<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
THERMOTREX CORPORATION
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(Name of Registrant as Specified In Its Charter)
THERMOTREX CORPORATION
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(Name of Person(s) Filing Proxy Statement,)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
THERMOTREX CORPORATION
10455 Pacific Center Court, San Diego, CA 92121
January 21, 1998
Dear Stockholder:
The enclosed Notice calls the 1998 Annual Meeting of the Stockholders of
ThermoTrex Corporation. I respectfully request all Stockholders to attend this
meeting, if possible.
Our Annual Report for the fiscal year ended September 27, 1997, 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,
GARY S. WEINSTEIN
Chairman and Chief Executive Officer
<PAGE>
THERMOTREX CORPORATION
10455 Pacific Center Court, San Diego, CA 92121
January 21, 1998
To the Holders of the Common Stock of
THERMOTREX CORPORATION
NOTICE OF ANNUAL MEETING
The 1998 Annual Meeting of the Stockholders of ThermoTrex Corporation (the
"Corporation") will be held on Thursday, March 5, 1998, at 10:00 a.m. at the
Westin Hotel, 70 Third Avenue, Waltham, Massachusetts 02154. The purpose of the
meeting is to consider and take action upon the following matters:
1. Election of seven directors.
2. Such other business as may properly be brought before the meeting and
any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to receive notice
of and to vote at the meeting is January 14, 1998.
The by-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
meeting in order to constitute a quorum for the transaction of business. It is
important that your stock be represented at the meeting regardless of the number
of shares you may hold. Whether or not you are able to be present in person,
please sign and return promptly the enclosed proxy in the accompanying envelope,
which requires no postage if mailed in the United States.
This notice, the proxy and proxy statement enclosed herewith are sent to
you by order of the board of directors.
SANDRA L. LAMBERT
Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of ThermoTrex
Corporation (the "Corporation") for use at the 1998 Annual Meeting of the
Stockholders (the "Meeting") to be held on Thursday, March 5, 1998, at 10:00
a.m. at the Westin Hotel, 70 Third Avenue, Waltham, Massachusetts 02154, and any
adjournment thereof. The mailing address of the executive offices of the
Corporation is 10455 Pacific Center Court, San Diego, CA 92121. This proxy
statement and the enclosed proxy were first furnished to Stockholders of the
Corporation on or about January 23, 1998.
VOTING PROCEDURES
The board of directors intends to present to the Meeting the election of
seven directors, constituting the entire board of directors.
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Corporation, $.01 par value ("Common Stock"),
entitled to vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you plan
to attend the Meeting in person, please sign and promptly return the enclosed
proxy card, which requires no postage if mailed in the United States. All signed
and returned proxies will be counted towards establishing a quorum for the
Meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the management nominees for directors,
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 in person or
represented by proxy and entitled to vote on the election. Withholding authority
to vote for a nominee for director 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. Broker "non-votes" will not
be treated as shares present and entitled to vote on a voting matter and will
have no effect on the outcome of the vote. A broker "non-vote" occurs when a
nominee holding shares for a beneficial holder does not have discretionary
voting power and does not receive voting instructions from the beneficial owner.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the Meeting by written notice to the secretary
of the Corporation received prior to the Meeting, by executing and returning a
later-dated proxy or by voting by ballot at the Meeting.
The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of January 14, 1998, consisted of
19,366,381 shares of Common Stock. Only Stockholders of record at the close of
business on January 14, 1998, are entitled to vote at the Meeting. Each share is
entitled to one vote.
1
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--PROPOSAL 1--
ELECTION OF DIRECTORS
Seven directors are to be elected at the Meeting, each to hold office until
his successor is chosen and qualified or until his earlier resignation, death or
removal.
Nominees for Directors
Set forth below are the names of the persons nominated as directors, their
ages, their offices in the Corporation, if any, their principal occupation or
employment for the past five years, the length of their tenure as directors and
the names of other public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the Corporation's Common
Stock and of the common stock of its parent corporation, Thermo Electron
Corporation ("Thermo Electron"), a provider of diversified products and services
for the biomedical, instrument and environmental markets, is reported under the
caption "Stock Ownership." All of the nominees are currently directors of the
Corporation.
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Morton Collins Mr. Collins, 62, 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 Thermedics
Detection Inc.
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Peter O. Crisp Mr. Crisp, 65, has been a director of the Corporation
since 1991. Mr. Crisp was a general partner of Venrock
Associates, a venture capital investment firm, for over
five years until his retirement in September 1997. Mr.
Crisp is also a director of American Superconductor
Corporation, Evans & Sutherland Computer Corporation,
Thermedics Inc., Thermo Electron, Thermo Power
Corporation and United States Trust Corporation.
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Paul F. Ferrari Mr. Ferrari, 67, has been a director of the Corporation
since 1990. Since 1991 he has been a consultant to
various companies including Thermo Electron and its
subsidiaries. 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. and Thermedics Inc.
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George N. Hatsopoulos Dr. Hatsopoulos, 71, has been a director of 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 Photoelectron Corporation, Thermedics Inc., Thermo
Ecotek Corporation, Thermo Electron, Thermo Fibertek
Inc., Thermo Instrument Systems Inc., Thermo Optek
Corporation and ThermoQuest Corporation. Dr. Hatsopoulos
is the brother of Mr. John N. Hatsopoulos, senior vice
president and chief financial officer of the
Corporation.
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Robert C. Howard Mr. Howard, 67, has been a director of the Corporation
since 1988 and was chairman of the board from 1988 to
February 1996. Mr. Howard was an executive vice
president of Thermo Electron from 1986 until his
retirement in January 1997. Mr. Howard currently serves
as a consultant to Thermo Electron.
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2
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Gary S. Weinstein Mr. Weinstein, 40, has been chairman of the board, chief
executive officer and a director of the Corporation, as
well as a vice president of Thermo Electron, since
February 1996. Mr. Weinstein was a managing director of
Lehman Brothers Inc. from 1992 until February 1996,
serving from March 1995 until leaving the firm as
managing director and head of global syndicate and
equity capital markets. Mr. Weinstein joined Lehman
Brothers in 1988 and served in various positions,
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.
