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<SEC-DOCUMENT>0000097745-02-000016.txt : 20020415
<SEC-HEADER>0000097745-02-000016.hdr.sgml : 20020415
ACCESSION NUMBER:		0000097745-02-000016
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		19
CONFORMED PERIOD OF REPORT:	20011229
FILED AS OF DATE:		20020315

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			THERMO ELECTRON CORP
		CENTRAL INDEX KEY:			0000097745
		STANDARD INDUSTRIAL CLASSIFICATION:	MEASURING & CONTROLLING DEVICES, NEC [3829]
		IRS NUMBER:				042209186
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0102

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08002
		FILM NUMBER:		02576919

	BUSINESS ADDRESS:	
		STREET 1:		81 WYMAN ST
		STREET 2:		P O BOX 9046
		CITY:			WALTHAM
		STATE:			MA
		ZIP:			02454-9046
		BUSINESS PHONE:		7816221000
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>tmok01.txt
<TEXT>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
               ----------------------------------------------------

                                    FORM 10-K

(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the fiscal year ended December 29, 2001

[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

                          Commission file number 1-8002

                          THERMO ELECTRON CORPORATION
             (Exact name of Registrant as specified in its charter)

Delaware                                                              04-2209186
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts                                                02454-9046
(Address of principal executive offices)                              (Zip Code)

       Registrant's telephone number, including area code: (781) 622-1000

          Securities registered pursuant to Section 12(b) of the Act:

Title of each class                    Name of each exchange on which registered
- --------------------------------------------------------------------------------
Common Stock, $1.00 par value                            New York Stock Exchange
Preferred Stock Purchase Rights                          New York Stock Exchange
3 1/4% Subordinated Convertible Debentures due 2007      American Stock Exchange
4% Subordinated Convertible Debentures due 2005          American Stock Exchange

          Securities registered pursuant to Section 12(g) of the Act:
                                      None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to the filing requirements for
at least the past 90 days. Yes [ X ] No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [   ]

The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of January 25, 2002, was approximately $3,946,627,000.

As of January 25, 2002, the Registrant had 175,210,210 shares of Common Stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

Sections of Thermo Electron's Annual Report to Shareholders for the year ended
December 29, 2001, are incorporated by reference into Parts I and II, and
sections of the company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on May 15, 2002, are incorporated by reference into Part
III. Copies of these documents can be obtained at no cost by calling the
company's Investor Relations department at 781-622-1111.


<PAGE>


                                     PART I

Item 1.  Business
         --------

(a)   General Development of Business
      -------------------------------

      Thermo Electron Corporation (also referred to in this document as "Thermo
Electron," "we," the "company," or the "registrant") is a global leader in the
development, manufacture, and sale of technology-based instrument systems,
components, and solutions used in virtually every industry to monitor, collect,
and analyze data to provide knowledge for the user. For example, our powerful
analysis technologies help biotech researchers sift through data to make the
discoveries that will fight disease or prolong life; allow telecommunications
equipment manufacturers to fabricate components required to increase the speed
and quality of communications; and monitor and control industrial processes
on-line to ensure that critical quality standards are met efficiently and
safely.

      In the late 1980s, Thermo Electron adopted a strategy of spinning out
certain businesses into separate public subsidiaries in which we kept a majority
ownership. By 1997, we had spun out 22 public entities serving many diverse
markets. To simplify our structure, we commenced in 1999 a major reorganization
that ultimately consisted of taking private all of our public subsidiaries,
selling noncore businesses with aggregate revenues in excess of $1.5 billion,
and spinning off our paper-recycling and medical products businesses. This
reorganization was substantially completed in February 2002, with the spin-in of
Spectra-Physics, Inc., our last publicly traded subsidiary.

      The businesses spun off and sold as part of our reorganization have been
accounted for as discontinued operations (see "Description of Business -
Principal Products and Services"). Except where indicated, the information
presented in this Form 10-K pertains to our continuing operations.

      Our strategy going forward is to focus on integrating our operations to
improve productivity and enable us to better serve our customers with improved
products, technologies, and complete integrated systems and services. We also
intend to emphasize internal growth by investing proceeds from the sale of
noncore businesses to pursue developments in the markets that we serve that have
potential for high-growth. In addition, we plan to augment that growth with
strategic acquisitions that expand the reach of our technology by either
rounding out our product lines or bringing them to new markets.

      Thermo Electron is a Delaware corporation and was incorporated in 1956.
The company completed its initial public offering in 1967 and was listed on the
New York Stock Exchange in 1980.

Forward-looking Statements

      We may make forward-looking statements, as defined in Section 21E of the
Securities Exchange Act of 1934, throughout this Annual Report on Form 10-K. Any
statements in this document that are not statements of historical fact may be
considered forward-looking. As you read this document, the words "believes,"
"anticipates," "plans," "expects," "seeks," "estimates," and other similar
expressions are intended to identify forward-looking statements. A number of
important factors could cause the company's results to differ materially from
those indicated by such forward-looking statements, including those detailed
under the heading "Forward-looking Statements" in our 2001* Annual Report to
Shareholders, which statements are incorporated in this document by reference.

(b)   Financial Information About Segments
      ------------------------------------

      Financial information about the company's segments (also called "sectors")
is summarized in Note 3 to Consolidated Financial Statements in our 2001 Annual
Report to Shareholders, which is incorporated in this document by reference.


- --------------------
* References to 2001, 2000, and 1999 herein are for the fiscal years ended
  December 29, 2001, December 30, 2000, and January 1, 2000, respectively.


<
                                       2
<PAGE>
>



(c)   Description of Business
      -----------------------

      (i)  Principal Products and Services
           -------------------------------

      We report our business in three principal sectors (segments):
Life Sciences, Optical Technologies, and Measurement and Control.

Life Sciences

      We address the biotechnology and pharmaceutical markets, as well as the
clinical laboratory and healthcare industries, through our Life Sciences sector.
This sector is organized into four divisions: bioscience technologies,
analytical instruments, informatics, and clinical diagnostics.

      Bioscience technologies encompasses a broad range of instruments and
consumables, such as microplate-based handling and reading equipment, optical
biosensors, polymerase chain reaction (PCR) thermal cyclers for deoxyribonucleic
acid (DNA) amplification, magnetic particle-based molecular separation
instruments, and single nucleotide polymorphism (SNP) scoring systems.
Consumables include reagents, microtiter plates, liquid-handling pipettes, and
pipette tips. Biosciences instruments are used primarily by pharmaceutical
companies for drug discovery and development, testing, and quality control, and
by biotechnology companies and universities for research leading to knowledge
about diseases and possible treatments. These products are typically used on the
"front end" of multi-instrument systems, as the instruments prepare and handle
samples prior to being loaded into other, advanced instruments.

      This division also includes a range of scientific equipment used for the
preparation and preservation of chemical and biological samples, principally in
research settings for pharmaceutical, academic, and government customers.
Products include cell culture incubators, ultralow-temperature freezers,
high-speed centrifuges, centrifugal vacuum concentrators, biological safety
cabinets, cryopreservation storage tanks, and laboratory freeze dryers. We also
design, manufacture, and market electrochemistry products, including pH and
ion-selective electrolyte (ISE) and other technologies for quality assurance and
regulatory compliance, primarily in the environmental, food and beverage,
chemical, pharmaceutical, and biomedical research industries. These products
determine the quality of various substances, from food and pharmaceuticals to
water and wastewater, by measuring their pH, specific ion concentration,
dissolved oxygen, and conductivity.

      Analytical instruments includes our offerings of mass spectrometers,
liquid and gas chromatographs, and multi-meters instrument combinations of these
products, along with consumable products such as the vials, syringes, and
columns necessary for chromatography. These systems are used by the
pharmaceutical industry for drug development, testing, and quality control, and
by the biotechnology industry for research leading to knowledge about disease
and possible treatments. A significant and growing application for these
instruments is proteomics, the study of proteins. Most drugs - about 90 percent
- - interact with proteins, so multi-instrument systems that can rapidly identify
and quantify proteins are of increasing value to pharmaceutical and
biotechnology customers. We continue to introduce new systems that offer a total
solution for high-throughput analysis, such as our Surveyor high performance
liquid chromatograph, LCQ Deca mass spectrometer, TurboSEQUEST(R) software, and
TSQ(R) Quantum - the first high-resolution, ultracompact benchtop triple
quadrupole mass spectrometer.

      Informatics laboratory information management systems facilitate the
monitoring and analysis of samples by storing and organizing the massive amounts
of analytical data gathered in laboratories, industrial settings, and
clinical-testing sites. We are a leading supplier of laboratory information
management systems, and provide chromatography data systems (CDS) to analyze
chromatographic data obtained via gas or liquid chromatography and capillary
electrophoresis.

<
                                       3
<PAGE>
>


      Clinical diagnostics equipment and supplies are used by healthcare
laboratories in doctors' offices and hospitals to detect and diagnose disease.
Products in this group include sample-preparation instruments and materials to
highlight abnormal cells, blood gas and ISE consumables, chemistry reagents,
clinical-biochemistry instruments and automation equipment, and rapid diagnostic
tests for use in physicians' offices. Our rapid diagnostic products currently
test for influenza A and B, Streptococcus A and B, pregnancy, Rotavirus,
mononucleosis, Chlamydia, and Clostridium difficile toxin A.

Optical Technologies

      We are a leader in optical and semiconductor equipment systems and
technologies that control and apply light throughout the electromagnetic
spectrum for many different uses. Products within the Optical Technologies
sector are used in multiple markets - particularly the scientific instrument,
microelectronics, biomedical, and telecommunications industries - to research,
fabricate, and analyze advanced materials. These products are grouped into three
divisions: photonics, semiconductor, and temperature control.

      Photonics businesses manufacture optical and optoelectronics components
and systems that are used in a variety of industries, including scientific and
medical instruments, telecommunications, and semiconductor applications. For
example, our diffraction gratings are used in the line-narrowing packages of
excimer lasers used for photolithography systems in semiconductor manufacturing,
and in the fabrication of "grisms" (grating and prism) for the multiplexing and
demultiplexing of wavelengths in optical telecommunications.

      This division also includes Spectra-Physics, a leader in the design,
development, manufacture, and distribution of semiconductor-based lasers and
laser optics for a broad range of applications, including active and passive
components for telecommunications. Passive components are used to mix, filter,
and adjust the optical signals transmitted through a fiber-optic network, while
active components generate and amplify optical signals, or light.
Spectra-Physics has also developed high-power semiconductor-based laser products
for a variety of other commercial markets, including computer and
microelectronics manufacturing, industrial manufacturing, medical image
recording, and research and development.

      Semiconductor products are used in the manufacture of capital equipment
that produces and tests semiconductor chips. In particular, we are the leading
supplier of molecular beam epitaxy (MBE) systems for the manufacture of gallium
arsenide and other compound semiconductor devices. The largest application of
these systems is for microwave devices used in cellular telephones and other
high-speed wireless communications devices. In 1999, we introduced the V150 MBE,
a successor to our V100 MBE system. The V150 MBE helps customers keep pace with
the rapidly growing demand for high-speed telecommunications devices by
significantly increasing semiconductor production capacity. In 2000, we
introduced the Theta Probe, a next-generation semiconductor metrology tool, to
analyze defects in ultra-thin surface layers of a chip.

      Temperature control systems are necessary for laser, semiconductor,
analytical, laboratory, industrial, and research and development applications.
We are the leading manufacturer of precision temperature-control products for
these applications, and also supply instruments that analyze materials for
viscosity, surface tension, and thermal properties. Customers include the food
and beverage industries as well as manufacturers of paints and ink products,
which use high-precision viscometers to maintain the quality and consistency of
their products.


