ATTACHMENT A
DIRECTORS
Set forth below are the names of the persons serving as
directors, their ages, their offices in the Corporation, if any,
their principal occupation or employment for the past five years,
the length of their tenure as directors and the names of other
public companies in which such persons hold directorships.
Information regarding their beneficial ownership of the
Corporation's Common Stock and of the common stock of its parent
corporations, Thermo TerraTech Inc. ("Thermo TerraTech") and
Thermo Electron Corporation ("Thermo Electron"), is reported
under the caption "Stock Ownership."
John P. Dr. Appleton, 62, has been the Chairman of the
Appleton Board and a director of the Corporation since
1993. He also served as the Corporation's
chief executive officer from September 1993 to
May 1997. Dr. Appleton has been president,
chief executive officer and a director of
Thermo TerraTech since September 1993, and has
served as a vice president of Thermo Electron
since 1975 in various managerial capacities.
Elias P. Dr. Gyftopoulos, 70, has been a director of the
Gyftopoulos Corporation since 1994 . Dr. Gyftopoulos
Professor Emeritus of the Massachusetts
Institute of Technology, where he was the Ford
Professor of Mechanical Engineering and of
Nuclear Engineering for more than twenty years
until his retirement in 1996 . Dr. Gyftopoulos
is also a director of Thermo Electron, Thermo
BioAnalysis Corporation, Thermo Cardiosystems
Inc., ThermoLase Corporation, ThermoSpect
Corporation, Thermo Voltek Corp. and Tr
Medical Corporation.
Fred Holubow Mr. Holubow, 58, has been a director of the
Corporation since 1992. Mr. Holubow has been
vice president of Pegasus Associates, an
investment management firm, for more than five
years.
PAGE
Theo Mr. Melas-Kyriazi, 38, has been a director of
Melas-Kyriazi the Corporation since 1992. Mr. Melas-Kyriazi
has been president and chief executive officer
and a director of ThermoSpectra Corporation,
which develops and manufactures precision
imaging, inspection and measurement instruments
based on high-speed data acquisition and
digital processing technologies, since its
inception in August 1994. Mr. Melas-Kyriazi was
Treasurer of Thermo Electron from May 1988 to
August 1994 and Treasurer of Thermo Remediation
from 1991 to 1994. Mr. Melas-Kyriazi is also a
director of ThermoSpectra Corporation and
Thermo Voltek Corp.
Frank E. Morris Dr. Morris, 73, has been a director of the
Corporation since 1993. Dr. Morris served as
president of the Federal Reserve Bank of Boston
from 1968 until he retired in 1988. Dr. Morris
also served as the Peter Drucker Professor of
Management at Boston College from 1989 to 1994.
Dr. Morris is a director of Thermo Electron and
is a trustee of SEI Mutual Funds, The Capitol
Mutual Funds, FFB Lexicon Funds and The Arbor
Fund.
Jeffrey L. Mr. Powell, 39, has been president and a
Powell director of the Corporation since December
1991, and was named chief executive officer in
May 1997.
William A. Mr. Rainville, 55, has been a director of the
Rainville Corporation since June 1993. Mr. Rainville has
been President and Chief Executive Officer of
Thermo Fibertek Inc., a majority owned
subsidiary of Thermo Electron that develops and
manufactures equipment and products for the
paper making and paper recycling industries,
since its inception in 1991, and a Senior Vice
President of Thermo Electron since March 1993
and a Vice President of Thermo Electron from
1986 to 1993. From 1984 until January 1993,
Mr. Rainville was the President and Chief
Executive Officer of Thermo Electron Web
Systems Inc., a subsidiary of Thermo Fibertek
Inc. Mr. Rainville is also a director of
Thermo Ecotek Corporation, Thermo Fibergen
Inc., Thermo Fibertek Inc. and Thermo
TerraTech.
Committees of the Board of Directors and Meetings
The Board of Directors has established an Audit Committee
and a Human Resources Committee, each consisting solely of
outside directors. The present members of the Audit Committee are
Mr. Holubow (Chairman) and Dr. Morris. The Audit Committee
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reviews the scope of the audit with the Corporation's independent
public accountants and meets with them for the purpose of
reviewing the results of the audit subsequent to its completion.
The present members of the Human Resources Committee are Dr.
Morris (Chairman), Dr. Gyftopoulos and Mr. Holubow. The Human
Resources Committee reviews the performance of senior members of
management, recommends executive compensation and administers the
Corporation's stock option and other stock-based compensation
plans. The Corporation does not have a nominating committee of
the Board of Directors. The Board of Directors met five times,
the Audit Committee met twice and the Human Resources Committee
met seven times during fiscal 1997. Each director attended at
least 75% of all meetings of the Board of Directors and
Committees on which he served held during fiscal 1997.