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Nicholas T. Zervas Dr. Zervas, 68, has been a director of the 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.
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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 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 five times, the audit committee met twice and the human
resources committee met three times during fiscal 1997. Each director attended
at least 75% of all meetings of the board of directors and committees on which
he served held during fiscal 1997.
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 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 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 acquisition, without the prior approval of the board of
directors, directly or indirectly, by any person of 50% or more of the
outstanding Common Stock or 25% or more of the outstanding common stock of
Thermo Electron; or (b) the failure of the persons serving on the board of
directors immediately prior to any contested election of directors or any
exchange offer or tender offer for the Common Stock or the common stock of
Thermo 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
3
<PAGE>
have been reserved for issuance under the Deferred Compensation Plan. As of
November 28, 1997, deferred units equal to 5,110.81 shares of Common Stock were
accumulated under the Deferred Compensation Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan (the "Directors Plan"),
provides for the grant of stock options to purchase shares of the common stock
of the Corporation and its majority-owned subsidiaries 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. 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 1996 are currently 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.
Outside directors also 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 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 another Thermo Electron
company prior to the first anniversary of the grant date.
In addition, under the 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 at the
close of business on the date of the first Annual Meeting of the 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 options 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 anniversary of the grant date. These options expire after five years.
Under this provision of the Directors Plan, the outside directors each will be
granted options to purchase 1,500 shares of the common stock of Trex
Communications Corporation on the date of the 1998 Annual Meeting of the
Stockholders, as a consequence of the spinout of this subsidiary in September
1997.
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 immediately 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.
As of November 28, 1997, options to purchase 115,650 shares of Common Stock had
been granted and were outstanding under the Directors Plan, no options had
lapsed, options to purchase 10,290 shares of Common Stock had been exercised,
and options to purchase 109,350 shares of Common Stock were reserved and
available for grant.
4
<PAGE>
Stock Ownership Policies for Directors
During fiscal 1996, the human resources committee of the board of directors
(the "Committee") established a stock holding policy for directors. The stock
holding policy requires each director to hold a minimum of 1,000 shares of
Common Stock. Directors are requested to achieve this ownership level by the
1998 Annual Meeting of the Stockholders. Directors who are also executive
officers of the Corporation are required to comply with a separate stock holding
policy established by the Committee in fiscal 1996, which is described in the
Committee Report on Executive Compensation - Stock Ownership Policies.
In addition, the Committee adopted a policy requiring directors to hold a
certain number of shares of the Corporation's Common Stock acquired upon the
exercise of stock options. Under this policy, directors are required to hold
shares of Common Stock equal to one-half of their net option exercises over a
period of five years. The net option exercise is determined by calculating the
number of shares acquired upon exercise of a stock option, after deducting the
number of shares that could have been traded to exercise the option and the
number of shares that could have been surrendered to satisfy tax withholding
obligations attributable to the exercise of the option. This policy is also
applicable to executive officers and is described in the Committee Report on
Executive Compensation - Stock Ownership Policies.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock, as
well as the common stock of Thermo Electron, and ThermoLase Corporation
("ThermoLase"), Trex Medical Corporation ("Trex Medical") and Trex
Communications Corporation ("Trex Communications"), each a majority-owned
subsidiary of the Corporation, as of November 28, 1997, 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 current 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 beneficially owned by Thermo Electron.
<TABLE>
<CAPTION>
ThermoTrex Thermo Electron ThermoLase Trex Medical Trex Communications
Name (1) Corporation (2) Corporation (3) Corporation (4) Corporation (5) Corporation (6)
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<S> <C> <C> <C> <C> <C>
Thermo Electron Corporation (7) 10,554,969 N/A N/A N/A N/A
Morton Collins 25,898 0 13,504 1,500 0
Peter O. Crisp 44,463 100,478 67,343 13,845 0
Paul F. Ferrari 29,400 19,229 24,658 3,075 0
George N. Hatsopoulos 48,476 3,651,571 31,125 41,188 0
Robert C. Howard 36,554 156,779 70,181 43,174 0
Hal Kirshner (8) 93,321 118,823 62,086 285,000 0
Anthony Pellegrino 747,021 70,875 408,582 147,513 0
Brett A. Spivey 49,932 12,878 25,600 1,378 0
Kenneth Y. Tang 79,516 16,000 354,318 48,706 37,500
David A. Teitel 30,000 10,112 5,000 5,000 0
Gary S. Weinstein 110,000 201,211 198,044 315,000 6,250
Nicholas T. Zervas 29,541 0 87,243 5,000 5,000
All directors and current executive
officers as a group (12 persons) 561,413 5,080,805 1,039,131 811,471 48,750
</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, Trex Medical and Trex Communications 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.
5
<PAGE>
(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 10,554,969 shares beneficially owned by Thermo Electron. Shares
of the Common Stock beneficially owned by Mr. Collins, Mr. Crisp, Mr.
Ferrari, Dr. G. Hatsopoulos, Mr. Howard, Mr. Kirshner, Mr. Pellegrino,
Dr. Spivey, Dr. Tang, Mr. Teitel, Mr. Weinstein, Dr. Zervas and all
directors and current executive officers as a group include 18,710,
28,800, 28,650, 36,600, 32,320, 73,000, 134,500, 46,969, 63,318, 30,000,
100,000, 27,200 and 469,998 shares, respectively, that such person or
group has the right to acquire within 60 days of November 28, 1997,
through the exercise of stock options. Shares beneficially owned by Mr.
Collins, Mr. Crisp, Dr. Zervas and all directors and current executive
officers as a group include 549, 2,219, 2,341, and 5,109 full shares,
respectively, that had been allocated through November 28, 1997, 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 a trust of which Mr. Ferrari is the
trustee. 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 November 28, 1997, no director or
executive officer beneficially owned more than 1.0% of the Common Stock
outstanding as of November 28, 1997, other than Mr. Pellegrino, who
beneficially owned approximately 3.9% of the Common Stock; all directors
and current executive officers as a group beneficially owned 2.9% of the
Common Stock outstanding as of such date.