<
                                       4
<PAGE>
>


Measurement and Control

      We provide a range of real-time, on-line sensors, monitors, and control
systems through our Measurement and Control sector. These products help
manufacturers improve and refine their processes to increase productivity and
quality. These improvements also help our customers meet government standards
for product and worker safety. This sector is organized into three divisions:
spectroscopy, process instruments, and environmental instruments.

      Spectroscopy instrumentation uses various optical techniques to determine,
in a nondestructive manner, the elemental and molecular composition of a wide
range of complex liquids and solids. Customers include pharmaceutical, specialty
chemical, steel, and basic material producers, who use these instruments either
in a laboratory or integrated directly into the production line.

      Process instruments includes a comprehensive family of online weighing and
inspection equipment for consumer products, packaged goods, and bulk materials.
Products for the packaged and consumer goods market ensure that each package
contains the proper quantity of a specific item. We use a variety of
technologies, including X-ray imaging and ultratrace chemical detection, to
inspect food, beverage, and pharmaceutical packages to see that they are free of
physical contaminants and contain no missing or broken parts. In bulk materials,
our product line includes solids-flow-monitoring and level measurement for a
wide variety of process industries including food, chemicals, plastics, and
pharmaceuticals.

      Also included in this division are online process optimization systems
that use proprietary, ultrahigh-speed, noninvasive measurement technologies to
analyze the physical and chemical properties of streams of raw materials, such
as coal, cement, minerals, and pharmaceuticals, in real time. This technology
allows the entire stream of material to be analyzed and eliminates the need for
off-line sampling, which can add production time and cost. We also provide
process optimization systems that measure the total thickness, basis weight, and
coating thickness of web-type finished materials, such as metal strip, plastics,
foil, rubber, glass, and paper.

      In addition, we provide sophisticated systems for the field-measurement
and sensor sector of the process-control market to improve efficiency, provide
process and quality control, maintain regulatory compliance, and increase worker
safety. These systems provide real-time data collection, analysis, and local
control functions using a variety of technologies, including radiation, radar,
ultrasonic, and vibrational measurement principles, as well as flow-monitoring
meters, gas chromatography, mass spectrography, and X-ray fluorescence.
Industries served include oil and gas, chemical, semiconductor, pharmaceutical,
electric utility, minerals and mining, water and wastewater treatment, and pulp
and paper.

      Environmental instruments and systems monitor pollutants generated by
industrial and mobile sources. These include continuous gaseous and aerosol
monitors, and water-quality instruments for assessing ambient air quality,
emissions, and effluents from stationary sources. Compounds measured include
common air pollutants, aerosols, and organic halogens and carbon. We also
provide a comprehensive line of gas detectors for controlling and detecting the
presence of combustible and toxic gases for worker and plant safety. These
products range from simple handheld, general-purpose portable equipment to more
sophisticated fixed systems. In addition, we supply a range of products for
monitoring and detecting radiation at power plants, including portable radiation
and contamination monitors, as well as electronic dosimetry and hand probes for
protecting power plant personnel. These devices are also being used in border
crossings and other public venues for public-safety purposes.

Sector Changes
- --------------
      During the first quarter of 2002, we fine-tuned the make-up of our three
sectors. The Spectroscopy division, formerly part of our Measurement and Control
sector, became part of the re-named Life and Laboratory Sciences sector, and our
Temperature Control division moved from Optical Technologies to Measurement and
Control. We also transferred our business that markets electrochemistry products
from the Life and Laboratory Sciences sector into the Measurement and Control
sector. We believe this structure enables us to better develop and provide
integrated end-to-end solutions based on our customers' needs. These changes
will be reflected in our financial reports beginning in the first quarter of
2002.

<
                                       5
<PAGE>
>


Discontinued Operations
- -----------------------

      As a result of our January 2000 reorganization plan, a number of
businesses have been accounted for as discontinued operations. Businesses in
this category included Kadant Inc., a supplier of systems to the paper-making
and recycling industry, as well as fiber-based consumer products, and Viasys
Healthcare Inc., a manufacturer of a range of medical products for diagnosis and
monitoring. Kadant was spun off to shareholders in August 2001 and Viasys was
spun off in November 2001. These businesses, together with a number of operating
units sold, constituted the company's former Energy and Environment, Biomedical
and Emerging Technologies, and Recycling and Resource Recovery segments. At
March 15, 2002, two operating units with aggregate revenue of approximately $90
million remained for sale in discontinued operations.

      (ii) and (xi)   New Products; Research and Development
                      --------------------------------------

      Our business includes the development and introduction of new products and
may include entry into new business sectors. We are not currently committed to
any new products that require the investment of a material amount of our assets,
nor do we have any definitive plans to enter new businesses that would require
such an investment.

      During 2001, 2000, and 1999, we spent $171.6 million, $176.8 million, and
$171.1 million, respectively, on research and development.

      (iii)  Raw Materials
             -------------

      Our management team believes that we have a readily available supply of
raw materials for all of our significant products from various sources. We do
not anticipate any difficulties obtaining the raw materials essential to our
business.

      (iv) Patents, Licenses, and Trademarks
           ---------------------------------

      Patents are important to our business; no particular patent, or related
group of patents, is so important, however, that its loss would significantly
affect our operations as a whole. Generally, we seek patent protection for
inventions and developments made by our personnel and incorporated into our
products or otherwise falling within our fields of interest. Patent rights
resulting from work sponsored by outside parties do not always accrue
exclusively to the company and may be limited by agreements or contracts.

      We protect some of our technology as trade secrets and, where appropriate,
we use trademarks or register our products. We also enter into license
agreements with others to grant and/or receive rights to patents and know-how.

      (v)  Seasonal Influences
           -------------------

      Revenues in the fourth calendar quarter are historically stronger than in
the other quarters due to capital spending patterns of industrial and academic
customers.

      (vi) Working Capital Requirements
           ----------------------------

      There are no special inventory requirements or credit terms extended to
customers that would have a material adverse effect on our working capital.

      (vii)  Dependency on a Single Customer
             -------------------------------

      No customer accounted for more than 10% of our total revenues in any of
the past three years.



<
                                       6
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                                                                       <C>        <C>



      (viii)  Backlog
              -------

      Our backlog of firm orders at year-end 2001 and 2000 was as follows:

(In thousands)                                                                             2001       2000
- ----------------------------------------------------------------------------------------------------------

Life Sciences                                                                          $128,652   $118,284
Optical Technologies                                                                    171,572    257,485
Measurement and Control                                                                 133,485    184,621
Other                                                                                     1,328          -
Intersegment                                                                             (2,413)    (4,000)
                                                                                       --------   --------

                                                                                       $432,624   $556,390
                                                                                       ========   ========
</TABLE>

      The decrease in backlog in the Optical Technologies and Measurement and
Control sectors arose principally due to a slowdown in markets served by these
businesses. For further discussion see Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations. The Measurement and
Control sector's backlog was $168 million at the end of 2000, excluding
businesses subsequently divested. We believe that virtually all of our backlog
at the end of 2001 will be filled during 2002.

      (ix) Government Contracts
           --------------------

      Not applicable.

      (x)  Competition
           -----------

      The markets for our products are highly competitive. In general, our
success in these markets depends on four factors:

      - technical advances that result in new products and improved price/
        performance ratios,
      - our reputation among customers as a quality provider of products and
        services,
      - active research and application-development programs, and
      - relative prices of our products and services.

      In many markets, we compete with large analytical instrument companies
such as Agilent Technologies Inc.; PerkinElmer, Inc.; Varian Associates, Inc.;
Waters Corporation; and Hitachi, Ltd.  In other markets, we compete with
numerous smaller, more specialized firms.

Life Sciences

      Bioscience Technologies.  Our principal competitors for laboratory
equipment are Kendro Laboratory Products, which is owned by SPX Corporation; New
Brunswick Scientific; Jouan S.A.; NuAire Inc.; Sanyo Electric Co. Ltd.; Labconco
Corporation; Corning-Costar Corporation; Fisher Scientific International Inc.;
Mettler-Toledo International Inc.; Danaher Corporation; Eppendorf AG; Beckman
Coulter, Inc.; Metrohm Ltd.; Radiometer; Kyoto; ManTech; and Denver Instruments.
We compete primarily on the basis of technical performance, customer service and
support, and price.

      In biosciences instruments and consumables, we compete with PerkinElmer;
Molecular Devices Corporation; Beckman Coulter; Bio-Rad Laboratories, Inc.;
Agilent; MJ Research Technology; Qiagen Corporation; Biacore International,
Inc.; Nalge Nunc Inc.; Corning-Costar; Rainin Instruments; Greiner GmbH; and
Eppendorf AG. In this market, we compete primarily on the basis of technical
performance, user convenience, and price.

<
                                       7
<PAGE>
>


      Analytical instruments. Our principal competitors in this market include
Agilent, Waters, Shimadzu Corporation, PerkinElmer, Bruker, and Applied
Biosystems, and we compete primarily on the basis of technical performance,
customer service and support, and price.

      Informatics.  Our competitors include PerkinElmer, PE Biosystems, Beckman
Coulter, Agilent, LabVantage Solutions, LIMS U.S., Scientific Software Inc., and
Waters.  We compete primarily on the basis of technical performance and price.

      Clinical diagnostics.  In this market, our principal competitors are Leica
Microsystems; Sakura Finetek U.S.A., Inc.; Ventana Corporation; Cytyc
Corporation; Wescor Inc.; and Mopec Inc., and we compete primarily on the basis
of product quality, price, and customer service.

      In the clinical chemistry reagent market, our competitors include Abbott
Laboratories; BioChem Pharma; Chiron Corporation; and Sigma Diagnostics, a
division of Sigma-Aldrich Co. Competition in this market is primarily based on
product quality and price.

      Competitors in the market for rapid diagnostic test kits include Abbott
Laboratories; Becton, Dickinson and Company; Roche-Boeringher Manheim; and
Quidel Corporation. We compete primarily on the basis of innovative technology
as well as price.

Optical Technologies

      Photonics.  We compete primarily on the basis of technical performance,
reliability, and price. Principal competitors include Optical Coating
Laboratory, Inc.; Newport Corporation; Hamamatsu Photonics K.K.; Barr
Associates, Inc; and JY Horiba.  At Spectra-Physics we compete primarily on the
basis of product quality, technical performance, customer service, and
innovative technology.  Principal competitors include SDL, Inc.; Coherent, Inc.;
Siemens; Thompson-CSF; Lightwave Electronics Inc.; Continuum (a division of
Hoya); and JDS/Uniphase Corporation.

      Semiconductor.  We compete primarily with Riber Instruments S.A., Oxford
Instruments plc., Physical Electronics Inc., Veeco Instruments Inc., Aixtron AG,
EDAX Inc., Kratos Analytical (a subsidiary of Shimadzu), Omicron GmbH, and Oryx
Inc.  In this market, we compete primarily on the basis of product quality,
technical performance, innovative technology, and price.

      Temperature Control.  Our temperature control products compete with those
of Lauda (Dr. Wobser GmbH & Co. KG); Julabo Labortechnik GmbH; Affinity, Inc.;
and Lytron, Inc., primarily on the basis of technical performance, price, and
customer service.  In the market for mid-level products that operate on a
personal-computer platform, our principal competitors are TA Instruments, Inc.,
a subsidiary of Waters, and Rheometrics Scientific Inc. and we compete primarily
on the basis of product quality, technical performance, and price.

Measurement and Control

      Spectroscopy. In the spectroscopy market, our principal competitors are
PerkinElmer, Varian, Agilent, and Bio-Rad, and we compete primarily on the basis
of product quality, technical performance, innovative technology, and price.

      Process Instruments.  Major competitors in the packaged-goods and bulk-
materials markets are Ishida Scales Mfg. Co., Ltd.; Mettler-Toledo; Industrial
Dynamics Corporation; Carl Schenck AG; and Milltronics Corporation.  We compete
primarily on the basis of customer service, product quality, and price.