Compensation of Directors
Cash Compensation
Directors who are not employees of the Corporation, of
Thermo Electron or of any other company affiliated with Thermo
Electron (also referred to as "outside directors") receive an
annual retainer of $2,000 and a fee of $1,000 per day for
attending regular meetings of the Board of Directors and $500 per
day for participating in meetings of the Board of Directors held
by means of conference telephone and for participating in certain
meetings of committees of the Board of Directors. Payment of
directors' fees is made quarterly. Dr. Appleton, Mr.
Melas-Kyriazi, Mr. Powell and Mr. Rainville are all employees of
Thermo Electron or its subsidiaries and do not receive any cash
compensation from the Corporation for their services as
directors. Directors are also reimbursed for out-of-pocket
expenses incurred in attending such meetings.
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 the outstanding common stock
of Thermo TerraTech or 25% or more of the outstanding common
stock of Thermo Electron; or (b) the failure of the persons
serving on the Board of Directors immediately prior to any
contested election of directors or any exchange offer or tender
offer for the Common Stock or the common stock of Thermo
TerraTech or Thermo Electron to constitute a majority of the
Board of Directors at any time within two years following any
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such event. Amounts deferred pursuant to the Deferred
Compensation Plan are valued at the end of each quarter as units
of the Corporation's Common Stock. When payable, amounts deferred
may be disbursed solely in shares of Common Stock accumulated
under the Deferred Compensation Plan. A total of 37,500 shares of
Common Stock have been reserved for issuance under the Deferred
Compensation Plan. As of June 28, 1997, deferred units equal to
5,784 full shares of Common Stock were accumulated under the
Deferred Compensation Plan.
Directors Stock Option Plan
The Corporation's directors stock option plan, which was
amended in 1995, (the "Directors Plan") provides for the grant of
stock options to purchase shares of Common Stock of the
Corporation to outside directors as additional compensation for
their service as directors.
The Directors Plan originally provided for the grant of
stock options upon a director's initial appointment. Outside
directors appointed before the amendment of the plan received an
option to purchase 22,500 shares of Common Stock upon their
appointment or election. The amended plan provides that the size
of the award to new directors is reduced by 4,500 shares each
year until 1998, when the initial grant for new directors will be
eliminated entirely. Accordingly, directors first appointed or
elected in 1997 will receive options to purchase 13,500 shares
and directors first appointed or elected in 1998 and thereafter
will not receive an initial option grant. Options granted upon a
director's election or appointment may be exercised at any time
from and after the six-month anniversary of the grant date of the
option and prior to the expiration of the option on the fifth
anniversary of the grant date. Such options are subject to
restrictions on resale and to the repurchase by the Corporation
of the shares subject to option at the exercise price if the
director ceases to serve as a director of the Corporation, Thermo
Electron or any subsidiary of Thermo Electron, for any reason
other than death. The restriction and repurchase rights lapse in
equal installments of 4,500 shares starting with the first
anniversary of the grant date, provided the director has
continuously served as a director of the Corporation or any other
Thermo Electron company prior to that date.
Commencing with the 1998 Annual Meeting of Stockholders,
outside directors will receive an annual grant of options to
purchase 1,000 shares of Common Stock pursuant to the Directors
Plan at the close of business on the date of each Annual Meeting
of the Stockholders of the Corporation. Options evidencing
annual grants may be exercised at any time from and after the
six-month anniversary of the grant date of the option and prior
to the expiration of the option on the third anniversary of the
grant date. Shares acquired upon exercise of the options are
subject to repurchase by the Corporation at the exercise price if
the recipient ceases to serve as a director of the Corporation or
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any other Thermo Electron company prior to the first anniversary
of the grant date.
The exercise price for options granted under the Directors
Plan is the average of the closing prices of the Common Stock as
reported on the American Stock Exchange (or other principal
market on which the Common Stock is then traded) for the five
trading days preceding and including the date of grant, or, if
the shares are not then traded, at the last price per share paid
by third parties in an arms-length transaction prior to the
option grant. As of June 28, 1997, options to purchase 72,000
shares of Common Stock had been granted and were outstanding
under the Directors Plan, no options had lapsed or been
exercised, and options to purchase 78,000 shares of Common Stock
were reserved and available for grant under the Directors Plan.
Stock Ownership Policies for Directors
During fiscal 1997, the Human Resources Committee of the
Board of Directors (the "Committee") established a stock holding
policy for directors. The stock holding policy requires each
director to hold a minimum of 1,000 shares of Common Stock.
Directors are requested to achieve this ownership level by the
1998 Annual Meeting of Stockholders. Directors who are also
executive officers of the Corporation are required to comply with
a separate stock holding policy established by the Committee in
fiscal 1997.
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.
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of
Common Stock, as well as the common stock of Thermo TerraTech and
Thermo Electron, as of June 28, 1997, with respect to (i) each
person who was known by the Corporation to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each
director, (iii) each executive officer named in the summary
compensation table under the heading "Executive Compensation" and
(iv) all directors and current executive officers as a group.