(3) Shares of the common stock of Thermo Electron beneficially owned by Mr.
Crisp, Dr. G. Hatsopoulos, Mr. Howard, Mr. Kirshner, Mr. Pellegrino, Dr.
Spivey, Dr. Tang, Mr. Teitel, Mr. Weinstein and all directors and
current executive officers as a group include 10,375, 1,649,500, 47,361,
116,325, 70,875, 337, 10,350, 10,000, 200,175 and 2,704,658 shares,
respectively, that such person or group has the right to acquire within
60 days of November 28, 1997, through the exercise of stock options.
Shares beneficially owned by Dr. G. Hatsopoulos and all directors and
current executive officers as a group include 2,266 and 5,728 full
shares, respectively, allocated to their respective accounts maintained
pursuant to Thermo Electron's employee stock ownership plan, of which
the trustees, who have investment power over its assets were, as of
November 28, 1997, executive officers of Thermo Electron. Shares
beneficially owned by Mr. Crisp and all directors and current executive
officers as a group include 45,459 full shares, allocated through
November 28, 1997, to Mr. Crisp's account maintained pursuant to Thermo
Electron's deferred compensation plan for directors. Shares beneficially
owned by Mr. Ferrari include 2,678 shares held in a trust of which Mr.
Ferrari is the trustee and 11,062 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, 168,750 shares
held by a QTIP Trust for Dr. G. Hatsopoulos' spouse, 39,937 shares held
by a family trust of which Dr. G. Hatsopoulos' spouse is trustee, and
153 shares allocated to the account of Dr. G. Hatsopoulos' spouse
maintained pursuant to Thermo Electron's employee stock ownership plan.
Shares beneficially owned by Dr. G. Hatsopoulos also include 50,000
shares that a family trust, of which Dr. G. Hatsopoulos' spouse is the
trustee, has the right to acquire within 60 days of November 28, 1997
through the exercise of stock options. As of November 28, 1997, 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 such common stock; all directors and
current executive officers as a group beneficially owned approximately
3.2% of the Thermo Electron common stock outstanding as of November 28,
1997.
(4) Shares of the common stock of ThermoLase beneficially owned by Mr.
Collins, Mr. Crisp, Mr. Ferrari, Dr. G. Hatsopoulos, Mr. Kirshner, Mr.
Pellegrino, Dr. Spivey, Dr. Tang, Mr. Teitel, Mr. Weinstein, Dr. Zervas
and all directors and current executive officers as a group include
13,504, 22,508, 22,508, 28,800, 36,400, 72,000, 25,600, 304,000, 5,000,
130,000, 67,068 and 746,188 shares, respectively, that such person or
group has the right to acquire within 60 days of November 28, 1997,
through the exercise of stock options. Shares beneficially owned by Dr.
Zervas and all directors and current executive officers as a group
include 1,019 full shares, allocated through November 28, 1997, to Dr.
Zervas's account maintained pursuant to ThermoLase's deferred
compensation plan for directors. Shares beneficially owned by Mr. Crisp
include 9,900 shares owned by Mr. Crisp's spouse, as to which shares Mr.
Crisp disclaims beneficial ownership.
6
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Shares beneficially owned by Dr. G. Hatsopoulos include 32 shares held
by his spouse. 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 November
28, 1997, 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 current executive officers as a group beneficially owned
approximately 2.6% 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. Howard, Mr.
Kirshner, Mr. Pellegrino, Dr. Tang, Mr. Teitel, Mr. Weinstein, Dr.
Zervas and all directors and current executive officers as a group
include 1,500, 1,500, 1,500, 40,000, 40,000, 150,000, 40,000, 40,000,
5,000, 300,000, 1,500 and 627,000 shares, respectively, that such person
or group has the right to acquire within 60 days of November 28, 1997,
through the exercise of stock options. Shares beneficially owned by Mr.
Ferrari include 1,575 shares held in a trust of which Mr. Ferrari is the
trustee. Shares beneficially owned by Mr. Pellegrino include 1,041
shares held in a trust of which Mr. Pellegrino's spouse is the trustee
for the benefit of his minor child. As of November 28, 1997, 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 approximately 1.1% of such common stock; all directors and current
executive officers as a group beneficially owned 2.8% of such
outstanding common stock as of such date.
(6) As of November 28, 1997, no director or executive officer owned more
than 1% of the outstanding common stock of Trex Communications; all
directors and current executive officers as a group beneficially owned
less than 1% of the Trex Communications common stock outstanding of such
date.
(7) Thermo Electron beneficially owned 54.7% of the Common Stock as of
November 28, 1997. Shares beneficially owned by Thermo Electron include
370,370 shares issuable upon conversion of a 3 1/4% convertible
debenture due in 2007. Thermo Electron's address is 81 Wyman Street,
Waltham, Massachusetts 02254-9046. As of November 28, 1997, Thermo
Electron had the power to elect all of the members of the Corporation's
board of directors.
(8) As a November 28, 1997, Mr. Kirshner beneficially owned 11,678
redemption rights issued by ThermoLase. Each of these rights, issued in
an exchange offering in April 1997, permits the holder to sell one share
of ThermoLase common stock back to ThermoLase during the period of April
3, 2001 through April 30, 2001 at a price of $20.25 per share.
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 1997, except in the following
instances. Thermo Electron filed five Forms 4 late, by periods ranging from four
days to 43 days, reporting a total of 22 transactions, including 10 open market
purchases of shares of Common Stock and 12 transactions associated with the
grant and exercise of options to purchase Common Stock granted to employees
under its stock option program.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation for services to the
Corporation in all capacities awarded to, earned by or paid to the Corporation's
chief executive officer, and its four other most highly compensated executive
officers as well as one other executive who would have been among the four most
highly compensated executive officers except for the fact that he was not
serving as an executive officer at fiscal year-end (the "named executive
7
<PAGE>
officers") for the last two full fiscal years from September 29, 1996 to
September 27, 1997 ("fiscal 1997") and from October 1, 1995 to September 28,
1996 ("fiscal 1996"), 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 the preceding full fiscal year from January 2, 1994 to
December 31, 1994 ("fiscal 1994").
