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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
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Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6 (e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11 or (S) 240.14a-12
Thermo Electron Corporation
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(Name of Registrant as Specified In Its Charter)
Thermo Electron Corporation
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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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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
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<PAGE>
81 Wyman Street
P.O. Box 9046
Waltham, MA 02454-9046
April 8, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of the
Stockholders of Thermo Electron Corporation. Your board of directors and
management look forward to greeting personally those Stockholders able to
attend. Our Annual Report for the year ended January 2, 1999, is enclosed. We
hope you will read it carefully. Please feel free to forward any questions you
may have if you are unable to attend the meeting.
At the meeting, you will be asked to elect four directors, to approve an
amended and restated certificate of incorporation, and to vote on two
stockholder proposals if they are presented at the meeting. These proposals
are more fully discussed in the accompanying proxy statement, which you are
urged to read carefully. Your board of directors recommends a vote FOR
proposals 1 and 2 and AGAINST the stockholder proposals, if presented.
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. It
is important that your shares are represented and voted at the meeting whether
or not you plan to attend. Accordingly, you are requested to sign, date and
mail the enclosed proxy in the envelope provided at your earliest convenience.
On behalf of the board of directors, thank you for your cooperation and
continued support.
Yours very truly,
/s/ George N. Hatsopoulos
George N. Hatsopoulos
Chairman and Chief Executive Officer
Arvin H. Smith
President
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD.
<PAGE>
81 Wyman Street
P.O. Box 9046
Waltham, MA 02454-9046
April 8, 1999
To the Holders of the Common Stock of
THERMO ELECTRON CORPORATION
NOTICE OF ANNUAL MEETING
The 1999 Annual Meeting of the Stockholders of Thermo Electron Corporation
("Thermo Electron" or the "Corporation") will be held on Thursday, May 27,
1999 at 3:00 p.m. at The Westin Hotel, 70 Third Avenue, Waltham,
Massachusetts. The purpose of the meeting is to consider and take action upon
the following matters:
1. Election of four directors, comprising the class of directors to be
elected for a three-year term expiring in the year 2002.
2. A proposal recommended by the board of directors to amend and restate
the Corporation's certificate of incorporation.
3. Stockholder proposals, if presented by their proponents at the
meeting.
4. Such other business as may properly be brought before the meeting and
any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to notice of
and to vote at the meeting is April 7, 1999.
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. Enclosed is a proxy authorizing three officers
of the Corporation to vote your shares as you instruct. Whether or not you are
able to be present in person, please sign the enclosed proxy and return it
promptly to our transfer agent 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
Vice President, Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Thermo Electron
Corporation ("Thermo Electron" or the "Corporation") for use at the 1999
Annual Meeting of the Stockholders to be held Thursday, May 27, 1999 at 3:00
p.m. at The Westin Hotel, 70 Third Avenue, Waltham, Massachusetts and any
adjournment thereof. The mailing address of the executive office of the
Corporation is 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02454-
9046. This proxy statement and the enclosed proxy were first furnished to
Stockholders of the Corporation on or about April , 1999.
VOTING PROCEDURES
The board of directors intends to present to the meeting the election of
four directors, comprising the class of directors to be elected for a three-
year term expiring in 2002, as well as one other matter: a proposal to amend
and restate the Corporation's certificate of incorporation.
The representation in person or by proxy of a majority of the outstanding
shares of common stock, $1.00 par value, of the Corporation ("Common Stock")
entitled to vote at the meeting is necessary to provide a quorum for the
transaction of business at the meeting. Shares can be voted only 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.
For purposes of the quorum, votes of Stockholders of record who are present at
the meeting in person or by proxy, abstentions, and broker non-votes (as
defined below) are counted as present or represented at the meeting for
purposes of determining whether a quorum exists.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on
the proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted FOR the management nominees for directors,
FOR the management proposal, AGAINST the stockholder proposals, and as the
individuals named as proxy holders on the proxy deem advisable on all other
matters as may properly come before the meeting.
Nominees for election as directors at the meeting will be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting. For the proposal to amend and restate the Corporation's
certificate of incorporation, the affirmative vote of two-thirds of the
Corporation's outstanding Common Stock is necessary for approval. For the
stockholder proposals, the affirmative vote of a majority of the Corporation's
outstanding Common Stock present or represented by proxy and entitled to vote
on the matter is necessary for approval. If you hold your shares of Common
Stock through a broker, bank or other nominee, generally the nominee may only
vote the Common Stock that it holds for you in accordance with your
instructions. However, if it has not timely received your instructions, the
nominee may vote on certain matters for which it has discretionary voting
authority. If a nominee cannot vote on a particular matter because it does not
have discretionary voting authority, this is a "broker non-vote" on that
matter. Because abstentions are treated as shares present or represented and
entitled to vote, abstentions have the same effect as negative votes. As to
the stockholder proposals, broker non-votes are not deemed to be present and
represented and are not entitled to vote for the purpose of determining
whether stockholder approval of that matter has been obtained, and therefore
will have no effect on the outcome of the vote. As to the proposal to amend
and restate the Corporation's certificate of incorporation, which requires the
affirmative vote of two-thirds of the Corporation's outstanding Common Stock,
broker non-votes have the same effect as negative votes.
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.
1
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The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of April 7, 1999, consisted of
shares of Common Stock. Only Stockholders of record at the close of business
on April 7, 1999 are entitled to vote at the meeting. Each share is entitled
to one vote.
PROPOSAL 1
ELECTION OF DIRECTORS
Four directors are to be elected at the meeting, and John N. Hatsopoulos,
Robert A. McCabe, Hutham S. Olayan and Richard F. Syron are listed below as
nominees for the three-year term expiring at the Annual Meeting of the
Stockholders to be held in the year 2002. For purposes of this meeting, the
board of directors has fixed the number of directors at twelve, divided into
three classes of four directors each. Each class is elected for a three-year
term at successive Annual Meetings of the Stockholders. In all cases,
directors hold office until their successors have been elected and qualified,
or until their earlier resignation, death or removal.
Nominees and Incumbent Directors
Set forth below are the names of the persons nominated as directors and
directors whose terms do not expire this year, their ages, their offices in
the Corporation, if any, their principal occupations 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 certain subsidiaries of the Corporation is reported under
the caption "Stock Ownership." All of the nominees are currently directors of
the Corporation.
Nominees for Directors Whose Term of Office Will Expire in 2002
John N. Hatsopoulos Mr. Hatsopoulos, 64, has been a director of the
Corporation since September 1997 and vice chairman of the board of directors
since September 1998. He was the president of the Corporation from January
1997 until September 1998, chief financial officer from 1988 until his
retirement in December 1998, and executive vice president from 1986 until
1997. Mr. Hatsopoulos is also a director of LOIS/USA Inc., Thermedics Inc.,
Thermo Ecotek Corporation, Thermo Fibertek Inc., Thermo Instrument Systems
Inc., Thermo Power Corporation, Thermo TerraTech Inc. and US Liquids Inc. Mr.
Hatsopoulos is the brother of Dr. George N. Hatsopoulos, a director, chairman
of the board and chief executive officer of the Corporation.
Robert A. McCabe Mr. McCabe, 64, has been a director of the Corporation
since 1962. He has been the chairman of Pilot Capital Corporation, which is
engaged in private investments and provides acquisition services, since 1998.
Mr. McCabe was the president of Pilot Capital Corporation from 1987 to 1998.
Prior to that time, Mr. McCabe was a managing director of Lehman Brothers
Inc., an investment banking firm. Mr. McCabe is also a director of Atlantic
Bank, Borg-Warner Security Corporation, Church & Dwight Company, Morrison-
Knudsen Corporation and Thermo Optek Corporation.
Hutham S. Olayan Ms. Olayan, 45, has been a director of the Corporation
since 1987. She has served since 1995 as president and a director of Olayan
America Corporation, a member of the Olayan Group, and as president and a
director of Competrol Real Estate Limited, another member of the Olayan Group,
from 1986 until its merger into Olayan America Corporation in 1997. The
surviving company is engaged in private investments, including real estate,
and advisory services. In addition, from 1985 to 1994, Ms. Olayan served as
president and a director of Crescent Diversified Limited, another member of
the Olayan Group engaged in private investments. Ms. Olayan is also a director
of Trex Medical Corporation.
Richard F. Syron Dr. Syron, 55, has been a director of the Corporation since
September 1997. In March 1999, Dr. Syron was appointed president and chief
executive officer of the Corporation, effective June 1, 1999. Since April
1994, Dr. Syron has been the chairman and chief executive officer of the
American Stock Exchange
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Inc. From January 1989 through April 1994, he was the president and chief
executive officer of the Federal Reserve Bank of Boston. Prior to that time,
he held a variety of senior positions with the Federal Home Loan Bank of
Boston, the Federal Reserve Bank of Boston, the Board of Governors of the
Federal Reserve System, and the U.S. Department of Treasury. Dr. Syron is also
a director of Dreyfus Corporation and The John Hancock Corporation.
Incumbent Directors Whose Term of Office Will Expire in 2000
John M. Albertine Dr. Albertine, 54, has been a director of the Corporation
since 1986. Dr. Albertine serves as chairman of the board and chief executive
officer of Albertine Enterprises, Inc., an economic- and public-policy
consulting and full-service mergers and acquisitions firm he founded in 1990.
Dr. Albertine is also a director of American Precision Industries, Inc.,
Intermagnetics General Corp. and U.S. Cast Products Inc.
Peter O. Crisp Mr. Crisp, 66, has been a director of the Corporation since
1974. Mr. Crisp was a general partner of Venrock Associates, a venture capital
investment firm, for more than five years until his retirement in September
1997. He has been the vice chairman of Rockefeller Financial Services, Inc.
since December 1997. Mr. Crisp is also a director of Evans & Sutherland
Computer Corporation, NovaCare Inc., Thermedics Inc., Thermo Power
Corporation, ThermoTrex Corporation and United States Trust Corporation.
George N. Hatsopoulos Dr. Hatsopoulos, 72, has been a director, the chairman
of the board and chief executive officer of the Corporation since he founded
the Corporation in 1956. Until January 1997, he was also the president of the
Corporation. Effective June 1, 1999, Dr. Hatsopoulos will step down as the
chief executive officer of the Corporation and remain as non-executive
chairman of the board. Dr. Hatsopoulos is also a director of Photoelectron
Corporation, Thermedics Inc., Thermo Ecotek Corporation, Thermo Fibertek Inc.,
Thermo Instrument Systems Inc., Thermo Optek Corporation, ThermoQuest
Corporation and ThermoTrex Corporation. Dr. Hatsopoulos is the brother of Mr.
John N. Hatsopoulos, a director of the Corporation.
Roger D. Wellington Mr. Wellington, 72, has been a director of the
Corporation since 1986. Mr. Wellington serves as the president and chief
executive officer of Wellington Consultants, Inc. and of Wellington Associates
Inc., international business consulting firms he founded in 1994 and 1989,
respectively. Prior to 1989, Mr. Wellington served as chairman of the board of
Augat Inc., a manufacturer of electromechanical components and systems, for
more than five years. Prior to 1988, Mr. Wellington also served as the chief
executive officer and president of Augat Inc. for more than ten years. Mr.
Wellington is also a director of Photoelectron Corporation and Thermo Fibergen
Inc.
Incumbent Directors Whose Term of Office Will Expire in 2001
Elias P. Gyftopoulos Dr. Gyftopoulos, 71, has been a director of the
Corporation since 1976. Dr. Gyftopoulos is Professor Emeritus of the
Massachusetts Institute of Technology, where he was the Ford Professor of
Mechanical Engineering and of Nuclear Engineering for more than 20 years until
his retirement in 1996. Dr. Gyftopoulos is also a director of Thermo
BioAnalysis Corporation, Thermo Cardiosystems Inc., ThermoLase Corporation,
ThermoRetec Corporation, ThermoSpectra Corporation, Thermo Vision Corporation
and Trex Medical Corporation.
Frank Jungers Mr. Jungers, 72, has been a director of the Corporation since
1978. Mr. Jungers has been a consultant on business and energy matters since
1977. Mr. Jungers was employed by the Arabian American Oil Company from 1974
through 1977 as chairman and chief executive officer. Mr. Jungers is also a
director of The AES Corporation, Donaldson, Lufkin & Jenrette, Inc., Georgia-
Pacific Corporation, ONIX Systems Inc., Statia Terminals Group N.V., Thermo
Ecotek Corporation and ThermoQuest Corporation.
Robert W. O'Leary Mr. O'Leary, 55, has been a director of the Corporation
since June 1998. He has been the president and chairman of Premier Inc., a
strategic alliance of not-for-profit health care and hospital
3
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systems, since 1995. From 1990 to 1995, Mr. O'Leary was the chairman of
American Medical International, Inc., one of the three predecessor entities of
Premier Inc.
Donald E. Noble Mr. Noble, 84, has been a director of the Corporation since
1983. Mr. Noble has announced his intention to retire from the board of
directors in September 1999. For more than 20 years, from 1959 to 1980, Mr.
Noble served as the chief executive officer of Rubbermaid, Incorporated, first
with the title of president and then as chairman of the board. Mr. Noble is
also a director of Thermo Fibertek Inc., Thermo Power Corporation, Thermo
Sentron Inc. and Thermo TerraTech Inc.
Committees of the Board of Directors and Meetings
The board of directors has established an executive committee, an audit
committee and a human resources committee. The present members of the
executive committee are Dr. G. Hatsopoulos (Chairman), Mr. Jungers, Mr. Noble
and Dr. Syron. The executive committee is empowered to act when it is
impractical to call a meeting of the entire board of directors and, with
certain exceptions, has the powers of the board of directors. The audit
committee consists solely of outside directors, and its present members are
Dr. Albertine (Chairman), Mr. Jungers, Dr. Syron and Mr. Wellington. 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 human resources
committee consists solely of outside directors and its present members are Mr.
Noble (Chairman), Dr. Gyftopoulos, Mr. Jungers, Mr. McCabe and Ms. Olayan. The
human resources committee reviews corporate organization, reviews the
performance of senior members of management, approves 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 18 times, the audit
committee met twice and the human resources committee met 14 times during
fiscal 1998. Each director attended at least 75% of all meetings of the board
of directors and committees on which he or she served held during fiscal 1998.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation or of any companies
affiliated with Thermo Electron ("outside directors") receive an annual
retainer of $20,000 and a fee of $1,000 per day for attending regular meetings
of the board of directors or its committees and for each day of consulting for
the board of directors, and $500 per day for participating in meetings of the
board of directors or such committees held by means of conference telephone.
Payment of directors' fees is made quarterly. Dr. G. Hatsopoulos, who is a
full-time employee of the Corporation, does not receive any cash compensation
from the Corporation for his service as a director. Mr. J. Hatsopoulos, who is
a consultant to the Corporation, does not receive any cash compensation from
the Corporation for his services as a director during the term of his
consulting agreement. See "Executive Compensation--Consulting Agreement with
Mr. John N. Hatsopoulos." Directors are also reimbursed for out-of-pocket
expenses and in some instances for travel time incurred in attending such
meetings.
Deferred Compensation Plan for Directors
Under the Corporation's 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 (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 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
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Plan are valued at the end of each quarter as units of Common Stock. When
payable, amounts deferred may be disbursed solely in shares of Common Stock
accumulated under the Deferred Compensation Plan. A total of 613,360 shares of
Common Stock has been reserved for issuance under the Deferred Compensation
Plan. As of January 31, 1999, deferred units equal to 321,757.32 shares of
Common Stock were accumulated under the Deferred Compensation Plan.
Stock-Based Compensation
Directors Stock Option Plan. The Corporation's directors stock option plan
(the "Directors Plan"), provides for two types of grants of stock options to
purchase shares of common stock of the Corporation and certain of 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 of
options to purchase up to 1,500 shares of the common stock of certain of the
Corporation's publicly traded, majority-owned subsidiaries and of each
majority-owned subsidiary of the Corporation that is subsequently "spun out"
to outside investors, both upon the initial spinout and at five-year intervals
thereafter.
Under the first type of grant pursuant to the 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
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.
Under the second type of grant pursuant to the Directors Plan, outside
directors automatically receive a grant of options to purchase shares of
common stock of certain of the Corporation's publicly traded, majority-owned
subsidiaries as described in the Directors Plan and of each majority-owned
subsidiary of the Corporation that is subsequently "spun out" to outside
investors, both upon the initial spinout and at five-year intervals
thereafter. Outside directors receive options to purchase 1,500 shares of
common stock in majority-owned subsidiaries that are directly owned by the
Corporation and 1,000 shares of common stock in majority-owned subsidiaries
that are indirectly owned by the Corporation through one or more of its other
majority-owned subsidiaries. The grant of options with respect to the common
stock of subsidiaries that are spun out 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 option will become immediately
exercisable and the shares acquired upon exercise will be subject to
restrictions on transfer and the right of the Corporation to repurchase such
shares at the exercise price in the event the director ceases to serve as a
director of the Corporation or any other 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. At the
1999 Annual Meeting of the Stockholders, each outside director will be granted
options to purchase 1,000 shares of the common stock of each of . Also at
the 1999 Annual Meeting of the Stockholders, each outside director will be
granted options to purchase 1,500 shares of the common stock of each of .
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 New York
or 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 per share paid by third parties in an arms-length transaction prior
to the option grant. As of January 31, 1999, options to purchase shares of
Common Stock were outstanding under the Directors Plan, no options had lapsed
or been exercised, and options to purchase shares of Common Stock were
available for future grant.
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Other Stock-Based Compensation. In 1998, options to purchase 10,000 shares
of the Common Stock at an exercise price of $34.21 per share were granted to
Mr. O'Leary in connection with his appointment as a director. These options
may be exercised at any time from and after the six-month anniversary of the
grant date and prior to the expiration of the options on the twelfth
anniversary of the grant date. Shares acquired upon exercise of the options
are subject to restrictions on transfer and the right of the Corporation to
repurchase such shares at the exercise price if Mr. O'Leary ceases to serve as
a director of the Corporation or any other Thermo Electron company. The
restrictions and repurchase rights lapse or are deemed to have lapsed 10% per
year, starting with the first anniversary of the grant date, provided Mr.
O'Leary has continuously served as a director of the Corporation or any other
Thermo Electron company since the grant date.
Stock Ownership Policies for Directors
During 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 within
three years of their appointment. The chief executive officer of the
Corporation is required to comply with a separate stock holding policy
established by the Committee in 1996, which is described in "Committee Report
on Executive Compensation--Stock Ownership Policies."
In addition, the Committee adopted a policy requiring directors to hold
shares of the Corporation's 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 "Committee Report on Executive Compensation--Stock Ownership Policies."
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STOCK OWNERSHIP
The following table sets forth, as of January 31, 1999, the beneficial
ownership of the Corporation's Common Stock, by (a) each director, (b) each of
the Corporation's executive officers named in the summary compensation table
set forth below under the heading "Executive Compensation," and (c) all
directors and current executive officers as a group, as well as their
beneficial ownership of each of the Corporation's majority-owned subsidiaries
as follows: (i) Thermo Coleman Corporation and Thermo Information Solutions
Inc., a majority-owned subsidiary of Thermo Coleman Corporation, (ii) Thermo
Ecotek Corporation and Thermo Trilogy Corporation, a majority-owned subsidiary
of Thermo Ecotek Corporation, (iii) Thermo Fibertek Inc. and Thermo Fibergen
Inc., a majority-owned subsidiary of Thermo Fibertek Inc., (iv) Thermo Power
Corporation and ThermoLyte Corporation, a majority-owned subsidiary of Thermo
Power Corporation, (v) Thermo TerraTech Inc. and The Randers Killam Group
Inc., Thermo EuroTech N.V. and ThermoRetec Corporation, each a majority-owned
subsidiary of Thermo TerraTech Inc., (vi) Thermedics Inc. and Thermedics
Detection Inc., Thermo Cardiosystems Inc., Thermo Sentron Inc. and Thermo
Voltek Corp., each a majority-owned subsidiary of Thermedics Inc., (vii)
ThermoTrex Corporation and ThermoLase Corporation, Trex Medical Corporation
and Trex Communications Corporation, each a majority-owned subsidiary of
ThermoTrex Corporation, and (viii) Thermo Instrument Systems Inc. and Metrika
Systems Corporation, ONIX Systems Inc., Thermo BioAnalysis Corporation, Thermo
Optek Corporation, ThermoQuest Corporation, ThermoSpectra Corporation and
Thermo Vision Corporation, each a majority-owned subsidiary of Thermo
Instrument Systems Inc. The common stock of each of the majority-owned
subsidiaries is publicly traded except for the common stock of Thermo Coleman
Corporation, Thermo Information Solutions Inc., ThermoLyte Corporation, Thermo
EuroTech N.V., Thermo Trilogy Corporation, and Trex Communications
Corporation, which are privately held, and Thermo Voltek Corp., which has,
subsequent to January 31, 1999, been taken private and merged with a wholly-
owned subsidiary of Thermedics Inc. In addition, the following table sets
forth the beneficial ownership of Common Stock, as of January 31, 1999, with
respect to each person who was known by the Corporation to own beneficially
more than 5% of the outstanding shares of Common Stock.