<
                                       8
<PAGE>
>



      Our major competitors for online analysis systems are Scantech Limited;
Integrated Measurement Systems, Inc.; Toshiba Corporation; Yokogawa Electric
Corporation; and Infrared Engineering Limited. We compete primarily on the basis
of technical performance, customer service, and price.

      In the field measurement instruments and sensors market we compete
primarily on the basis of product quality, price, and customer service.  We
compete with a few large competitors in each product area and with many
companies within specific industries.  Our major competitors include Fisher-
Rosemount, a division of Emerson Electric Co., Inc.; Asea Brown Boveri (Holding)
Ltd.; and Yokogawa.

      We have a relatively small presence within the large and varied
process-control marketplace, which is extremely fragmented and consists of
several large companies, including Fisher-Rosemount, Elsag Bailey, and Honeywell
Process Control, as well as numerous smaller companies. We compete in this
market primarily on the basis of technical performance, customer service, and
price.

      Environmental Instruments.  Our principal competitors include Monitor Labs
Incorporated; Advanced Pollution Instruments; Rupprecht & Pataschnick Co., Inc.;
and Mine Safety Appliances Co.  We compete in this market primarily on the basis
of technical performance, price, and customer service.

      (xii)   Environmental Protection Regulations
              ------------------------------------

      Complying with federal, state, and local environmental protection
regulations should not significantly affect our capital spending, our earnings,
or our competitive position.

      (xiii)  Number of Employees
              -------------------

      As of December 29, 2001, we employed approximately 12,000 persons as part
of our continuing operations.

(d)   Financial Information About Geographic Areas
      --------------------------------------------

      Financial information about geographic areas is summarized in Note 3 to
Consolidated Financial Statements in our 2001 Annual Report to Shareholders,
which information is incorporated in this document by reference.

(e)   Executive Officers of the Registrant
      ------------------------------------

                                   Present Title (Fiscal Year First Became
      Name                   Age   Executive Officer)
      --------------------------------------------------------------------------

      Richard F. Syron        58   Chief Executive Officer and Chairman of the
                                   Board (1999)
      Marijn E. Dekkers       44   President and Chief Operating Officer (2000)
      Guy Broadbent           38   Vice President; President, Optical
                                   Technologies (2001)
      Marc N. Casper          33   Vice President; President, Life Sciences
                                   (2001)
      Barry S. Howe           46   Vice President; President, Measurement and
                                   Control (2001)
      Theo Melas-Kyriazi      42   Vice President and Chief Financial Officer
                                   (1998)
      Seth H. Hoogasian       47   Vice President, General Counsel, and
                                   Secretary (2001)
      Peter E. Hornstra       42   Corporate Controller and Chief Accounting
                                   Officer (2001)

      Mr. Syron was appointed President and Chief Executive Officer in June 1999
and Chairman of the Board in January 2000.  From April 1994 until May 1999, Mr.
Syron was the Chairman and Chief Executive Officer of the American Stock
Exchange Inc.

      Mr. Dekkers was appointed President and Chief Operating Officer in July
2000. From June 1999 to June 2000 Mr. Dekkers served as president of Honeywell
International's (formerly Allied Signal) electronic materials division, from
August 1997 to May 1999 he served as vice president and general manager of its
fluorine products division, and from July 1995 to July 1997 he served as vice
president and general manager of its specialty films division.

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                                       9
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      Mr. Broadbent was appointed Vice President of Thermo Electron in January
2001 and President, Optical Technologies in October 2000. From May 2000 to
October 2000, Mr. Broadbent was vice president and general manager of the
amorphous metals division of Honeywell International and from November 1998 to
April 2000 he was business director for Honeywell International's specialty
fluorine division. From June 1996 to October 1998, he was the marketing manager
of new business development of the plastics division of General Electric
Company. He also served as product manager of this division from December 1994
to May 1996.

      Mr. Casper was appointed Vice President of Thermo Electron and President,
Life Sciences in December 2001.  From July 2000 to July 2001, Mr. Casper was
president and chief executive officer of Kendro Laboratory Products, a life
sciences company that provides sample-preparation and processing equipment.
From May 1999 to June 2000, Mr. Casper was president for the Americas at Dade
Behring Inc., a manufacturer of products for the clinical-diagnosis market.
From January 1997 to May 1999, Mr. Casper was executive vice president for
Europe, Asia, and Intercontinental at Dade Behring Inc.  From June 1995 to
December 1996, Mr. Casper worked at Bain Capital as a member of the portfolio
management group.

      Mr. Howe was appointed Vice President of Thermo Electron in January 2001
and President, Measurement and Control in October 2000. Since 1995, Mr. Howe has
held various operating positions at Thermo Electron. These included President,
Optical Technologies from February 2000 to October 2000; President and Chief
Executive Officer of its Thermo Optek Corporation subsidiary from March 1999 to
February 2000; President and Chief Executive Officer of its ThermoSpectra
Corporation subsidiary from March 1998 to March 1999; and President and Chief
Executive Officer of its Thermo BioAnalysis Corporation subsidiary from February
1995 to March 1998.

      Mr. Melas-Kyriazi was appointed Chief Financial Officer in January 1999.
He joined the company in 1986 as Assistant Treasurer and served as Treasurer
from 1988 until 1994. He was named President and Chief Executive Officer of the
company's ThermoSpectra subsidiary in 1994, a position he held until becoming
Vice President of Corporate Strategy for Thermo Electron in 1998.

      Mr. Hoogasian was appointed General Counsel in 1992, Vice President in
1996, and Secretary in 2001.

      Mr. Hornstra was appointed Chief Accounting Officer in January 2001 and
Corporate Controller in 1996.  From 1995 until 1996 Mr. Hornstra was Assistant
Corporate Controller.

Item 2.  Properties
         ----------

      The location and general character of our principal properties by sector
as of December 29, 2001, are as follows:

Life Sciences

      We own approximately 1,079,000 square feet of office, engineering,
laboratory, and production space, principally in Ohio, California,
Massachusetts, Pennsylvania, Texas, Italy, and Germany. We lease approximately
1,115,000 square feet of office, engineering, laboratory, and production space,
principally in Massachusetts, Texas, New York, Virginia, Finland, England, and
France, under various leases that expire between 2002 and 2015.

Optical Technologies

      We own approximately 664,000 square feet of office, engineering,
laboratory, and production space, principally in New Hampshire, California,
Wisconsin, Arizona, Colorado, and Germany. We lease approximately 655,000 square
feet of office, engineering, laboratory, and production space, principally in
California, Massachusetts, and England, under various leases that expire between
2002 and 2016.


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Measurement and Control

      We own approximately 765,000 square feet of office, engineering,
laboratory, and production space, principally in Wisconsin, Minnesota, New York,
New Mexico, Germany, and Switzerland. We lease approximately 1,458,000 square
feet of office, engineering, laboratory, and production space, principally in
Massachusetts, Texas, California, Maryland, England, the Netherlands, Canada,
and Australia, under various leases that expire between 2002 and 2030.

Corporate Headquarters

      We own approximately 81,000 square feet of office space in Massachusetts
and lease approximately 18,000 square feet of office space in Massachusetts
under a lease that expires in 2004.

      We believe that all these facilities are in good condition and are
suitable and adequate to meet our current needs. If we are unable to renew any
of the leases that are due to expire in the next year or two, we believe that
suitable replacement properties are available on commercially reasonable terms.

Item 3.  Legal Proceedings
         -----------------

      Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

      Not applicable.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters
         ---------------------------------------------------------------------

      Information concerning the market and market price for our common stock,
and our dividend policy, is included under the sections labeled "Common Stock
Market Information" and "Dividend Policy" in our 2001 Annual Report to
Shareholders, which information is incorporated in this document by reference.

Item 6.  Selected Financial Data
         -----------------------

      This data is included under the sections labeled "Selected Financial
Information" and "Dividend Policy" in our 2001 Annual Report to Shareholders,
which data is incorporated in this document by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations
         -----------------------------------------------------------------------

      This information is included under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in our 2001
Annual Report to Shareholders, which information is incorporated in this
document by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

      These disclosures are included under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in our 2001
Annual Report to Shareholders, which disclosures are incorporated in this
document by reference.

Item 8.  Financial Statements and Supplementary Data
         -------------------------------------------

      This data is included in our 2001 Annual Report to Shareholders, which
data is incorporated in this document by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosures
         -----------------------------------------------------------------------

      Not Applicable.

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                                       11
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                                    PART III


Item 10.  Directors and Executive Officers of the Registrant
          --------------------------------------------------

      The information with respect to Directors is listed under the caption
"Election of Directors" in our definitive proxy statement to be filed with the
Securities and Exchange Commission (SEC), not later than 120 days after the
close of the fiscal year. This information is incorporated in this document by
reference.

      We are also required, under Item 405 of Registration S-K, to provide
information concerning delinquent filers of reports under Section 16 of the
Securities Exchange Act of 1934, as amended. This information is listed under
the heading "Section 16(a) Beneficial Ownership Reporting Compliance" under the
caption "Stock Ownership" in our definitive proxy statement to be filed with the
SEC, not later than 120 days after the close of the fiscal year. This
information is incorporated in this document by reference.

Item 11.  Executive Compensation
          ----------------------

      This information is listed under the caption "Executive Compensation" in
our definitive proxy statement to be filed with the SEC, not later than 120 days
after the close of the fiscal year. This information is incorporated in this
document by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
          --------------------------------------------------------------

      This information is listed under the caption "Stock Ownership" in our
definitive proxy statement to be filed with the SEC, not later than 120 days
after the close of the fiscal year. This information is incorporated in this
document by reference.

Item 13.  Certain Relationships and Related Transactions
          ----------------------------------------------

      This information is listed under the captions "Relationship with
Affiliates" and "Compensation Committee Interlocks and Insider Participation" in
our definitive proxy statement to be filed with the SEC, not later than 120 days
after the close of the fiscal year. This information is incorporated in this
document by reference.


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                                       12
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                                     PART IV


Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
          ----------------------------------------------------------------

(a, d)  Financial Statements and Schedules
        ----------------------------------

        (1) The financial statements set forth in the list below are filed as
            part of this Report.

        (2) The financial statement schedule set forth in the list below is
            filed as part of this Report.

        (3) Exhibits filed here or incorporated here by reference are listed in
            Item 14(c) below.

        List of Financial Statements and Schedules Referenced in this Item 14
        ---------------------------------------------------------------------

        Information incorporated by reference from Exhibit 13 filed herewith:

            Consolidated Statement of Operations
            Consolidated Balance Sheet
            Consolidated Statement of Cash Flows
            Consolidated Statement of Comprehensive Loss and Shareholders'
              Investment
            Notes to Consolidated Financial Statements
            Report of Independent Public Accountants

        Financial Schedule included herewith:

            Schedule II:  Valuation and Qualifying Accounts

        All other schedules are omitted because they are not applicable or not
        required, or because the required information is shown either in the
        financial statements or in the notes thereto.

(b)     Reports on Form 8-K
        -------------------

        On October 12, 2001, the company filed a Current Report on Form 8-K with
        respect to the Board of Director's approval of the distribution of all
        of the shares of common stock of Viasys Healthcare Inc. held by the
        company to holders of record of Thermo Electron's common stock as of
        November 7, 2001.

        On November 2, 2001, the company filed a Current Report on Form 8-K with
        respect to the Information Statement detailing the distribution of the
        shares of common stock of Viasys Healthcare Inc. held by Thermo
        Electron.

        On November 2, 2001, the company filed a Current Report on Form 8-K with
        respect to the company's financial results for the quarter ended
        September 29, 2001.

        On November 16, 2001, the company filed a Current Report on Form 8-K
        with respect to the distribution on November 15, 2001, of 0.1461 of a
        share of common stock of Viasys Healthcare Inc. as a dividend on each
        share of the company's common stock outstanding as of November 7, 2001.