While certain directors or executive officers of the
Corporation are also directors or executive officers of Thermo
Electron or Thermo TerraTech, all such persons disclaim
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beneficial ownership of the shares of Common Stock owned by
Thermo TerraTech or Thermo Electron.
Thermo Thermo Thermo
Electron TerraTech
Name (1) Remediation Corporation Inc. (4)
-------- ----------- ----------- --------
Inc. (2) (3)
-------- ---
Thermo TerraTech Inc.(5) 8,891,460 N/A N/A
William Harris 1,088,562 N/A N/A
Investors, Inc. (6)
John P. Appleton 63,000 144,749 216,989
Robert W. Dunlap 95,848 10,000 10,000
Elias P. Gyftopoulos 27,600 71,070 1,500
Fred Holubow 53,764 6,000 16,500
Nels R. Johnson 30,688 21,752 12,958
James Lousararian 82,841 7,637 27,226
Theo Melas-Kyriazi 22,500 161,404 10,319
Frank E. Morris 27,301 23,910 1,500
Jeffrey L. Powell 111,000 41,287 82,835
William A. Rainville 24,000 249,292 60,000
All directors and
executive
officers as a group
(13 persons) 606,345 1,518,508 529,417
(1) Except as reflected in the footnotes to this table, shares
beneficially owned consist of shares owned by the indicated
person or by that person for the benefit of minor children and
all share ownership includes sole voting and investment power.
(2) Shares beneficially owned by Dr. Appleton, Dr. Gyftopoulos,
Mr. Holubow, Mr. Johnson, Mr. Lousararian, Mr. Melas-Kyriazi, Dr.
Morris, Mr. Powell, Mr. Rainville and all directors and current
executive officers as a group include 63,000, 27,600, 24,450,
30,250, 80,500, 22,500, 24,450, 111,000, 22,500 and 476,750
shares, respectively, that such person or group has the right to
acquire within 60 days of June 28, 1997, through the exercise of
stock options. Shares beneficially owned by Mr. Holubow, Dr.
Morris and all directors and current executive officers as a
group include 2,932, 2,851 and 5,783 shares, respectively, that
had been allocated through June 28, 1997, to their respective
accounts maintained under the Corporation's Deferred Compensation
Plan for Directors. Shares beneficially owned by Dr. Dunlap
include 16,527 shares of the Corporation's common stock being
held in an escrow account in connection with the acquisition by
the Corporation of Remediation Technologies, Inc. on December 8,
1995, to secure indemnification obligations of Mr. Dunlap in
connection with such acquisition, as well as warrants to purchase
23,962 shares of the Corporation's common stock, of which
warrants to purchase 5,509 shares are likewise being held in
escrow. No director or current executive officer beneficially
owned more than 1% of the Common Stock outstanding as of June 28,
1997; all directors and executive officers as a group
beneficially owned 4.7% of the Common Stock outstanding as of
such date.
(3) Shares of the common stock of Thermo Electron beneficially
owned by Dr. Appleton, Mr. Dunlap, Dr. Gyftopoulos, Mr. Johnson,
Mr. Lousararian, Mr. Melas-Kyriazi, Dr. Morris, Mr. Powell, Mr.
Rainville and all directors and current executive officers as a
group include 107,257, 10,000, 9,375, 16,882, 4,275, 120,072,
9,375, 35,012, 197,236 and 1,146,556 shares, respectively, that
such person or group has the right to acquire within 60 days of
June 28, 1997, through the exercise of stock options. Shares
beneficially owned by all directors and current executive
officers as a group include 3,674 full shares allocated through
June 28, 1997, to their respective accounts maintained pursuant
to Thermo Electron's employee stock ownership plan, of which the
trustees, who have investment power over its assets, were as of
June 28, 1997, executive officers of Thermo Electron ("ESOP").
Shares beneficially owned by Dr. Morris and all directors and
current executive officers as a group each include 11,120 shares
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allocated through June 28, 1997, to Dr. Morris's account
maintained pursuant to Thermo Electron's Deferred Compensation
Plan for directors. Shares beneficially owned by Dr. Morris
include 3,415 shares owned by his spouse. No director or current
executive officer beneficially owned more than 1% of the common
stock of Thermo Electron outstanding as of June 28, 1997; all
directors and current executive officers as a group beneficially
owned approximately 1.0% of the Thermo Electron common stock
outstanding as of such date.
(4) Shares of the common stock of Thermo TerraTech beneficially
owned by Dr. Appleton, Mr. Dunlap, Dr. Gyftopoulos, Mr. Johnson,
Mr. Lousararian, Mr. Melas-Kyriazi, Dr. Morris, Mr. Powell, Mr.