While certain directors and executive officers of the Corporation are also
directors or executive officers of majority-owned subsidiaries of the
Corporation, all such persons disclaim beneficial ownership of the shares of
common stock of other Thermo Electron companies owned by the Corporation or
such majority-owned subsidiaries.
7
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<TABLE>
<CAPTION>
Thermo Thermo Thermo Thermo
Electron Information Ecotek Trilogy Thermo Thermo
Name(1) Corporation(2) Solutions Inc.(3) Corporation(4) Corporation(5) Fibertek Inc.(6) Fibergen Inc.(7)
------- -------------- ----------------- -------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Putnam
Investments,
Inc.(32)....... 8,559,064 N/A N/A N/A N/A N/A
FMR
Corporation(33).. 14,131,886 N/A N/A N/A N/A N/A
John M.
Albertine...... 43,363 -- 2,250 -- 8,250 1,000
Peter O. Crisp.. 103,007 -- 5,191 -- 8,250 1,000
Elias P.
Gyftopoulos.... 71,855 -- 2,250 -- 8,250 1,000
George N.
Hatsopoulos.... 3,600,811 -- 25,579 -- 170,494 20,000
John N.
Hatsopoulos.... 873,854 -- 15,569 -- 127,220 20,000
Frank Jungers... 175,754 2,000 11,712 3,000 9,375 4,000
John T. Keiser.. 296,608 -- -- -- -- --
Earl R. Lewis... 204,878 -- -- -- -- 2,000
Robert A.
McCabe......... 48,009 12,000 2,250 18,000 8,250 1,000
Donald E.
Noble.......... 59,751 3,000 2,250 2,500 120,737 7,500
Hutham S.
Olayan......... 28,748 -- 2,250 6,060 8,250 2,000
Robert W.
O'Leary........ 25,226 -- -- -- 1,500 --
William A.
Rainville...... 359,409 -- 4,467 -- 690,077 43,000
Arvin H. Smith.. 931,378 -- 6,000 -- 63,000 10,000
Richard F.
Syron.......... 12,849 -- -- -- -- --
Roger D.
Wellington..... 38,050 -- 2,250 8,000 17,250 11,748
All directors
and current
executive
officers as a
group (21
persons)....... 8,425,740 17,000 341,164 37,560 1,412,271 145,248
<CAPTION>
Thermo Thermo
Power ThermoLyte TerraTech
Name(1) Corporation(8) Corporation(9) Inc.(10)
------- -------------- -------------- ---------
<S> <C> <C> <C>
Putnam
Investments,
Inc.(32)....... N/A N/A N/A
FMR
Corporation(33).. N/A N/A N/A
John M.
Albertine...... 3,000 -- 1,500
Peter O. Crisp.. 37,566 -- 1,500
Elias P.
Gyftopoulos.... 6,925 -- 3,040
George N.
Hatsopoulos.... 54,282 -- 55,471
John N.
Hatsopoulos.... 46,753 -- 60,357
Frank Jungers... 3,000 -- 1,500
John T. Keiser.. -- -- --
Earl R. Lewis... 12,500 -- --
Robert A.
McCabe......... 11,209 -- 3,660
Donald E.
Noble.......... 24,332 -- 53,340
Hutham S.
Olayan......... 3,000 -- 1,500
Robert W.
O'Leary........ -- -- --
William A.
Rainville...... -- -- 60,000
Arvin H. Smith.. 7,969 -- 36,997
Richard F.
Syron.......... -- -- --
Roger D.
Wellington..... 6,425 -- 2,500
All directors
and current
executive
officers as a
group (21
persons)....... 253,818 -- 325,506
</TABLE>
<TABLE>
<CAPTION>
The Randers Thermo Thermo Thermo Thermo
Killam Group EuroTech ThermoRetec Thermedics Thermedics Cardiosystems Sentron Voltek
Name(1) Inc.(11) N.V.(12) Corporation(13) Inc.(14) Detection Inc.(15) Inc.(16) Inc.(17) Corp.(18)
------- ------------ -------- --------------- ---------- ------------------ ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Putnam
Investments,
Inc.(32)....... N/A N/A N/A N/A N/A 3,354,271 N/A N/A
FMR
Corporation(33).. N/A N/A N/A N/A N/A N/A N/A N/A
John M.
Albertine...... -- -- 4,500 4,500 1,000 1,000 1,000 1,500
Peter O. Crisp.. -- -- 4,500 35,418 1,500 2,250 1,500 2,250
Elias P.
Gyftopoulos.... -- -- 30,950 10,048 1,600 16,023 1,000 5,250
George N.
Hatsopoulos.... 48,000 -- 9,000 63,681 21,197 11,584 17,000 --
John N.
Hatsopoulos.... 48,000 -- 61,282 64,630 21,262 432 37,800 --
Frank Jungers... -- -- 15,000 9,050 1,000 13,250 1,000 1,500
John T. Keiser.. 4,000 -- -- 193,993 17,000 56,773 51,000 --
Earl R. Lewis... 4,000 -- -- -- 2,000 -- 2,000 --
Robert A.
McCabe......... -- -- 4,500 6,998 10,000 12,250 3,000 3,300
Donald E.
Noble.......... 300 -- 10,500 14,173 1,968 12,250 18,284 1,500
Hutham S.
Olayan......... -- -- 4,500 4,500 1,000 12,250 1,000 1,500
Robert W.
O'Leary........ -- -- -- -- -- -- -- --
William A.
Rainville...... 24,000 -- 24,000 -- 10,000 -- 7,000 --
Arvin H. Smith.. 24,000 -- 2,400 91,290 10,000 30,000 7,000 --
Richard F.
Syron.......... -- -- -- -- -- -- -- --
Roger D.
Wellington..... -- -- 4,500 4,500 1,000 4,750 1,000 1,500
All directors
and current
executive
officers as a
group (21
persons)....... 196,300 -- 240,912 733,962 149,678 227,746 195,584 130,852
<CAPTION>
ThermoTrex ThermoLase
Name(1) Corporation(19) Corporation(20)
------- --------------- ---------------
<S> <C> <C>
Putnam
Investments,
Inc.(32)....... N/A N/A
FMR
Corporation(33).. N/A N/A
John M.
Albertine...... 6,000 2,000
Peter O. Crisp.. 40,282 22,508
Elias P.
Gyftopoulos.... 6,000 62,455
George N.
Hatsopoulos.... 44,889 31,125
John N.
Hatsopoulos.... 23,844 542,329
Frank Jungers... 12,500 3,300
John T. Keiser.. -- --
Earl R. Lewis... -- 5,000
Robert A.
McCabe......... 11,500 3,976
Donald E.
Noble.......... 6,000 6,000
Hutham S.
Olayan......... 6,000 2,000
Robert W.
O'Leary........ 1,500 --
William A.
Rainville...... 1,797 10,000
Arvin H. Smith.. 1,967 10,000
Richard F.
Syron.......... -- --
Roger D.
Wellington..... 6,000 2,000
All directors
and current
executive
officers as a
group (21
persons)....... 182,835 827,610
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Trex Trex Thermo Metrika ONIX Thermo Thermo
Medical Communications Instrument Systems Systems BioAnalysis Optek
Name(1) Corporation(21) Corporation(22) Systems Inc.(23) Corporation(24) Inc.(25) Corporation(26) Corporation(27)
------- --------------- --------------- ---------------- --------------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Putnam
Investments,
Inc.(32)........ N/A N/A N/A N/A N/A N/A N/A
FMR
Corporation(33).. N/A N/A N/A N/A N/A N/A N/A
John M.
Albertine....... 1,000 -- 2,343 1,000 1,000 1,000 1,000
Peter O. Crisp.. 4,500 -- 2,343 1,000 1,000 1,000 1,000
Elias P.
Gyftopoulos..... 41,031 -- 57,743 1,000 1,000 16,019 1,000
George N.
Hatsopoulos..... 41,188 -- 179,141 30,000 20,000 37,300 113,100
John N.
Hatsopoulos..... 32,263 -- 94,226 25,000 20,000 62,200 132,800
Frank Jungers... 3,850 5,000 19,993 1,000 40,000 4,100 1,000
John T. Keiser.. 20,000 -- 154,212 12,000 2,000 -- --
Earl R. Lewis... 32,000 -- 338,250 20,000 35,666 72,500 253,000
Robert A.
McCabe.......... 7,050 12,500 56,818 6,000 8,333 3,000 70,961
Donald E.
Noble........... 1,000 6,250 68,357 2,500 1,000 6,300 1,000
Hutham S.
Olayan.......... 46,746 -- 2,343 1,000 1,000 1,000 1,000
Robert W.
O'Leary......... -- -- -- -- 1,000 -- --
William A.
Rainville....... 20,000 -- -- 10,000 10,000 6,000 15,000
Arvin H. Smith.. 20,000 -- 539,583 10,000 24,000 39,000 98,000
Richard F.
Syron........... -- -- -- -- -- -- --
Roger D.
Wellington...... 1,300 -- 6,093 1,000 1,000 1,000 1,000
All directors
and current
executive
officers as a
group (21
persons)........ 313,528 23,750 1,659,786 138,000 184,332 270,419 740,361
<CAPTION>
Thermo Thermo
ThermoQuest Spectra Vision Thermo Coleman
Name(1) Corporation(28) Corporation(29) Corporation(30) Corporation(31)
------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Putnam
Investments,
Inc.(32)........ N/A N/A N/A N/A
FMR
Corporation(33).. N/A N/A N/A N/A
John M.
Albertine....... 1,000 1,000 1,000 --
Peter O. Crisp.. 1,000 1,000 1,000 --
Elias P.
Gyftopoulos..... 1,000 21,022 16,089 --
George N.
Hatsopoulos..... 92,600 24,750 23,800 --
John N.
Hatsopoulos..... 109,500 24,400 36,100 --
Frank Jungers... 47,852 1,500 3,725 --
John T. Keiser.. -- 1,500 1,500 --
Earl R. Lewis... 135,000 55,000 421,720 --
Robert A.
McCabe.......... 1,000 1,500 2,120 --
Donald E.
Noble........... 2,300 4,000 1,000 --
Hutham S.
Olayan.......... 1,000 1,000 1,000 --
Robert W.
O'Leary......... -- -- 1,000 --
William A.
Rainville....... 15,000 10,000 7,500 --
Arvin H. Smith.. 90,000 20,000 16,120 --
Richard F.
Syron........... -- -- -- --
Roger D.
Wellington...... 1,000 1,000 1,000 --
All directors
and current
executive
officers as a
group (21
persons)........ 541,252 259,972 173,124 --
</TABLE>
- ----
(1) Except as reflected in the footnotes to this table, shares of the Common
Stock of the Corporation and of the common stock of each of the
Corporation's subsidiaries beneficially owned consist of shares owned by
the indicated person or by that person for the benefit of minor children,
and all share ownership includes sole voting and investment power.
(2) Shares of the Common Stock of the Corporation beneficially owned by Dr.
Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr. Noble,
Ms. Olayan, Mr. O'Leary, Mr. Rainville, Mr. Smith, Dr. Syron, Mr.
Wellington and all directors and current executive officers as a group
include 9,125, 9,125, 9,125, 1,899,500, 812,735, 9,125, 251,622, 202,350,
9,125, 9,125, 9,125, 11,000, 293,287, 622,249, 11,000, 9,125 and 5,331,224
shares, respectively, that such person or members of the group have the
right to acquire within 60 days of January 31, 1999, through the exercise
of stock options. Shares beneficially owned by Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Smith and all directors and current executive officers as
a group include 2,266, 2,036, 1,717 and 11,166 full shares, respectively,
allocated to their respective accounts maintained pursuant to the
Corporation's employee stock ownership plan (the "ESOP"), of which the
trustees, who have investment power over its assets, are executive
officers of the Corporation. Shares beneficially owned by Dr. Albertine,
Mr. Crisp, Dr. Gyftopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms.
Olayan, Mr. O'Leary, Dr. Syron, Mr. Wellington and all directors and
current executive officers as a group include 31,988, 47,058, 151, 80,427,
34,725, 44,961, 17,373, 1,226, 1,849, 24,145 and 283,903 full shares,
respectively, allocated to accounts maintained pursuant to the
Corporation's deferred compensation plan for directors. Shares
beneficially owned by Dr. G. Hatsopoulos include 158,351 shares held by
his spouse, 408,664 shares held by a family trust of which his spouse is
the trustee, 500,000 shares held by a trust of
9
<PAGE>
which Dr. G. Hatsopoulos is the trustee and 153 shares allocated to his
spouse's account maintained pursuant to the ESOP. 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 January 31, 1999, through the exercise of
stock options. Shares beneficially owned by Mr. Jungers include 4,500
shares held by Mr. Jungers' spouse. Shares beneficially owned by Ms.
Olayan do not include 6,050,000 shares owned by Crescent Holding GmbH, a
member of the Olayan Group. Crescent Holding GmbH is indirectly controlled
by Suliman S. Olayan, Ms. Olayan's father. Ms. Olayan disclaims beneficial
ownership of the shares owned by Crescent Holding GmbH. Except for Dr. G.
Hatsopoulos, who beneficially owned 2.25% of the Common Stock outstanding
as of January 31, 1999, no director or executive officer beneficially
owned more than 1% of the Common Stock outstanding as of such date; all
directors and current executive officers as a group beneficially owned
5.29% of the Common Stock outstanding as of January 31, 1999.
(3) Shares of the common stock of Thermo Information Solutions Inc.
beneficially owned by Mr. McCabe include 12,000 shares held by a trust of
which he and members of his family are trustees. The directors and
executive officers did not individually or as a group beneficially own
more than 1% of the Thermo Information Solutions Inc. common stock
outstanding as of January 31, 1999.
(4) Shares of the common stock of Thermo Ecotek Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr.
Wellington and all directors and current executive officers as a group
include 2,250, 2,250, 2,250, 15,000, 13,257, 5,500, 2,250, 2,250, 2,250,
2,250 and 297,507 shares, respectively, that such person or members of
the group have the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Mr.
Jungers and all directors and current executive officers as a group
include 1,662 shares allocated to Mr. Jungers' account maintained
pursuant to Thermo Ecotek's deferred compensation plan for directors.
Shares beneficially owned by Mr. Jungers include 500 shares held by Mr.
Jungers' spouse. The directors and executive officers did not
individually or as a group beneficially own more than 1% of the Thermo
Ecotek Corporation common stock outstanding as of January 31, 1999.
(5) Shares of the common stock of Thermo Trilogy Corporation beneficially
owned by Mr. McCabe include 18,000 shares held by a trust of which he and
members of his family are trustees. Shares beneficially owned by Ms.
Olayan do not include 60,000 shares owned by Crescent International
Holdings Ltd., a member of the Olayan Group which is indirectly
controlled by Suliman S. Olayan, Ms. Olayan's father. Ms. Olayan
disclaims beneficial ownership of the shares owned by Crescent
International Holdings Ltd. The directors and executive officers did not
individually or as a group beneficially own more than 1% of the Thermo
Trilogy Corporation common stock outstanding as of January 31, 1999.
(6) Shares of the common stock of Thermo Fibertek Inc. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr. O'Leary,
Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 8,250, 8,250, 8,250, 139,910,
57,600, 8,250, 8,250, 8,850, 8,250, 1,500, 550,000, 63,000, 8,250 and
1,021,110 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Mr. Noble and all
directors and current executive officers as a group include 9,202 shares
allocated to Mr. Noble's account maintained pursuant to Thermo Fibertek
Inc.'s deferred compensation plan for directors. Shares beneficially
owned by Mr. J. Hatsopoulos include 2,900 shares held by his spouse.
Shares beneficially owned by Mr. Jungers include 1,125 shares held by his
spouse. Except for Mr. Rainville, who beneficially owned 1.12% of the
common stock of Thermo Fibertek Inc. outstanding as of January 31, 1999,
no director or executive officer beneficially owned more than 1% of the
Thermo Fibertek Inc. common stock outstanding as of January 31, 1999; all
directors and current executive officers as a group beneficially owned
2.29% of the Thermo Fibertek Inc. common stock outstanding as of such
date.
(7) Shares of the common stock of Thermo Fibergen Inc. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble,
10
<PAGE>
Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington, and all directors
and current executive officers as a group include 1,000, 1,000, 1,000,
20,000, 20,000, 1,000, 2,000, 1,000, 1,500, 1,000, 40,000, 10,000, 11,000
and 131,500 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Mr. Wellington and
all directors and current executive officers as a group include 748 shares
allocated to Mr. Wellington's account maintained pursuant to Thermo
Fibergen Inc.'s deferred compensation plan for directors. No director or
executive officer beneficially owned more than 1% of the Thermo Fibergen
Inc. common stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned less than 1% of
the Thermo Fibergen Inc. common stock outstanding as of January 31, 1999.
In addition, Mr. Jungers, Mr. Noble, Mr. Rainville and all directors and
current executive officers as a group beneficially owned 1,500, 3,000,
1,500 and 6,000 redemption rights, respectively, issued by Thermo Fibergen
Inc. Each of these rights, issued in a public offering in September 1996,
permits the holder to sell one share of the Thermo Fibergen common stock
back to Thermo Fibergen Inc. at certain times in the future at a price of
$12.75 per share.
(8) Shares of the common stock of Thermo Power Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Wellington and all directors and current executive officers as a
group include 3,000, 6,600, 3,000, 40,000, 40,000, 3,000, 10,000, 3,000,
7,200, 3,000, 3,000 and 141,800 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially
owned by Mr. Crisp, Mr. Noble and all directors and current executive
officers as a group include 11,873, 8,307, and 20,180 shares,
respectively, allocated to their respective accounts maintained pursuant
to Thermo Power Corporation's deferred compensation plan for directors.
Shares beneficially owned by Dr. G. Hatsopoulos include 114 shares held
by Dr. G. Hatsopoulos' spouse. Shares beneficially owned by Mr. J.
Hatsopoulos include 1,000 shares held by Mr. J. Hatsopoulos' spouse.
Shares beneficially owned by Mr. Lewis include 500 shares held by Mr.
Lewis' son. No director or executive officer beneficially owned more than
1% of the Thermo Power Corporation common stock outstanding as of January
31, 1999; all directors and current executive officers as a group
beneficially owned 2.14% of the Thermo Power Corporation common stock
outstanding as of January 31, 1999.
(9) The directors and current executive officers as a group did not
beneficially own any of the ThermoLyte Corporation common stock
outstanding as of January 31, 1999.
(10) Shares of the common stock of Thermo TerraTech Inc. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr.
Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 1,500, 1,500, 1,500, 40,000,
40,000, 1,500, 1,500, 8,900, 1,500, 60,000, 35,000, 1,500 and 211,400
shares, respectively, that such person or members of the group have the
right to acquire within 60 days of January 31, 1999, through the exercise
of stock options. Shares beneficially owned by Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Smith and all directors and current executive officers
as a group include 309, 315, 265 and 1,817 full shares, respectively,
allocated to their respective accounts maintained pursuant to the
Corporation's ESOP. Shares beneficially owned by Mr. Noble and all
directors and current executive officers as a group include 21,400 shares
allocated to Mr. Noble's account maintained pursuant to Thermo TerraTech
Inc.'s deferred compensation plan for directors. Shares beneficially
owned by Mr. J. Hatsopoulos and all directors and current executive
officers as a group include 12,500 shares that Mr. J. Hatsopoulos has the
right to acquire within 60 days of January 31, 1999, through the exercise
of stock purchase warrants acquired in connection with private placements
of securities by Thermo TerraTech Inc. and one or more of that
corporation's subsidiaries on terms identical to terms granted to outside
investors. Shares beneficially owned by Dr. G. Hatsopoulos include 3
shares held by his spouse and 93 shares allocated to his spouse's account
maintained pursuant to the Corporation's ESOP. No director or executive
officer beneficially owned more than 1% of the Thermo TerraTech Inc.
common stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 1.69% of the
Thermo TerraTech Inc. common stock outstanding as of January 31, 1999.
11
<PAGE>
(11) Shares of the common stock of The Randers Killam Group Inc. beneficially
owned by Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Keiser, Mr. Lewis,
Mr. Noble, Mr. Rainville, Mr. Smith and all directors and current
executive officers as group include 48,000, 48,000, 4,000, 4,000, 300,
24,000, 24,000 and 196,300 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. The directors and
current executive officers as a group beneficially own less than 1% of
The Randers Killam Group Inc. common stock outstanding as of January 31,
1999.
(12) The directors and current executive officers as a group did not
beneficially own any of the Thermo EuroTech N.V. common stock outstanding
as of January 31, 1999.
(13) Shares of the common stock of ThermoRetec Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr.
Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 4,500, 4,500, 29,600, 7,500,
22,500, 4,500, 4,500, 6,000, 4,500, 22,500, 2,400, 4,500 and 157,400
shares, respectively, that such person or members of the group have the
right to acquire within 60 days of January 31, 1999, through the exercise
of stock options. No director or executive officer beneficially owned
more than 1% of the ThermoRetec Corporation common stock outstanding as
of January 31, 1999; all directors and current executive officers as a
group beneficially owned 1.83% of the ThermoRetec Corporation common
stock outstanding as of January 31, 1999.
(14) Shares of the common stock of Thermedics Inc. beneficially owned by Dr.
Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Smith, Mr. Wellington and all directors and current executive
officers as a group include 4,500, 8,850, 4,500, 50,000, 50,000, 4,500,
187,200, 4,500, 4,500, 4,500, 82,500, 4,500 and 562,950 shares,
respectively, that such person or members of the group have the right to
acquire within 60 days of January 31, 1999, through the exercise of stock
options. Shares beneficially owned by Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Smith and all directors and current executive officers
as a group include 1,635, 1,737, 1,445 and 9,182 full shares,
respectively, allocated to their respective accounts maintained pursuant
to the Corporation's ESOP. Shares beneficially owned by Mr. Crisp and all
directors and current executive officers as a group include 8,463 shares
allocated to Mr. Crisp's account maintained pursuant to Thermedics Inc.'s
deferred compensation plan for directors. Shares beneficially owned by
Dr. G. Hatsopoulos include 654 shares held by his spouse and 92 shares
allocated to the account of his spouse maintained pursuant to the
Corporation's ESOP. Shares beneficially owned by Mr. Jungers include
1,550 shares held by Mr. Jungers' spouse. No director or executive
officer beneficially owned more than 1% of the common stock of Thermedics
Inc. outstanding as of January 31, 1999; all directors and current
executive officers as a group beneficially owned 1.99% of the Thermedics
Inc. common stock outstanding as of January 31, 1999.
(15) Shares of the common stock of Thermedics Detection Inc. beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all
directors and current executive officers as a group include 1,000, 1,500,
1,000, 20,000, 20,000, 1,000, 17,000, 2,000, 1,000, 1,000, 1,000, 10,000,
10,000, 1,000 and 119,300 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially
owned by Dr. G. Hatsopoulos include 57 shares held by his spouse. Shares
beneficially owned by Mr. McCabe include 9,000 shares held in a trust of
which he and members of his family are trustees. The directors and
current executive officers as a group beneficially did not own more than
1% of the Thermedics Detection Inc. common stock outstanding as of
January 31, 1999.
(16) Shares of the common stock of Thermo Cardiosystems Inc. beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Mr. Jungers, Mr.
Keiser, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr. Smith, Mr. Wellington and
all directors and current executive officers as a group include 1,000,
2,250, 15,000, 12,250, 49,500, 12,250, 12,250, 12,250, 30,000, 4,750 and
178,850 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise
12
<PAGE>
of stock options. Shares beneficially owned by Dr. Gyftopoulos and all
directors and current executive officers as a group include 23 shares
allocated to Dr. Gyftopoulos' account maintained pursuant to Thermo
Cardiosystems Inc.'s deferred compensation plan for directors. The
directors and executive officers did not individually or as a group
beneficially own more than 1% of the Thermo Cardiosystems Inc. common
stock outstanding as of January 31, 1999.
(17) Shares of the common stock of Thermo Sentron Inc. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr. Noble,
Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all directors
and current executive officers as a group include 1,000, 1,500, 1,000,
15,000, 15,000, 1,000, 19,500, 2,000, 1,000, 15,000, 1,000, 7,000, 7,000,
1,000 and 130,000 shares, respectively, that such person or members of
the group have the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Mr.
Noble and all directors and current executive officers as a group include
1,984 shares allocated to Mr. Noble's account maintained pursuant to
Thermo Sentron Inc.'s deferred compensation plan for directors. No
director or executive officer beneficially owned more than 1% of the
Thermo Sentron Inc. common stock outstanding as of January 31, 1999; all
directors and current executive officers as a group beneficially owned
2.07% of the Thermo Sentron Inc. common stock outstanding as of January
31, 1999.
(18) Shares of the common stock of Thermo Voltek Corp. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Mr. Jungers, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Wellington and all directors and current executive
officers as a group include 1,500, 2,250, 4,250, 1,500, 1,500, 1,500,
1,500, 1,500 and 97,850 shares, respectively, that such persons or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. No director or executive
officer beneficially owned more than 1% of the Thermo Voltek Corp. common
stock outstanding as of January 31, 1999; all directors and current
executive officers beneficially owned 1.49% of the Thermo Voltek Corp.
common stock outstanding as of January 31, 1999. Subsequent to January
31, 1999, Thermo Voltek was taken private and merged with a wholly-owned
subsidiary of Thermedics Inc.
(19) Shares of the common stock of ThermoTrex Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr. O'Leary,
Mr. Wellington and all directors and current executive officers as a
group include 6,000, 7,600, 6,000, 30,000, 21,000, 6,000, 6,000, 6,000,
6,000, 1,500, 6,000 and 112,100 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially
owned by Mr. Crisp and all directors and current executive officers as a
group include 3,558 shares allocated to Mr. Crisp's account maintained
pursuant to ThermoTrex Corporation's deferred compensation plan for
directors. Shares beneficially owned by Dr. G. Hatsopoulos include 160
shares held by his spouse. The directors and current executive officers
did not individually or as a group beneficially own more than 1% of the
ThermoTrex Corporation common stock outstanding as of January 31, 1999.
(20) Shares of the common stock of ThermoLase Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 2,000, 22,508, 61,400, 28,800,
39,400, 2,000, 5,000, 2,000, 2,000, 2,000, 10,000, 10,000 2,000 and
307,508 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Dr. Gyftopoulos
and all directors and current executive officers as a group include 55
shares allocated to Dr. Gyftopoulos' account maintained pursuant to
ThermoLase Corporation's deferred compensation plan for directors. Shares
beneficially owned by Dr. G. Hatsopoulos include 32 shares held by his
spouse. Except for Mr. Hatsopoulos, who beneficially owned 1.36% of the
common stock outstanding as of January 31, 1999, no director or executive
officer beneficially owned more than 1% of the common stock outstanding
as of such date; all directors and current executive officers as a group
beneficially owned 2.08% of the common stock outstanding as of January
31, 1999.
13
<PAGE>
(21) Shares of the common stock of Trex Medical Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr. Noble,
Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all directors
and current executive officers as a group include 1,000, 1,500, 40,000,
40,000, 32,000, 1,000, 20,000, 32,000, 1,000, 1,000, 40,000, 20,000,
20,000, 1,000 and 288,500 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially
owned by Dr. Gyftopoulos, Ms. Olayan and all directors and current
executive officers as a group include 31, 1,746 and 1,777 shares
allocated to accounts maintained pursuant to Trex Medical Corporation's
deferred compensation plan for directors. Shares beneficially owned by
Dr. G. Hatsopoulos include 16 shares held by his spouse. Shares
beneficially owned by Ms. Olayan do not include 350,000 shares owned by
Crescent International Holdings Ltd., a member of the Olayan Group which
is indirectly controlled by Suliman S. Olayan, Ms. Olayan's father. Ms.
Olayan disclaims beneficial ownership of the shares owned by Crescent
International Holdings Ltd. The directors and current executive officers
did not individually or as a group beneficially own more than 1% of the
Trex Medical Corporation common stock outstanding as of January 31, 1999.
(22) Shares of the common stock of Trex Communications Corporation
beneficially owned by Mr. McCabe include 12,500 shares held by a trust of
which he and members of his family are trustees. Shares beneficially
owned by Ms. Olayan do not include 50,000 shares owned by Crescent
International Holdings Ltd., a member of the Olayan Group which is
indirectly controlled by Suliman S. Olayan, Ms. Olayan's father. Ms.
Olayan disclaims beneficial ownership of the shares owned by Crescent
International Holdings Ltd. The directors and current executive officers
did not individually or as a group beneficially own more than 1% of the
Trex Communications Corporation common stock outstanding as of January
31, 1999.
(23) Shares of the common stock of Thermo Instrument Systems Inc. beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Smith, Mr. Wellington and all directors and
current executive officers as a group include 2,343, 2,343, 12,648,
117,187, 70,312, 13,587, 70,312, 322,085, 10,771, 4,451, 2,343, 292,968,
2,343 and 1,004,627 shares, respectively, that such person or members of
the group have the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Dr.
G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Smith and all directors and
current executive officers as a group include 598, 661, 663 and 3,648
full shares, respectively, allocated to accounts maintained pursuant to
the Corporation's ESOP. Shares beneficially owned by Dr. G. Hatsopoulos
include 26,773 shares held by his spouse and 63 shares allocated to his
spouse's account maintained pursuant to the Corporation's ESOP. Shares
beneficially owned by Mr. Lewis include 2,987 shares held by his spouse.
No director or executive officer beneficially owned more than 1% of the
common stock outstanding as of January 31, 1999. The directors and
current executive officers as a group beneficially owned 1.39% of the
Thermo Instrument Systems Inc. common stock outstanding as of January 31,
1999.
(24) Shares of the common stock of Metrika Systems Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all
directors and current executive officers as group include 1,000, 1,000,
1,000, 30,000, 10,000, 1,000, 12,000, 20,000, 1,000, 1,000, 1,000,
10,000, 10,000, 1,000 and 116,500 shares, respectively, that such person
or members of the group have the right to acquire within 60 days of
January 31, 1999, through the exercise of stock options. Shares
beneficially owned by Mr. McCabe include 5,000 shares held in a trust of
which he and members of his family are trustees. No director or executive
officer beneficially owned more than 1% of the common stock of Metrika
Systems Corporation outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 1.79% of the
Metrika Systems Corporation common stock outstanding as of January 31,
1999.
(25) Shares of the common stock of ONIX Systems Inc. beneficially owned by Dr.
Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe,
14
<PAGE>
Mr. Noble, Ms. Olayan, Mr. O'Leary, Mr. Rainville, Mr. Smith, Mr.
Wellington and all directors and current executive officers as a group
include 1,000, 1,000, 1,000, 20,000, 20,000, 30,000, 2,000, 33,333, 1,000,
1,000, 1,000, 1,000, 10,000, 20,000, 1,000 and 160,666 shares,
respectively, that such person or members of the group have the right to
acquire within 60 days of January 31, 1999, through the exercise of stock
options. Shares beneficially owned by Mr. McCabe include 7,333 shares held
by a trust of which he and members of his family are trustees. Shares of
ONIX Systems Inc. beneficially owned by Ms. Olayan do not include 16,666
shares owned by Crescent International Holdings Ltd., a member of the
Olayan Group which is indirectly controlled by Suliman S. Olayan, Ms.
Olayan's father. Ms. Olayan disclaims beneficial ownership of the shares
owned by Crescent International Holdings Ltd. Shares beneficially owned by
Mr. Lewis include 333 shares held by his son. Shares beneficially owned by
Mr. Smith include 4,000 shares held by his spouse. No director or
executive officers beneficially owned more than 1% of the ONIX Systems
Inc. common stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 1.28% of the ONIX
Systems Inc. common stock outstanding as of January 31, 1999.
(26) Shares of common stock of Thermo BioAnalysis Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms.
Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and
current executive officers as a group include 1,000, 1,000, 15,000,
17,300, 17,200, 1,500, 50,000, 1,500, 1,000, 1,000, 6,000, 20,000, 1,000
and 150,500 shares, respectively, that such person or members of the
group have the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Dr.
Gyftopoulos and all directors and current executive officers as a group
include 19 shares allocated to Dr. Gyftopoulos' account maintained
pursuant to Thermo BioAnalysis Corporation's deferred compensation plan
for directors. Shares beneficially owned by Mr. Jungers include 600
shares held by his spouse. Shares beneficially owned by Mr. Lewis include
1,000 shares held by his spouse. No director or executive officer
beneficially owned more than 1% of the Thermo BioAnalysis Corporation
common stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 1.54% of the
Thermo BioAnalysis Corporation common stock outstanding as of January 31,
1999.
(27) Shares of the common stock of Thermo Optek Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 1,000, 1,000, 1,000, 93,100,
92,800, 1,000, 225,000, 45,000, 1,000, 1,000, 15,000, 90,000, 1,000 and
615,900 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Mr. Lewis include
3,500 shares held by his spouse. Shares beneficially owned by Mr. McCabe
include 5,000 shares held by a trust of which he and members of his
family are trustees, 7,171 shares issuable upon conversion of $100,000 in
principal amount of the 5% convertible subordinated debentures due 2000
issued by Thermo Optek Corporation and 790 full shares allocated to Mr.
McCabe's account maintained pursuant to Thermo Optek Corporation's
deferred compensation plan for directors. No director or executive
officer beneficially owned more than 1% of the Thermo Optek Corporation
common stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 1.44% of the
Thermo Optek Corporation common stock outstanding as of January 31, 1999.
(28) Shares of the common stock of ThermoQuest Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 1,000, 1,000, 1,000, 92,600,
92,400, 45,000, 125,000, 1,000, 1,000, 1,000, 15,000, 90,000, 1,000 and
510,000 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Mr. Jungers and
all directors and current executive officers as a group include 1,852
full shares allocated to Mr. Jungers' account maintained pursuant to
ThermoQuest Corporation's deferred compensation plan for directors. The
directors and executive officers did not individually or as a group
beneficially own more than 1% of the ThermoQuest Corporation common stock
outstanding as of January
15
<PAGE>
31, 1999; all directors and current executive officers as a group
beneficially owned 1.06% of the ThermoQuest Corporation common stock
outstanding as of January 31, 1999.
(29) Shares of the common stock of ThermoSpectra Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all
directors and current executive officers as a group include 1,000, 1,000,
20,000, 24,750, 24,400, 1,500, 1,500, 50,000, 1,500, 1,000, 1,000,
10,000, 20,000, 1,000 and 233,350 shares, respectively, that such person
or members of the group have the right to acquire within 60 days of
January 31, 1999, through the exercise of stock options. Shares
beneficially owned by Dr. Gyftopoulos and all directors and current
executive officers as a group include 22 shares allocated to Dr.
Gyftopoulos' account maintained pursuant to ThermoSpectra Corporation's
deferred compensation plan for directors. No director or executive
officer beneficially owned more than 1% of the common stock of
ThermoSpectra Corporation outstanding as of January 31, 1999; all
directors and current executive officers as a group beneficially owned
1.69% of the ThermoSpectra Corporation common stock outstanding as of
January 31, 1999.
(30) Shares of the common stock of Thermo Vision Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. O'Leary, Mr. Rainville, Mr. Smith, Mr. Wellington
and all directors and current executive officers as group include 1,000,
1,000, 15,000, 15,000, 15,000, 1,000, 1,500, 25,000, 1,000, 1,000, 1,000,
1,000, 7,500, 15,000, 1,000 and 114,500 shares, respectively, that such
person or members of the group have the right to acquire within 60 days
of January 31, 1999, through the exercise of stock options. Shares of the
common stock of Thermo Vision Corporation beneficially owned by Mr. J.
Hatsopoulos include 3,000 shares held by his spouse. Shares beneficially
owned by Mr. Lewis include 350 shares held by his spouse and 1,140 shares
held by his son. Shares beneficially owned by Mr. McCabe include 700
shares held by a trust of which members of his family are trustees.
Shares beneficially owned by Dr. Gyftopoulos and all directors and
current executive officers as a group include 89 shares allocated to Dr.
Gyftopoulos' account maintained pursuant to Thermo Vision Corporation's
deferred compensation plan for directors. No director or executive
officer beneficially owned more than 1% of the common stock of Thermo
Vision Corporation outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 2.15% of the
Thermo Vision Corporation common stock outstanding as of January 31,
1999.
(31) The directors and current executive officers as a group did not
beneficially own any of the Thermo Coleman Corporation Common Stock
outstanding as of January 31, 1999.
(32) Information regarding the number of shares of Common Stock and the shares
of the common stock of Thermo Cardiosystems Inc. beneficially owned by
Putnam Investments, Inc. is based on the most recent Schedule 13G of
Putnam Investments, Inc. received by the Corporation, which reported such
ownership as of December 31, 1998. The address of Putnam Investments,
Inc. is One Post Office Square, Boston, Massachusetts 02109. Shares
reported as beneficially owned by Putnam Investments, Inc. consist of
shares beneficially owned by subsidiaries of Putnam Investments, Inc.
that are registered investment advisers, which in turn include shares
beneficially owned by clients of such investment advisers. As of December
31, 1998, Putnam Investments, Inc. beneficially owned approximately 5.5%
of the outstanding common stock and approximately 9.0% of the outstanding
common stock of Thermo Cardiosystems Inc.
(33) Information regarding the number of shares of Common Stock beneficially
owned by FMR Corp. is based on the most recent Schedule 13G of FMR Corp.
received by the Corporation, which reported such ownership as of December
31, 1998. The address of FMR Corp. is 82 Devonshire Street, Boston,
Massachusetts 02109. Shares beneficially owned by FMR Corp. include
343,675 shares issuable upon conversion of $12,991,000 in principal
amount of the Corporation's 4 1/4% Convertible Subordinated Debentures
due 2003. As of December 31, 1998, FMR Corp. beneficially owned
approximately 8.9% of the outstanding Common Stock.
16
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Corporation's directors and executive officers, and beneficial
owners of more than 10% of the Common Stock, 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 1998 except in the following instances. Mr. John N.
Hatsopoulos, a director of the Corporation, filed three transactions late,
reporting three gifts of Common Stock. Dr. Elias P. Gyftopoulos, a director of
the Corporation, filed one transaction late, consisting of an exempt grant of
stock options.
17
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation for services to the Corporation
in all capacities awarded to, earned by or paid during the last three years to
the Corporation's chief executive officer and its four other most highly
compensated executive officers who were employed by the Corporation as of the
end of fiscal 1998. The table also includes 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 of the Corporation as of
the end of fiscal 1998. These executive officers are collectively referred to
herein as the "named executive officers."
Summary Compensation Table
<TABLE>
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------- Securities Underlying
Name and Fiscal Options (No. of Shares All Other
Principal Position Year Salary Bonus Other and Company)(1)(2) Compensation(3)
------------------ ------ -------- -------- ------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
George N. Hatsopoulos... 1998 $585,000 TBD 200,000 (TMO) $7,200
Chief Executive Officer 20,000 (MKA)
20,000 (ONX)
48,000 (RGI)
2,300 (TBA)
10,000 (TISI)
3,100 (TOC)
2,600 (TMQ)
4,750 (THS)
20,000 (TRIL)
15,000 (VIZ)
20,000 (TRCC)
1997 $560,000 $630,000 200,000 (TMO) $7,125
10,000 (MKA)
20,000 (TDX)
1996 $520,000 $575,000 100,000 (TMO) $6,750
15,000 (TBA)
20,000 (TFG)
15,000 (TLT)
90,000 (TOC)
90,000 (TMQ)
15,000 (TSR)
40,000 (TXM)
- ---------------------------------------------------------------------------------------------------
Arvin H. Smith.......... 1998 $300,000 TBD 116,000 (TMO) $7,200
President 20,000 (ONX)
24,000 (RGI)
10,000 (TDX)
5,000 (TISI)
10,000 (TRIL)
10,000 (TRCC)
1997 $285,000 $300,000 $57,947(4) 6,000 (TMO) $7,125
10,000 (MKA)
15,000 (VIZ)
1996 $270,000 $260,000 $55,089(4) 9,000 (TMO) $6,750
20,000 (TBA)
10,000 (TFG)
90,000 (TOC)
90,000 (TMQ)
7,000 (TSR)
20,000 (TXM)
- ---------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
Summary Compensation Table (Continued)
<TABLE>
- ----------------------------------------------------------------------------------------------
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------- Securities Underlying
Name and Fiscal Options (No. of Shares All Other
Principal Position Year Salary Bonus Other and Company)(1)(2) Compensation(3)
------------------ ------ -------- -------- ----- ---------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Earl R. Lewis........... 1998 $280,000 TBD 120,000 (TMO) $15,939(5)
Chief Operating
Officer, 33,333 (ONX)
Measurement & Detection 4,000 (RGI)
2,000 (TDX)
10,000 (THP)
1,000 (TISI)
2,000 (TRIL)
2,000 (TRCC)
1997 $220,000 $250,000 20,000 (MKA) $16,710(5)
62,500 (THI)
75,000 (TMQ)
25,000 (VIZ)
1996 $180,000 $160,000 42,500 (TBA) $11,550(5)
2,000 (TFG)
2,000 (TLT)
225,000 (TOC)
2,000 (TSR)
50,000 (TMQ)
40,000 (TXM)
- ----------------------------------------------------------------------------------------------
William A. Rainville.... 1998 $260,000 TBD 123,800 (TMO) $28,922(6)
Chief Operating
Officer, Recycling & 10,000 (MKA)
Resource Recovery 10,000 (ONX)
24,000 (RGI)
10,000 (TDX)
5,000 (TISI)
7,500 (VIZ)
10,000 (TRCC)
1997 $220,000 $200,000 3,400 (TMO) $28,340
240,000 (TFT)
1996 $205,000 $191,000 6,450 (TMO) $17,558
40,000 (TFG)
15,000 (TOC)
15,000 (TMQ)
7,000 (TSR)
20,000 (TXM)
- ----------------------------------------------------------------------------------------------
John T. Keiser.......... 1998 $240,000 TBD 128,100 (TMO) $ 7,200
Chief Operating
Officer, Biomedical & 2,000 (MKA)
Emerging Technologies 2,000 (ONX)
4,000 (RGI)
60,700 (TMD)
17,000 (TDX)
25,000 (TCA)
30,000 (TCOL)
1,000 (TISI)
12,000 (TSR)
2,000 (TRIL)
1,500 (VIZ)
2,000 (TRCC)
1997 $155,000 $160,000 53,100 (TMO) $ 7,125
10,000 (MKA)
20,000 (TCA)
800 (TMD)
1996 $145,000 $130,000 3,750 (TMO)
800 (TMD)
7,500 (TSR)
20,000 (TXM)
- ----------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
Summary Compensation Table (Continued)
<TABLE>
- ----------------------------------------------------------------------------------------------
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------- Securities Underlying
Name and Fiscal Options (No. of Shares All Other
Principal Position Year Salary Bonus Other and Company)(1)(2) Compensation(3)
------------------ ------ -------- -------- ----- ---------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John N. Hatsopoulos..... 1998 $425,000 TBD 205,100 (TMO) $7,200
Former President 20,000 (ONX)
and Chief Financial
Officer(7) 2,200 (TBA)
4,400 (THS)
2,800 (TOC)
2,400 (TMQ)
1997 $400,000 $600,000 206,000 (TMO) $7,125
10,000 (MKA)
48,000 (RGI)
20,000 (TDX)
10,000 (TISI)
15,000 (VIZ)
20,000 (TRCC)
1996 $325,000 $550,000 107,200 (TMO) $6,750
15,000 (TBA)
20,000 (TFG)
15,000 (TLT)
90,000 (TOC)
90,000 (TMQ)
15,000 (TSR)
40,000 (TXM)
- ----------------------------------------------------------------------------------------------
</TABLE>
(1)In addition to grants of options to purchase Common Stock of the
Corporation (designated in the table as TMO), the named executive officers
have been granted options to purchase common stock of subsidiaries of the
Corporation, as compensation for their services either to the Corporation or
to its subsidiaries. Options were granted during the last three fiscal years
to the chief executive officer and the other named executive officers in
their capacities as executive officers of the Corporation or directors or
executive officers of the following subsidiaries of the Corporation: Metrika
Systems Corporation (designated in the table as MKA), ONIX Systems Inc.