(c)     Exhibits
        --------

        See the Exhibit Index on page 17.


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                                       13
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                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:  March 15, 2002                              THERMO ELECTRON CORPORATION

                                                   By: /s/ Richard F. Syron
                                                       -------------------------
                                                       Richard F. Syron
                                                       Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of March 15, 2002.

Signature                        Title
- --------------------------------------------------------------------------------

By:  /s/ Richard F. Syron        Chairman of the Board, Chief Executive Officer,
     Richard F. Syron            and Director (Principal Executive Officer)

By:  /s/ Theo Melas-Kyriazi      Vice President and Chief Financial Officer
     Theo Melas-Kyriazi

By:  /s/ Peter E. Hornstra       Corporate Controller and Chief Accounting
     Peter E. Hornstra           Officer

By:  /s/ Peter O. Crisp          Director
     Peter O. Crisp

By:  /s/ Marijn E. Dekkers       President, Chief Operating Officer, and
     Marijn E. Dekkers           Director

By:  /s/ Frank Jungers           Director
     Frank Jungers

By:  /s/ John L. LaMattina       Director
     John L. LaMattina

By:  /s/ Jim P. Manzi            Director
     Jim P. Manzi

By:  /s/ Robert A. McCabe        Director
     Robert A. McCabe

By:  /s/ Hutham S. Olayan        Director
     Hutham S. Olayan

By:  /s/ Robert W. O'Leary       Director
     Robert W. O'Leary

By:  /s/ Michael E. Porter       Director
     Michael E. Porter

By:  /s/ Elaine S. Ullian        Director
     Elaine S. Ullian


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                                       14
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                    Report of Independent Public Accountants
                    ----------------------------------------


To the Shareholders and Board of Directors of Thermo Electron Corporation:

      We have audited in accordance with auditing standards generally accepted
in the United States, the consolidated financial statements included in Thermo
Electron Corporation's Annual Report to Shareholders incorporated by reference
in this Form 10-K, and have issued our report thereon dated February 7, 2002
(except with respect to the matters discussed in Note 19, as to which the date
is February 25, 2002). Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The schedule listed in Item 14 on
page 13 is the responsibility of the company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic consolidated financial statements. This schedule has been
subjected to the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.



                                                            Arthur Andersen LLP


Boston, Massachusetts
February 7, 2002

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<TABLE>
<CAPTION>
<S>                                     <C>          <C>         <C>         <C>         <C>       <C>


SCHEDULE II

                                       Thermo Electron Corporation

                                    Valuation and Qualifying Accounts
                                              (In thousands)



                                    Balance at   Provision                Accounts                 Balance
                                     Beginning  Charged to    Accounts     Written                  at End
Description                            of Year     Expense   Recovered         Off   Other (a)     of Year
- ----------------------------------------------------------------------------------------------------------

Allowance for Doubtful Accounts

Year Ended December 29, 2001          $ 30,593    $  6,316    $     23    $ (8,147)   $ (2,260)   $ 26,525

Year Ended December 30, 2000          $ 33,650    $  9,264    $    450    $ (7,211)   $ (5,560)   $ 30,593

Year Ended January 1, 2000            $ 26,938    $  8,614    $    253    $ (8,908)   $  6,753    $ 33,650




                                            Balance at   Established    Activity                   Balance
                                             Beginning    as Cost of  Charged to                    at End
Description                                    of Year  Acquisitions     Reserve    Other (c)      of Year
- ----------------------------------------------------------------------------------------------------------

Accrued Acquisition Expenses (b)

Year Ended December 29, 2001                  $ 10,070      $    144    $ (1,920)    $ (1,190)    $  7,104

Year Ended December 30, 2000                  $ 19,445      $    352    $ (6,445)    $ (3,282)    $ 10,070

Year Ended January 1, 2000                    $ 16,284      $ 17,252    $ (11,539)   $ (2,552)    $ 19,445



                                            Balance at     Provision    Activity                   Balance
                                             Beginning    Charged to  Charged to                    at End
Description                                    of Year   Expense (e)     Reserve    Other (f)      of Year
- ----------------------------------------------------------------------------------------------------------

Accrued Restructuring Costs (d)

Year Ended December 29, 2001                  $ 21,024      $ 76,314    $(35,747)    $   (906)    $ 60,685

Year Ended December 30, 2000                  $  5,425      $ 35,785    $(20,216)    $     30     $ 21,024

Year Ended January 1, 2000                    $ 11,320      $  5,931    $(11,177)    $   (649)    $  5,425

(a) Includes allowance of businesses, acquired and sold during the year as described in Note 2 to
    Consolidated Financial Statements in our 2001 Annual Report to Shareholders and the effect of currency
    translation.
(b) The nature of activity in this account is described in Note 2 to Consolidated Financial Statements in
    our 2001 Annual Report to Shareholders.
(c) Represents reversal of accrued acquisition expenses and corresponding reduction of goodwill or other
    intangible assets resulting from finalization of restructuring plans, the effect of currency
    translation and, in 2001 and 2000, the reserves of businesses sold.
(d) The nature of activity in this account is described in Note 15 to Consolidated Financial Statements in
    our 2001 Annual Report to Shareholders.
(e) In 2001, excludes $51.1 million of noncash costs, net, primarily for asset writedowns, and excludes a
    $5.9 million loss on litigation. In 2000, excludes $104.6 million of noncash income, net, primarily
    from the sale of businesses, offset by provisions for asset writedowns, and excludes $0.8 million of
    cash costs related to two lawsuits. In 1999, includes the reversal of $2.3 million of previously
    recorded restructuring costs, and excludes provisions of $31.4 million primarily for asset writedowns.
(f) Represents the effect of currency translation.

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                                       16
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                                  EXHIBIT INDEX
Exhibit
Number         Description of Exhibit
- --------------------------------------------------------------------------------

   3.1         Amended and Restated Certificate of Incorporation of the
               Registrant, (filed as Exhibit 1 to the Registrant's Amendment
               No. 3 to Registration Statement on Form 8-A/A [File No. 1-8002]
               and incorporated in this document by reference).

   3.2         By-laws of the Registrant, as amended and effective as of
               February 7, 2002.

   4.1         Fiscal Agency Agreement dated as of January 3, 1996, between the
               Registrant and Chemical Bank pertaining to the Registrant's 4
               1/4% Subordinated Convertible Debentures due 2003 (filed as
               Exhibit 4.1 to the Registrant's Annual Report on Form 10-K for
               the fiscal year ended December 30, 1995 [File No. 1-8002] and
               incorporated in this document by reference).

               The Registrant agrees, pursuant to Item 601(b)(4)(iii)(A) of
               Regulation S-K, to furnish to the Commission upon request, a copy
               of each instrument with respect to other long-term debt of the
               Registrant or its consolidated subsidiaries.

   4.2         Rights Agreement dated as of October 29, 2001, between the
               Registrant and American Stock Transfer & Trust Company, which
               includes as Exhibit A the Form of Certificate of Designations, as
               Exhibit B the Form of Rights Certificate, and as Exhibit C the
               Summary of Rights to Purchase Preferred Stock.

   4.3         Amendment No. 1 to Rights Agreement dated as of February 7, 2002,
               between the Registrant and American Stock Transfer & Trust
               Company.

  10.1         Thermo Electron Corporate Charter as amended and restated
               effective January 3, 1993 (filed as Exhibit 10.1 to the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               January 2, 1993 [File No. 1-8002] and incorporated in this
               document by reference).

  10.2         Thermo Electron Corporation Executive Retention Plan/Form of
               Executive Retention Agreement (filed as Exhibit 10.1 to the
               Registrant's Quarterly Report on Form 10-Q for the quarter ended
               October 3, 1998 [File No. 1-8002] and incorporated in this
               document by reference). (Each executive officer has a two-year
               agreement except Mr. Richard F. Syron and Mr. Marijn Dekkers,
               each of whom has a three-year agreement, and Mr. Peter E.
               Hornstra who has a one-year agreement.)

  10.3         Executive Severance Agreement dated as of January 27, 2000,
               between the Registrant and Theo Melas-Kyriazi.

  10.4         Revolving Credit Facility Letters from Barclays Bank PLC in favor
               of the Registrant and its subsidiaries (filed as Exhibit 10.8 to
               the Registrant's Annual Report on Form 10-K for the year ended
               January 3, 1998 [File No. 1-8002] and incorporated in this
               document by reference).

  10.5         Stock Holdings Assistance Plan and Form of Promissory Note (filed
               as Exhibit 10.9 to the Registrant's Annual Report on Form 10-K
               for the year ended January 3, 1998 [File No. 1-8002] and
               incorporated in this document by reference).

  10.6         Amended and Restated Deferred Compensation Plan for Directors of
               the Registrant (filed as Exhibit 10.1 to the Registrant's
               Quarterly Report on Form 10-Q for the quarter ended July 3, 1999
               [File No. 1-8002] and incorporated in this document by
               reference).


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                                       17
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                                  EXHIBIT INDEX

Exhibit
Number         Description of Exhibit
- --------------------------------------------------------------------------------

  10.7         Thermo Electron Corporation Directors Stock Option Plan, as
               amended and restated as of February 7, 2002.

  10.8         Incentive Stock Option Plan of the Registrant (filed as Exhibit
               4(d) to the Registrant's Registration Statement on Form S-8 [Reg.
               No. 33-8993] and incorporated in this document by reference).

  10.9         Amended and Restated Nonqualified Stock Option Plan of the
               Registrant (filed as Exhibit 10.3 to the Registrant's Quarterly
               Report on Form 10-Q for the quarter ended July 3, 1999 [File No.
               1-8002] and incorporated in this document by reference). (Plan
               amended in 1984 to extend expiration date to December 14, 1994.)

  10.10        Thermo Electron Corporation Equity Incentive Plan, as amended and
               restated as of February 7, 2002.

  10.11        Thermo Electron Corporation 2001 Equity Incentive Plan, as
               amended and restated as of February 7, 2002.

  10.12        Thermo Electron Corporation Employees Equity Incentive Plan, as
               amended and restated as of February 7, 2002.

  10.13        Thermo Electron Corporation Deferred Compensation Plan, effective
               November 1, 2001.

  10.14        Amended and Restated Thermo Electron Corporation - Thermo
               TerraTech Inc. Nonqualified Stock Option Plan (filed as Exhibit
               10.7 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On September 22, 2000, Thermo
               TerraTech merged with Thermo Electron and all outstanding options
               granted under this plan were assumed by Thermo Electron.)

  10.15        Amended and Restated Thermo Electron Corporation - Thermo Power
               Corporation Nonqualified Stock Option Plan (filed as Exhibit 10.8
               to the Registrant's Quarterly Report on Form 10-Q for the quarter
               ended July 3, 1999 [File No. 1-8002] and incorporated in this
               document by reference). (On October 28, 1999, Thermo Power merged
               with Thermo Electron and all outstanding options granted under
               this plan were assumed by Thermo Electron.)

  10.16        Amended and Restated Thermo Electron Corporation - Thermo Ecotek
               Corporation Nonqualified Stock Option Plan (filed as Exhibit
               10.10 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On August 10, 2000, Thermo Ecotek
               merged with Thermo Electron and all outstanding options granted
               under this plan were assumed by Thermo Electron.)

  10.17        Amended and Restated Thermo Electron Corporation - ThermoTrex
               Corporation Nonqualified Stock Option Plan (filed as Exhibit
               10.11 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On August 14, 2000, ThermoTrex
               merged with Thermo Electron and all outstanding options granted
               under this plan were assumed by Thermo Electron.)

