -- -- 134,500 /0 $3,442,288 /--
Pellegrino
ThermoLase -- -- 72,000 /0 $1,557,000 /--
Trex Medical -- -- 40,000 /0 $370,000 /--
Thermo -- -- 115,875 (3) $2,953,132 /--
Electron
Hal Kirshner ThermoTrex 76,500 $2,079,270 73,000 /0 $1,809,155 /--
ThermoLase -- -- 36,400 /0 $787,150 /--
Trex Medical -- -- 150,000 /0 $1,387,500 /--
Thermo -- -- 116,025 /0 (3) $2,953,132 /--
Electron
PAGE
<PAGE>
Thermo -- -- 2,000 /0 $7,750 /--
BioAnalysis
Thermo -- -- 2,000 /0 $5,250 /--
Fibergen
ThermoLyte -- -- 0 /2000 --/ $0(4)
Thermo Optek -- -- 6,000 /0 $18,000 /--
ThermoQuest -- -- 6,000 /0 $3,000 /--
Thermo -- -- 2,000 /0 $0 /--
Sentron
Kenneth Y. ThermoTrex -- -- 63,318 /0 $1,840,598 /--
Tang
ThermoLase -- -- 304,000 /0 $6,490,000 /--
Trex Medical 40,000 /0 $370,000 /--
Thermo 19,125 $595,419 23,850 /0 $674,004 /--
Electron
Thermo -- -- 3,000 /0 $33,501 /--
Ecotek
Thermo -- -- 4,500 /0 $45,563 /--
Fibertek
Brett A. ThermoTrex -- -- 67,969 /0 $1,822,918 /--
Spivey
ThermoLase -- -- 32,000 /0 $692,000 /--
Trex Medical 15,000 /0 $138,750 /--
Thermedics -- -- 2,250 /0 $36,574 /--
Thermo -- -- 1,500 /0 $16,751 /--
Ecotek
Thermo 16,147 396,728 13,853 /0 $381,413 /--
Electron
Thermo -- -- 4,500 /0 $45,563 /--
Fibertek
</TABLE>
(1) The shares of the common stock shown in the table have been
adjusted to reflect three-for-two stock splits effected by Thermo
Electron in May 1996 and Thermo Fibertek Inc. in June 1996. All
of the options reported outstanding at the end of the fiscal year
are immediately exercisable as of fiscal year-end, except
ThermoLyte Corporation (designated in the table as TLT), which
are not exercisable until the earlier of (i) 90 days after the
effective date of the registration of that company's common stock
under Section 12 of the Exchange Act and (ii) nine years after
the grant date. In all cases, the shares acquired upon exercise
of the options reported in the table are subject to repurchase by
the granting corporation at the exercise price if the optionee
ceases to be employed by such corporation or another Thermo
Electron company. The granting corporation may exercise its
repurchase rights within six months after the termination of the
optionee's employment. 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
15
PAGE
<PAGE>
from seven to twelve years, provided that the optionee continues
to be employed by the Corporation or another Thermo Electron
company. For companies that are not publicly traded, the
repurchase rights lapse in their entirety on the ninth
anniversary of the grant date. Certain options granted as 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) As officers of Thermo Electron, Mr. Weinstein and Mr. Rufeh
also hold unexercised options to purchase common stock of Thermo
Electron and its subsidiaries other than the Corporation. These
options are not reported in the table as they were granted as
compensation for service to other Thermo Electron companies in
capacities other than in their capacities as officers of the
Corporation.
(3) Options to purchase 22,500 shares of the common stock of
Thermo Electron granted to each of Mr. Kirshner and Mr.
Pellegrino are subject to the same terms 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.
(4) No public market existed for the shares as of December 28,
1996. Accordingly, no value in excess of the exercise price has
attributed to these options.
Employment Agreements
In connection with the acquisition of the LORAD Corporation
("LORAD") in November 1992, the Corporation entered into an
employment agreement with each of Mr. Anthony J. Pellegrino and
Mr. Hal Kirshner. Mr. Pellegrino's agreement calls for Mr.
Pellegrino to serve as Chairman of the Board and Chief Executive
Officer of LORAD until December 31, 1995, at a base salary of
$250,000 per year plus bonus. Mr. Kirshner's agreement calls for
Mr. Kirshner to serve as President and Chief Operating Officer of
LORAD until December 31, 1995, at a base salary of $200,000 per
year plus bonus.
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,
16
PAGE
<PAGE>
for whatever reason, within one year thereafter. For purposes of
the agreement, a change of control exists upon (i) the
acquisition of 50% or more of the outstanding common stock of
Thermo Electron by any person without the prior approval of the
Board of Directors of Thermo Electron, (ii) the failure of the
Board of Directors of Thermo Electron, within two years after any
contested election of directors or tender or exchange offer not
approved by the board of directors, to be constituted of a
majority of directors holding office prior to such event or (iii)
any other event that the Board of Directors of Thermo Electron
determines constitutes an effective change of control of Thermo
Electron. Each of the recipients of these agreements would
receive a lump-sum benefit at the time of a qualifying severance
(as defined below) 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 qualifying severance. 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 September 28, 1996, Mr. Rufeh would have
received approximately $335,000.