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation (1) Securities Underlying
Name and Fiscal ----------------------- Options (No. of Shares All Other
Principal Position Year Salary Bonus(2) and Company)(3) Compensation (4)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gary S. Weinstein (5) 1997 $117,604 $150,000 (2) 30,000 (TLZ) $163,329 (6)
President and 1996 $72,916 $150,000 100,000 (TKN)
Chief Executive Officer 100,000 (TLZ) $4,736 (7)
300,000 (TXM)
- --------------------------------------------------------------------------------------------------------------
Anthony J. Pellegrino (8) 1997 $218,750 $150,000 (2) -- $5,344
Former Senior Vice President 1996 $223,750 $150,000 40,000 (TXM) $5,344
and Director of Business 1995 $187,500 (1) $200,000 -- $6,750
Development 1994 $250,000 $180,000 22,500 (TMO) $6,750
- --------------------------------------------------------------------------------------------------------------
Hal Kirshner (8) 1997 $197,500 $200,000 (2) 300 (TMO) $5,344
President and Chief 1996 $192,500 $200,000 150 (TMO) $9,958 (9)
Executive Officer, Trex 2,000 (TBA)
Medical Corporation 2,000 (TFG)
2,000 (TLT)
6,000 (TOC)
6,000 (TMQ)
2,000 (TSR)
150,000 (TXM)
1995 $150,000 (1) $200,000 -- $7,005
1994 $200,000 $180,000 22,500 (TMO) $6,750
- --------------------------------------------------------------------------------------------------------------
Kenneth Y. Tang 1997 $164,000 $53,000 (2) -- $7,125
Senior Vice President 1996 $156,500 $50,000 40,000 (TXM) $6,975
1995 $114,000 (1) $49,000 -- $6,578
1994 $145,000 $50,000 -- $6,750
- --------------------------------------------------------------------------------------------------------------
David A. Teitel (10) 1997 $115,000 $27,000 (2) 20,000 (TKN) $0
Vice President, Finance 12,500 (TRCC)
- --------------------------------------------------------------------------------------------------------------
Brett A. Spivey (11) 1997 $128,750 $0 (2) 7,500 (TRCC) $6,954
Vice President 1996 $123,750 $42,000 15,000 (TXM) $7,094
1995 $90,000 (1) $40,000 -- $6,968
1994 $116,000 $36,000 -- $6,701
- --------------------------------------------------------------------------------------------------------------
</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
8
<PAGE>
paid during the nine-month period from January 1, 1995 to September 30,
1995. Salary data for subsequent fiscal years reflects salary paid during
the Corporation's full fiscal year.
(2) The bonus amount represents the bonus paid for performance during the
calendar year in which the Corporation's fiscal year-end occurred. As
bonuses have not yet been determined for calendar 1997, the bonus amounts
shown for fiscal 1997 are estimates.
(3) In addition to receiving options to purchase Common Stock of the
Corporation (designated in the table as TKN) and its subsidiaries,
ThermoLase (designated in the table as TLZ), Trex Medical (designated in
the table as TXM) and Trex Communications Corporation (designated in the
table as TRCC), the named executive officers have been granted options to
purchase common stock of Thermo Electron and certain of its other
subsidiaries from time to time by Thermo Electron or such 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). Mr. Weinstein has been granted certain options to purchase common
stock of Thermo Electron and certain of its subsidiaries, other than the
Corporation and its subsidiaries, from time to time as compensation for
service to other Thermo Electron companies in capacities other than in his
capacity as the chief executive officer of the Corporation. These options
are not reported in the table.
(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.
(5) Mr. Weinstein was appointed the Corporation's chief executive officer
effective as of February 26, 1996. He was also appointed a vice president
of Thermo Electron effective as of February 26, 1996, and a portion of his
annual cash compensation (salary and bonus) has been allocated to and paid
by Thermo Electron since the commencement of his employment for the time
he devoted to his responsibilities in that capacity. The annual cash
compensation (salary and bonus) reported in the table for Mr. Weinstein
represents the amount paid by the Corporation for Mr. Weinstein's services
as its chief executive officer. For each of fiscal 1997 and 1996,
approximately 50% of Mr. Weinstein's aggregate salary and bonus earned in
all capacities throughout the Thermo Electron organization was paid by the
Corporation for his services as chief executive officer.
(6) In addition to a $5,344 matching contribution referred to in footnote (4),
this amount includes $18,533 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"), the reimbursement by the Corporation of $96,407 in
expenses associated with Mr. Weinstein's relocation to Waltham,
Massachusetts, and an additional $43,045 paid by the Corporation to Mr.
Weinstein as an adjustment to such reimbursement to account for taxes.
(7) Represents the amount attributable during fiscal 1996 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."
(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. Mr. Pellegrino resigned as senior
vice president as of March 11, 1997 to assume the non-executive officer
position of director of business development. Mr. Pellegrino's salary and
bonus for fiscal 1997 reflect compensation received in both capacities
during the relevant periods. Mr. Pellegrino also serves as a director of
ThermoQuest Corporation, a majority owned subsidiary of Thermo Electron.
Options granted to Mr.
9
<PAGE>
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) In addition to a $5,344 matching contribution referred to in footnote (4),
this amount includes $4,614, representing the then market value of 115
shares of Thermo Electron common stock received by Mr. Kirshner in May
1996 at Thermo Electron's Annual Management Conference in recognition of
his managerial achievements.
(10) Mr. Teitel was appointed vice president, finance, of the Corporation
effective as of September 1996. He did not meet the definition of "highly
compensated" within the meaning of the Securities and Exchange
Commission's executive compensation disclosure rules in fiscal 1996.