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                                       18
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                                  EXHIBIT INDEX

Exhibit
Number         Description of Exhibit
- --------------------------------------------------------------------------------

  10.18        Amended and Restated Thermo Electron Corporation - Thermo
               BioAnalysis Corporation Nonqualified Stock Option Plan (filed as
               Exhibit 10.14 to the Registrant's Quarterly Report on Form 10-Q
               for the quarter ended July 3, 1999 [File No. 1-8002] and
               incorporated in this document by reference). (On April 19, 2000,
               Thermo BioAnalysis merged with Thermo Instrument Systems Inc. and
               on June 30, 2000, Thermo Instrument merged with Thermo Electron
               and all outstanding options granted under this plan were
               ultimately assumed by Thermo Electron.)

  10.19        Amended and Restated Thermo Electron Corporation - ThermoLase
               Corporation Nonqualified Stock Option Plan (filed as Exhibit
               10.18 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On August 14, 2000, ThermoLase
               merged with Thermo Electron and all outstanding options granted
               under this plan were assumed by Thermo Electron.)

  10.20        Amended and Restated Thermo Electron Corporation - ThermoQuest
               Corporation Nonqualified Stock Option Plan (filed as Exhibit
               10.19 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On May 11, 2000, ThermoQuest merged
               with Thermo Instrument and on June 30, 2000, Thermo Instrument
               merged with Thermo Electron and all outstanding options granted
               under this plan were ultimately assumed by Thermo Electron.)

  10.21        Amended and Restated Thermo Electron Corporation - Thermo Optek
               Corporation Nonqualified Stock Option Plan (filed as Exhibit
               10.20 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On May 11, 2000, Thermo Optek
               merged with Thermo Instrument and on June 30, 2000, Thermo
               Instrument merged with Thermo Electron and all outstanding
               options granted under this plan were ultimately assumed by Thermo
               Electron.)

  10.22        Amended and Restated Thermo Electron Corporation - Thermo Sentron
               Inc. Nonqualified Stock Option Plan (filed as Exhibit 10.21 to
               the Registrant's Quarterly Report on Form 10-Q for the quarter
               ended July 3, 1999 [File No. 1-8002] and incorporated in this
               document by reference). (On April 4, 2000, Thermo Sentron merged
               with Thermedics Inc. and on June 30, 2000, Thermedics merged with
               Thermo Electron and all outstanding options granted under this
               plan were ultimately assumed by Thermo Electron.)

  10.23        Amended and Restated Thermo Electron Corporation - Trex Medical
               Corporation Nonqualified Stock Option Plan (filed as Exhibit
               10.22 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On November 29, 2000, Trex Medical
               merged with Thermo Electron and all outstanding options granted
               under this plan were assumed by Thermo Electron.)

  10.24        Amended and Restated Thermo Electron Corporation - Thermedics
               Detection Inc. Nonqualified Stock Option Plan (filed as Exhibit
               10.24 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On April 12, 2000, Thermedics
               Detection merged with Thermedics and on June 30, 2000, Thermedics
               merged with Thermo Electron and all outstanding options granted
               under this plan were ultimately assumed by Thermo Electron.)

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                                       19
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                                  EXHIBIT INDEX

Exhibit
Number         Description of Exhibit
- --------------------------------------------------------------------------------

  10.25        Amended and Restated Thermo Electron Corporation - Thermo Vision
               Corporation Nonqualified Stock Option Plan (filed as Exhibit
               10.26 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 3, 1999 [File No. 1-8002] and incorporated in
               this document by reference). (On January 6, 2000, Thermo Vision
               merged with Thermo Instrument and on June 30, 2000, Thermo
               Instrument merged with Thermo Electron and all outstanding
               options granted under this plan were ultimately assumed by Thermo
               Electron.)

  10.26        Amended and Restated Thermo Electron Corporation - ONIX Systems
               Inc. Nonqualified Stock Option Plan (filed as Exhibit 10.27 to
               the Registrant's Quarterly Report on Form 10-Q for the quarter
               ended July 3, 1999 [File No. 1-8002] and incorporated in this
               document by reference). (On April 12, 2000, ONIX merged with
               Thermo Instrument and on June 30, 2000, Thermo Instrument merged
               with Thermo Electron and all outstanding options granted under
               this plan were ultimately assumed by Thermo Electron.)

  10.27        Amended and Restated Thermo Electron Corporation - The Randers
               Killam Group Inc. Nonqualified Stock Option Plan (filed as
               Exhibit 10.28 to the Registrant's Quarterly Report on Form 10-Q
               for the quarter ended July 3, 1999 [File No. 1-8002] and
               incorporated in this document by reference). (On May 15, 2000,
               Randers Killam merged with Thermo TerraTech and on September 22,
               2000, Thermo TerraTech merged with Thermo Electron and all
               outstanding options granted under this plan were ultimately
               assumed by Thermo Electron.)

  10.28        Amended and Restated Thermo Electron Corporation - Trex
               Communications Corporation Nonqualified Stock Option Plan (filed
               as Exhibit 10.29 to the Registrant's Quarterly Report on Form
               10-Q for the quarter ended July 3, 1999 [File No. 1-8002] and
               incorporated in this document by reference). (On November 8,
               1999, Trex Communications merged with ThermoTrex and on August
               14, 2000, ThermoTrex merged with Thermo Electron and all
               outstanding options granted under this plan were ultimately
               assumed by Thermo Electron.)

  10.29        1997 Spectra-Physics Lasers, Inc. Stock Option Plan (filed as
               Exhibit 10.6 of Amendment No. 1 to Spectra-Physics Lasers, Inc.'s
               Registration Statement on Form S-1 [File No. 333-38329] and
               incorporated in this document by reference).  (On February 25,
               2002, Spectra-Physics merged with Thermo Electron and all
               outstanding options granted under this plan were assumed by
               Thermo Electron.)

  10.30        2000 Spectra-Physics Lasers, Inc. Stock Option Plan (filed as
               Exhibit 10.1 to Spectra-Physics Quarterly Report on Form 10-Q for
               the quarter ended September 30, 2000 [File No. 000-23461] and
               incorporated in this document by reference). (On February 25,
               2002, Spectra-Physics merged with Thermo Electron and all
               outstanding options granted under this plan were assumed by
               Thermo Electron.)

  10.31        Description of Amendments to Certain Stock Option Plans made in
               February 2002.

  10.32        Form of Indemnification Agreement between the Registrant and the
               directors and officers of its majority-owned subsidiaries (filed
               as Exhibit 10.1 to the Registrant's Registration Statement on
               Form S-4 [Reg. No. 333-90661] and incorporated in this document
               by reference).

<
                                       20
<PAGE>
>
                                  EXHIBIT INDEX

Exhibit
Number         Description of Exhibit
- --------------------------------------------------------------------------------

  10.33        Form of Amended and Restated Indemnification Agreement between
               the Registrant and its directors and officers (filed as Exhibit
               10.2 to the Registrant's Registration Statement on Form S-4 [Reg.
               No. 333-90661] and incorporated in this document by reference).

  10.34        Executive Severance Agreement dated as of January 27, 2000,
               between the Registrant and Seth H. Hoogasian.

  10.35        Employment and Consulting Agreement dated as of March 31, 2000,
               between the Registrant and George N. Hatsopoulos (filed as
               Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
               for the quarter ended April 1, 2000 [File No. 1-8002] and
               incorporated in this document by reference).

  10.36        Transaction Bonus Letter Agreement dated May 18, 2000, between
               the Registrant and Brian D. Holt.

  10.37        Letter agreement dated July 10, 2000, between the Registrant and
               Earl R. Lewis pertaining to his resignation (filed as Exhibit
               10.1 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 1, 2000 [File No. 1-8002] and incorporated in
               this document by reference).

  10.38        Executive Severance Agreement dated as of January 27, 2000, by
               and between the Registrant and Brian D. Holt (filed as Exhibit
               10.2 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended July 1, 2000 [File No. 1-8002] and incorporated in
               this document by reference).

  10.39        Employment Agreement between the Registrant and Marijn Dekkers
               (filed as Exhibit 10.1 to the Registrant's Quarterly Report on
               Form 10-Q for the quarter ended September 30, 2000 [File No.
               1-8002] and incorporated in this document by reference).

  10.40        Amended and Restated Employment Agreement dated as of July 11,
               2000, between the Registrant and Mr. Richard F. Syron (filed as
               Exhibit 10.38 to the Registrant's Annual Report on Form 10-K for
               the fiscal year ended December 30, 2000 [File No. 1-8002] and
               incorporated in this document by reference).

  10.41        Executive Severance Agreement dated January 25, 2001, by and
               between the Registrant and Mr. John T. Keiser (filed as Exhibit
               10.39 to the Registrant's Annual Report on Form 10-K for the
               fiscal year ended December 30, 2000 [File No. 1-8002] and
               incorporated in this document by reference).

  10.42        Employment Offer Letter dated October 3, 2000, between the
               Registrant and Mr. Guy Broadbent (filed as Exhibit 10.40 to the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               December 30, 2000 [File No. 1-8002] and incorporated in this
               document by reference).

  10.43        Amendment to Amended and Restated Employment Agreement dated as
               of March 14, 2001, between the Registrant and Mr. Richard F.
               Syron (filed as Exhibit 10.41 to the Registrant's Annual Report
               on Form 10-K for the fiscal year ended December 30, 2000 [File
               No. 1-8002] and incorporated in this document by reference).

  10.44        Retention Agreement dated January 31, 2000, between the
               Registrant and Mr. Peter E. Hornstra (filed as Exhibit 10.42 to
               the Registrant's Annual Report on Form 10-K for the fiscal year
               ended December 30, 2000 [File No. 1-8002] and incorporated in
               this document by reference).

<
                                       21
<PAGE>
>
                                  EXHIBIT INDEX

Exhibit
Number         Description of Exhibit
- --------------------------------------------------------------------------------

  10.45        Plan and Agreement of Distribution dated August 3, 2001, between
               the Registrant and Kadant Inc. (filed as Exhibit 99.3 to the
               Registrant's Current Report on Form 8-K dated August 6, 2001
               [File No. 1-8002] and incorporated in this document by reference).

  10.46        Tax Matters Agreement effective as of August 8, 2001, between the
               Registrant and Kadant Inc. (filed as Exhibit 99.4 to the
               Registrant's Current Report on Form 8-K dated August 6, 2001
               [File No. 1-8002] and incorporated in this document by
               reference).

  10.47        Transition Services Agreement dated August 3, 2001, between the
               Registrant and Kadant Inc. (filed as Exhibit 99.5 to the
               Registrant's Current Report on Form 8-K dated August 6, 2001
               [File No. 1-8002] and incorporated in this document by reference).

  10.48        Amendment to the Plan and Agreement of Distribution dated
               December 27, 2001, between the Registrant and Kadant Inc.

  10.49        Executive Severance Agreement dated as of September 21, 2001, by
               and between the Registrant and Brian D. Holt (filed as Exhibit
               10.1 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended September 29, 2001 [File No. 1-8002] and
               incorporated in this document by reference).

  10.50        Executive Severance Agreement dated as of October 30, 2001, by
               and between the Registrant and Colin Maddix (filed as Exhibit
               10.2 to the Registrant's Quarterly Report on Form 10-Q for the
               quarter ended September 29, 2001 [File No. 1-8002] and
               incorporated in this document by reference).

  10.51        Plan and Agreement of Distribution dated November 15, 2001,
               between the Registrant and Viasys Healthcare Inc. (filed as
               Exhibit 99.2 to the Registrant's Current Report on Form 8-K dated
               November 15, 2001 [File No. 1-8002] and incorporated in this
               document by reference).

  10.52        Tax Matters Agreement dated November 15, 2001, between the
               Registrant and Viasys Healthcare Inc. (filed as Exhibit 99.3 to
               the Registrant's Current Report on Form 8-K dated November 15,
               2001 [File No. 1-8002] and incorporated in this document by
               reference).