(designated in the table as ONX), The Randers Killam Group Inc. (designated
in the table as RGI), Thermedics Inc. (designated in the table as TMD),
Thermedics Detection Inc. (designated in the table as TDX), Thermo
BioAnalysis Corporation (designated in the table as TBA), Thermo
Cardiosystems Inc. (designated in the table as TCA), Thermo Coleman
Corporation (designated in the table as TCOL), Thermo Fibergen Inc.
(designated in the table as TFG), Thermo Instrument Systems Inc. (designated
in the table as THI), Thermo Fibertek Inc. (designated in the table as TFT),
Thermo Information Solutions Inc. (designated in the table as TISI),
ThermoLyte Corporation (designated in the table as TLT), Thermo Optek
Corporation (designated in the table as TOC), Thermo Power Corporation
(designated in the table as THP), ThermoQuest Corporation (designated in the
table as TMQ), Thermo Sentron Inc. (designated in the table as TSR),
ThermoSpectra Corporation (designated in the table as THS), Thermo Trilogy
Corporation (designated in the table as TRIL), Thermo Vision Corporation
(designated in the table as VIZ), Trex Communications Corporation
(designated in the table as TRCC) and Trex Medical Corporation (designated
in the table as TXM).
(2)No awards of restricted stock of the Corporation were made to the chief
executive officer or other named executive officers during the last three
fiscal years. As of January 2, 1999, the amount and value of each executive
officer's restricted stock holdings were as follows: Dr. G. Hatsopoulos--
20,250 shares valued at $342,984; Mr. Smith--10,125 shares valued at
$171,492.
(3)For all executive officers except Mr. Rainville, this amount represents
matching contributions made on behalf of the executive officer by the
Corporation pursuant to the Corporation's 401(k) plan. As to Mr. Rainville,
this amount represents employer contributions to his account under the
profit sharing plan of Thermo Web Systems Inc., a subsidiary of Thermo
Fibertek Inc.
(4)This amount includes a special bonus in 1997 and 1996 of $40,447 and
$37,589, respectively, paid pursuant to the Corporation's stock retention
program, which rewards each officer who does not sell shares of the
Corporation's common stock for three years or more.
(5)In addition to the matching contribution referred to in footnote (3), such
amounts include $8,739, $9,585 and $4,800, which represent the amounts of
compensation attributable in fiscal 1998, 1997 and 1996, respectively, to an
interest-free loan provided to Mr. Lewis pursuant to the stock holding
assistance plan of Thermo Optek Corporation, a subsidiary of Thermo
Instrument Systems Inc. See "Relationship with Affiliates--Stock Holding
Assistance Plans."
(6)In addition to the matching contribution referred to in footnote (3), such
amounts include $5,319, $5,471 and $1,313, which represent the amounts of
compensation attributable in fiscal 1998, 1997 and 1996, respectively, to an
interest-free loan provided to Mr. Rainville pursuant to the stock holding
assistance plan of Thermo Fibertek Inc., a subsidiary of the Corporation.
See "Relationship with Affiliates--Stock Holding Assistance Plans."
(7)Mr. Hatsopoulos ceased to be an executive officer of the Corporation upon
his resignation as Chief Financial Officer effective as of December 31,
1998.
20
<PAGE>
Stock Options Granted During Fiscal 1998
The following table sets forth information concerning individual grants of
stock options made during fiscal 1998 to the Corporation's chief executive
officer and the other named executive officers. It has not been the
Corporation's policy in the past to grant stock appreciation rights, and no
such rights were granted during fiscal 1998.
Option Grants in Fiscal 1998
<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>
George N. Hatsopoulos... 50,000 (TMO) 1.50% $40.91 04/03/10 $ 1,628,000 $ 4,374,000
50,000 (TMO) 1.50% $34.65 07/03/10 $ 1,379,000 $ 3,705,000
50,000 (TMO) 1.50% $15.26 10/02/10 $ 607,000 $ 1,631,500
50,000 (TMO) 1.50% $16.59 12/31/10 $ 660,000 $ 1,774,000
20,000 (MKA) 7.04% $14.23 01/21/05 $ 115,800 $ 270,000
20,000 (ONX) 2.04% $14.25 01/21/08 $ 179,200 $ 454,200
48,000 (RGI) 9.04% $ 4.00 01/21/05 $ 78,240 $ 181,920
2,300 (TBA) 0.63% $19.00 01/21/05 $ 17,779 $ 41,469
10,000 (TISI) 16.74% $10.00 01/21/08 $ 62,900 $ 159,400
3,100 (TOC) 0.33% $14.09 01/21/05 $ 17,794 $ 41,447
2,600 (TMQ) 0.26% $15.79 01/21/05 $ 16,718 $ 38,948
4,750 (THS) 1.25% $ 9.30 01/21/05 $ 18,003 $ 41,895
20,000 (TRIL) 11.13% $ 8.25 01/21/08 $ 103,800 $ 263,000
15,000 (VIZ) 3.65% $ 7.25 01/21/05 $ 44,250 $ 103,200
20,000 (TRCC) 1.63% $ 4.00 01/21/08 $ 50,400 $ 127,400
- --------------------------------------------------------------------------------------------------------
Arvin H. Smith.......... 100,000 (TMO) 3.00% $17.56 10/27/05 $ 715,000 $ 1,666,000
10,000 (TMO) 0.30% $22.46 08/11/03 $ 62,100 $ 137,100
6,000 (TMO) 0.18% $34.50 06/02/03 $ 57,180 $ 126,360
20,000 (ONX) 2.04% $14.25 01/21/05 $ 116,000 $ 270,400
24,000 (RGI) 4.52% $ 4.00 01/21/05 $ 39,120 $ 90,960
10,000 (TDX) 1.08% $ 9.56 01/21/05 $ 38,900 $ 90,700
5,000 (TISI) 8.37% $10.00 01/21/08 $ 31,450 $ 79,700
10,000 (TRIL) 5.56% $ 8.25 01/21/08 $ 51,900 $ 131,500
10,000 (TRCC) 0.82% $ 4.00 01/21/08 $ 25,200 $ 63,700
- --------------------------------------------------------------------------------------------------------
Earl R. Lewis........... 100,000 (TMO) 3.00% $17.56 10/27/05 $ 715,000 $ 1,666,000
20,000 (TMO) 0.60% $22.46 08/11/03 $ 124,200 $ 274,200
33,333 (ONX) 3.41% $14.25 01/21/05 $ 193,331 $ 450,662
4,000 (RGI) 0.75% $ 4.00 01/21/05 $ 6,520 $ 15,160
2,000 (TDX) 0.22% $ 9.56 01/21/05 $ 7,780 $ 18,140
1,000 (TISI) 1.67% $10.00 01/21/08 $ 6,290 $ 15,940
10,000 (THP) 1.53% $11.33 05/27/05 $ 46,100 $ 107,500
2,000 (TRIL) 1.11% $ 8.25 01/21/08 $ 10,380 $ 26,300
2,000 (TRCC) 0.16% $ 4.00 01/21/08 $ 5,040 $ 12,740
- --------------------------------------------------------------------------------------------------------
William A. Rainville.... 100,000 (TMO) 3.00% $17.56 10/27/05 $ 715,000 $ 1,666,000
20,000 (TMO) 0.60% $22.46 08/11/03 $ 124,200 $ 274,200
3,800 (TMO) 0.11% $34.50 06/02/03 $ 36,214 $ 80,028
10,000 (MKA) 3.52% $14.23 01/21/05 $ 57,900 $ 135,000
10,000 (ONX) 1.02% $14.25 01/21/08 $ 89,600 $ 227,100
24,000 (RGI) 4.52% $ 4.00 01/21/05 $ 39,120 $ 90,960
10,000 (TDX) 1.08% $ 9.56 01/21/05 $ 38,900 $ 90,700
5,000 (TISI) 8.37% $10.00 01/21/08 $ 31,450 $ 79,700
7,500 (VIZ) 1.83% $ 7.25 01/21/05 $ 22,125 $ 51,600
10,000 (TRCC) 0.82% $ 4.00 01/21/08 $ 25,200 $ 63,700
- --------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Option Grants in Fiscal 1998 (Continued)
<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>
John T. Keiser 100,000 (TMO) 3.00% $17.56 10/27/05 $ 715,000 $ 1,666,000
20,000 (TMO) 0.60% $22.46 08/11/03 $ 124,200 $ 274,200
5,000 (TMO) 0.15% $39.36 03/11/03 $ 54,350 $ 120,150
3,100 (TMO) 0.09% $34.50 06/02/03 $ 29,543 $ 65,286
2,000 (MKA) 0.70% $14.23 01/21/05 $ 11,580 $ 27,000
2,000 (ONX) 0.20% $14.25 01/21/08 $ 17,920 $ 45,420
4,000 (RGI) 0.75% $ 4.00 01/21/05 $ 6,520 $ 15,160
700 (TMD) 0.15% $16.05 03/05/01 $ 1,771 $ 3,717
60,000 (TMD) 13.28% $17.11 04/13/05 $ 418,200 $ 973,800
2,000 (TDX) 0.22% $ 9.56 01/21/05 $ 7,780 $ 18,140
15,000 (TDX) 1.62% $11.04 04/13/05 $ 67,350 $ 157,050
25,000 (TCA) 3.15% $26.30 04/13/05 $ 267,750 $ 623,750
30,000 (TCOL) 4.58% $10.00 12/21/08 $ 188,700 $ 478,200
1,000 (TISI) 1.67% $10.00 01/21/08 $ 6,290 $ 15,940
12,000 (TSR) 3.73% $12.08 04/13/05 $ 59,040 $ 137,520
2,000 (TRIL) 1.11% $ 8.25 01/21/08 $ 10,380 $ 26,300
1,500 (VIZ) 0.37% $ 7.25 01/21/05 $ 4,425 $ 10,320
2,000 (TRCC) 0.16% $ 4.00 01/21/08 $ 5,040 $ 12,740
- ----------------------------------------------------------------------------------------------------
John N. Hatsopoulos 50,000 (TMO) 1.50% $40.91 04/03/10 $ 1,628,000 $ 4,374,000
50,000 (TMO) 1.50% $34.65 07/03/10 $ 1,379,000 $ 3,705,000
50,000 (TMO) 1.50% $15.26 10/02/10 $ 607,000 $ 1,631,500
50,000 (TMO) 1.50% $16.59 12/31/10 $ 660,000 $ 1,774,000
5,100 (TMO) 0.15% $34.50 06/02/03 $ 48,603 $ 107,406
20,000 (ONX) 2.04% $14.25 01/21/05 $ 116,000 $ 270,400
2,200 (TBA) 0.61% $19.00 01/21/05 $ 17,006 $ 39,666
2,800 (TOC) 0.29% $14.09 01/21/05 $ 16,072 $ 37,436
2,400 (TMQ) 0.24% $15.79 01/21/05 $ 15,432 $ 35,952
4,400 (THS) 1.16% $ 9.30 01/21/05 $ 16,676 $ 38,808
</TABLE>
- -------------------------------------------------------------------------------
(1) All of the options reported are immediately exercisable as of the end of
the fiscal year, except options to purchase shares of the common stock of
Thermo Coleman Corporation, Thermo Information Solutions Inc., Thermo
Trilogy 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 are subject to repurchase by the granting
corporation at the exercise price if the optionee ceases to be employed
by, or ceases to serve as a director of, the granting corporation or
another Thermo Electron company. The granting corporation may exercise its
repurchase rights within six months after the termination of the
optionee's employment or the cessation of directorship, as the case may
be. For publicly traded companies, the repurchase rights lapse ratably
over a one- to ten-year period, depending on the option term, which may
vary from five to twelve years, provided that the optionee continues to be
employed by or serve as a director of the granting corporation or another
Thermo Electron company. For companies whose shares are not publicly
traded, the repurchase rights generally lapse in their entirety on the
ninth anniversary of the grant date. Certain options 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 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. Please see footnote (1) on page
20 for the company abbreviations used in this table.
(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 or service as a
director through the option period and the date on which the options are
exercised.
22
<PAGE>
Stock Options Exercised During Fiscal 1998 and Fiscal Year-End Option Values
The following table reports certain information regarding stock option
exercises during fiscal 1998 and outstanding stock options held at the end of
fiscal 1998 by the Corporation's chief executive officer and the other named
executive officers. No stock appreciation rights were exercised or were
outstanding during fiscal 1998.
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option
Values
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
Number of Value of
Unexercised Unexercised
Shares Options at Fiscal In-the-Money
Acquired Year-End Options
on Value (Exercisable/ (Exercisable/
Name Company Exercise Realized(1) Unexercisable)(2) Unexercisable)
---- ------- -------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Dr. George N.
Hatsopoulos............. (TMO) -- -- 1,899,500/0 $2,067,767/ --
(MKA) -- -- 30,000/0 $ 0/ --
(ONX) -- -- 20,000/0 $ 0/ --
(RGI) -- -- 48,000/0 $ 0/ --
(TMD) -- -- 50,000/0 $ 0/ --
(TDX) -- -- 20,000/0 $ 0/ --
(TBA) -- -- 17,300/0 $ 40,320/ --
(TCK) -- -- 15,000/0 $ 76,875/ --
(TFG) -- -- 20,000/0 $ 0/ --
(TFT) -- -- 157,910/0 $ 499,839/ --
(TISI) -- -- --/10,000 --/$ 0(3)
(THI) -- -- 117,187/0 $ 187,264/ --
(TLZ) -- -- 28,800/0 $ 81,014/ --
(TLT) -- -- --/15,000 --/$ 0(3)
(TOC) -- -- 93,100/0 $ 0/ --
(THP) -- -- 40,000/0 $ 0/ --
(TMQ) -- -- 92,600/0 $ 28,170/ --
(THN) -- -- 7,500/0 $ 0/ --
(TSR) -- -- 15,000/0 $ 0/ --
(THS) -- -- 24,750/0 $ 37,356/ --
(TTT) -- -- 40,000/0 $ 0/ --
(TKN) 6,600 $93,146 30,000/0 $ 0/ --
(TRIL) -- -- --/20,000 --/$ 0(3)
(VIZ) -- -- 15,000/0 $ 0/ --
(TRCC) -- -- --/20,000 --/$ 0(3)
(TXM) -- -- 40,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
Arvin H. Smith.......... (TMO) 22,162 $403,441 322,249/0 $ 505,667/ --
(MKA) -- -- 10,000/0 $ 0/ --
(ONX) -- -- 20,000/0 $ 0/ --
(RGI) -- -- 24,000/0 $ 0/ --
(TMD) -- -- 82,500/0 $ 321,563/ --
(TDX) -- -- 10,000/0 $ 0/ --
(TBA) -- -- 20,000/0 $ 53,760/ --
(TCA) -- -- 30,000/0 $ 113,850/ --
(TFG) -- -- 10,000/0 $ 0/ --
(TFT) -- -- 90,000/0 $ 365,670/ --
(TISI) -- -- --/5,000 --/$ 0(3)
(THI) -- -- 292,968/0 $ 468,163/ --
(TLZ) -- -- 10,000/0 $ 0/ --
(TLT) -- -- --/6,000 --/$ 0(3)
(TOC) -- -- 90,000/0 $ 0/ --
(TMQ) -- -- 90,000/0 $ 28,170/ --
(THN) -- -- 2,400/0 $ 0/ --
(TSR) -- -- 7,000/0 $ 0/ --
(THS) -- -- 20,000/0 $ 27,500/ --
(TTT) -- -- 35,000/0 $ 0/ --
(TKN) 2,700 $ 38,273 --/-- --/ --
(TRIL) -- -- --/10,000 --/$ 0(3)
(VIZ) -- -- 15,000/0 $ 0/ --
(TRCC) -- -- --/10,000 --/$ 0(3)
(TXM) -- -- 20,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option
Values (Continued)
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
Number of Value of
Unexercised Unexercised
Shares Options at Fiscal In-the-Money
Acquired Year-End Options
on Value (Exercisable/ (Exercisable/
Name Company Exercise Realized(1) Unexercisable)(2) Unexercisable)
---- ------- -------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Earl R. Lewis........... (TMO) 17,024 $ 400,156 202,350/0 51,463/ --
(MKA) -- -- 20,000/0 $ 0/ --
(ONX) -- -- 33,333/0 $ 0/ --
(RGI) -- -- 4,000/0 $ 0/ --
(TDX) -- -- 2,000/0 $ 0/ --
(TBA) -- -- 50,000/0 $ 49,400/ --
(TFG) -- -- 2,000/0 $ 0/ --
(TISI) -- -- --/1,000 --/$ 0(3)
(THI) 31,040 $ 614,126 172,085/0(4) $ 175,117/ --
(TLZ) -- -- 5,000/0 $ 0/ --
(TLT) -- -- --/2,000 /$ 0(3)
(TOC) -- -- 225,000/0(5) $ 0/ --
(THP) -- -- 10,000/0 $ 0/ --
(TMQ) -- -- 125,000/0 $ 15,650/ --
(TSR) -- -- 2,000/0 $ 0/ --
(THS) -- -- 50,000/0 $ 68,750/ --
(TRIL) -- -- --/2,000 /$ 0(3)
(VIZ) -- -- 25,000/0 $ 0/ --
(TRCC) -- -- --/2,000 /$ 0(3)
(TXM) 8,000 $ 60,000 32,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
William A. Rainville.... (TMO) 15,937 $ 368,947 293,287/0(6) $ 103,377/ --
(MKA) -- -- 10,000/0 $ 0/ --
(ONX) -- -- 10,000/0 $ 0/ --
(RGI) -- -- 24,000/0 $ 0/ --
(TDX) -- -- 10,000/0 $ 0/ --
(TBA) -- -- 6,000/0 $ 16,128/ --
(TFG) -- -- 40,000/0(7) $ 0/ --
(TFT) 70,000 $ 529,410 665,000/0 $1,443,275/ --
(TISI) -- -- -- /5,000 -- /$ 0(3)
(TLZ) -- -- 10,000/0 $ 0/ --
(TLT) -- -- -- /6,000 -- /$ 0(3)
(TOC) -- -- 15,000/0 $ 0/ --
(TMQ) -- -- 15,000/0 $ 4,695/ --
(THN) -- -- 22,500/0 $ 0/ --
(TSR) -- -- 7,000/0 $ 0/ --
(THS) -- -- 10,000/0 $ 13,750/ --
(TTT) -- -- 60,000/0 $ 0/ --
(TKN) 2,700 $ 49,073 -- /-- -- / --
(VIZ) -- -- 7,500/0 $ 0/ --
(TRCC) -- -- -- /10,000 -- /$ 0(3)
(TXM) -- -- 20,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
John T. Keiser.......... (TMO) 10,875 $ 234,031 251,622/0 $ 66,725/ --
(MKA) -- -- 12,000/0 $ 0/ --
(ONX) -- -- 2,000/0 $ 0/ --
(RGI) -- -- 4,000/0 $ 0/ --
(TMD) -- -- 77,200/0 $ 0/ --
(TDX) -- -- 17,000/0 $ 0/ --
(TCA) 11,250 $ 175,500 49,500/0 $ 0/ --
(TCOL) -- -- -- /30,000 -- /$ 0(3)
(TFT) -- -- 6,750/0 $ 27,425/ --
(TISI) -- -- -- /1,000 -- /$ 0(3)
(THI) -- -- 70,312/0 $ 112,359/ --
(TSR) -- -- 19,500/0 $ 0/ --
(THS) -- -- 1,500/0 $ 2,063/ --
(TKN) 1,800 $ 25,965 -- /-- -- / --
(TRIL) -- -- -- /2,000 -- /$ 0(3)
(VIZ) -- -- 1,500/0 $ 0/ --
(TRCC) -- -- -- /2,000 -- /$ 0(3)
(TXM) -- -- 20,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option
Values (Continued)
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
Number of Value of
Unexercised Unexercised
Shares Options at Fiscal In-the-Money
Acquired Year-End Options
on Value (Exercisable/ (Exercisable/
Name Company Exercise Realized(1) Unexercisable)(2) Unexercisable)
---- ------- -------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
John N. Hatsopoulos..... (TMO) 7,800 $ 88,436 812,735/0(6) $ 151,023/ --
(MKA) -- -- 10,000/0 $ 0/ --
(ONX) -- -- 20,000/0 $ 0/ --
(RGI) -- -- 48,000/0 $ 0/ --
(TMD) -- -- 50,000/0 $ 0/ --
(TDX) -- -- 20,000/0 $ 0/ --
(TBA) -- -- 17,200/0 $ 40,320/ --
(TCK) -- -- 13,257/0 $ 67,943/ --
(TFG) -- -- 20,000/0 $ 0/ --
(TFT) -- -- 57,600/0 $ 120,629/ --
(TISI) -- -- -- /10,000 --/$ 0(3)
(THI) 11,719 $237,720 70,312/0 $ 112,359/ --
(TLZ) -- -- 39,400/0 $ 40,507/ --
(TLT) -- -- -- /15,000 --/$ 0(3)
(TOC) -- -- 92,800/0 $ 0/ --
(THP) -- -- 40,000/0 $ 0/ --
(TMQ) -- -- 92,400/0 $ 28,170/ --
(THN) -- -- 22,500/0 $ 0/ --
(TSR) -- -- 15,000/0 $ 0/ --
(THS) -- -- 24,400/0 $ 36,630/ --
(TTT) -- -- 40,000/0 $ 0/ --
(TKN) -- -- 21,000/0 $ 0/ --
(VIZ) -- -- 15,000/0 $ 0/ --
(TRCC) -- -- -- /20,000 --/$ 0(3)
(TXM) 8,000 $ 30,000 32,000/0 $ 0/ --
</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. Please see
footnote (1) on page 20 for the company abbreviations used in this table. In
addition, ThermoLase Corporation is designated in the table as TLZ.