(11) Mr. Spivey resigned his position as an executive officer of the
Corporation effective as of October 31, 1997.
Stock Options Granted During Fiscal 1997
The following table sets forth information concerning individual grants
of stock options by the Corporation and other Thermo Electron companies made
during fiscal 1997 to the Corporation's chief executive officer and the other
named executive officers in their capacities as executive officers of the
Corporation. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1997.
Mr. Weinstein has 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 capacities other
than in his capacity as the 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.
Option Grants in Fiscal 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation for
Number of Securities Granted to Exercise Option Term (2)
Underlying Options Employees in Price Per Expiration ----------------
Name Granted (1) Fiscal Year Share Date 5% 10%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gary S. Weinstein 30,000 (TLZ) 7.6% (3) $13.28 03/04/09 $317,100 $852,000
- --------------------------------------------------------------------------------------------------------------------
Anthony J. Pellegrino -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
Hal Kirshner 300 (TMO) 0.02% (3) $34.20 06/03/00 $1,617 $3,396
- --------------------------------------------------------------------------------------------------------------------
Kenneth Y. Tang -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
David A. Teitel 20,000 (TKN) 100.0% $26.69 09/18/09 $424,800 $1,141,400
12,500 (TRCC) 14.7% $4.00 09/18/07 $31,500 $79,625
- --------------------------------------------------------------------------------------------------------------------
Brett A. Spivey 7,500 (TRCC) 8.8% $4.00 09/18/07 18,870 47,820
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As part of Thermo Electron's stock option program, options have been
granted during fiscal 1997 to the named executive officers to purchase the
common stock of the Corporation (designated in the table as TKN), Thermo
Electron (TMO), ThermoLase Corporation (TLZ), Trex Communications
Corporation (TRCC) and Trex Medical Corporation (TXM). All of the options
granted during the fiscal year are immediately exercisable, except options
to purchase the common stock of Trex Communications Corporation, 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
10
<PAGE>
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.
(2) The amounts shown in this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the common stock of the
granting corporation, the optionee's continued employment through the
option period and the date on which the options are exercised.
(3) These options were granted under stock option plans maintained by Thermo
Electron and, accordingly, are reported as a percentage of total options
granted to employees of Thermo Electron and its subsidiaries.
Stock Options Exercised During Fiscal 1997 and Fiscal Year-End Values
The following table reports certain information regarding stock option
exercises during fiscal 1997 and outstanding stock options to purchase shares of
Thermo Electron companies held at the end of fiscal 1997 by the Corporation's
chief executive officer and the other named executive officers. No stock
appreciation rights were exercised or were outstanding during fiscal 1997.
11
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises In Fiscal 1997 And Fiscal 1997 Year-End Option Values
- --------------------------------------------------------------------------------------------------------------------------
Number of
Unexercised
Options at Fiscal Value of
Shares Year-End Unexercised
Acquired on Value (Exercisable/ In-the-Money
Name Company Exercise Realized (1) Unexercisable) (2) Options
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gary S. Weinstein (3) ThermoTrex -- -- 100,000 /0 $0 /--
ThermoLase -- -- 130,000 /0 $122,850 /--
Trex Medical -- -- 300,000 /0 $1,200,000 /--
- ----------------------------------------------------------------------------------------------------------------------------------
Anthony J. Pellegrino ThermoTrex -- -- 134,500 /0 $2,139,386 /--
Thermo Electron -- -- 115,875 /0 (4) $2,815,588 /--
ThermoLase -- -- 72,000 /0 $1,125,000 /--
Trex Medical -- -- 40,000 /0 $160,000 /--
- ----------------------------------------------------------------------------------------------------------------------------------
Hal Kirshner ThermoTrex -- -- 73,000 /0 $1,102,004 /--
Thermo Electron -- -- 116,325 /0 (4) $2,817,084 /--
Thermo BioAnalysis -- -- 2,000 /0 $13,750 /--
Thermo Fibergen -- -- 2,000 /0 $0 /--
ThermoLase -- -- 36,400 /0 $568,750 /--
ThermoLyte -- -- 0 /2,000 -- / $0 (5)
Thermo Optek -- -- 6,000 /0 $40,128 /--
ThermoQuest -- -- 6,000 /0 $36,750 /--
Thermo Sentron -- -- 2,000 /0 $250 /--
Trex Medical -- -- 150,000 /0 $600,000 /--
- ----------------------------------------------------------------------------------------------------------------------------------
Kenneth Y. Tang ThermoTrex -- -- 63,318 /0 $1,227,236 /--
Thermo Electron 13,500 $424,305 10,350 /0 $218,851 /--
Thermo Ecotek 3,000 $33,375 -- / -- -- /--
Thermo Fibertek 4,500 $31,500 -- / -- -- /--
ThermoLase -- -- 304,000 /0 $4,666,000 /--
Trex Medical -- -- 40,000 /0 $160,000 /--
- ----------------------------------------------------------------------------------------------------------------------------------
David A. Teitel ThermoTrex -- -- 30,000 /0 $0 /--
Thermo Electron -- -- 10,000 /0 $0 /--
ThermoLase -- -- 5,000 /0 $0 /--
Trex Communications -- -- 0 /12,500 -- / $0 (5)
Trex Medical -- -- 5,000 /0 $0 /--
- ----------------------------------------------------------------------------------------------------------------------------------
Brett A. Spivey ThermoTrex -- -- 46,969 /0 $933,754 /--
Thermo Electron 3,750 $95,813 9,128 /0 $266,698 /--
Thermedics 2,250 $23,918 -- / -- -- /--
Thermo Ecotek 1,500 $17,156 -- / -- -- /--
Thermo Fibertek -- -- 4,500 /0 $38,813 /--
ThermoLase -- -- 25,600 /0 $400,000 /--
Trex Medical -- -- 1,500 /0 $6,000 /--
Trex Communications -- -- 0 /7,500 -- / $0 (5)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the
option because in many cases the shares are not sold on exercise but
continue to be held by the executive officer exercising the option. The
amounts shown represent the difference between the option exercise
price and the market price on the date of exercise, which is the amount
that would have been realized if the shares had been sold immediately
upon exercise.