  10.53        Transition Services Agreement dated November 15, 2001, between
               the Registrant and Viasys Healthcare Inc. (filed as Exhibit 99.4
               to the Registrant's Current Report on Form 8-K dated November 15,
               2001 [File No. 1-8002] and incorporated in this document by
               reference).

  10.54        Employment Agreement dated as of November 29, 2001, between the
               Registrant and Marc N. Casper.

  10.55        Letter Agreement dated as of November 27, 2001, among SPX
               Corporation, Kendro Laboratory Products, L.P., the Registrant,
               and Marc N. Casper.

  13           Annual Report to Shareholders for the year ended December 29,
               2001 (only those portions incorporated in this document by
               reference).

  21           Subsidiaries of the Registrant.

  23           Consent of Arthur Andersen LLP.



</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.48
<SEQUENCE>2
<FILENAME>tmok01ex10-48.txt
<TEXT>
                                                                   Exhibit 10.48


                               FIRST AMENDMENT TO
                       PLAN AND AGREEMENT OF DISTRIBUTION


     This  first  amendment  TO THE Plan and  Agreement  of  Distribution  (this
"Amendment") is made as of the 27th day of December,  2001 by and between Thermo
Electron  Corporation,  a Delaware corporation  ("Thermo Electron"),  and Kadant
Inc., a Delaware corporation  ("Kadant").  Capitalized terms used herein without
definition  shall  have  the  same  meanings  ascribed  to  such  terms  in  the
Distribution Agreement (as defined below).

                                    RECITALS

     WHEREAS,  Thermo  Electron  and Kadant are parties to that certain Plan and
Agreement  of  Distribution  dated  as of  August  3,  2001  (the  "Distribution
Agreement");

     WHEREAS,  the parties hereto desire to amend the Distribution  Agreement as
herein provided:

     NOW THEREFORE,  in consideration of the covenants and agreements  contained
herein  and  for  other  good  and  valuable  consideration,   the  receipt  and
sufficiency of which is hereby acknowledged,  the parties hereto hereby agree as
follows:

     1. That  Section  9.6(a)  of the  Distribution  Agreement  is  amended  and
restated in its entirety to read as follows:

     "9.6 Financial Covenants.

          (a) Kadant will not, for so long as the  guarantee by Thermo  Electron
of obligations under the Kadant Debentures is outstanding:

               (i)  permit Net Debt  divided by Net  Capital to be greater  than
                    40% measured at the end of each fiscal quarter commencing on
                    September 29, 2001; or

               (ii) permit the  quotient  obtained  by  dividing  (x) the sum of
                    EBITA and Interest Income by (y) Interest Expense to be less
                    than  4.0,  measured  at the  end  of  each  fiscal  quarter
                    commencing  on  September  29, 2001 on an  annualized  basis
                    using  the  quarter  then  ended  and  the  previous   three
                    quarters.

               Notwithstanding  the foregoing,  in the event that the percentage
calculated in paragraph (i) of this Section 9.6 is less than or equal to 20% for
any measurement date, the required quotient  specified in paragraph (ii) of this
Section 9.6 shall be lowered from 4.0 to 3.0 (measured at the end of each fiscal

<PAGE>

quarter on an  annualized  basis using the quarter  then ended and the  previous
three quarters) for such period."

     2. This Amendment and the rights and  obligations of the parties  hereunder
shall be construed in  accordance  with and governed by the laws of the State of
Delaware.

     3. This Amendment may be executed in  counterparts,  each of which shall be
considered an original,  but all of which together shall  constitute one and the
same agreement.

     4. At all  times  on and  after  the date  hereof,  all  references  in the
Distribution  Agreement and each of the Ancillary Agreements to the Distribution
Agreement shall be deemed to be references to such Distribution  Agreement after
giving effect to this Amendment.



                   [REMAINDER OF PAGE INTENTIONALY LEFT BLANK]



<PAGE>


     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first set forth above.



                                THERMO ELECTRON CORPORATION



                                By:     /s/ Kenneth J. Apicerno
                                        ----------------------------
                                Name:   Kenneth J. Apicerno
                                Title:  Treasurer



                                KADANT INC.


                                By:     /s/ Thomas M. O'Brien
                                        ----------------------------
                                Name:   Thomas M. O'Brien
                                Title:  Executive Vice President and CFO



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.54
<SEQUENCE>3
<FILENAME>tmok01ex10-54.txt
<TEXT>
                                                                   Exhibit 10.54



                                                     November 29, 2001


Mr. Marc N. Casper
144 Clark Road
Brookline, MA 02445


Dear Marc:

     I am pleased to offer you a position as Vice  President of Thermo  Electron
Corporation  and  President  of the Life  Sciences  Sector  of  Thermo  Electron
Corporation, effective November 26, 2001, and subject to the terms of the letter
agreement  among SPX  Corporation  ("SPX"),  Kendro  Laboratory  Products,  L.P.
("Kendro"),  Thermo  Electron  Corporation  ("Thermo  Electron"),  and you dated
November 27, 2001 (the "SPX  Letter").  This offer is expressly  conditioned  on
obtaining  approval  at  the  next  meeting  of the  Thermo  Electron  Board  of
Directors, scheduled to meet on November 29, 2001.

     The salary for the position will be at a rate of $300,000 per year, subject
to annual review beginning in 2003 as described below. In addition,  you will be
eligible for an annual  incentive  award in  accordance  with Thermo  Electron's
policies for annual incentives to professional  employees. To be eligible for an
annual  incentive  award,  you  must  be  actively  employed  at the  end of the
incentive  period.  Your  annual  reference  bonus for  purposes  of the  annual
incentive award will be $150,000  (beginning in 2003), with a multiplier of zero
to two based on a combination of subjective and objective  factors.  You will be
eligible for review of your  compensation  package beginning in 2003 at the time
Thermo Electron reviews all officers, which is usually in the first quarter.

     In addition,  you will receive a $200,000 one-time bonus payable in January
2002 with respect to your  performance  in 2002.  Should you  voluntarily  leave
Thermo  Electron  before January 1, 2003 without good reason (as defined below),
you will be responsible for repaying a pro-rated portion of the sign-on bonus to
Thermo Electron.

     You will receive,  upon commencement of employment,  a non-statutory option
for 275,000 shares, which shares shall vest on a cumulative basis at the rate of
one-third per annum on each anniversary  date of your  employment.  Your options
will be evidenced by a Stock Option  Agreement in the form of Exhibit A attached
hereto.  Additional stock option grants would be at the discretion of the Thermo
Electron Board of Directors.


<PAGE>


Mr. Marc N. Casper
November 29, 2001
Page 2

     You  will  be  entitled  to four  weeks  vacation  each  year,  accrued  in
accordance  with Thermo  Electron's  vacation  policy,  together with such other
benefits as are generally made available to professional  employees and officers
of Thermo Electron,  including Thermo Electron's car lease/allowance program and
its Executive Medical Supplemental Program.

     Under Thermo  Electron's car  lease/allowance  program,  you may either (i)
have the  company  lease a company  car for you,  or (ii)  receive  a  quarterly
allowance of $3,124. If you decide to have the company lease a vehicle,  you can
select the make,  model and  options as long as the vehicle is  appropriate  for
business use. If the acquisition  cost of the car exceeds  $26,000,  the balance
will be deducted from your payroll checks.  The sales tax and insurance are paid
separately by the company and are not calculated in the $26,000 limit.

     Under Thermo Electron's  Executive Medical Supplemental Program you will be
paid $1,250  quarterly,  which you can use to reduce any medical  deductible  or
co-insurance  costs that you incur.  These funds are for your discretionary use,
are not restricted to medical payments, and are taxable income.

     You will also be entitled to receive expense  reimbursement  for legal fees
incurred in the  negotiation  and preparation of this agreement up to the amount
of $5,000.

     If your employment is terminated by Thermo Electron without cause or by you
with good reason,  you will be entitled to receive a lump sum severance  payment
of eighteen months salary in lieu of any other severance benefit, except that if
your  termination  entitles you to greater  benefits under any change in control
arrangement,  you will be  entitled  to  benefits  under the  change in  control
arrangement, but not both. Upon commencement of your employment, Thermo Electron
will execute and deliver to you an Executive  Retention Agreement in the form of
Exhibit B attached hereto.

     For the purpose of this letter  "cause"  shall mean:  (i)  conviction  of a
felony or any crime involving moral turpitude,  or (ii) conduct that constitutes
gross neglect or gross misconduct,  insubordination, or a willful and deliberate
violation of a company  rule or  regulation  that results in material  injury to
Thermo Electron, and "good reason" shall mean: (i) a material diminution in your
duties or responsibilities, (ii) a downgrade in title, (iii) a reduction in your
salary,  (iv) a change in the reporting  structure so that you report to someone
other than the Chief  Operating  Officer,  or (v) a change by the company in the
location at which you  perform  your  principal  duties for the company to a new
location that is outside a radius of 50 miles of the company's  headquarters  in
Waltham, Massachusetts.
<PAGE>
Mr. Marc N. Casper
November 29, 2001
Page 3

     You will be entitled to  indemnification  if by reason of your status as an
officer of Thermo  Electron you are made or  threatened  to be made a party to a
legal  action,   on  the  terms  and   conditions  set  forth  in  the  form  of
Indemnification  Agreement  attached  hereto as Exhibit C. Thermo  Electron will
also  indemnify  you  for  any  liability,  loss,  cost  or  expense  (including
reasonable  attorneys  fees) that you  suffer or incur  with  respect to actions
brought  against  you by SPX or Kendro  for  violation  of the SPX Letter or the
Agreements (referenced in the SPX Letter) that relate to the performance of your
duties on behalf of Thermo  Electron,  including  the  exercise of any  remedies
under the SPX Letter or the  Agreements,  provided  that  Thermo  Electron  will
control the  selection of legal  counsel to represent you as well as the defense
of such actions and all decisions relating to any proposed settlement thereof.

     In accordance with Thermo Electron's  standard  employment  practices,  you
will be  required  to sign  an  agreement  covering  Thermo  Electron's  Company
Information  and  Inventions  Policy  and  Drug  Testing  Policy,  as well as an
acknowledgment  of Thermo  Electron's  policies  related to Business Conduct and
Drugs and  Alcohol  in the  Workplace,  copies of which are  attached  hereto as
Exhibits D, E, F and G. You will be required to take a  drug-screening  test for
illegal drugs and controlled substances.

     Since Thermo  Electron's  standard  policy does not provide for  agreements
guaranteeing  employment  for any  specific  period of time,  this  offer is not
intended to be  construed  as an  employment  contract  (except as  specifically
provided  herein) and your  employment will therefore be "at will." The terms of
employment  contained in this letter,  including  "at will"  status,  may not be
altered except by written agreement signed by an officer of Thermo Electron.

     Please  indicate  your  acceptance  of our offer by  signing a copy of this
letter and returning it to me. We are looking forward to your joining us.