(2)All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of fiscal year-end, except options to purchase
the common stock of Thermo Coleman Corporation, Thermo Information Solutions
Inc., ThermoLyte Corporation, Thermo Trilogy Corporation, and Trex
Communications Corporation, which are not exercisable until the earlier of
(i) 90 days after the effective date of the registration of the 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 are subject to repurchase by the granting corporation at the
exercise price if the optionee ceases to be employed by, or ceases to serve
as a director of, 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 or the cessation of
directorship, as the case may be. For publicly traded companies, the
repurchase rights generally lapse ratably over a one- to ten-year period,
depending on the option term, which may vary from five to twelve years,
provided that the optionee continues to be employed by or serve as a
director of the granting corporation or another Thermo Electron company. For
companies whose shares are not publicly traded, the repurchase rights lapse
in their entirety on the ninth anniversary of the grant date. Certain
options have three-year terms and the repurchase rights lapse in their
entirety on the second anniversary of the grant date.
(3)No public market for the shares underlying these options existed at fiscal
year-end. Accordingly, no value in excess of exercise price has been
attributed to these options.
(4)Options to purchase 62,500 shares of the common stock of Thermo Instrument
Systems Inc. granted to Mr. Lewis are subject to the same terms as described
in footnote (2), 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.
25
<PAGE>
(5) Options to purchase 100,000 shares of the common stock of Thermo Optek
Corporation granted to Mr. Lewis are subject to the same terms as
described in footnote (2), except that the repurchase rights are deemed to
lapse 20% per year commencing on the sixth anniversary of the grant date.
(6) Options to purchase 90,000 and 135,000 shares of the Common Stock granted
to Messrs. Rainville and J. Hatsopoulos, respectively, are subject to the
same terms as described in footnote (2), 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.
(7) Options to purchase 20,000 shares of the common stock of Thermo Fibergen
Inc. granted to Mr. Rainville are subject to the same terms as described
in footnote (2), except that the repurchase rights are deemed to lapse 20%
per year commencing on the sixth anniversary of the grant date.
Defined Benefit Retirement Plan
Thermo Web Systems Inc., a wholly owned subsidiary of Thermo Fibertek Inc.,
maintains a defined benefit retirement plan (the "Retirement Plan") for
eligible U.S. employees. Mr. Rainville is the chief executive officer of
Thermo Fibertek Inc. and the only executive officer of the Corporation who
participates in the Retirement Plan. The following table sets forth the
estimated annual benefits payable under the Retirement Plan upon retirement to
employees of the subsidiary in specified compensation and years-of-service
classifications. The estimated benefits at certain compensation levels reflect
the statutory limits on compensation that can be recognized for plan purposes.
This limit is currently $160,000 per year.
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------
Annual Compensation 15 20 25 30 35
------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$100,000 $25,250 $35,000 $43,750 $48,125 $48,125
$125,000 $32,813 $43,750 $54,688 $60,156 $60,156
$150,000 $39,375 $52,500 $65,625 $72,188 $72,188
$160,000 $42,000 $56,000 $70,000 $84,000 $84,000
</TABLE>
Each eligible employee receives a monthly retirement benefit, beginning at
normal retirement age (65), based on a percentage (1.75%) of the average
monthly compensation of such employee before retirement, multiplied by his
years of service (up to a maximum of 30 years). Full credit is given for the
first 25 years of service, and half credit is given for years over 25 and less
than 30. Benefits are reduced for retirement before normal retirement age.
Average monthly compensation is generally defined as average monthly base
salary over the five years of highest compensation in the ten-year period
preceding retirement. For 1998, the annual compensation of Mr. Rainville
recognized for plan purposes was $160,000. The estimated credited years of
service recognized under the Retirement Plan for Mr. Rainville is 30, assuming
retirement at age 65. No benefits under the Retirement Plan vest for an
employee until after five years of participation, at which time they become
fully vested. The benefits shown in the above table are subject to reduction
for Social Security benefits. The plan benefits shown are payable during the
employee's lifetime unless the employee elects another form of benefit that
provides death benefit protection.
Executive Retention Agreements
Thermo Electron has entered into agreements with certain executive officers
and key employees of the Corporation that provide severance benefits if there
is a change in control of Thermo Electron and their employment is terminated
without cause or for good reason, as those terms are defined therein, within
18 months thereafter. For purposes of these agreements, a change in control
exists upon (i) the acquisition by any person of 40% or more of the
outstanding common stock or voting securities of Thermo Electron; (ii) the
failure of the Thermo Electron board of directors to include a majority of
directors who are "continuing directors," which term is defined to include
directors who were members of Thermo Electron's board on the date of the
agreement
26
<PAGE>
or who subsequent to the date of the agreement were nominated or elected by a
majority of directors who were "continuing directors" at the time of such
nomination or election; (iii) the consummation of a merger, consolidation,
reorganization, recapitalization or statutory share exchange involving Thermo
Electron or the sale or other disposition of all or substantially all of the
assets of Thermo Electron unless immediately after such transaction (a) all
holders of Thermo Electron common stock immediately prior to such transaction
own more than 60% of the outstanding voting securities of the resulting or
acquiring corporation in substantially the same proportions as their ownership
immediately prior to such transaction and (b) no person after the transaction
owns 40% or more of the outstanding voting securities of the resulting or
acquiring corporation; or (iv) approval by stockholders of a complete
liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement with
each of Dr. George N. Hatsopoulos, Mr. John T. Keiser, Mr. Earl R. Lewis, Mr.
William A. Rainville and Mr. Arvin H. Smith. These agreements provide that in
the event the individual's employment is terminated within 18 months after a
change in control, the individual would be entitled to a lump sum payment
equal to the sum of (a) in the case of Dr. Hatsopoulos, three times, and in
the case of Messrs. Keiser, Lewis, Rainville and Smith, two times, the
individual's highest annual base salary in any 12 month period during the
prior five-year period, plus (b) in the case of Dr. Hatsopoulos, three times,
and in the case of Messrs. Keiser, Lewis, Rainville and Smith, two times, the
individual's highest annual bonus in any 12 month period during the prior
five-year period. In addition, the individual would be provided benefits for a
period of, in the case of Dr. Hatsopoulos, three years, and in the case of
Messrs. Keiser, Lewis, Rainville and Smith, two years, after such termination
substantially equivalent to the benefits package the individual would have
been otherwise entitled to receive if the individual was not terminated.
Further, all repurchase rights of the Corporation and its subsidiaries shall
lapse in their entirety with respect to all options that the individual holds
in Thermo Electron and its subsidiaries, as of the date of the change in
control. Finally, the individual would be entitled to a cash payment equal to,
in the case of Dr. Hatsopoulos, $25,000, and in the case of Messrs. Keiser,
Lewis, Rainville and Smith, $20,000, to be used toward outplacement services.
These executive retention agreements supersede and replace any and all prior
severance arrangements which these individuals had with Thermo Electron.
Assuming that the severance benefits would have been payable as of January
1, 1999, the lump sum salary and bonus payment under such agreement to Dr.
Hatsopoulos, Mr. Keiser, Mr. Lewis, Mr. Rainville and Mr. Smith would have
been approximately $3,645,000, $920,000, $1,140,000, $960,000 and $1,300,000,
respectively. In the event that payments under these agreements are deemed to
be so called "excess parachute payments" under the applicable provisions of
the Internal Revenue Code of 1986, as amended, the individuals would be
entitled to receive a gross-up payment equal to the amount of any excise tax
payable by such individual with respect to such payment plus the amount of all
other additional taxes imposed on such individual attributable to the receipt
of such gross-up payment.
Consulting Agreement with Mr. John N. Hatsopoulos
On September 15, 1998, the Corporation entered into an agreement with Mr.
John N. Hatsopoulos regarding his retirement as chief financial officer of the
Corporation and his consulting arrangement with the Corporation. Pursuant to
the agreement, Mr. Hatsopoulos' employment with the Corporation was terminated
effective as of December 31, 1998 (the "Employment Termination Date"). The
agreement provides that in addition to receiving his regular salary through
the Employment Termination Date, Mr. Hatsopoulos would be paid a bonus for the
1998 calendar year in an amount to be determined on the same basis as
similarly situated Corporation executives. The agreement also provides for an
ongoing consulting relationship between Mr. Hatsopoulos and the Corporation
for the five-year period from January 1, 1999 to December 31, 2003. For his
consulting services, Mr. Hatsopoulos will be paid a fee at a rate of $500,000
per year, payable monthly in arrears. The board of directors also agreed to
nominate Mr. Hatsopoulos as a director of the Corporation for the three-year
term expiring in 2002, and agreed to renominate him for a second three-year
term in 2002. Assuming Mr. Hatsopoulos is reelected a director, and subject to
the board of directors' fiduciary duties, the Corporation also agreed to use
its best efforts to cause Mr. Hatsopoulos to remain non-executive vice
chairman for the term of his consulting agreement.
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<PAGE>
Employment Agreement with Dr. Richard F. Syron
On March 12, 1999, Dr. Richard F. Syron, a director of the Corporation,
agreed to become president and chief executive officer of the Corporation
effective June 1, 1999. In connection therewith, Dr. Syron entered into an
employment agreement with the Corporation that provides for an annual base
salary of $800,000 and for an annual incentive bonus in an amount to be
determined by the Corporation's board of directors, provided that Dr. Syron
will be entitled to a guaranteed minimum bonus in calendar 1999, 2000 and 2001
of $145,833, $250,000 and $104,167, respectively. Also, on each of June 1,
1999, June 1, 2000 and June 1, 2001, Dr. Syron will be granted an award of
shares of Common Stock ("Restricted Stock") having a market value at the time
of grant of $200,000 based on the average closing price of the Common Stock as
reported on the New York Stock Exchange ("NYSE") for the five business days
preceding the corresponding grant date. Vesting of these shares of Restricted
Stock shall occur on the third anniversary of each corresponding grant date.
In addition, on June 1, 1999, Dr. Syron will be granted a stock option ("Stock
Option") to acquire one million shares of Common Stock at an exercise price
equal to the average of the closing price of the Common Stock as reported on
the NYSE for the five business days preceding the grant date. The transfer
restrictions with respect to the Stock Option shall lapse ratably over the
first three anniversaries of the grant date. The Corporation will also
purchase Dr. Syron's current home in the New York area for a purchase price of
$1.5 million and will reimburse him for his reasonable out-of-pocket moving
expenses. Further, if Dr. Syron's employment is terminated without cause or as
a result of a constructive termination, as those terms are defined in the
agreement, he will be entitled to continue to receive salary payments based on
his then current annual base salary for a period of the greater of (i) twelve
months or (ii) the remaining term of his employment agreement (the "Salary
Continuation Period"). Dr. Syron will also be entitled to a pro rata annual
bonus payment for the year in which the termination occurs and, if applicable,
for the Salary Continuation Period. Further, he will also be entitled to
retain his Restricted Stock and his Stock Option, all transfer restrictions
relating thereto shall lapse in their entirety, and his Stock Option shall
continue to be exercisable until the later of June 1, 2002 or two years from
the employment termination date (but in no event beyond the option expiration
date of June 1, 2006). The agreement has a three year term, with automatic
one-year extensions thereafter, unless either party elects not to extend the
agreement by providing twelve months' prior written notice.
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"). 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 (collectively
referred to as "total compensation").
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.
Establishing Competitiveness
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 compensation consultants 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 500 Index but do not necessarily correspond
to the companies included in the Corporation's peer group.
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<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 process for determining each of these elements for
the named executive officers is outlined below. For its review of the
compensation of other officers of the Corporation, the Committee follows a
substantially similar process.
Base Salary
Base salaries are intended to approximate the mid-point of competitive
salaries for similar organizations of comparable size and complexity as 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. It is the Committee's
intention that over time the base salaries for the chief executive officer and
the other named executive officers will approximate the mid-point of
competitive data. The salary increases in fiscal 1998 for the chief executive
officer and other named executive officers generally reflect this practice of
gradual increases and moderation.
Cash Bonus
The Committee establishes a median potential bonus for each executive (other
than the chief executive officer) 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 applied throughout the
Corporation. 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 by
using graphs developed by the Corporation. These graphs are 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 fiscal 1998 measured 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 these operating measures and subjective evaluation
varies depending on the executive's role and responsibilities within the
organization.
The bonuses for named executive officers approved by the Committee with
respect to fiscal 1998 performance were less than the prior year's bonuses,
reflecting the Corporation's performance, but exceeded the median potential
bonuses.
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 shares of
common stock of the Corporation and its majority-owned subsidiaries.
The Committee and management believe that awards of stock options to
purchase 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, closely
aligns management's interests to the interests of all the Stockholders, and
results in management's compensation being
29
<PAGE>
closely linked to stock performance. In addition, because the options vest
over periods of varying durations and are subject 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 that stock option awards in the Corporation and its majority-owned
subsidiaries are also an important tool in providing incentives for
performance within the entire organization.
In determining awards, the Committee considers for each officer the annual
value of all options to purchase shares of the Corporation and other companies
within the Thermo Electron organization that vest in the next year and
compares the individual's total compensation using this value to competitive
data. The Committee uses a modified Black-Scholes option pricing model to
determine the value of an option award. In addition, the Committee considers
the aggregate amount of net awards to purchase shares of Common Stock granted
to all employees over the last five years to monitor the number of aggregate
awards to all employees. In reviewing the aggregate number of awards, the
Committee considers such factors as the size of the company, its stage of
development, and its growth strategy, as well as the aggregate awards and
option practices of comparably situated companies.
The Committee periodically awards stock options based on its assessment of
the total compensation of each executive, the 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.
Stock Ownership and Retention Policies
The Corporation's compensation program is also designed to encourage
executives to own shares of the Corporation's Common Stock. The Committee
believes that encouraging executives to retain stock acquired through its
stock option program or otherwise provides additional incentive for executive
officers to follow strategies designed to maximize long-term value to
Stockholders.
There are several elements to the Corporation's stock retention program. For
example, the Committee annually awards stock options based upon an executive's
ownership of the Corporation's Common Stock over the prior year. These option
awards are independent of the award of stock options as an incentive for
management performance. In addition, the Committee has approved several forms
of stock option awards that contain different vesting provisions and
restrictions upon resale, which are intended to encourage executives to follow
an exercise and hold strategy.
The Committee also established a stock holding policy for executive officers
of the Corporation in 1996 that required executive officers to own a multiple
of their compensation in shares of the Corporation's Common Stock. For the
chief executive officer, the multiple was one times his base salary and
reference bonus for the calendar year. For all other officers, the multiple
was 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.
The policy was amended in 1998 to apply only to the chief executive officer.
In order to assist officers in complying with the policy, the Committee also
adopted in 1996 a stock holding assistance plan under which the Corporation
was 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 determined by the Committee. In 1996, Mr.
Rainville received a loan in the principal amount of $118,104 under the Thermo
Fibertek Inc. stock holding assistance plan to purchase 10,000 shares of the
common stock of Thermo Fibertek Inc. of which $94,483 was outstanding as of
January 31, 1999. In 1996, Mr. Lewis received a loan in the principal amount
of $194,030 under the Thermo Optek Corporation stock holding assistance plan
to purchase 15,000 shares of the
30
<PAGE>
common stock of Thermo Optek Corporation of which $155,224 was outstanding as
of January 31, 1999. Both this plan and the Thermo Fibertek Inc. plan were
amended in 1998 to apply only to their respective chief executive officers.
The Committee also has a policy requiring executive officers of the
Corporation to hold shares of the Common Stock acquired upon the exercise of
stock options granted by the Corporation. Under this policy, executive
officers are required to hold 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 options.
Similar stock holding policies and stock holding assistance plans have been
adopted by each of the Corporation's publicly traded, majority-owned
subsidiaries. Certain executive officers of the Corporation who are chief
executive officers of these subsidiaries are required to comply with these
stock holding policies. See "Relationship with Affiliates--Stock Holding
Assistance Plans."
Policy on Deductibility of Compensation
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") to the
Corporation's compensation practices. Section 162(m) limits the tax deduction
available to public companies for annual compensation that is paid to senior
executives in excess of $1 million, unless the compensation qualified as
"performance-based" or is otherwise exempt from Section 162(m).
The cash compensation of the chief executive officer exceeded $1 million in
1998; none of the other named executive officers received compensation in
excess of $1 million in 1998. The Committee does not believe that the amount
by which the chief executive officer's cash compensation exceeded $1 million
was significant. The Committee does not currently expect the cash compensation
of any of the named executive officers other than the chief executive officer
to exceed the $1 million threshold in 1999. Furthermore, although the
Corporation generally claims a tax deduction when an executive exercises a
stock option, it is believed that the Corporation's stock incentive plans
qualify as "performance-based." Therefore, it does not appear that the Section
162(m) limitation will have a significant impact on the Corporation in the
near-term. The Committee believes that the Corporation's incentive
compensation program, as presently structured, continues to serve the best
interests of the Corporation and its Stockholders. The Committee will continue
to monitor the effect of Section 162(m) on the Corporation.
1998 CEO Compensation
The Committee determines the total cash compensation for Dr. George N.
Hatsopoulos, the Corporation's chief executive officer and founder. The
determinations of the Committee as to cash compensation for the chief
executive officer are subject to review by the entire board of directors. In
1998, the board of directors concurred in the decisions of the Committee.