Rainville and all directors and current executive officers as a
group include 215,000, 10,000, 1,500, 12,000, 27,000, 10,000,
1,500, 63,000, 60,000 and 461,000 shares, respectively, that such
person or group has the right to acquire within 60 days of June
28, 1997, through the exercise of stock options. Shares
beneficially owned by Mr. Holubow and all directors and current
executive officers as a group include 16,500 and 29,000 shares,
respectively, that such person or group has the right to acquire
within 60 days of June 28, 1997, through the exercise of stock
purchase warrants acquired in connection with private placements
of the securities of Thermo TerraTech and one or more of the
Corporation's subsidiaries on terms identical to terms granted to
unaffiliated investors. Shares beneficially owned by Dr.
Appleton and all directors and current executive officers as a
group include 255 and 909 full shares, respectively, allocated
through June 28, 1997 to accounts maintained pursuant to the
ESOP. Except for Dr. Appleton, who beneficially owned
approximately 1.2% of the common stock of Thermo TerraTech
outstanding as of June 28, 1997, no director or current executive
officer beneficially owned more than 1% of such common stock
outstanding as of June 28, 1997; all directors and current
executive officers as a group beneficially owned 2.9% of the
Common Stock outstanding as of such date.
(5) Includes 269,492 shares of Common Stock that Thermo
TerraTech has the right to acquire within 60 days of June 28,
1997, through the conversion of certain convertible notes of the
Corporation held by Thermo TerraTech. As of June 28, 1997,
Thermo TerraTech beneficially owned approximately 70.59% of the
outstanding Common Stock. Thermo TerraTech's address is 12068
Market Street, Livonia, Michigan 48150. As of June 28, 1997,
Thermo Terra Tech had the power to elect all of the members of
the Corporation's Board of Directors. Thermo TerraTech is a
majority owned subsidiary of Thermo Electron and, therefore,
Thermo Electron may be deemed a beneficial owner of the shares of
Common Stock beneficially owned by Thermo TerraTech. Thermo
Electron disclaims beneficial ownership of these shares.
(6) Based on information provided in the Schedule 13G of William
Harris Investors, Inc. ("Harris") dated February 3 1997, these
shares of Common Stock have been acquired by Harris on behalf of
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unidentified discretionary clients of Harris. Harris is a
investment adviser registered under Section 203 of the Investment
Adviser Act of 1940, as amended. Its address is 2 North LaSalle
Street, Suite 300, Chicago, Illinois 60602.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's directors and executive officers, and
beneficial owners of more than 10% of the Common Stock, such as
Thermo TerraTech and Thermo Electron, to file with the Securities
and Exchange Commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities.
Based upon a review of such filings, all Section 16(a) filing
requirements applicable to such persons were complied with during
fiscal 1997, except in the following instances. Mr. James
Lousararian, a Vice President of the Corporation, filed a Form 5
late reporting one exempt purchase of Common Stock under the
Corporation's employee stock purchase plan. Thermo TerraTech
filed two Forms 4 late reporting two transactions associated with
the exercise and lapse of options granted to employees to
purchase shares of Common Stock under its stock option program.
Thermo Electron filed six Forms 4 late, reporting a total of six
transactions, including the two transactions described above for
Thermo TerraTech, one open market purchase of shares of Common
Stock and three additional transactions associated with the grant
to employees of options to purchase shares of Common Stock under
its stock option program.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation for services to
the Corporation in all capacities awarded to, earned by or paid
to the Corporation's chief executive officer and its four other
most highly compensated executive officers for the last three
fiscal years.
The Corporation is required to appoint certain executive
officers and full-time employees of Thermo Electron as executive
officers of the Corporation, in accordance with the Thermo
Electron Corporate Charter. The compensation for these executive
officers is determined and paid entirely by Thermo Electron. The
time and effort devoted by these individuals to the Corporation's
affairs is provided to the Corporation under the Corporate
Services Agreement between the Corporation and Thermo Electron.
Accordingly, the compensation for these individuals is not
reported in the following table.