                                Sincerely,

                                THERMO ELECTRON CORPORATION


                                /s/ Marijn Dekkers
                                ----------------------------------
                                Marijn Dekkers
                                President and COO



<PAGE>
Mr. Marc N. Casper
November 29, 2001
Page 4



Attachments:

Exhibit A:        Form of Stock Option Agreement
Exhibit B:        Form of Executive Retention Agreement
Exhibit C:        Form of Indemnification Agreement
Exhibit D:        Information and Inventions Policy
Exhibit E:        Drug Testing Policy
Exhibit F:        Business Conduct Policy
Exhibit G:        Drugs and Alcohol in the Workplace


AGREED:



/s/ Marc N. Casper
- ---------------------------
Marc N. Casper

Date: November 29, 2001
      -----------------------------------------------

<PAGE>


                                                                       Exhibit A

Grant ID # 21-0199
[A/7;POST-7/1/00;D&O]


                           THERMO ELECTRON CORPORATION

                         EMPLOYEES EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT


                                 Marc N. Casper
                                    Optionee


275,000                                                                 $22.18
Number of Shares of                                               Exercise Price
Common Stock Subject                                                  Per Share
to the Option ("Option Shares")

                                Vesting Schedule
                 # of Shares                            Vesting Date(s)

                one-third of Option Shares              11/30/02
                one-third of Option Shares              11/30/03
                one-third of Option Shares              11/30/04

November 30, 2001                                             November 30, 2008
Grant Date                                                      Expiration Date


     Thermo Electron Corporation (the "Company") confirms the grant to you of an
option  (the  "Option")  to acquire  the  number of shares of common  stock (the
"Common Stock")  specified  above, of the Company,  subject to the provisions of
the Employees Equity  Incentive Plan (the "Plan") and the terms,  conditions and
restrictions  contained in this agreement  (the  "Agreement").  You  acknowledge
receipt of the Plan and the Agreement for your records.


                                        THERMO ELECTRON CORPORATION


                                        By:     /s/ Richard F. Syron
                                                ------------------------------
                                                Richard F. Syron
                                                Chairman and Chief Executive
                                                Officer

                                       1
<PAGE>



                           THERMO ELECTRON CORPORATION

                         EMPLOYEES EQUITY INCENTIVE PLAN

                             Stock Option Agreement

     1. Grant of Option. This Stock Option Agreement (the "Agreement")  contains
the terms and conditions of a grant of a  nonqualified  stock option to purchase
the shares of the common stock of the Company (the "Option Shares") made to you,
the Optionee  named on the first page of this  Agreement,  pursuant to the Plan.
Attached  is a copy of the  Plan  which is  incorporated  in this  Agreement  by
reference and made a part hereof.  This Option is intended to be a non-statutory
stock option under the Internal Revenue Code of 1986, as amended.

     2.  Exercisability  and Vesting of Option. The Option may be exercised only
to the extent the  Option  Shares  shall  have  vested in  accordance  with this
Agreement. The Option Shares will vest and become exercisable in accordance with
the schedule  set forth on the first page of this  Agreement,  provided  that on
each vesting date you are then, and have been since the Grant Date, continuously
employed  by  the  Company  or an  "Affiliated  Employer".  Notwithstanding  the
foregoing,  you shall  become  fully  vested in the Option  Shares  prior to the
vesting  date set forth on the first  page of this  Agreement  in the event of a
Change in Control,  as that event is defined in the Plan,  that occurs  prior to
the date on which you cease to be an employee  of the  Company or an  Affiliated
Employer.  The date on which you cease to be an  employee  of the  Company or an
Affiliated  Employer  is  defined as your  "Employment  Termination  Date".  For
purposes of this Agreement,  an "Affiliated Employer" shall mean a subsidiary of
the Company of which the Company  owns more than 50% of the  outstanding  common
stock.  Upon your Employment  Termination  Date, all Option Shares that have not
previously  vested  prior to that date,  shall be  immediately  forfeited to the
Company and cancelled.

     3.  Termination of Option.  The date on which the Option shall terminate in
whole or in part as provided in this Section 3 is hereinafter referred to as the
"Option  Termination Date." This Option shall terminate on the date which is the
earliest of:

     (a)  the  Expiration  Date  of the  Option  set  forth  on  page 1 of  this
Agreement; or

     (b) three months after your Employment  Termination  Date if the Employment
Termination  Date  occurs for any reason  other than the  reasons  specified  in
Sections 3(c), 3(d) or 3(e).; or

     (c) one year  after  your  Employment  Termination  Date if the  Employment
Termination  Date occurs by reason of your death or disability.  For purposes of
this  Agreement,  "disability"  shall  mean  that you are  receiving  disability
benefits under the Company's Long Term Disability  Coverage,  as then in effect,
on the Employment Termination Date; or

                                       2
<PAGE>

     (d) two years  after your  Employment  Termination  Date if the  Employment
Termination  Date  occurs by reason of your  retirement.  For  purposes  of this
Agreement,  (i)  if  you  are a  non-employee  director  of  the  Company,  then
"retirement"  shall mean the date on which you cease to serve as a  director  of
the  Company,  and (ii) if you are an employee  of the Company or an  Affiliated
Employer,  then "retirement"  shall mean the termination of your employment with
the Company or an  Affiliated  Employer  after age 55 and the  completion  of 10
years of continuous service to the Company or an Affiliated  Employer comprising
at least 20 hours per week; or

         (e)      the date of the dissolution or liquidation of the Company.

     4. No Assignment of Rights.  Except for assignments or transfers by will or
the applicable laws of descent and distribution, your rights and interests under
this  Agreement and the Plan may not be assigned or  transferred  in whole or in
part either  directly or by operation  of law or  otherwise,  including  without
limitation  by  way of  execution,  levy,  garnishment,  attachment,  pledge  or
bankruptcy,  and no such  rights or  interests  shall be  subject to any of your
obligations or liabilities.

     5. Exercise of Option;  Delivery and Deposit of Certificate(s).  You (or in
the case of your death, your legal  representative)  may exercise the Option (to
the extent the Option Shares have vested) in whole or in part by giving  written
notice  to the  Company  on the form  provided  by the  Company  (the  "Exercise
Notice") prior to the Option  Termination Date,  accompanied by full payment for
the Option Shares being  purchased (a) in cash or by certified or bank cashier's
check  payable to the order of the Company,  in an amount equal to the number of
Option Shares being  purchased  multiplied by the Exercise Price (the "Aggregate
Exercise Price"),  (b) in unrestricted shares of the Company's Common Stock (the
"Tendered  Shares") with a market value equal to the Aggregate Exercise Price or
(c) any  combination  of cash,  certified  or bank  cashier's  check or Tendered
Shares  having a total value equal to the Aggregate  Exercise  Price (such cash,
check or  Tendered  Shares with such value  being  referred to as the  "Exercise
Consideration").  However,  Tendered Shares that were acquired directly from the
Company may be surrendered as all or part of the Exercise  Consideration only if
you shall have acquired  such Tendered  Shares more than six months prior to the
date of exercise. Receipt by the Company of the Exercise Notice and the Exercise
Consideration  shall constitute the exercise of the Option or a part thereof. As
soon as reasonably practicable thereafter, the Company shall deliver or cause to
be delivered to you a certificate  or  certificates  representing  the number of
Option Shares purchased, registered in your name.

     6. Rights With  Respect to Option  Shares.  Prior to the date the Option is
exercised,  you shall not be deemed for any purpose to be a  stockholder  of the
Company with respect to any of the Option Shares.  Upon initial  issuance to you
of a certificate or  certificates  representing  Option  Shares,  you shall have
ownership  of such  Option  Shares,  including  the  right to vote  and  receive
dividends,  subject,  however, to the other restrictions and limitations imposed


                                       3
<PAGE>

thereon  pursuant  to the  Plan  and  this  Agreement  and  which  may be now or
hereafter  imposed by the  Certificate  of  Incorporation  or the By-Laws of the
Company.

     7. Dilution and Other Adjustments.  In the event of a stock dividend, stock
split or combination of shares, or other distribution with respect to holders of
Common Stock other than normal cash dividends,  occurring after the date of this
Agreement  and  prior  to the  exercise  in full of the  Option,  the  committee
appointed  by the  Company's  Board of  Directors  to  administer  the Plan (the
"Committee")  shall  make  appropriate  adjustments  to the number of shares for
which the Option may be exercised and the Exercise Price for the Option.  In the
event of any  recapitalization,  merger or consolidation  involving the Company,
any transaction in which the Company becomes a subsidiary of another entity, any
sale or other  disposition of all or a substantial  portion of the assets of the
Company or any similar transaction,  as determined by the Committee, (any of the
foregoing,  a "covered  transaction")  occuring while the option is outstanding,
the Committee in its discretion may (i)  accelerate  the  exercisability  of the
Option,  or (ii) adjust the terms of the Option (whether or not in a manner that
complies with the requirements of Section 424(a) of the Internal Revenue Code of
1986,  as amended  (the  "Code")),  or (iii) if there is a survivor  or acquiror
entity, provide for the assumption of the Option by such survivor or acquiror or
an affiliate thereof or for the grant of one or more replacement options by such
survivor or acquiror or an affiliate thereof,  in each case on such terms (which
may, but need not,  comply with the  requirements of Section 424(a) of the Code)
as the Committee may determine, or (iv) terminate the Option (provided,  that if
the Committee terminates the Option, it shall, in connection  therewith,  either
(A) accelerate the  exercisability of the Option prior to such  termination,  or
(B) provide for a payment to the holder of the Option of cash or other  property
or a combination of cash or other property in an amount reasonably determined by
the  Committee  to  approximate  the value of the Option  assuming  an  exercise
immediately prior to the transaction,  or (C) if there is a survivor or acquiror
entity,  provide for the grant of one or more  replacement  options  pursuant to
clasue  (iii)  above),  or (v) provide for none of, or any  combination  of, the
foregoing.  No fraction of a share or fractional  shares shall be purchasable or
deliverable under this Agreement.

     8. Reservation of Shares. The Company shall at all times during the term of
this  Agreement  reserve and keep  available such number of shares of the Common
Stock as will be sufficient to satisfy the  requirements  of this  Agreement and
shall  pay  all  fees  and  expenses  necessarily  incurred  by the  Company  in
connection with this Agreement and the issuance of Option Shares.

     9. Taxes.  If the  Company,  in its sole  discretion,  determines  that the
Company or any  subsidiary  of the Company or any other  person has  incurred or
will incur any liability to withhold any federal, state or local income or other
taxes by reason of the grant of the Option, the issuance of Option Shares to you
upon the  exercise  thereof  or the lapse of any  restrictions  upon the  Option
Shares,  you will,  promptly  upon  demand  therefor  by the Company or any such
subsidiary  of the  Company,  pay to the Company or such  subsidiary  any amount
requested by it for the purpose of satisfying such  liability.  If the amount so
requested is not paid promptly, the Company may refuse to permit the issuance to
you of Option Shares and may,  without further consent by you, have the right to
deduct  such  taxes  from any  payment  of any kind  otherwise  due to you,  the
Optionee,  including  but not  limited  to,  the hold back from the shares to be


                                       4
<PAGE>

delivered  pursuant  to  Section 5 of this  Agreement  of that  number of shares
calculated  to satisfy  all  federal,  state,  local or other  applicable  taxes
required to be withheld in connection with such exercise.

         You may satisfy the minimum statutory withholding tax requirement (the
"Obligation") arising from exercise of all or a part of the Option by making an
election (an "Election") to have the Company withhold from the number of shares
to be issued upon exercise of the Option, or to otherwise tender to the Company,
that number of shares of Common Stock having a value equal to the amount of the
Obligation. The value of the shares to be withheld or tendered shall be based
upon the closing price of the Common Stock on the New York Stock Exchange on the
date that the amount of the Obligation shall be determined (the "Tax Date").
Each Election must be made at the time the Option is exercised or the Tax Date,
whichever is later. The Committee may disapprove of any Election or may suspend
or terminate the right to make Elections. An Election is irrevocable.

     10.  Determination  of Rights.  Any dispute or disagreement  that may arise
under or as a result  of or  pursuant  to the  Plan or this  Agreement  shall be
determined  by the committee  appointed by the  Company's  Board of Directors to
administer the Plan (the "Committee"),  in its sole discretion, and any decision
made by the  Committee in good faith shall be  conclusive  on all  parties.  The
interpretation  and  construction  by the Committee of any provision of, and the
determination  of any question arising under,  this Agreement,  the Plan, or any
rule or regulation adopted pursuant to the Plan, shall be final and conclusive.