In determining the appropriate level of total cash compensation for the
chief executive officer, the Committee uses its discretion and compares the
compensation of chief executive officers of public companies of similar size
and comparable performance over a 10-year period. The Committee's objective is
to establish total cash compensation for the Corporation's chief executive
officer at the mid-point of the competitive total compensation.
To determine total cash compensation for the chief executive officer, the
Committee first determines the base salary to be paid the chief executive
officer using the same principles used in setting base salaries for the named
executive officers and officers of the Corporation (described above under the
heading "Base Salary"). The increase in base salary for the chief executive
officer approved for fiscal 1998 by the Committee reflected its policy of
gradual adjustment to reflect average competitive salaries.
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<PAGE>
The Committee uses its discretion to establish the total cash compensation
of the chief executive officer, taking into account the total cash
compensation of other executives in the Corporation and the Corporation's 10-
year total return to Stockholders. The Committee believes that the
Corporation's performance is reflected in its 10-year return, as highlighted
in the 10-year Performance Graph appearing on page 34 of this proxy statement,
which compares the Corporation's stock performance over this period to the
stock performance of the Standard & Poor's 500 Index and its peer performance
group. For the 10-year period ending January 2, 1999, the Corporation achieved
a ten-year compounded rate of return to Stockholders of 10.93 percent per
year. The Committee considered the Corporation's performance over the last ten
years as well as its performance in the last year in determining Dr.
Hatsopoulos' cash bonus reported in the Summary Compensation Table.
The awards of stock options to Dr. Hatsopoulos during fiscal 1998 were made
under a program approved by the Committee in 1996. Under this program, the
Committee awarded options to purchase a total of 500,000 shares of the Common
Stock, to be granted in 10 quarterly installments of 50,000 shares each at the
end of each fiscal quarter beginning in September 1996 and ending in March
1999. The program was adopted pursuant to a Committee policy to award to Dr.
Hatsopoulos options to purchase shares of the Corporation's Common Stock from
time to time in amounts such that his ownership of the Corporation approaches
five percent of the outstanding Common Stock. Such awards had been made at
times the Corporation achieved a ten-year rate of return to stockholders in
excess of the returns achieved by the Standard & Poor's 500 Index and its peer
performance group. For the year in which the program was approved, the ten-
year compounded rate of return to Stockholders was 24 percent per year for the
period 1985-1995, which exceeded the compounded rate of return of 15 percent
per year for the Standard & Poor's 500 Index.
In addition to awards of options to purchase the Corporation's Common Stock,
Dr. Hatsopoulos may be granted options to purchase the common stock of
majority-owned subsidiaries of the Corporation as part of the Corporation's
stock option program from time to time due to his position as a director of
these subsidiaries or as chief executive officer of the Corporation. The stock
option awards to Dr. Hatsopoulos in 1998 with respect to the shares of Metrika
Systems Corporation, ONIX Systems Inc., The Randers Killam Group Inc., Thermo
BioAnalysis Corporation, Thermo Information Solutions Inc., ThermoQuest
Corporation, Thermo Optek Corporation, ThermoSpectra Corporation, Thermo
Trilogy Corporation, Thermo Vision Corporation and Trex Communications
Corporation, were awarded under this program, using the methodology described
above for all executive officers under "Stock Option Program."
Mr. Donald E. Noble (Chairman)
Dr. Elias P. Gyftopoulos
Mr. Frank Jungers
Mr. Robert A. McCabe
Ms. Hutham S. Olayan
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COMPARATIVE PERFORMANCE GRAPHS
Five-Year Performance Graph: 1993-1998
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. Due in part to the addition of
the Corporation in 1996 to the companies comprising the Dow Jones diversified
technology industry index, and in part to the changing mix of the
Corporation's businesses, management has concluded that the Dow Jones
diversified technology industry index, excluding the Corporation (the "Peer
Group") is the most appropriate peer group to which to compare the
Corporation's shareholder returns. The Corporation has compared its
performance with the Standard & Poor's 500 Index (the "S&P 500 Index") and the
Peer Group. The Peer Group is composed of the following companies: Corning
Inc., Eaton Corp., Minnesota Mining and Manufacturing Co., The Perkin-Elmer
Corp., Rockwell International Corp., TRW Inc., Tektronix, Inc., Texas
Instruments Incorporated, United Technologies Corp. and Varian Associates,
Inc.
Comparison of 1993-1998 Cumulative Total Return Among Thermo Electron
Corporation (TMO),
the Standard & Poor's 500 Index (S&P 500), and its Peer Group
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
TMO................................. 100 107 186 202 231 91
S&P 500............................. 100 101 139 175 230 294
Peer Group.......................... 100 104 138 186 206 242
</TABLE>
The total return for the Corporation's Common Stock, the S&P 500 Index and
the Corporation's Peer Group assumes the reinvestment of dividends, although
dividends have not been declared on the Corporation's Common Stock. The
Corporation's Common Stock is traded on the New York Stock Exchange under the
ticker symbol "TMO".
33
<PAGE>
Ten-Year Performance Graph: 1988-1998
The Corporation has also elected to compare its cumulative shareholder
return to the S&P 500 Index and the Corporation's Peer Group for the last ten
years, as of the final trading day of each fiscal year. The Corporation's
human resources committee uses this information as a measure of performance in
determining total cash compensation for the Corporation's chief executive
officer.
Comparison of 1988-1998 Cumulative Total Return Among Thermo Electron
Corporation (TMO),
the S&P 500 Index (S&P 500), and the Corporation's Peer Group
[CHART TO APPEAR]
<TABLE>
<CAPTION>
12/88 12/89 12/90 12/91 12/92 12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TMO.......... 100 151 142 227 233 311 332 578 629 720 282
S&P 500...... 100 132 128 166 179 197 200 275 345 453 579
Peer Group... 100 122 129 148 169 195 201 268 361 400 471
</TABLE>
RELATIONSHIP WITH AFFILIATES
Thermo Electron has, from time to time, sold a minority interest in
subsidiary companies to investors, resulting in several private and publicly-
held subsidiaries. Such majority-owned Thermo Electron subsidiaries are
hereinafter referred to as the "Thermo Subsidiaries."
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries have adopted the Thermo Electron Corporate Charter (the
"Charter") to define the relationships and delineate the nature of such
cooperation among themselves. The purpose of the Charter is to ensure that (1)
all of the companies and their stockholders are treated consistently and
fairly, (2) the scope and nature of the cooperation among the companies, and
each company's responsibilities, are adequately defined, (3) each company has
access to the combined resources and financial, managerial and technological
strengths of the others, and (4) Thermo Electron and the Thermo Subsidiaries,
in the aggregate, are able to obtain the most favorable terms from outside
parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be
34
<PAGE>
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 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.
In general, under the corporate services agreements between Thermo Electron
and each of the Thermo Subsidiaries, Thermo Electron's corporate staff
provides each of the Thermo Subsidiaries with certain administrative services,
including certain legal advice and services, risk management, employee benefit
administration, tax advice and preparation of tax returns, centralized cash
management and financial and other services. For the fiscal year ended January
2, 1999, the Corporation assessed each Thermo Subsidiary an annual fee equal
to 0.8% of such subsidiary's revenues for these services The annual fee will
remain at 0.8% of the total revenues of each Thermo Subsidiary for fiscal
1999. The fee for each subsidiary is reviewed annually and may be changed by
mutual agreement of each respective Thermo Subsidiary and Thermo Electron.
Each corporate services agreement automatically renews for successive one-year
terms, unless canceled by the subsidiary upon 30 days' prior notice. In
addition, each corporate services agreement terminates automatically in the
event the subsidiary 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 a corporate
services agreement, the subsidiary will be required to pay a termination fee
equal to the fee that was paid by such subsidiary for services under the
corporate 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 subsidiary or as required in order to
meet such subsidiary's obligations under Thermo Electron's policies and
procedures. Thermo Electron will charge a subsidiary a fee equal to the market
rate for comparable services if such services are provided to such subsidiary
following termination.
Pursuant to an international distributorship agreement, Thermedics Detection
Inc. ("Thermedics Detection"), a majority-owned subsidiary of Thermedics Inc.,
which in turn is a majority-owned subsidiary of the Corporation, appointed
Arabian Business Machines Co. ("ABM") as its exclusive distributor of
Thermedics Detection's security instruments in certain Middle Eastern
countries. ABM is a member of The Olayan Group. Ms. Hutham S. Olayan, a
director of the Corporation, is the president and a director of Olayan America
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Corporation, a member of The Olayan Group, which is indirectly controlled by
Suliman S. Olayan, Ms. Olayan's father. Revenues recorded under this agreement
totaled $248,000 in fiscal 1998.
In March 1995, ThermoLyte Corporation ("ThermoLyte") sold 1,845,000 units,
each unit consisting of one share of ThermoLyte common stock and one
redemption right, at $10.00 per unit. Holders of the common stock issued in
the offering have the option to require ThermoLyte to redeem any or all of
their shares at $10.00 per share in December 1998 or December 1999. In
December 1998, 1,707,000 shares of ThermoLyte common stock were redeemed for a
total redemption value of $17.1 million. In connection therewith, ThermoLyte
redeemed 25,000 shares held by Crescent International Holdings Ltd. at a
redemption price of $10.00 per share, the same redemption price received by
unaffiliated holders. Crescent International Holdings Ltd. is a wholly owned
subsidiary of Crescent Holdings GmbH, which is indirectly controlled by
Suliman S. Olayan, Ms. Olayan's father. Ms. Olayan has disclaimed beneficial
ownership of the ThermoLyte shares owned by Crescent International Holdings
Ltd. that were redeemed by ThermoLyte.
In December 1997 and March 1998, Thermo Trilogy Corporation ("Trilogy"), a
subsidiary of Thermo Ecotek Corporation, which in turn is a majority-owned
subsidiary of the Corporation, completed private placements of an aggregate of
1,942,821 shares primarily to outside investors of minority investments in its
common stock. In connection with Trilogy's private placement of its shares of
common stock in March 1998, Trilogy and the Corporation entered into a
placement agreement with KSH Investment Group, Inc. ("KSH") to act as
placement agent on behalf of Trilogy. KSH received a placement agent fee of
approximately $387,050, representing 6% of the gross proceeds from the sale of
shares of Trilogy common stock in the March 1998 private placement to
investors introduced to Trilogy by KSH. KSH is a privately held investment
banking firm of which John C. Hatsopoulos is a shareholder and a managing
director. John C. Hatsopoulos is the son of John N. Hatsopoulos, a director
and former president and chief financial officer of the Corporation. John C.
Hatsopoulos will receive a portion of the placement agent fee equal to
$16,750.
A company controlled by Dr. John M. Albertine, a director of the
Corporation, is in negotiations with the Corporation for the possible purchase
of a business from the Corporation in a transaction valued at approximately
$23 million. No definitive agreement has been reached with respect to this
proposed transaction. A special committee of the Corporation's board of
directors, comprised of Ms. Olayan and Messrs. Jungers and McCabe, has been
formed to evaluate the fairness to the Corporation of the proposed
transaction. Any definitive agreement would be subject to the approval of this
committee and the Corporation's board of directors, excluding Dr. Albertine.
Stock Holding Assistance Plans
In 1996, the Corporation adopted a stock holding policy that 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. This policy and plan were amended in 1998 to apply only to the chief
executive officer of the Corporation in the future. No such loans are
currently outstanding under this plan.
Each of the Corporation's publicly traded, majority-owned subsidiaries have
adopted similar stock holding policies and stock holding assistance plans,
which are applicable, beginning in 1998, only to their chief executive
officers. Certain executive officers of the Corporation are the chief
executive officers of these subsidiaries and are required to comply with the
subsidiary's stock holding policies. Mr. William A. Rainville, a chief
operating officer of the Corporation, is also the chief executive officer of
Thermo Fibertek Inc. Mr. Earl R. Lewis, a chief operating officer of the
Corporation, is also the chairman of Thermo Optek Corporation. In 1996, Mr.
Rainville received a loan in the principal amount of $118,104 under the Thermo
Fibertek Inc. stock holding assistance
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plan to purchase 10,000 shares of the common stock of Thermo Fibertek Inc. of
which amount $94,483 was outstanding as of January 31, 1999. In 1996, Mr.
Lewis received a loan in the principal amount of $194,030 under the Thermo
Optek Corporation stock holding assistance plan to purchase 15,000 shares of
the common stock of Thermo Optek Corporation of which amount $155,224 was
outstanding as of January 31, 1999. Both of Mr. Rainville's and Mr. Lewis'
loans are payable on the earlier of demand or the fifth anniversary of the
date of the loan, unless otherwise determined by the human resources committee
of the board of directors of Thermo Fibertek Inc. or Thermo Optek Corporation,
respectively. None of the other named executive officers have loans currently
outstanding under any subsidiary stock holding assistance plan.
-PROPOSAL 2-
PROPOSAL TO AMEND AND RESTATE THE CORPORATION'S CERTIFICATE OF INCORPORATION
From time to time, the Corporation undertakes a review of its corporate
documents, including its Amended and Restated Certificate of Incorporation
(the "Current Charter"). As a result of the latest review of the Current
Charter, the Corporation has concluded that certain provisions of the Current
Charter have become obsolete, unnecessary or are duplicative under the current
General Corporation Law of the State of Delaware (the "Delaware Law"), which
governs the Corporation's activities as a Delaware corporation. In addition,
the Corporation believes that certain provisions which were intended to apply
to transactions involving a potential change in control without the board of
directors' approval, have, in practice, had the unintended effect of making
transactions, including matters that do not involve a change in control and
that have been approved by the board of directors, more difficult to
accomplish. Consequently, the Corporation believes that such provisions are no
longer justifiable and serve no continuing purpose. For example, the provision
in the Current Charter requiring a two-thirds vote (as opposed to a simple
majority) for any amendment to the certificate of incorporation, in the
Corporation's view, creates unnecessary uncertainty regarding whether the
Corporation would be able to obtain the requisite vote to implement plans
approved by the board, such as an amendment to the certificate of
incorporation to increase the number of authorized shares in order to cover
the shares issuable upon a stock split.
Since 1960, when the Corporation was first incorporated in the State of
Delaware, both the Delaware Law and Delaware corporate practice have undergone
many changes. The proposed changes to the Amended and Restated Certificate of
Incorporation (the "Proposed Restatement") ensure that the document is
consistent with the current Delaware Law and reflects current corporate
practice, in a simple and straightforward format. The board of directors
believes that the proposed changes will result in a document that will better
serve the Corporation and its Stockholders in the years ahead. Accordingly, on
March 18, 1999, the board of directors unanimously approved, subject to the
approval of Stockholders at the meeting, a proposal to amend and restate the
Current Charter.
The proposed changes to the Current Charter and the reasons for such changes
are summarized below.
Eliminate Superfluous Provisions Relating to Changes in Control
The Current Charter contains certain provisions, adopted at the
Corporation's 1978 Annual Meeting of Stockholders, relating to transactions
that could result in a change in control of the Corporation. These provisions
contain (1) super-majority voting requirements in the event of certain
significant corporate actions and (2) a redemption right for shareholders who
continue to hold shares of the Corporation following a tender offer not
approved by the board of directors. Since the adoption of these provisions,
Delaware law and practice relating to a corporation's response to proposed
transactions involving a change in control have developed significantly. The
board of directors believes that, since 1978, these developments, together
with the adoption by the Corporation of other measures applicable to a
proposal that could result in a change in control (described in Current
Measures Relating to Change in Control, below) have made the Current Charter's
provisions obsolete, unnecessary and, in some cases, extremely cumbersome. The
board of directors proposes to remove both the super-majority voting
requirements and the redemption provision contained in the Current Charter.
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Eliminate Super-majority Voting Requirements
Article Eleventh of the Current Charter requires that a larger percentage of
votes than a simple majority must be obtained in order to approve corporate
actions under certain circumstances.
--Part A of Article Eleventh requires a vote of the holders of two-thirds of
the outstanding Common Stock in order to approve certain corporate actions,
including the amendment of the Corporation's certificate of incorporation,
merger of the Corporation into another entity and other significant corporate
actions; and
--Part B of Article Eleventh requires that, if any business entity owns more
than 25% of the Corporation's Common Stock, the vote of the holders of 85% of
the outstanding Common Stock (other than shares held by the 25% holder) is
required to approve certain corporate transactions, including a merger,
involving the 25% holder.
Article Eleventh was adopted in 1978 (1) to make it more difficult for the
holder of a large block of Common Stock to exert undue influence in
implementing significant corporate transactions and (2) to ensure that
significant corporate actions, including those that could result in a change
in control, would be approved by a greater percentage of stockholders.
However, the board of directors has found that the presence of these super-
majority voting requirements has, in practice, created unnecessary uncertainty
surrounding the ability of the Corporation to implement decisions of the board
of directors which require the approval of the Corporation's Stockholders in
circumstances not involving a potential change in control, such as an
amendment to the certificate of incorporation to increase the number of
authorized shares. Because a super-majority vote applied to such transactions,
this provision has had the effect of making more difficult even transactions
approved by the board of directors. The board of directors believes that it is
to the Corporation's and the Stockholders' advantage to reduce this
uncertainty, in that it could impede such matters as charter amendments and
transactions initiated or agreed to by the board of directors. In addition,
the board of directors believes that the purposes of Article Eleventh are
better served by the provisions of Section 203 of the Delaware Law (adopted in
1988) and the Corporation's shareholder rights plan (also adopted in 1988), as
described in Current Measures Relating to Change in Control, below.
Eliminate Redemption Provision
Section 9 of Article Ninth of the Current Charter ("Section 9") states that,
in the event of a tender offer that is not recommended by the board of
directors, the Stockholders remaining after the completion of the tender offer
have the right to require the Corporation to redeem their shares of Common
Stock at a price equal to the greater of the highest price paid by the
acquiring party in the tender offer and the book value per share of Common
Stock. This provision, which was adopted in 1978, was intended to address a
takeover tactic of the time in which the acquiring party would gain control of
a corporation by acquiring just over 50% of the outstanding shares at one
price, and would subsequently acquire the remaining shares at a lower price.
The board of directors believes that the change in control measures
described below, specifically the Corporation's shareholder rights plan (the
"Rights Plan") and Section 203 of the Delaware Law, (1) better address the
concerns which led to the adoption of Section 9 and (2) reflect current
Delaware corporate practice regarding how best to address a proposed
transaction that could involve a change in control. Section 203 and the Rights
Plan are designed to encourage parties seeking to implement such a transaction
to negotiate with the board of directors rather than proceeding on a
unilateral basis. In addition, because charter provisions such as Section 9
are no longer customary for public Delaware corporations, the validity and
effect of such provisions in the context of a potential change in control may
be subject to differing interpretations and consequently possibly
unenforceable under Delaware law.
Current Measures Relating to Change in Control
Since 1978, when the provisions set forth in Article Eleventh and Section 9
of Article Ninth were implemented, other strategies for addressing
transactions involving a potential change in control have become
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available to or been developed by Delaware corporations as a result of
revisions in the Delaware Law and the experiences of other companies in actual
situations involving potential changes in control.
In 1988, the Delaware Law was revised to include Section 203, the Delaware
Business Combinations Statute ("Section 203"). Section 203 provides that a
corporation and an "interested" stockholder (one who beneficially owns 15% or
more of the outstanding shares) may not enter into a proposed business
combination for a period of three years following the interested stockholder's
acquisition of its 15% or greater interest unless the proposed combination is
approved by the holders of two-thirds of the disinterested shares or unless
other specified conditions are satisfied. These conditions include approval by
the board of directors of the acquisition by the interested stockholder of its
15% interest or of the proposed business combination prior to the interested
stockholder acquiring its 15% interest, or acquisition by the interested
stockholder of 85% of the outstanding shares of the corporation in the same
transaction in which it became an interested stockholder, among others.
The Corporation also has adopted a shareholder rights plan (the "Rights
Plan"). The Corporation first adopted a Rights Plan in 1988, and approved the
current version of the Rights Plan in 1996. Under the Rights Plan, when an
entity becomes the beneficial owner of 15% or more of the outstanding shares
of the Corporation's Common Stock (except pursuant to an offer for all
outstanding shares of Common Stock that the board of directors determines to
be fair to, and otherwise in the best interests of, the Stockholders), the
other shareholders would have the right to purchase from the Corporation
additional shares of Common Stock at one-half of the then current market price
for those shares.
In addition, the Corporation's board of directors is classified into three
classes, which means that the terms of office of only one-third of the
Directors expire each year. This feature is intended to ensure continuity and
stability in the Corporation's leadership by virtue of the fact that, at any
time, at least two-thirds of the board of directors has had prior experience
on the board. The classified structure also would moderate the pace of any
change in control of the Corporation because all directors' terms do not
expire at the same time, which extends the time required to elect a majority
of the board of directors.
Rights plans, together with classified boards of directors, were developed
in order to encourage potential acquirors of large percentages of shares of
publicly traded corporations to initiate negotiations with the boards of
directors of those corporations, and not to act unilaterally. As a general
matter, most Delaware companies that have adopted rights plans and have
classified boards of directors believe that those measures are sufficient to
ensure that their boards will be given the time and the opportunity to
consider appropriate alternatives, including negotiation of the terms of any
possible transaction.