(2) All of the options reported outstanding at the end of the fiscal year
are immediately exercisable as of fiscal year-end, except options to
purchase the common stock of ThermoLyte Corporation and Trex
Communications Corporation, 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
12
<PAGE>
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. As to the options to
purchase shares of the common stock of Trex Medical Corporation granted
to Mr. Pellegrino and Dr. Tang, the repurchase rights are deemed to
lapse 20% per year commencing on the sixth anniversary of the grant
date. As to the options to purchase shares of the common stock of Trex
Medical Corporation granted to Mr. Kirshner, the repurchase rights are
deemed to lapse 10% per year on each of the first two anniversaries of
the grant date and 20% per year commencing on the seventh 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.
(3) As an officer of Thermo Electron, Mr. Weinstein also holds 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 his capacity as
the chief executive officer of the Corporation.
(4) 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.
(5) No public market existed for the shares as of November 28, 1997.
Accordingly, no value in excess of the exercise price has been
attributed to these options.
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 total compensation of executive
officers should reflect the scope of their responsibilities, the success of the
Corporation, and the contributions of each executive to that success. In
addition, the Committee believes that base salaries should approximate the
mid-point of competitive salaries derived from market surveys and that
short-term and long-term incentive compensation should reflect the performance
of the Corporation and the contributions of each executive.
External competitiveness is an important element of the Committee's
compensation policy. The competitiveness of the Corporation's total compensation
for its executives is assessed by comparing it to market data provided by its
compensation consultant and by participating in annual executive compensation
surveys, primarily "Project 777," an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The majority
of firms represented in the Project 777 survey are included in the Standard &
Poor's Index, but do not necessarily correspond to the companies included in the
Corporation's peer group index, the Dow Jones Total Return Index for the
Diversified Technology Industry Group.
13
<PAGE>
Principles of internal equity are also central to the Committee's
compensation policies. Total compensation considered for the Corporation's
officers, whether cash or stock-based incentives, is also evaluated by comparing
it to total compensation of other executives within the Thermo Electron
organization with comparable levels of responsibility for comparably sized
business units.
The Committee changed its fiscal year to end on the Saturday nearest
September 30 in 1995. Because the compensation practices of the Corporation are
guided by the policies of its parent corporation, Thermo Electron, the Committee
has continued to conduct cash compensation reviews on a calendar-year basis in
order to coincide with the compensation reviews conducted by the human resources
committee of the board of directors of Thermo Electron. Thermo Electron operates
on a fiscal year that ends on the Saturday nearest December 31.
The process for determining each of the elements of total compensation
for the Corporation's officers is outlined below.
Base Salary
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity to the
Corporation. Executive salaries are adjusted gradually over time and only as
necessary to meet this objective. Increases in base salary may be moderated by
other considerations, such as geographic or regional market data, industry
trends or internal fairness within the Corporation and Thermo Electron. It is
the Committee's intention that over time the base salaries for the chief
executive officer and the Corporation's other named executive officers will
approach the mid-point of competitive data. The salary increases in calendar
1997 for the 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 which are designed to
measure profitability and contributions to shareholder value, and are measures
of corporate and divisional performance that are evaluated using graphs
developed by Thermo Electron intended to reward performance that is perceived as
above average and to penalize performance that is perceived as below average.
The measures of operating returns used in the Committee's determinations in
calendar 1997 included return on net assets, growth in income, and return on
sales, and the Committee's determinations also included a subjective evaluation
of the contributions of each executive that are not captured by operating
measures but are considered important to the creation of long-term value for the
Stockholders. These measures of achievements are not financial targets that are
met, not met or exceeded. The relative weighting of the operating measures and
subjective evaluation varies among the executives, depending on their roles and
responsibilities within the organization.
The bonuses for named executive officers approved by the Committee with
respect to calendar 1997 performance in each instance exceeded the median
potential bonus.
14
<PAGE>
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 its parent corporation, Thermo Electron, and its majority-owned
subsidiaries, ThermoLase Corporation, Trex Medical Corporation and Trex
Communications Corporation, 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.) Awards are
reviewed annually in conjunction with the annual review of cash compensation,
and additional awards are made periodically as deemed appropriate. 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, in determining
option awards. The option awards made with respect to the common stock of Thermo
Electron and the Corporation, as well as of subsidiaries of Thermo Electron and
the Corporation, as part of Thermo Electron's stock option program were
determined by the human resources committee of the board of directors of the
applicable company using a similar analysis. In addition, certain awards to
purchase Thermo Electron stock were made under a program that awards options to
certain eligible employees annually based on the number of shares of the common
stock of Thermo Electron held by the employee, as an incentive to buy and hold
Thermo Electron stock.
Stock Ownership Policies
During fiscal 1996, the Committee established a stock holding policy
for executive officers of the Corporation. The stock holding policy specifies an
appropriate level of ownership of the Corporation's Common Stock as a multiple
of the officer's compensation. For the chief executive officer, the multiple is
one times his base salary and reference bonus for the calendar year. For all
other executive officers, the multiple is one times the officer's base salary.
The Committee deemed it appropriate to permit officers to achieve these
ownership levels over a three-year period.
In order to assist officers in complying with the policy, the Committee
also adopted a stock holding assistance plan under which the Corporation is
authorized to make interest-free loans to officers to enable them to purchase
shares of the Common Stock in the open market. The loans are required to be
repaid upon the earlier of demand or the fifth anniversary of the date of the
loan, unless otherwise authorized by the Committee. During 1996, Mr. Weinstein,
the Corporation's chief executive officer, received a loan in the principal
amount of $375,003.85 under this program. As of the date hereof , $300,003.08 of
this loan remained outstanding. See Relationship with Affiliates - Stock Holding
Assistance Plan.