Summary Compensation Table
Annual Compensation Long Term
------------------ Compensation
------------
Securities
Underlying
Options All Other
Name and Fiscal (No. of Shares
Principal Position Year Salary Bonus and Company) (1) Compensation
------------------ ---- ------ ----- ---------------- ------------
(2)
John P. Appleton(3)1997 $36,750 $20,000 -- $6,919
Chief Executive 1996 $33,750 $20,000 -- $6,919
Officer
1995 $7,313 $5,000 30,000(TTT) $11,171
Jeffrey L. Powell 1997 $122,000 $40,000 600(TMO) $7,023
(4 )
President and 2,000(TFG)
Chief
Operating Officer 6,000(TOC)
1996 $116,000 $60,000 300(TMO) $6,646
2,000(TBA)
5,000(TLZ)
2,000(TLT)
6,000(TMQ)
2,000(TSR)
4,000(TXM)
PAGE
1995 $108,000 $63,500 15,000(THN) $6,828
10,000(TTT)
22,275(TMO)
James Lousararian 1997 $106,000 $25,000 10,000(THN) $6,567
Vice President, 1996 $102,000 $33,000 -- $6,636
Sales
and Marketing 1995 $96,000 $49,500 10,500(THN) $6,078
4,000(TTT)
Nels R. Johnson 1997 $97,300 $28,000 8,000(THN) $5,275
(5)
Vice President 900(TMO)
1996 $93,600 $25,000 20,000(THN) $4,730
Robert W. Dunlap 1997 $165,000 $35,000 10,000(TTT)
(6)
Vice President 10,000(TMO) $5,088
(1) In addition to grants of options to purchase shares of
Common Stock of the Corporation (designated in the table as THN),
the named executive officers of the Corporation have been granted
options to purchase common stock of Thermo Electron and certain
of its other subsidiaries as part of Thermo Electron's stock
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option program. Options have been granted during the last three
fiscal years to the named executive officers in the following
Thermo Electron companies: Thermo Electron (designated in the
table as TMO), Thermo TerraTech Inc. (designated in the table as
TTT), Thermo BioAnalysis Corporation (designated in the table as
TBA), Thermo Fibergen Inc. (designated in the table as TFG),
ThermoLase Corporation (designated in the table as TLZ),
ThermoLyte Corporation (designated in the table as TLT), Thermo
Optek Corporation (designated in the table as TOC), ThermoQuest
Corporation (designated in the table as TMQ), Thermo Sentron Inc.
(designated in the table as TSR), and Trex Medical Corporation
(designated in the table as TXM).
(2) Represents the amount of matching contributions made by the
individual's employer on behalf of named executive officers
participating in the Thermo Electron 401(k) plan.
(3) Dr. Appleton served as the Corporation's chief executive
officer from 1993 until May 14, 1997. Dr. Appleton is also a
vice president of Thermo Electron and president and chief
executive officer of Thermo TerraTech. A portion of Dr.
Appleton's annual cash compensation (salary and bonus) has been
allocated to and paid by each of the Corporation, Thermo Electron
and Thermo TerraTech over each of the past three fiscal years as
compensation for the services provided to these companies based
on the time he devoted to his responsibilities to these
companies. The annual cash compensation reported in the table
for Dr. Appleton represents the amount paid from all sources,
including the Corporation, solely for Dr. Appleton's services as
the chief executive officer of the Corporation. For fiscal 1997,
1996 and 1995, approximately 20%, 20% and 5%, respectively, of
Dr. Appleton's annual cash compensation was paid by the
Corporation for his services as its chief executive officer.
Bonuses paid to Dr. Appleton reflect compensation decisions based
on calendar year performance, in accordance with Thermo
Electron's compensation practices for its officers. Dr. Appleton
has served as an officer of Thermo Electron since 1975 and has
been granted options to purchase shares of the common stock of
Thermo Electron and certain of its subsidiaries other than the
Corporation from time to time by Thermo Electron or such other
subsidiaries. These options are not reported here as they were
granted as compensation for service to Thermo Electron companies
in capacities other than in his capacity as the chief executive
officer of the Corporation.
(4) Mr. Powell was appointed chief executive officer of the
Corporation on May 14, 1997.
(5) Mr. Johnson was appointed an executive officer of the
Corporation on June 30, 1995.
(6) Mr. Dunlap was appointed an executive officer of the
Corporation on May 8, 1996.
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Stock Options Granted During Fiscal 1997
The following table sets forth information concerning
individual grants of stock options made during fiscal 1997 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 1997.
Dr. Appleton has served as a vice president of Thermo
Electron since 1975 and from time to time has been granted
options to purchase common stock of Thermo Electron and certain
of its subsidiaries other than the Corporation. These options
are not reported in this table as they were granted as
compensation for service to other Thermo Electron companies in
capacities other than in his capacity as the chief executive
officer of the Corporation. During fiscal 1997, no options to
purchase Common Stock were granted to Dr. Appleton.