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 majority-owned
subsidiaries. The Corporation has created ThermoLase Corporation
("ThermoLase") and Trex Medical Corporation ("Trex Medical") as
publicly held, majority-owned subsidiaries. From time to time,
Thermo Electron and its subsidiaries will create other
majority-owned subsidiaries as part of its spinout strategy.
(The Corporation and 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
17
PAGE
<PAGE>
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 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
18
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<PAGE>
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 financial and other
services to the Corporation. Thermo Electron assessed the
Corporation an annual fee equal to 1.2% and 1.25% of the
Corporation's revenues for these services in calendar 1995 and
for periods prior to calendar 1995, respectively. Effective
January 1, 1996, the fee was reduced to 1.0% of the Corporation's
revenues. The fee may be changed by mutual agreement of the
Corporation and Thermo Electron. During fiscal 1996, Thermo
Electron assessed the Corporation $1,906,000 in fees under the
Services Agreement. Management believes that the charges under
the Services Agreement are reasonable and that such fees are
representative of the expense the Corporation would have incurred
on a stand-alone basis. For additional items such as employee
benefit plans, insurance coverage and other identifiable costs,
Thermo Electron charges the Corporation based on costs
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.
A majority-owned subsidiary of Thermo Electron provides
contract administration and data processing services to the
Corporation. The Corporation was charged $90,000 for such
services for fiscal 1996.
19
PAGE
<PAGE>
From time to time, the Corporation may transact business
with other companies in the Thermo Group. In fiscal 1996, such
transactions included the following.
The Corporation leased two office and research facilities
from Thermo Electron under an agreement that was terminated in
June 1996. The rental payments made to Thermo Electron during
fiscal 1996 were $89,000. In connection with the Corporation's
decision to close its Waltham facilities and because Thermo
Electron desires to sell these facilities, the Corporation
vacated these facilities in June 1996.
Trex Medical has an arrangement with the Tecomet division of
Thermo Electron for the manufacture of Trex Medical's proprietary
HTC grid. Under this arrangement Tecomet manufactures the grid
for Trex Medical pursuant to written purchase orders. During
fiscal 1996, Trex Medical purchased 331 grids for an aggregate
purchase price of $397,000 under this arrangement. In addition,
Trex Medical paid Tecomet $250,000 during fiscal 1996 for
research and development provided by Tecomet in connection with
this project. Trex Medical owns the intellectual property rights
to the grid.
Under an arrangement with Thermedics Detection Inc., a
subsidiary of Thermedics Inc., a majority-owned subsidiary of
Thermo Electron, Trex Medical manufactures an X-ray source that
is used as a component to a fill-measuring device produced by
Thermedics Detection. Trex Medical manufactures these X-ray
sources for Thermedics Detection pursuant to written purchase
orders. During fiscal 1996, Thermedics Detection purchased 100
units from Trex Medical for an aggregate purchase price of
$361,000 under this arrangement.
In September 1995, the Corporation borrowed $8,000,000 from
Thermo Electron pursuant to a promissory note, due September
1996, and bearing interest at the 90-day Commercial Paper
Composite Rate plus 25 basis points. This note was repaid in
September 1996. In September 1996, the Corporation borrowed
$2,000,000 from Thermo Electron pursuant to a promissory note,
due April 1997, and bearing interest at the 90-day Commercial
Paper Composite Rate plus 25 basis points.
The Corporation sold its thermo electrics and thermionics
businesses to two subsidiaries of Thermo Electron, for
approximately $860,000, which represents the net book value of
the net assets transferred.
As of September 28, 1996, $40,727,000 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
20
PAGE
<PAGE>
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. The repurchase agreement earns a
rate based on the 90-day Commercial Paper Composite Rate plus 25
basis points, set at the beginning of each quarter.
Thermo Electron owned approximately 51% of the Corporation's
outstanding Common Stock on December 28, 1996. Thermo Electron
intends for the foreseeable future to maintain at least 50%
ownership of the Corporation. This may require the purchase by
Thermo Electron of additional shares of the Corporation's Common
Stock from time to time as the number of outstanding shares
issued by the Corporation increases. These and other purchases
may be made either in the open market or directly from the
Corporation.
In November 1995, Mr. Crisp and Mr. Rufeh, Directors of the
Corporation, and Mr. Kirshner, Mr. Pellegrino and Dr. Spivey,
executive officers of the Corporation, purchased from Trex
Medical 10,000, 19,600, 100,000, 20,000 and 9,800 shares of Trex
Medical common stock, respectively, for an aggregate purchase
price of $102,500, $200,900, $1,025,000, $205,000 and $100,450,
respectively, in a private placement of 1,852,000 shares of
common stock by Trex Medical at $10.25 per share.
Stock Holding Assistance Plan
In 1996, the Corporation adopted a stock holding policy
which requires its executive officers to acquire and hold a
minimum number of shares of Common Stock. In order to assist the
executive officers in complying with the policy, the Corporation
also adopted a Stock Holding Assistance Plan under which it may
make interest-free loans to certain key employees, including its
executive officers, to enable such employees to purchase the
Common Stock in the open market. During 1996, Mr. Weinstein
received a loan in the principal amount of $375,003.85 under this
plan to purchase 10,000 shares. The loan to Mr. Weinstein is
payable on demand and requires that 20% of the principal amount
of the loan be repaid from the bonus payable to Mr. Weinstein in
each of the next five years, commencing with the bonus payment in
1997 for calendar 1996 performance, until the loan is repaid in
full.
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