The Committee also adopted a policy requiring its executive officers to
hold a certain number of shares of the Corporation's Common Stock acquired upon
the exercise of stock options granted by the Corporation. Under this policy,
executive officers are required to hold shares of Common Stock equal to one-half
of their net option exercises for a period of five years. The net option
exercise is determined by calculating the number of shares acquired upon
exercise of a stock option, after deducting the number of shares that could have
been traded to
15
<PAGE>
exercise the option and the number of shares that could have been surrendered to
satisfy tax withholding obligations attributable to the exercise of the option.
Policy on Deductibility of Compensation
The Committee has also considered the application of Section 162(m) of
the Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation paid to senior executives in excess of $1 million unless the
compensation qualifies as "performance based" or is otherwise exempt from
Section 162(m). The annual cash compensation paid to individual executives does
not approach the $1 million threshold, and it is believed that the stock
incentive plans of the Corporation qualify as "performance based." Therefore,
the Committee does not believe any further action is necessary in order to
comply with Section 162(m). From time to time, the Committee will reexamine the
Corporation's compensation practices and the effect of Section 162(m).
1997 CEO Compensation
Cash compensation for Mr. Gary S. Weinstein is reviewed by both the
Committee and the human resources committee of the board of directors of Thermo
Electron, due to his responsibilities as both the Corporation's chief executive
officer and as a vice president of Thermo Electron, the Corporation's parent
company. Each committee evaluates Mr. Weinstein's performance and proposed
compensation using a process similar to that used for the other executive
officers of the Corporation. At the Thermo Electron level, Mr. Weinstein is
evaluated on his performance related to the Corporation, as well as on his
performance of other responsibilities within Thermo Electron, weighted in
accordance with the amount of time and effort devoted to each operation or
function. The Corporation's Committee then reviews the analysis and
determinations of the Thermo Electron committee, makes an independent assessment
of Mr. Weinstein's performance as it relates to the Corporation using criteria
similar to those used for the other executive officers of the Corporation, and
then agrees to an appropriate allocation of Mr. Weinstein's compensation to be
paid by the Corporation.
In December 1997, the Committee conducted its review of Mr. Weinstein's
proposed salary for calendar 1998 and bonus for calendar 1997 performance. The
Committee concurred in the recommendation made by the Thermo Electron committee
and agreed to an allocation of 50% of Mr. Weinstein's total cash compensation
for 1997 to the Corporation, based on his relative responsibilities at the
Corporation and Thermo Electron. In determining Mr. Weinstein's cash
compensation as reported the Committee considered as part of its subjective
evaluation, among other factors, Mr. Weinstein's leadership in continuing the
Corporation's spinout strategy with the spinout of Trex Communications
Corporation, and the raising of additional equity to fund the growth strategy of
the Corporation and its majority-owned subsidiaries.
Awards to Mr. Weinstein of options to purchase shares of the
Corporation's Common Stock are reviewed and determined periodically by the
Committee using criteria similar to those used for the other executive officers
of the Corporation. No awards to purchase shares of the Corporation's Common
Stock were made by the Committee to Mr. Weinstein in fiscal 1997. The stock
option awards to Mr. Weinstein in fiscal 1997 with respect to shares of
ThermoLase were determined using an analysis similar to that used by the
Committee in awarding options to purchase common stock, as described above under
"Executive Compensation - Stock Option Program." In addition to stock option
awards by the Committee, Mr. Weinstein may receive awards to purchase shares of
the common stock of Thermo Electron or its other majority-owned subsidiaries
from time to time as part of Thermo Electron's stock option program due to his
position as a chief executive officer of a majority-owned subsidiary of Thermo
Electron. No options to purchase stock were awarded to Mr. Weinstein under this
program in fiscal 1997.
Mr. Peter O. Crisp (Chairman)
Mr. Morton Collins
Dr. Nicholas T. Zervas
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<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns for the Corporation's Common Stock with a
broad-based market index and either a nationally recognized industry standard or
an index of peer companies selected by the Corporation. The Corporation has
compared its performance with the American Stock Exchange Market Value Index and
the Dow Jones Total Return Index for the Diversified Technology Industry Group.
Comparison of Total Return Among ThermoTrex Corporation,
the American Stock Exchange Market Value Index and the
Dow Jones Total Return Index for the Diversified Technology Industry Group
From December 31, 1992 to September 26, 1997
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
12/31/92 12/31/93 12/31/94 09/29/95 09/27/96 09/26/97
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TKN 100 139 122 308 325 239
-------------------------------------------------------------------------------
AMEX 100 120 109 136 143 173
-------------------------------------------------------------------------------
DJDTC 100 117 121 158 188 261
-------------------------------------------------------------------------------
</TABLE>
The total return for the Corporation's Common Stock (TKN), the American
Stock Exchange Market Value Index (AMEX) and the Dow Jones Total Return for the
Diversified Technology Industry Group (DJDTC) 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 "TKN."
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 Subsidiaries, including the Corporation, have adopted the Thermo Electron
Corporate Charter (the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the Charter is to
ensure that (1) all of the companies and their stockholders are treated
consistently and fairly, (2)
17
<PAGE>
the scope and nature of the cooperation among the companies, and each company's
responsibilities, are adequately defined, (3) each company has access to the
combined resources and financial, managerial and technological strengths of the
others, and (4) Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general principles to
be followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo Subsidiaries (the "Thermo Group")
to external financing sources, ensuring compliance with external financial
covenants and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit services. Pursuant to
the Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining that
the Thermo Group remains in compliance with all covenants imposed by external
financing sources, including covenants related to borrowings of Thermo Electron
or other members of the Thermo Group, and for apportioning such constraints
within the Thermo Group. In addition, Thermo Electron establishes certain
internal policies and procedures applicable to members of the Thermo Group. The
cost of the services provided by Thermo Electron to the Thermo Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
each of the Thermo Subsidiaries.