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Option Grants in Fiscal 1997
Percent of Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation for
Options Employees in Price Per Expiration Option Term (2)
Name Granted (1) Fiscal Year Share Date 5% 10%
- - ---- ----------- ----------- ----- ---- -- ---
Jeffrey L. Powell 600 (TMO) 0.06% (3) $42.79 05/22/99 $4,044 $8,496
2,000 (TFG) 0.4% (3) $10.00 09/12/08 $15,920 $ 42,760
6,000 (TOC) 0.2% (3) $12.00 04/09/08 $57,300 $153,960
James Lousararian 10,000 (THN) 1.8% $10.00 10/30/08 $79,600 $213,800
Nels R. Johnson 8,000 (THN) 1.4% $10.00 10/30/08 $63,680 $171,040
900 (TMO) 0.09% (3) $42.79 05/22/99 $6,066 $12,744
Robert W. Dunlap 10,000 (TMO) 3.4% (3) $10.40 10/30/08 $82,800 $222,400
10,000 (THN) 1.0% $36.05 12/03/08 $286,900 $770,900
(1) In addition to the grant of options to purchase Common Stock
of the Corporation (THN), options have been granted during fiscal
1997 to the named executive officers as part of Thermo Electron's
stock option program to purchase the common stock of Thermo
Electron (TMO), Thermo Fibergen Inc. (TFG) and Thermo Optek
Corporation (TOC). All of the options granted during the fiscal
year are immediately exercisable at the date of grant. 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 such corporation or any
other Thermo Electron company. The granting corporation may
exercise its repurchase rights within six months after the
termination of the optionee's employment. For publicly traded
companies, the repurchase rights generally lapse ratably over a
five- to ten-year period, depending on the option term, which may
vary from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another Thermo
Electron company. The granting corporation may permit the
holders of options to exercise options and to satisfy tax
withholding obligations by surrendering shares equal in fair
market value to the exercise price or withholding obligation.
(2) 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 applicable corporation, the optionee's
continued employment through the option period and the date on
which the options are exercised.
(3) These options were granted under stock option plans
maintained by Thermo Electron or its subsidiaries as part of
Thermo Electron's compensation program and accordingly are
reported as a percentage of total options granted to employees of
Thermo Electron and its subsidiaries.
Stock Options Exercised During Fiscal 1997 and Fiscal Year-End
Option Values
The following table reports certain information regarding
stock option exercises during fiscal 1997 and outstanding stock
options held at the end of fiscal 1997 by the Corporation's chief
executive officer and the other named executive officers. No
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stock appreciation rights were exercised or were outstanding
during fiscal 1997.
Aggregated Option Exercises In Fiscal 1997 And Fiscal 1997 Year-End Option Values
Number of
Unexercised
Shares Options at Fiscal Value of
Acquired Year-End Unexercised
on Value (Exercisable/ In-the-Money
Name Company Exercise Realized Unexercisable) (1) Options
- - ---- ------- -------- -------- ------------------ -------
John P.Appleton Thermo
(2) Remediation -- -- 63,000 /-- $12,285 /--
Jeffrey L.Powell Thermo
Remediation -- -- 111,000 /-- $18,720 /--
Thermo
TerraTech -- -- 63,000 /-- (3) $74,785 /--
Thermo
Electron 5,062 $126,955 34,312 /-- (4) $470,330 /--
Thermo
BioAnalysis -- -- 2,000 /-- $0 /--
Thermo
Fibergen -- -- 2,000 /-- $0 /--
Thermo
Fibertek -- -- 4,500 /-- $32,625 /--
ThermoLase -- -- 5,000 /-- $0 /--
ThermoLyte -- -- -- /2,000 -- /$0 (5)
PAGE
Thermo Optek -- -- 6,000 /-- $3,000 /--
ThermoQuest -- -- 6,000 /-- $9,000 /--
Thermo Sentron -- -- 2,000 /-- $0 /--
Trex Medical -- -- 4,000 /-- $2,500 /--
James Lousararian Thermo
Remediation -- -- 80,500 /-- $11,700 /--
Thermo
TerraTech 11,250 $95,400 27,000 /-- (3) $38,665 /--
Thermo
Electron -- -- 4,275 /-- $72,702 /--
Thermo
Fibertek -- -- $4,500 /-- $32,625 /--
Nels R. Johnson Thermo
Remediation -- -- 30,250 /-- $439 /--
Thermo
TerraTech -- -- 12,000 /-- $5,340 /--
Thermo
Electron -- -- 16,082 /-- $279,182 /--
Thermo
Instruments -- -- 20,625 /-- $396,696 /--
Thermo
Spectra -- -- 600 /-- $2,250 /--
Robert Dunlap Thermo
TerraTech -- -- 10,000 /-- $0 /--
Thermo
Electron -- -- 10,000 /-- $0 /--
(1) All of the options granted during the fiscal year are
immediately exercisable at the date of grant, except options to
purchase the common stock of ThermoLyte Corporation, which are
not exercisable until the earlier of (i) 90 days after the
effective date of the registration of that company's common
stock under Section 12 of the Securities Exchange Act of 1934
(the "Exchange Act") and (ii) nine years from 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 such corporation or any
other Thermo Electron company. The granting corporation may
exercise its repurchase rights within six months after the
termination of the optionee's employment. For publicly traded
companies, the repurchase rights generally lapse ratably over a
five- to ten-year period, depending on the option term, which may
vary from seven to twelve years, provided that the optionee
continues to be employed by the Corporation or another Thermo
Electron company. For companies whose shares are not publicly
traded, the repurchase rights lapse in their entirety on the
ninth anniversary of the grant date.