Eliminate Provisions Repeating, or Not Required by, the Delaware Law
The Proposed Restatement will simplify and modernize the Current Charter by
eliminating provisions that repeat, are not required by, or reflect superseded
versions of the Delaware Law. These provisions contain information that was
once required by now-revised sections of the Delaware Law to be included in
certificates of incorporation but which the statute no longer requires (such
as a list of the specific powers that were granted to the Corporation),
information that was required by the Delaware Law to be included in the
Corporation's certificate of incorporation at the time of its first
organization, but is not required for a corporation that has been in existence
for some time (such as a statement of the minimum capital with which the
Corporation could start its business and a listing of the original
incorporators of the Corporation), matters that are not required by the
Delaware Law to be addressed in certificates of incorporation, or matters that
simply repeat the Delaware Law.
The board of directors believes that these provisions should be eliminated
because their presence in the Current Charter adds no useful, pertinent or
necessary features to the Charter and serves no continuing purpose.
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Integrate Amendments since 1994 into One Document
The Corporation most recently amended and restated the Current Charter in
1994. Since then, there have been three amendments to the Current Charter,
each of which is now represented by a separate document. The Proposed
Restatement integrates all of the amendments that have been made by the
Corporation to the Current Charter since 1994 into one unified document, which
eliminates the need to refer to a number of separate documents in order to
find the complete text of the Current Charter.
Other Changes
In addition to the proposed changes set forth above, the Corporation has
made certain wording changes in some of the sections of the Current Charter,
none of which has any substantive effect.
Filing and Text of Proposed Restatement
The Proposed Restatement will be effective upon filing with the Secretary of
State of the State of Delaware, if it is approved by Stockholders at the
meeting. This summary of the proposed changes to the Current Charter is not
intended to be complete and is qualified in its entirety by reference to the
copy of the Proposed Restatement that is attached to this proxy statement as
Appendix A. Please review the copy of the Proposed Restatement attached to
this proxy statement, which has been marked to show the proposed changes to
the Current Charter.
Recommendation
The board of directors believes that the proposed amendment and restatement
of the Corporation's Current Charter is in the best interests of the
Corporation and its Stockholders and recommends that the Stockholders vote FOR
the approval of the Proposed Restatement. A vote of the holders of two-thirds
of the outstanding Common Stock is required to approve the Proposed
Restatement. Abstentions and broker non-votes will have the same effect as
votes against the proposal.
STOCKHOLDER PROPOSALS
--PROPOSAL 3--
Certain Stockholders have submitted the proposal set forth below. The
Corporation will furnish, orally or in writing as requested, the names,
addresses and claimed share ownership positions of the proponents of the
stockholder proposal promptly upon written or oral request directed to the
Secretary of the Corporation. The board of directors has carefully considered
the stockholder proposal and concluded that its adoption would not be in the
best interests of the Corporation or its Stockholders. For the reasons stated
after the proposal and its supporting statement, the board of directors
recommends a vote against the proposal.
Stockholders have submitted the following proposal, which will be voted upon
at the meeting if presented by its proponents.
WHEREAS WE BELIEVE:
Responsible implementation of a sound, credible environmental policy
increases long-term shareholder value by raising efficiency, decreasing clean-
up costs, reducing litigation, and enhancing public image and product
attractiveness;
Adherence to public standards for environmental performance gives a company
greater public credibility than standards created by industry alone. For
maximum credibility and usefulness, such standards should specifically meet
the concerns of investors and other stakeholders;
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Companies are increasingly being expected by investors to do meaningful,
regular, comprehensive and impartial environmental reports. Standardized
environmental reports enable investors to compare performance over time. They
also attract investment from investors seeking companies which are
environmentally responsible and which minimize risk of environmental
liability.
WHEREAS:
The Coalition for Environmentally Responsible Economies (CERES) -- which
includes shareholders of this company, public interest representatives, and
environmental experts--consulted with corporations to produce the CERES
Principles as comprehensive public standards for both environmental
performance and reporting. Fifty-four companies, including Sun [Sunoco],
General Motors, H.B. Fuller, Polaroid, and Bethlehem Steel, have endorsed
these principles to demonstrate their commitment to public environmental
accountability and standardized reporting. Fortune-500 endorsers say that the
benefits of working with CERES are public credibility; and "value-added" for
the company's environmental initiatives;
In endorsing the CERES Principles, a company commits to work toward:
1. Protection of the biosphere4. Energy conservation 8. Informing the
2. Sustainable natural resource use public
5. Risk reduction
3. Waste reduction and disposal 9. Management
commitment
6. Safe products/services
7. Environmental restoration
10. Audits and reports
[Full text of the CERES Principles and accompanying CERES Report Form
obtainable from CERES, 711 Atlantic Avenue, Boston MA 02110, tel: 617-451-
0927].
CERES is distinguished from other initiatives for corporate environmental
responsibility, in being (1) a successful model of shareholder relations; (2)
a leader in public accountability through standardized environmental
reporting; and (3) a catalyst for significant and measurable environmental
improvement within firms.
RESOLVED: Shareholders request the Corporation to endorse the CERES
Principles as a part of its commitment to be publicly accountable
for its environmental impact.
Supporting Statement for Stockholder Proposal (Proposal 3)
Many investors support this resolution. Those sponsoring similar resolutions
at various companies have portfolios totaling $75 billion. The number of
public pension funds and foundations supporting this resolution increases
every year. The objectives are: standards for environmental performance and
disclosure; methods for measuring progress toward these goals; and a format
for public reporting of progress. We believe this is comparable to the
European Community regulation for voluntary participation in verified and
publicly-reported eco-management and auditing, and fully compatible with ISO
14000 certification.
Your vote FOR this resolution will encourage both scrutiny of our Company's
environmental policies and reports and adherence to standards upheld by
management and stakeholders alike.
Statement in Opposition to Stockholder Proposal (Proposal 3)
Thermo Electron is proud of its commitment to the environment through its
business practices and its products and services. Many of its businesses
provide environmentally responsible products or offer services to aid other
companies in meeting their environmental commitments and responsibilities. The
Corporation believes that its environmental policy and business practices are
already consistent with the basic tenets of the CERES Principles.
The Corporation's environmental policy has evolved over several years. It
was designed and is intended to reflect and recognize the diverse businesses
in which the Corporation engages and the specific and varied
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environmental issues and responsibilities which affect the Corporation's
businesses. The policy states the Corporation's objectives with respect to
environmental issues, sets forth the Corporation's environmental expectations
of its employees and explains the environmental responsibilities of each
business unit and its managers. The board of directors believes that this
environmental policy, as adapted to the structure and specific circumstances
of the Corporation, is better suited to the Corporation and more adaptable to
changing responsibilities and concerns, than the statement recommended by the
Stockholder proponents.
The Corporation operates businesses throughout the world and is already
subject to extensive environmental regulation and disclosure requirements in
the jurisdictions in which it conducts its businesses. The Corporation
believes that its environmental practices and policies already comply with the
laws of these jurisdictions. Furthermore, the Corporation is concerned that
the proliferation of independent practices for environmental disclosure, such
as that represented by the CERES Principles in the United States, the European
Community regulations referred to in the Supporting Statement, ISO 14000 for
European operations, and others, present confusing and conflicting disclosures
that are not applied uniformly to all companies. Finally, the Corporation
believes that adoption of the CERES Principles would not further the
Corporation's environmental objectives but merely create an additional
administrative reporting obligation that would burden the Corporation with
additional expenses and divert resources better employed to creating better
environmental products and services.
The board of directors recommends a vote AGAINST this Stockholder Proposal.
Proxies solicited by the board of directors will be voted AGAINST the proposal
unless Stockholders otherwise specify to the contrary on their proxy. A
substantially identical proposal was submitted to, and rejected by, the
Stockholders at the 1997 and 1998 Annual Meetings of the Stockholders, with
approximately 92.9% and 91.7% of the shares voting on the proposal at the 1997
and 1998 meetings, respectively, voted against the proposal.
--PROPOSAL 4--
Mr. John Jennings Craypo, P.O. Box 400151, Cambridge, Massachusetts 02140-
0002, the owner of 711 shares of Common Stock, has notified the Corporation
that he intends to introduce the following proposal for action at the meeting:
"Effect appropriate changes to the Certificate of Incorporation whereby
commencing January First, the year Two Thousand the Chief Executive Officer of
the Corporation shall always be a direct lineal descendant of the Founder of
the Corporation.
In the event the Board does not wish a direct lineal descendant of the
Founder as Chief Executive Officer, the Board shall provide that a lineal
descendant direct of one of the Brothers or Sisters who have the same parents
as that of the Founder shall serve as Chief Executive Officer of the
Corporation.
In the event the Board does not wish a direct lineal descendant of one of
the brothers or sisters who have the same parents as that of the Founder of
the Corporation as Chief Executive Officer, the Board shall provide for the
Chief Operating Officer of the Corporation being a direct lineal descendant of
the Founder.
In the event the Board does not want a direct lineal descendant of the
Founder as Chief Operating Officer of the Corporation, the Board shall provide
for direct lineal descendant of one of the brothers or sisters of the Founder
with the same parents as that of the Founder to serve as Secretary or Clerk of
the Corporation.
This process shall be effectuated each time a Chief Executive Officer, a
Chief Operating Officer, and Clerk/Secretary of the Corporation is appointed.
In the event the Founder has no Brothers or Sisters with the same parents as
the Founder the designations reference Sisters and/or Brothers of said Founder
will be disregarded but the rest of this enactment shall apply."
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Supporting Statement for Stockholder Proposal (Proposal 4)
"Many Corporations have a history of providing for hereditary privilege for
qualified persons.
One Corporation for example has the procedure whereby its current Chief
Executive Officer is the son of one of it's ancestor corporations.
And another major corporation has its Board Chairperson a direct lineal
descendant of its Founder.
Nationally, here in the United States of America, Mr. John Quincy Adams, its
sixth President, was the son of its second President, and prior to Mr. Adam's
election as sixth President, Mr. Adams served as United States Secretary of
State.
Statement in Opposition to Stockholder Proposal (Proposal 4)
The board of directors opposes this Stockholder proposal in the belief it is
inconsistent with the corporate governance principles guiding most public
companies. In addition, the board of directors has recently conducted a search
for a successor to the Corporation's founder, Dr. George N. Hatsopoulos, and
has named Dr. Richard F. Syron as president and chief executive officer of the
Corporation, effective June 1, 1999.
The board of directors believes that constraining the potential choices for
senior executive positions within the Corporation to descendants of the
founder or his relatives is not in the best interests of the Corporation. The
executives of the Corporation and its subsidiaries reflect a substantial
diversity of experience and background that has contributed to the
entrepreneurial environment and culture of the Corporation. The board of
directors is committed to maintaining and increasing the diversity of the
executive team throughout the organization and believes that tapping
executives within and outside the organization is essential to the future
success of the Corporation.
The board of directors recommends a vote AGAINST this Stockholder Proposal.
Proxies solicited by the board of directors will be voted AGAINST the proposal
unless Stockholders otherwise specify to the contrary on their proxy.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1999. 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. Arthur
Andersen LLP has acted as independent public accountants for the Corporation
since 1960.
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 included in the proxy statement and
form of proxy relating to the 2000 Annual Meeting of the Stockholders of the
Corporation and to be presented at such meeting must be
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received by the Corporation for inclusion in the proxy statement and form of
proxy no later than December 9, 1999. Notices of Stockholder proposals
submitted outside the processes of Rule 14a-8 of the Securities Exchange Act
of 1934, as amended (relating to proposals to be presented at the meeting but
not included in the Corporation's proxy statement and form of proxy), will be
considered untimely, and thus the Corporation's proxy may confer discretionary
voting authority on the persons named in the proxy with regard to such
proposals, if received after February 26, 2000.
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 or by telephone, facsimile
transmission or telegram. In addition, the Corporation has engaged D.F. King &
Co., Inc. for a fee not to exceed $ plus out-of-pocket expenses in order to
assist in the solicitation of proxies. 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.
Waltham, Massachusetts
, 1999
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APPENDIX A
(Note: Material between asterisks (*) has been added; bracketed ([ ]) material
has been removed.)
*SECOND* AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THERMO ELECTRON CORPORATION
FIRST: The name of the Corporation is
THERMO ELECTRON CORPORATION
SECOND: The registered office of the Corporation in the State of
Delaware is to be located in the City of Wilmington, in the County of New
Castle, in the State of Delaware. The name of its registered agent is The
Corporation Trust Company whose address is No. 1209 Orange Street, in said city.
[THIRD: The nature of the business of the Corporation and the objects
or purposes proposed to be transacted, promoted or carried on by it are:
(1) To design, manufacture, buy, sell, trade, import, export, or otherwise
deal in heat engines or other power and energy sources and in materials and
items in any way related thereto;
(2) To invent and foster the invention of and carry on research and
development programs with respect to heat engines and other power and energy
sources and materials and items in any way related thereto;
(3) To publish or cause to be published or to assist in the publication of
books, pamphlets, magazines, articles, papers and other publications in the
furtherance of or related to or connected with any of the purposes of the
Corporation;
(4) To apply for, register, introduce, develop, acquire, hold, use,
exercise, operate, lease, deal in, dispose of, take or grant licenses or other
rights with respect to, and in any and all ways exploit or turn to account
inventions, improvements, processes, privileges, copyrights, patents, trade-
marks, formulae, trade names and distinctive marks and similar rights of any and
all kinds in relation to any of the purposes herein stated, and whether granted,
registered or established by or under the laws of the United States of America
or of any state, foreign country, authority or place;
(5) To acquire, by purchase, subscription or otherwise, hold and dispose of
all forms of securities, including stocks, bonds, debentures, notes, evidences
of indebtedness,
<PAGE>
certificates of interest and other rights, choses in action, interests and
obligations, whether issued or created by corporations, domestic or foreign,
associations, partnerships, joint ventures, individuals, governments, states,
municipalities or other political divisions or subdivisions; and to issue in
exchange therefor shares of its own capital stock, bonds and other securities or
obligations; and while the holder of any such securities, to posses and exercise
in respect thereof any and all of the rights, powers and privileges of
individual ownership or interest therein, including the right to vote thereon
for any and all purposes and to consent or otherwise act with respect thereto;
(6) To purchase, lease or otherwise acquire, hold, operate or develop,
lease to others, sell or otherwise dispose of real and personal property of
every class and description, or any interest therein, and to any amount, in the
State of Delaware or in any state or territory of the United States of America
or in any foreign country, subject to the laws of any such state, territory or
foreign country;
(7) To borrow money and contract debts for any of the purposes of the
Corporation, and to issue bonds, debentures, notes or other securities or
obligations of any nature for moneys so borrowed or in payment for property
acquired, and to secure the payment thereof, or of any debt contracted for such
purposes, by mortgage upon or pledge or conveyance assignment in trust of the
whole or any part of the property and franchises of the Corporation, real and
personal, including securities and contract rights, whether at the time owned or
thereafter acquired; to confer on the holder of any debt or obligation of the
Corporation, secured or unsecured, the right to convert the principal thereof
into stock of the Corporation; to loan money with or without collateral, in
furtherance of any of the purposes of the Corporation; and to guarantee any
obligation for the payment of money or the performance of any contract by any
corporation, association, partnership, joint venture or individual; but all only
to such extent as a corporation organized under the General Corporation Law of
the State of Delaware may at the time lawfully do;
(8) To purchase or otherwise acquire shares of its own capital stock, to
hold any stock acquired by the Corporation, and, to such extent and in such
manner and upon such terms as the directors shall determine, subject to the By-
Laws of the Corporation, to reissue, sell or otherwise dispose of any such
stock; provided it shall not use its funds or property for the purchase of its
own shares of capital stock when such use would cause any impairment of its
capital, nor shall any shares of its own capital stock belonging to it be voted
upon directly or indirectly;
(9) To transact its business and conduct its affairs, so far as permitted
by law, in the State of Delaware, in other states of the Untied States of
America, in the District of Columbia, in any of the territories, districts,
protectorates, dependencies or insular or other possessions of the United States
of America, or in any foreign countries;
(10) To acquire all or any part of the goodwill, rights, property,
privileges, franchises and business of any other person, entity, partnership,
joint venture, association or corporation heretofore or hereafter engaged in any
business similar to any business
<PAGE>
which the Corporation has power to conduct; to pay for the same in cash or in
stocks, bonds, debentures, notes or other securities or obligations of the
Corporation or otherwise; to hold, utilize and in any manner dispose of the
whole or any part of the rights and property so acquired; and to assume, in
connection therewith, any liability of any such person, entity, partnership,
joint venture, association or corporation; and to conduct in any lawful manner
the whole or any part of the business thus acquired;
(11) To carry out all or any part of the foregoing purposes and objects as
principal, factor, agent, contractor, or otherwise, either alone or in
conjunction with any person, firm, joint venture, association or corporation;
and in carrying on its business and for the purpose of attaining or furthering
any of its objects, to make and perform contracts of any kind and description,
to aid in any manner any person, corporation, association, partnership, joint
venture or individual in the welfare of which the Corporation shall have any
interest, and to do anything and everything necessary, suitable, convenient or
proper for the accomplishment of any of the purposes, or the attainment of any
one or more of the objects herein enumerated or incidental to the powers herein
specified, or which shall at any time appear conducive to or expedient for the
accomplishment of any of the purposes or for the attainment of any of the
objects hereinbefore enumerated, so far as, and to the extent and subject to
compliance with such conditions and requirements, that the same may lawfully be
done and performed by a corporation organized under the General Corporation Law
of the State of Delaware, but not otherwise.
The foregoing clauses of this Article THIRD shall be construed as stating
powers as well as objects and purposes, in furtherance and not in limitation of
the general powers conferred upon the Corporation by the laws of the State of
Delaware or of the United States, whether expressly or impliedly by reasonable
construction of such laws, and whether the same be now or hereafter in effect.
It is the intention that the objects, purposes and powers specified in each of
said clauses shall be in no wise limited or restricted by reference to or
inference from the terms of any other clause, but that the objects, purposes and
powers specified in each of the clauses of this Article shall be regarded as
independent objects, purposes and powers.]
(Note: Material between asterisks (*) has been added; bracketed ([ ]) material
has been removed.)
*THIRD: The nature of the business or purposes to be conducted or promoted
by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.*
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is: (a) Three Hundred Fifty Million (350,000,000) shares
of Common Stock of the par value of $1.00 per share, the holders of which shall
have one vote for each share so held, *and* (b) [Ten] *Fifty* Thousand
([1]*5*0,000) shares of Preferred Stock of the par value of $100 per share, to
be issued in such classes, including
<PAGE>
one or more series within such class, and to possess such specific terms
including dividend rates, conversion prices, voting rights, redemption prices,
maturity dates and other special rights, preferences, qualifications,
limitations, and restrictions thereof, as shall be determined in the resolution
or resolutions providing for the issue of such Preferred Stock adopted by the
Board of Directors from time to time[;]*.* [and (c)] *Pursuant to a Certificate
of Designation filed on January 31, 1996,* Forty Thousand (40,000) shares of
*Preferred Stock has been designated as* Series B Junior Participating Preferred
Stock of the par value of $100 per share, the relative rights, preferences and
limitations of which are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock" (the "Series
B Preferred Stock") and the number of shares constituting the Series B
Preferred Stock shall be 40,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series B Preferred Stock to a
number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series B Preferred Stock with respect to dividends, the holders of shares
of Series B Preferred Stock, in preference to the holders of Common Stock,
par value $1.00 per share (the "Common Stock"), of the Corporation, and of
any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds of the Corporation legally
available for the payment of dividends, quarterly dividends payable in cash
on March 31, June 30, September 30 and December 31 in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series B Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of
(a) $100 or (b) subject to the provision for adjustment hereinafter set
forth, 10,000 times the aggregate per share amount of all cash dividends,
and 10,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the
<PAGE>
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share
of Series B Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event. In the
event the Corporation shall at any time declare or pay any dividend on the
Series B Preferred Stock payable in shares of Series B Preferred Stock, or
effect a subdivision, combination or consolidation of the outstanding
shares of Series B Preferred Stock (by reclassification or otherwise than
by payment of a dividend in shares of Series B Preferred Stock) into a
greater or lesser number of shares of Series B Preferred Stock, then in
each such case the amount to which holders of shares of Series B Preferred
Stock were entitled immediately prior to such event under clause (b) of the
first sentence of this Section 2(A) shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Series B Preferred Stock that were outstanding immediately prior to such
event and the denominator of which is the number of shares of Series B
Preferred Stock outstanding immediately after such event.