The Charter presently provides that it shall continue in effect so long
as Thermo Electron and at least one Thermo Subsidiary participate. The Charter
may be amended at any time by agreement of the participants. Any Thermo
Subsidiary, including the Corporation, can withdraw from participation in the
Charter upon 30 days' prior notice. In addition, Thermo Electron may terminate a
subsidiary's participation in the Charter in the event the subsidiary ceases to
be controlled by Thermo Electron or ceases to comply with the Charter or the
policies and procedures applicable to the Thermo Group. A withdrawal from the
Charter automatically terminates the corporate services agreement and tax
allocation agreement (if any) in effect between the withdrawing company and
Thermo Electron. The withdrawal from participation does not terminate
outstanding commitments to third parties made by the withdrawing company, or by
Thermo Electron or other members of the Thermo Group, prior to the withdrawal.
In addition, a withdrawing company is required to continue to comply with all
policies and procedures applicable to the Thermo Group and to provide certain
administrative functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.
Corporate Services Agreement
As provided in the Charter, the Corporation and Thermo Electron have
entered into a Corporate Services Agreement (the "Services Agreement") under
which Thermo Electron's corporate staff provides certain administrative
services, including certain legal advice and services, risk management, certain
employee benefit administration, tax advice and preparation of tax returns,
centralized cash management and certain financial and other services to the
Corporation. The Corporation was assessed an annual fee equal to 1% of the
Corporation's total revenues for these services in calendar 1996 and 1997. The
annual fee will be reduced to 0.8% of the Corporation's total revenues in
calendar 1998. The fee is reviewed annually and may be changed by mutual
agreement of the Corporation and Thermo Electron. During fiscal 1997, Thermo
Electron assessed the Corporation $2,821,000 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
18
<PAGE>
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.
Miscellaneous
From time to time, the Corporation may transact business with other
companies in the Thermo Group. In fiscal 1997, such transactions included the
following.
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 1997, Trex Medical purchased grids for an
aggregate purchase price of $678,000 under this arrangement. Trex Medical owns
the intellectual property rights to the grid.
Under an arrangement with Thermedics Detection Inc., a majority-owned
subsidiary of Thermedics Inc., which is a majority-owned subsidiary of Thermo
Electron, Trex Medical manufactures an X-ray source that is used as a component
in 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 1997, Thermedics Detection purchased X-ray source
units from Trex Medical for an aggregate purchase price of $37,000 under this
arrangement.
In April 1997, the Corporation repaid $2,000,000 borrowed from Thermo
Electron the previous September. In addition, the Corporation borrowed
$11,000,000 from Thermo Electron in July 1997 to finance an acquisition. Each of
these borrowings was made pursuant to a promissory note and bears interest at
the 90-day Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter. At September 27, 1997, the Corporation owed Thermo
Electron an aggregate of $11,000,000.
In November 1997, the Corporation issued $124,500,000 principal amount
of its 3 1/4% Convertible Subordinated Debentures due 2007 in a registered
public offering. The Debentures are convertible into shares of the Corporation's
common stock at an initial conversion price of $27.00 per share. Thermo Electron
purchased $10,000,000 principal amount of the Debentures from the underwriters
of the offering on the same terms as the Debentures sold by such underwriters to
the public.
As of September 27, 1997, $91,164,000 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. 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 beneficially owned 54.7% of the Corporation's Common
Stock on November 28, 1997. Such amount includes 370,370 shares issuable upon
conversion of a 3 1/4% convertible debenture due in 2007. 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.
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
19
<PAGE>
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 to be repaid upon the earlier of demand or
the fifth anniversary of the date of the loan, unless otherwise authorized by
the human resources committee of the board of directors of the Corporation. As
of the date hereof, $300,003.08 of the loan remained outstanding.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1998. Arthur Andersen LLP has acted as independent
public accountants for the Corporation since 1990. Representatives of that firm
are expected to be present at the meeting, will have the opportunity to make a
statement if they desire to do so and will be available to respond to questions.
The board of directors has established an audit committee, presently consisting
of three outside directors, the purpose of which is to review the scope and
results of the audit.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the meeting. Should any such matters be presented, the
proxies grant power to the proxy holders to vote shares represented by the
proxies in the discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1999 Annual
Meeting of the Stockholders of the Corporation must be received by the
Corporation for inclusion in the proxy statement and form of proxy relating to
that meeting no later than September 25, 1998.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by the
Corporation. Solicitation will be made primarily by mail, but regular employees
of the Corporation may solicit proxies personally, by telephone or by telegram.
Brokers, nominees, custodians and fiduciaries are requested to forward
solicitation materials to obtain voting instructions from beneficial owners of
stock registered in their names, and the Corporation will reimburse such parties
for their reasonable charges and expenses in connection therewith.
San Diego, California
January 21, 1998
20
<PAGE>
FORM OF PROXY
THERMOTREX CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 5, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints John N. Hatsopoulos, Melissa F. Riordan and
Gary S. Weinstein, or any one of them in the absence of the others, as attorneys
and proxies of the undersigned, with full power of substitution, for and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
the Stockholders of ThermoTrex Corporation, a Delaware corporation (the
"Company"), to be held on Thursday, March 5, 1998, at 9:30 a.m. at the Westin
Hotel, 70 Third Avenue, Waltham, Massachusetts 02154, 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 January 14, 1998, with all of the
powers the undersigned would possess if personally present at such meeting.
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
Please mark your
[X] votes as in this
example.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
FOR [_] WITHHELD [_]
- ---------------------------------------
FOR all nominees listed at right, except authority to vote
withheld for the following nominees (if any)
- ---------------------------------------
<PAGE>
Nominees: Morton Collins, Peter O. Crisp, Paul F. Ferrari, George N.
Hatsopoulos, Robert C. Howard, Gary S. Weinstein and Nicholas T. Zervas.
2. In their discretion on such other matters as may properly come before the
Meeting.
The shares represented by this Proxy will be voted "FOR" the nominees set forth
herein if no instruction to the contrary is indicated or if no instruction is
given.
Copies of the Notice of Meeting and of the Proxy Statement have been received
by the undersigned.
SIGNATURE(S)
---------------------------------------
DATE
-----------------
Note: This proxy should be dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.