(2) Dr. Appleton has served as a vice president of Thermo
Electron since 1975 and has been granted options to purchase
shares of the common stock of Thermo Electron and certain of its
subsidiaries other than the Corporation from time to time by
Thermo Electron or such other subsidiaries. These options are
not reported here as they were granted as compensation for
service to Thermo Electron companies in capacities other than in
his capacity as the chief executive officer of the Corporation.
(3) Options to purchase 15,000 and 9,000 shares of the common
stock of Thermo TerraTech held by Mr. Powell and Mr. Lousararian,
respectively, are subject to the same terms described in footnote
(1), except that in the event of the optionee's voluntary
resignation or discharge for cause prior to February 8, 1998, all
of the shares acquired upon exercise of these options are subject
to repurchase by Thermo TerraTech at the exercise price. In
addition, all shares acquired upon the exercise of these options
are subject to restrictions on resale until February 8, 1998.
(4) Options to purchase 22,500 shares of the common stock of
Thermo Electron granted to Mr. Powell are subject to the same
terms as described in footnote (1), except that the repurchase
rights of the granting corporation generally do not lapse until
the tenth anniversary of the grant date. In the event of the
employee's death or involuntary termination prior to the tenth
anniversary of the grant date, the repurchase rights of the
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PAGE
granting corporation shall be deemed to lapse ratably over a
five-year period commencing with the fifth anniversary of the
grant date.
(5) No public market existed for the shares underlying these
options as of June 28, 1997. Accordingly, no value in excess of
exercise price has been attributed to these options.
Severance Agreements
Thermo Electron has entered into severance agreements with
several key employees, including Dr. Appleton. These agreements
provide severance benefits if there is a change in control of
Thermo Electron that is not approved by the Board of Directors of
Thermo Electron and the employee's employment with Thermo
Electron or one of its majority-owned subsidiaries is terminated,
for whatever reason, within one year thereafter. For purposes of
the severance agreements, a change in control exists upon (i) the
acquisition of 50% or more of the outstanding common stock of
Thermo Electron by any person without the prior approval of the
board of directors of Thermo Electron, (ii) the failure of the
board of directors of Thermo Electron, within two years after any
contested election of directors or tender or exchange offer not
approved by the board of directors, to be constituted of a
majority of directors holding office prior to such event or (iii)
any other event that the board of directors of Thermo Electron
determines constitutes an effective change of control of Thermo
Electron. The benefit under these agreements is stated as an
initial percentage which was established by the Board of
Directors of Thermo Electron and is generally based upon the
employee's age and length of service with Thermo Electron at the
time of severance. Benefits are to be paid over a five-year
period. The benefit to be paid in the first year is determined
by applying this percentage to the employee's highest annual
total remuneration in any 12-month period during the preceding
three years. This benefit is reduced by 10% in each of the
succeeding four years in which benefits are paid. The initial
percentage to be so applied to Dr. Appleton is 40.1%. Assuming
that severance benefits would have been payable under such
agreements as of March 29, 1997, Dr. Appleton would have received
approximately $119,906 in the first year thereof from Thermo
Electron.
RELATIONSHIP WITH AFFILIATES
Thermo Electron has adopted a strategy of selling a minority
interest in subsidiary companies to outside investors as an
important tool in its future development. As part of this
strategy, Thermo TerraTech has created the Corporation as a
publicly held subsidiary, and Thermo Electron and certain of its
subsidiaries have created several other privately and publicly
held subsidiaries. From time to time, Thermo Electron and its
subsidiaries will create other majority-owned subsidiaries as
part of its spinout strategy. (The Corporation and the other
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PAGE
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
mutual affiliation are essential elements of their individual
performance. Accordingly, Thermo Electron and each of the Thermo
Subsidiaries have adopted the Thermo Electron Corporate Charter
(the "Charter") to define the relationships and delineate the
nature of such cooperation among themselves. The purpose of the
Charter is to ensure that (1) all of the companies and their
stockholders are treated consistently and fairly, (2) the scope
and nature of the cooperation among the companies, and each
company's responsibilities, are adequately defined, (3) each
company has access to the combined resources and financial,
managerial and technological strengths of the others, and (4)
Thermo Electron and the Thermo Subsidiaries, in the aggregate,
are able to obtain the most favorable terms from outside parties.
To achieve these ends, the Charter identifies the general
principles to be followed by the companies, addresses the role
and responsibilities of the management of each company, provides
for the sharing of group resources by the companies and provides
for centralized administrative, banking and credit services to be
performed by Thermo Electron. The services provided by Thermo
Electron include collecting and managing cash generated by
members, coordinating the access of Thermo Electron and the
Thermo Subsidiaries (the "Thermo Group") to external financing
sources, ensuring compliance with external financial covenants
and internal financial policies, assisting in the formulation of
long-range planning and providing other banking and credit
services. Pursuant to the Charter, Thermo Electron may also
provide guarantees of debt or other obligations of the Thermo
Subsidiaries or may obtain external financing at the parent level
for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on
behalf of, the consolidated entity or may obtain financing
directly from external financing sources. Under the Charter,
Thermo Electron is responsible for determining that the Thermo
Group remains in compliance with all covenants imposed by
external financing sources, including covenants related to
borrowings of Thermo Electron or other members of the Thermo
Group, and for apportioning such constraints within the Thermo
Group. In addition, Thermo Electron establishes certain internal
policies and procedures applicable to members of the Thermo
Group. The cost of the services provided by Thermo Electron to
the Thermo Subsidiaries is covered under existing corporate
services agreements between Thermo Electron and each of the
Thermo Subsidiaries.