(B) The Corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock) and the
Corporation shall pay such dividend or distribution on the Series B
Preferred Stock before the dividend or distribution declared on the Common
Stock is paid or set apart; provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $100 per share on the Series
B Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series B Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series B
Preferred Stock in an amount less than the total amount of such dividends
<PAGE>
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series B Preferred Stock shall entitle the holder thereof to
10,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision, combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event. In the event the Corporation shall at any
time declare or pay any dividend on the Series B Preferred Stock payable in
shares of Series B Preferred Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Series B Preferred Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Series B Preferred Stock) into a greater or lesser number of shares of
Series B Preferred Stock, then in each such case the number of votes per
share to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Series B Preferred Stock that were outstanding immediately prior to such
event and the denominator of which is the number of shares of Series B
Preferred Stock outstanding immediately after such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series B Preferred Stock and the holders of shares of Common
Stock and any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series B Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends
thereon, the holders of the Series B Preferred Stock, voting as a separate
series from all other series of Preferred Stock and classes of capital
stock, shall be entitled to elect two
<PAGE>
members of the Board of Directors in addition to any Directors elected by
any other series, class or classes of securities and the authorized number
of Directors will automatically be increased by two. Promptly thereafter,
the Board of Directors of this Corporation shall, as soon as may be
practicable, call a special meeting of holders of Series B Preferred Stock
for the purpose of electing such members of the Board of Directors. Said
special meeting shall in any event be held within 45 days of the occurrence
of such arrearage.
(ii) During any period when the holders of Series B Preferred Stock,
voting as a separate series, shall be entitled and shall have
exercised their right to elect two Directors, then and during such
time as such right continues (a) the then authorized number of
Directors shall be increased by two, and the holders of Series B
Preferred Stock, voting as a separate series, shall be entitled to
elect the additional Directors so provided for, and (b) each such
additional Director shall not be a member of any existing class of the
Board of Directors, but shall serve until the next annual meeting of
stockholders for the election of Directors, or until his or her
successor shall be elected and shall qualify, or until his or her
right to hold such office terminates pursuant to the provisions of
this Section 3 (C).
(iii) A Director elected pursuant to the terms hereof may be removed
with or without cause by the holders of Series B Preferred Stock
entitled to vote in an election of such Director.
(iv) If, during any interval between annual meetings of stockholders
for the election of Directors and while the holders of Series B
Preferred Stock shall be entitled to elect two Directors, there is no
such Director in office by reason of resignation, death or removal,
then, promptly thereafter, the Board of Directors shall call a special
meeting of the holders of Series B Preferred Stock for the purpose of
filling such vacancy and such vacancy shall be filled at such special
meeting. Such special meeting shall in any event be held within 45
days of the occurrence of such vacancy.
(v) At such time as the arrearage is fully cured, and all dividends
accumulated and unpaid on any shares of Series B Preferred Stock
outstanding are paid, and, in addition thereto, at least one regular
dividend has been paid subsequent to curing such arrearage, the term
of office of any Director elected pursuant to this Section 3 (C), or
his or her successor, shall automatically terminate, and the
authorized number of Directors shall automatically decrease by two,
the rights of the holders of the shares of the Series B Preferred
Stock to vote as provided in this Section 3(C) shall cease, subject to
renewal from time to time upon the same terms and conditions, and the
holders of shares of the Series B Preferred Stock shall have only the
limited voting rights elsewhere herein set forth.
<PAGE>
(D) Except as set forth herein, or as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 *above*
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series B Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B
Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series B Preferred Stock, except dividends paid ratably on
the Series B Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B
Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B Preferred Stock, or any shares of stock
ranking on a parity with the Series B Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4 purchase or otherwise acquire such shares at such
time and in such manner.
<PAGE>
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, or in
any other Certificate of Designation creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock unless, prior thereto, the holders of shares of Series
B Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series B
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 10,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except distributions made ratably on the Series B
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.
(B) Neither the consolidation, merger or other business combination of the
Corporation with or into any other corporation nor the sale, lease, exchange or
conveyance of all or any part of the property, assets or business of the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 6.
(C) In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of paragraph (A) of this Section 6 shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. In the event the Corporation shall
at any time declare or pay any dividend on the Series B Preferred Stock payable
in shares of Series B Preferred Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Series B Preferred Stock (by
reclassification or otherwise than by
<PAGE>
payment of a dividend in shares of Series B Preferred Stock) into a greater or
lesser number of shares of Series B Preferred Stock, then in each such case the
aggregate amount to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of
paragraph (A) of this Section [4] *6* shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Series B
Preferred Stock that were outstanding immediately prior to such event and the
denominator of which is the number of shares of Series B Preferred Stock
outstanding immediately after such event.
Section 7. Consolidation, Merger, etc. Notwithstanding anything to the
contrary contained herein, in case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each share of Series B
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 10,000 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock or effect a subdivision, combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series B
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event. In
the event the Corporation shall at any time declare or pay any dividend on the
Series B Preferred Stock payable in shares of Series B Preferred Stock, or
effect a subdivision, combination or consolidation of the outstanding shares of
Series B Preferred Stock (by reclassification or otherwise than by payment of a
dividend in shares of Series B Preferred Stock) into a greater or lesser number
of shares of Series B Preferred Stock, then in each such case the amount set
forth in the first sentence of this Section 7 with respect to the exchange or
change of shares of Series B Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Series B Preferred Stock that were outstanding immediately prior to such event
and the denominator of which is the number of shares of Series B Preferred Stock
outstanding immediately after such event.
Section 8. No Redemption. The shares of Series B Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series B Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Preferred Stock issued either before or after the
issuance of the Series B Preferred Stock, unless the terms of any such series
shall provide otherwise.
<PAGE>
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series B Preferred Stock, voting
together as a single class.
Section 11. Fractional Shares. Series B Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series B Preferred Stock.
(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
[FIFTH: The minimum amount of capital with which the Corporation will
commence business is one thousand dollars ($1,000.00).]
[SIXTH: The names and places of residence of each of the
incorporators are as follows:
<TABLE>
<CAPTION>
Name Residence
<S> <C>
David Simon 310 East 71st Street
New York 21, N.Y.
Lawrence Nirenstein 135-10 Grand Central Parkway,
Kew Gardens, N.Y.
David D. Brown, III 1350 Madison Avenue
New York 28, N.Y.]
</TABLE>
[SEVENTH: The Corporation is to have perpetual existence.]
[EIGHTH: The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever.]
[NINTH] *FIFTH*: The following provisions are inserted for the
management of the business and for the conduct of the affairs of the
Corporation, and for further definition, limitation and regulation of the powers
of the Corporation and of its directors and stockholders:
<PAGE>
(1) [Directors need not be stockholders.] Election of directors need
not be by ballot except only as the By-Laws may so provide. [Vacancies may be
filled by the Board of Directors or by the stockholders as shall be provided in
the By-Laws.]
[(2) The Board of Directors shall have power to make, alter, amend and
repeal the By-Laws of the Corporation, subject only to such limitations, if any,
as may from time to time be imposed by law or by the By-Laws.]
*(2) In furtherance of and not in limitation of powers conferred by
statute, it is further provided that the Board of Directors is expressly
authorized to adopt, amend or repeal the By-Laws of the Corporation.*
[(3) Subject to any provision of the By-Laws, the Board of Directors
shall have power from time to time to determine whether, to what extent, at what
times and places and under what conditions and regulations the accounts, books
and papers of the Corporation (other than the stock ledger), or any of them,
shall be open to the inspection of the stockholders; and no stockholder shall
have any right to inspect any account, book or paper of the Corporation except
as conferred by statute or authorized by the By-Laws or by the Board of
Directors.]
[(4) No contract or other transaction between the Corporation and
any other corporation shall be void or voidable because of the fact that any
director of the Corporation is a director, officer, stockholder or creditor of
such other corporation, if such contract or other transaction shall be approved
or ratified by the affirmative vote of a majority of the directors present at a
meeting of the Board of Directors or any committee of the Corporation having
authority in the premises, who are not so interested. Any director,
individually, or any firm of which any director is a partner may be a party to
or may be interested in any contract or other transaction of the Corporation if
such contract or other transaction shall be approved or ratified by the
affirmative vote of a majority of the directors present at a meeting of the
Board of Directors or any committee of the Corporation having authority in the
premises, who are not so interested. No director shall be liable to account to
the Corporation for any profit realized by him from or through any such contract
or other transaction of the Corporation ratified or approved as aforesaid, by
reason of his interest in such contract or other transaction. Directors so
interested may be counted when present at meetings of the Board of Directors or
of such committee for the purpose of determining the existence of a quorum. Any
director whose interest in any such contract or other transaction arises solely
by reason of the fact that he is a director, officer, stockholder or creditor of
such other corporation, or solely by reason of the fact that he is a partner,
officer or creditor of such firm, when such contract or other transaction is
made or carried out by officers or employees of the Corporation in the ordinary
performance of their duties and without the actual participation of such
director, shall not be deemed interested in such contract or other transaction
under any of the provisions of this Paragraph (4), nor shall any such contract
or other transaction be void or voidable, nor shall any such director be liable
to account because of such interest, nor need any such interest be disclosed.]
<PAGE>
[(5) Any contract, transaction or act of the Corporation or the Board of
Directors or of any committee which shall be ratified by a majority of a quorum
of the stockholders entitled to vote at any annual meeting, or at any special
meeting called for the purpose, shall be as valid and binding as though ratified
by every stockholder of the Corporation; provided, however that any failure of
the stockholders to approve or ratify such contract, transaction or act, when
and if submitted, shall not of itself be deemed in anyway to invalidate the same
or to deprive the Corporation, its directors or officers, of their right to
proceed with such contract, transaction or act.]
[(6) The Board of Directors shall have power from time to time to fix
and determine and to v ary the amount to be reserved as working capital, and,
before the payment of any dividends or the making of any distribution of
profits, it may set aside out of the net profits of the Corporation such sum or
sums as it may, from time to time and in its absolute discretion think proper as
additional working capital, or to meet contingencies, or for such corporate
purpose as the Board shall think conducive to the interests of the Corporation,
subject only to such limitations, if any, as the By-Laws of the Corporation may
from time to time impose.]
[(7)]*(3)* (a) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (except as otherwise provided herein), by reason of the fact that
he *or she* is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him *or her* in connection with
such action, suit or proceeding if he *or she* acted in good faith and in a
manner he *or she* reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his *or her* conduct was
unlawful.
(b) In the case of any action or suit by or in the right of the
Corporation to procure a judgment in its favor, no indemnification shall be made
(i) except for expenses (including attorneys' fees) or (ii) in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director or officer of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) or (b), or in defense of any claim,
issue or matter therein, he *or she* shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him *or her* in
connection therewith.
<PAGE>
(d) Any indemnification under subsections (a) or (b) (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director or officer is
proper in the circumstances because he *or she* has met the applicable standard
of conduct set forth in subsection (a) and (b). Such determination shall be
(i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, (ii) if such
a quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the director or officer to repay such amount if it shall ultimately be
determined that he *or she* is not entitled to be indemnified by the Corporation
as authorized in this section.
(f) The indemnification and advancement of expenses provided by this
section shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his *or her* official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of the heirs, executors
and administrators of such person.
[(8) The Board of Directors shall have the power to establish stock
option, bonus, profit-sharing, pension or other types in incentive, compensation
or benefit plans for the employees (including officers and directors) of the
Corporation and to fix the terms thereof and to determine the persons to
participate in any such plans and the amounts of their respective
participations, if any.]
[(9) (a) If any Person (an "Acquiring Person") (i) who acquired
any Common Stock pursuant to a Tender Offer becomes the beneficial owner,
directly or indirectly, of more than 50% of the outstanding Common Stock or
(ii) who is the beneficial owner, directly or indirectly, of more than 50% of
the outstanding Common Stock becomes the beneficial owner, directly or
indirectly, of any additional shares of Common Stock pursuant to a Tender Offer,
each person who is then a Holder of Common Stock, other than the Acquiring
Person or a transferee of the Acquiring Person shall have the right to have the
Common Stock held by him or her redeemed by the Corporation unless the
Corporation, acting through a majority of its Board of Directors, shall have
recommended that the Tender Offer be accepted, as contemplated in clause (c).
(b) For the purposes of this Section 9:
(i) Person shall mean an individual, corporation,
partnership, trust or other entity. When two or more persons act as a
partnership, limited partnership, syndicate or other group for the purpose
of acquiring Common Stock, the partnership, syndicate or group shall be
deemed a "Person".
<PAGE>
(ii) A person shall be deemed to own beneficially all
Common Stock with respect to which that person has the capability to
control or influence the voting power or which that person has the
immediate or future right to acquire, directly or indirectly, pursuant to
agreements, through the exercise of options, warrants or rights or through
the conversion of convertible securities or otherwise. All Common Stock
which that person has the right to acquire shall be deemed to be
outstanding, but Common Stock which any other person has the right to
acquire shall not be deemed to be outstanding.
(iii) A Holder on any date shall mean a person who is the
record owner of Common Stock on that date or who becomes the record owner
of Common Stock within 30 days after that date pursuant to the exercise of
an option, right or warrant outstanding on that date or the conversion of
convertible securities outstanding on that date.
(iv) Tender Offer shall mean an offer to acquire shares
for cash, securities or any other consideration or an acquisition pursuant
to a request or invitation for tender.
(c) Within 10 days after any Person makes a Tender Offer, the
Corporation, acting through its Board of Directors, shall determine whether to
recommend to the Holders acceptance of the Tender Offer. If the Corporation
fails so to recommend acceptance, within 20 days after the Corporation receives
notice that any Person has become an Acquiring Person, the Corporation shall
advise each person who, on the date the person became an Acquiring Person, was a
Holder or a potential Holder (by first class mail, postage prepaid, at the
address shown on the records of the Corporation) of the right to have his or her
shares redeemed and the procedures for such redemption. In the event that the
Corporation fails to give notice as required by this clause (c), any Holder may
serve written demand upon the Corporation to give such notice. If within 20 days
after the receipt of written demand the Corporation fails to give the required
notice, that Holder may at the expense and on behalf of the Corporation take
such reasonable action as may be appropriate to give notice or to cause notice
to be given pursuant to this clause (c). The Directors of the Corporation shall
designate a redemption agent (the "Redemption Agent"), which shall be a
corporation or association (i) organized and doing business under the laws of
the United States of America or any State, (ii) subject to supervision or
examination by Federal or State authority, (iii) having combined capital and
surplus of at least $5,000,000 and (iv) having the power to exercise corporate
trust powers. For a period of 30 days from the date of the mailing of the notice
to the Holders and potential Holders, any Holder may, at his or her option,
deposit with the Redemption Agent certificates representing all or less than all
shares of Common Stock held of record by him or her and written notice that the
Holder elects to have those shares redeemed pursuant to this Section 9.
Redemption shall be deemed to have been effected at the close of business on the
day such certificates are deposited in proper form with the Redemption Agent.
The Corporation shall promptly deposit in trust with the Redemption
<PAGE>
Agent cash in an amount equal to the Aggregate Redemption Price of all of the
Common Stock deposited with the Redemption Agent for purposes of redemption. As
soon as practicable after receipt by the Redemption Agent of the cash deposited
by the Corporation referred to in this clause (c), the Redemption Agent shall
issue its checks payable to the order of the Holders entitled to receive the
Redemption Price of the Common Stock in respect of which such case deposit was
made.
(d) The Redemption Price shall be the greater of the following
amounts:
(i) The highest price per share, including any
commission paid to brokers or dealers, at which shares of Common Stock held
by the Acquiring Person were acquired pursuant to a Tender Offer within 18
months prior to the notice to Holders referred to in clause (c). If the
consideration paid in any such acquisition of Common Stock consisted, in
whole or part, of consideration other than cash, the Board of Directors of
the Corporation shall take such action, as in its judgment it deems
appropriate, to establish the cash value of such consideration, but the
value shall not be less than the cash value, if any, ascribed to such
consideration by the Acquiring Person.
(ii) The book value per share of Common Stock, as
determined in accordance with generally accepted accounting principles and
as reflected in any published report by the Corporation as at the fiscal-
year quarter ending immediately preceding the notice to Holders referred to
in clause (c).]
(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
[TENTH: No stockholder of this Corporation shall have any
preemptive right to purchase or subscribe for any part of any new or
additional issue of stock, convertible securities, warrants or options,
whether now or hereafter authorized and whether to be issued for money,
property, services or otherwise.]
[ELEVENTH: A. Except as otherwise provided by Paragraph B of this
Article ELEVENTH, the votes of the holders of 66-2/3% of the shares of
stock then entitled to vote for the election of directors of the
Corporation ("Voting Stock") shall be required for any of the following
actions:
(1) merge the Corporation into another corporation or other business
entity;
(2) merge another corporation or other business entity into the
Corporation;
(3) consolidate with another corporation or other business entity;
<PAGE>
(4) sell, exchange, lease or otherwise transfer all or substantially
all of the Corporation's assets to any other person;
(5) dissolve;
(6) amend the Corporation's Certificate of Incorporation; or
(7) amend the Corporation's By-laws or ratify the amendment thereof
by the Corporation's Board of Directors.
B. If any corporation or other business entity, together with all
affiliates thereof, owns beneficially, directly or indirectly, 25% or more of
the outstanding Common Stock (a "Related Entity"), the vote of the holders of
85% of all shares of the Voting Stock exclusive of all shares the Voting Stock
held by Related Entities shall be required for any of the following actions:
(1) merge the Corporation into a Related Entity;
(2) merge a Related Entity into the Corporation;
(3) consolidate with a Related Entity;
(4) sell, exchange, lease or otherwise transfer all or substantially
all of the Corporation's assets to a Related Entity;
(5) acquire an interest in a Related Entity through the issuance of
the Corporation's stock, exchange of Corporation's assets or otherwise;
(6) enter into any agreement to take any of the actions contemplated
by the immediately preceding clauses 1 through 5;
(7) any further amendment of the Corporation's Certificate of
Incorporation relating to the actions contemplated by the immediately
preceding clauses 1 through 6 or amendment of the Corporation's By-laws or
ratify the amendment thereof by the Corporation's Board of Directors in
such regard.
For the purpose of this Article ELEVENTH, an "affiliate" of any entity
shall be any person which controls, is controlled by or is under common control
with that entity, and any officer or director of that entity or any other
affiliate thereof and any person which owns beneficially, directly or
indirectly, 10% or more of any class of equity securities of that entity or any
other affiliate thereof.]
[TWELFTH] *SIXTH*: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by law, and all rights conferred herein
on stockholders are subject to this reserved power.
<PAGE>
[THIRTEENTH] *SEVENTH*: No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director; provided, however, that this
provision shall not eliminate or limit the liability of a director to the extent
provided by applicable law (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. The foregoing provisions of this Article shall not
eliminate the liability of a director for any act or omission occurring prior to
the date on which this Article becomes effective. No amendment to or repeal of
this Article shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
<PAGE>
SKU 0966-PS-99
<PAGE>
FORM OF PROXY
THERMO ELECTRON CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints George N. Hatsopoulos, Theo Melas-Kyriazi
and Arvin H. Smith, and each of them, proxies of the undersigned, each with
power to appoint his substitute, and hereby authorizes them to represent and to
vote, as designated below, all the shares of common stock of Thermo Electron
Corporation held of record by the undersigned on April 7, 1999, at the Annual
Meeting of the Stockholders to be held at The Westin Hotel, 70 Third Avenue,
Waltham, Massachusetts, on Thursday, May 27, 1999, at 3:00 p.m., and at any
postponement or adjournment thereof, as set forth on the reverse side hereof,
and in their discretion upon any other business that may properly come before
the meeting.
The Proxy will be voted as specified, or if no choice is specified, FOR the
election of the nominees for director, FOR Proposal 2 and AGAINST Proposals 3
and 4, if presented at the meeting, and as said proxies deem advisable on such
other matters as may properly come before the meeting.
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE>
Please mark your
[ x ] votes as in this
example.
The Board of Directors recommends a vote For Proposals 1 and 2.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
Nominees: John N. Hatsopoulos, Robert A. McCabe, Hutham S. Olayan and
Richard F. Syron.
FOR ALL NOMINEES [ ]
WITHHELD FROM ALL NOMINEES [ ]
FOR, except vote withheld for the following nominee(s): ______________________
FOR AGAINST ABSTAIN
2. Approve an amendment and restatement
of the Corporation's certificate of [ ] [ ] [ ]
incorporation.
The Board of Directors recommends a vote AGAINST Proposals 3 and 4.
FOR AGAINST ABSTAIN
3. Approve a stockholder proposal to request [ ] [ ] [ ]
the Corporation to endorse the CERES Principles.
FOR AGAINST ABSTAIN
4. Approve a stockholder proposal to request
the Corporation to amend the Corporation's [ ] [ ] [ ]
certificate of incorporation such that the
chief executive officer of the Corporation
shall always be a direct lineal descendant
of the founder of the Corporation.
5. In their discretion on such other matters as may properly come before the
meeting.
(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.)
Copies of the Notice of Meeting and of the Proxy Statement have been received by
the undersigned.
SIGNATURE(S)_______________________________________ DATE_________________