The Charter presently provides that it shall continue in
effect so long as Thermo Electron and at least one Thermo
Subsidiary participate. The Charter may be amended at any time by
agreement of the participants. Any Thermo Subsidiary, including
15
PAGE
the Corporation, can withdraw from participation in the Charter
upon 30 days' prior notice. In addition, Thermo Electron may
terminate a subsidiary's participation in the Charter in the
event the subsidiary ceases to be controlled by Thermo Electron
or ceases to comply with the Charter or the policies and
procedures applicable to the Thermo Group. A withdrawal from the
Charter automatically terminates the corporate services agreement
and tax allocation agreement (if any) in effect between the
withdrawing company and Thermo Electron. The withdrawal from
participation does not terminate outstanding commitments to third
parties made by the withdrawing company, or by Thermo Electron or
other members of the Thermo Group, prior to the withdrawal. In
addition, a withdrawing company is required to continue to comply
with all policies and procedures applicable to the Thermo Group
and to provide certain administrative functions mandated by
Thermo Electron so long as the withdrawing company is controlled
by or affiliated with Thermo Electron.
As provided in the Charter, the Corporation and Thermo
Electron have entered into a Corporate Services Agreement (the
"Services Agreement") under which Thermo Electron's corporate
staff provides certain administrative services, including certain
legal advice and services, risk management, certain employee
benefit administration, tax advice and preparation of tax
returns, centralized cash management and certain financial and
other services to the Corporation. The Corporation was assessed
an annual fee equal to 1.0% of the Corporation's revenues for
these services for fiscal 1997. The fee is reviewed annually and
may be changed by mutual agreement of the Corporation and Thermo
Electron. During fiscal 1997, Thermo Electron assessed the
Corporation $1,148,000 in fees under the Services Agreement.
Management believes that the charges under the Services Agreement
are reasonable and that the terms of the Services Agreement are
fair to the Corporation. For items such as employee benefit
plans, insurance coverage and other identifiable costs, Thermo
Electron charges the Corporation based on charges attributable to
the Corporation. The Services Agreement automatically renews for
successive one-year terms, unless canceled by the Corporation
upon 30 days' prior notice. In addition, the Services Agreement
terminates automatically in the event the Corporation ceases to
be a member of the Thermo Group or ceases to be a participant in
the Charter. In the event of a termination of the Services
Agreement, the Corporation will be required to pay a termination
fee equal to the fee that was paid by the Corporation for
services under the Services Agreement for the nine-month period
prior to termination. Following termination, Thermo Electron may
provide certain administrative services on an as-requested basis
by the Corporation or as required in order to meet the
Corporation's obligations under Thermo Electron's policies and
procedures. Thermo Electron will charge the Corporation a fee
equal to the market rate for comparable services if such services
are provided to the Corporation following termination.
16
PAGE
As of March 29, 1997, $19,674,000 of the Corporation's cash
equivalents were invested in a repurchase agreement with Thermo
Electron. Under this agreement, the Corporation in effect lends
excess cash to Thermo Electron, which Thermo Electron
collateralizes with investments principally consisting of
corporate notes, U.S. government agency securities, money market
funds, commercial paper and other marketable securities, in the
amount of at least 103% of such obligation. The Corporation's
funds subject to the repurchase agreement are readily convertible
into cash by the Corporation and have a maturity of three months
or less. The repurchase agreement earns a rate based on the
Commercial Paper Composite Rate plus 25 basis points, set at the
beginning of each quarter.
As of March 29, 1997, the Corporation owed Thermo TerraTech
$2,650,000.
Thermo TerraTech owned approximately 70.6% of the Common
Stock outstanding as of June 28, 1997.
Stock Holding Assistance Plan
In fiscal 1997, the Corporation adopted a stock holding
policy which requires its executive officers to acquire and hold
a minimum number of shares of Common Stock. In order to assist
the executive officers in complying with the policy, the
Corporation also adopted a stock holding assistance plan under
which it may make interest-free loans to certain key employees,
including its executive officers, to enable such employees to
purchase the Common Stock in the open market. Loans will be
repaid upon the earlier of demand or the fifth anniversary of the
date of the loan, unless otherwise authorized by the Human
Resources Committee of the Board of Directors. No such loans
were outstanding in fiscal 1997.
AA972050021