     11. Limitation of Employment  Rights.  The Option confers upon you no right
to continue in the employ of the Company or an Affiliated Employer or interferes
in any way with the right of the Company or an Affiliated  Employer to terminate
your employment at any time.

     12. Communications. Any communication or notice required or permitted to be
given under this  Agreement  shall be in writing,  and mailed by  registered  or
certified  mail or  delivered  in hand,  if to the  Company to its Stock  Option
Manager c/o Thermo Electron Corporation,  81 Wyman Street, Post Office Box 9046,
Waltham,  Massachusetts 02454-9046, and if to you, to the address you shall last
have  furnished  to the Company,  or such other  address,  in each case,  as the
addressee shall have last provided in writing to the communicating party.

                                       5
<PAGE>

                                                                       Exhibit B

                          EXECUTIVE RETENTION AGREEMENT


     THIS  AGREEMENT  by and between  THERMO  ELECTRON  CORPORATION,  a Delaware
corporation (the "Company"),  and Marc N. Casper (the "Executive") is made as of
November 26, 2001 (the "Effective Date").

     WHEREAS,   the  Company   recognizes   that,  as  is  the  case  with  many
publicly-held  corporations,  the  possibility  of a change  in  control  of the
Company  exists and that such  possibility,  and the  uncertainty  and questions
which  it may  raise  among  key  personnel,  may  result  in the  departure  or
distraction   of  key  personnel  to  the  detriment  of  the  Company  and  its
stockholders; and

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that appropriate  steps should be taken to reinforce and encourage the continued
employment  and  dedication of the Company's key personnel  without  distraction
from the  possibility  of a change in control of the Company and related  events
and circumstances.

     NOW, THEREFORE,  as an inducement for and in consideration of the Executive
remaining in its employ, the Company agrees that the Executive shall receive the
severance  benefits  set forth in this  Agreement  in the event the  Executive's
employment  with the Company is  terminated  under the  circumstances  described
below subsequent to a Change in Control (as defined in Section 1.1).

     1. Key Definitions.

     As used herein,  the following  terms shall have the  following  respective
meanings:

          1.1 "Change in Control"  means an event or occurrence set forth in any
one or more of  subsections  (a)  through  (d)  below  (including  an  event  or
occurrence  that  constitutes a Change in Control under one of such  subsections
but is specifically exempted from another such subsection):

               (a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities  Exchange Act of 1934,
as amended (the  "Exchange  Act")) (a "Person") of  beneficial  ownership of any
capital  stock  of  the  Company  if,  after  such   acquisition,   such  Person
beneficially  owns  (within  the  meaning  of Rule 13d-3  promulgated  under the
Exchange  Act) 40% or more of either (i) the  then-outstanding  shares of common
stock of the  Company  (the  "Outstanding  Company  Common  Stock")  or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding  Company Voting
Securities");  provided,  however, that for purposes of this subsection (a), the
following  acquisitions  shall  not  constitute  a Change  in  Control:  (i) any
acquisition by the Company,  (ii) any  acquisition by any employee  benefit plan
(or related  trust)  sponsored or maintained  by the Company or any  corporation

                                       1
<PAGE>

controlled by the Company, or (iii) any acquisition by any corporation  pursuant
to a transaction  which  complies with clauses (i) and (ii) of subsection (c) of
this Section 1.1; or

               (b) such time as the  Continuing  Directors (as defined below) do
not  constitute  a  majority  of the  Board  (or,  if  applicable,  the Board of
Directors of a successor corporation to the Company), where the term "Continuing
Director"  means at any date a member  of the  Board (i) who was a member of the
Board on the date of the  execution of this  Agreement or (ii) who was nominated
or elected  subsequent  to such date by at least a majority of the directors who
were  Continuing  Directors at the time of such  nomination or election or whose
election to the Board was  recommended or endorsed by at least a majority of the
directors  who  were  Continuing  Directors  at the time of such  nomination  or
election;  provided, however, that there shall be excluded from this clause (ii)
any  individual  whose initial  assumption of office  occurred as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened  solicitation of proxies or consents, by
or on behalf of a person other than the Board; or

               (c) the consummation of a merger, consolidation,  reorganization,
recapitalization  or statutory share exchange involving the Company or a sale or
other  disposition of all or  substantially  all of the assets of the Company in
one or a series of transactions (a "Business Combination"),  unless, immediately
following  such Business  Combination,  each of the following two  conditions is
satisfied: (i) all or substantially all of the individuals and entities who were
the beneficial  owners of the  Outstanding  Company Common Stock and Outstanding
Company  Voting  Securities  immediately  prior  to  such  Business  Combination
beneficially own, directly or indirectly,  more than 60% of the then-outstanding
shares of common  stock and the combined  voting  power of the  then-outstanding
securities   entitled  to  vote   generally  in  the   election  of   directors,
respectively,  of the  resulting  or  acquiring  corporation  in  such  Business
Combination (which shall include,  without limitation,  a corporation which as a
result  of  such  transaction  owns  the  Company  or  substantially  all of the
Company's  assets  either  directly or through one or more  subsidiaries)  (such
resulting  or  acquiring  corporation  is referred  to herein as the  "Acquiring
Corporation")  in  substantially   the  same  proportions  as  their  ownership,
immediately  prior to such  Business  Combination,  of the  Outstanding  Company
Common Stock and Outstanding Company Voting Securities,  respectively;  and (ii)
no Person (excluding the Acquiring  Corporation or any employee benefit plan (or
related  trust)  maintained  or  sponsored  by the  Company or by the  Acquiring
Corporation) beneficially owns, directly or indirectly,  40% or more of the then
outstanding  shares  of common  stock of the  Acquiring  Corporation,  or of the
combined  voting power of the  then-outstanding  securities of such  corporation
entitled to vote generally in the election of directors; or

               (d)  approval  by the  stockholders  of the Company of a complete
liquidation or dissolution of the Company.

          1.2 "Change in Control  Date" means the first date during the Term (as
defined  in Section 2) on which a Change in  Control  occurs.  Anything  in this


                                       2
<PAGE>


Agreement to the contrary  notwithstanding,  if (a) a Change in Control  occurs,
(b) the Executive's  employment with the Company is terminated prior to the date
on which the Change in Control occurs, and (c) it is reasonably  demonstrated by
the Executive  that such  termination  of employment (i) was at the request of a
third  party who has taken  steps  reasonably  calculated  to effect a Change in
Control or (ii)  otherwise  arose in  connection  with or in  anticipation  of a
Change in  Control,  then for all  purposes  of this  Agreement  the  "Change in
Control  Date"  shall  mean  the  date  immediately  prior  to the  date of such
termination of employment.

          1.3  "Cause"  means the  Executive's  willful  engagement  in  illegal
conduct or gross misconduct after the Change in Control Date which is materially
and demonstrably  injurious to the Company. For purposes of this Section 1.3, no
act or failure to act by the Executive shall be considered  "willful"  unless it
is done, or omitted to be done, in bad faith and without  reasonable belief that
the Executive's action or omission was in the best interests of the Company.

          1.4  "Good  Reason"  means the  occurrence,  without  the  Executive's
written consent,  of any of the events or circumstances set forth in clauses (a)
through  (g)  below.  Notwithstanding  the  occurrence  of  any  such  event  or
circumstance,  such occurrence shall not be deemed to constitute Good Reason if,
prior to the Date of Termination specified in the Notice of Termination (each as
defined in Section 3.2(a)) given by the Executive in respect thereof, such event
or  circumstance  has been fully corrected and the Executive has been reasonably
compensated for any losses or damages  resulting  therefrom  (provided that such
right of  correction  by the  Company  shall only  apply to the first  Notice of
Termination for Good Reason given by the Executive).

               (a) the assignment to the Executive of duties inconsistent in any
material  respect with the  Executive's  position  (including  status,  offices,
titles and  reporting  requirements),  authority or  responsibilities  in effect
immediately  prior to the  earliest to occur of (i) the Change in Control  Date,
(ii) the date of the execution by the Company of the initial  written  agreement
or  instrument  providing  for the  Change in  Control  or (iii) the date of the
adoption by the Board of Directors of a resolution  providing  for the Change in
Control  (with the  earliest  to occur of such dates  referred  to herein as the
"Measurement  Date") or a material  diminution  in such  position,  authority or
responsibilities;

               (b) a  reduction  in the  Executive's  annual  base  salary as in
effect on the Measurement Date or as the same was or may be increased thereafter
from time to time;

               (c) the  failure  by the  Company to (i)  continue  in effect any
material  compensation or benefit plan or program  (including without limitation
any life  insurance,  medical,  health and accident or  disability  plan and any
vacation  or  automobile  program  or policy)  (a  "Benefit  Plan") in which the
Executive participates or which is applicable to the Executive immediately prior
to the Measurement Date, unless an equitable arrangement (embodied in an ongoing
substitute  or  alternative  plan) has been made  with  respect  to such plan or
program,  (ii)  continue  the  Executive's  participation  therein  (or in  such
substitute or alternative  plan) on a basis not  materially  less favorable than


                                       3
<PAGE>


the basis existing  immediately  prior to the Measurement  Date (iii) award cash
bonuses to the  Executive  in amounts and in a manner  substantially  consistent
with past  practice  in light of the  Company's  financial  performance  or (iv)
continue to provide any material fringe benefit enjoyed by Executive immediately
prior to the Measurement Date;

               (d) a  change  by  the  Company  in the  location  at  which  the
Executive performs his or her principal duties for the Company to a new location
that is both (i)  outside a radius of 50 miles  from the  Executive's  principal
residence  immediately prior to the Measurement Date and (ii) more than 30 miles
from the location at which the Executive  performed his or her principal  duties
for the Company  immediately  prior to the Measurement Date; or a requirement by
the Company that the  Executive  travel on Company  business to a  substantially
greater extent than required immediately prior to the Measurement Date;

               (e) the failure of the Company to obtain the  agreement  from any
successor  to the  Company  to assume and agree to perform  this  Agreement,  as
required by Section 6.1;

               (f) a purported  termination of the Executive's  employment which
is not effected pursuant to a Notice of Termination  satisfying the requirements
of Section 3.2(a); or

               (g) any failure of the Company to pay or provide to the Executive
any portion of the  Executive's  compensation  or benefits due under any Benefit
Plan within seven days of the date such compensation or benefits are due, or any
material  breach by the Company of this  Agreement or any  employment  agreement
with the Executive.

     The  Executive's  right to terminate his or her  employment for Good Reason
shall not be affected by the  Executive's  incapacity  due to physical or mental
illness.

     1.5  "Disability"   means  the  Executive's   absence  from  the  full-time
performance  of the  Executive's  duties with the  Company  for 180  consecutive
calendar days as a result of incapacity due to mental or physical  illness which
is determined  to be total and permanent by a physician  selected by the Company
or its  insurers  and  acceptable  to the  Executive  or the  Executive's  legal
representative.

     2. Term of Agreement. This Agreement, and all rights and obligations of the
parties  hereunder,  shall take effect upon the Effective  Date and shall expire
upon the first to occur of (a) the  expiration of the Term (as defined below) if
a Change in Control  has not  occurred  during the Term,  (b) the date 18 months
after the Change in Control  Date,  if the  Executive  is still  employed by the
Company as of such later date, or (c) the  fulfillment  by the Company of all of
its obligations under Sections 4 and 5.2 if the Executive's  employment with the


                                       4
<PAGE>

Company terminates within 18 months following the Change in Control Date. "Term"
shall mean the period  commencing  as of the  Effective  Date and  continuing in
effect through December 31, 2003; provided,  however, that commencing on January
1, 2003 and each January 1, thereafter, the Term shall be automatically extended
for one  additional  year unless,  not later than 90 days prior to the scheduled
expiration of the Term (or any extension thereof),  the Company shall have given
the Executive written notice that the Term will not be extended.

     3. Employment Status; Termination Following Change in Control.


          3.1 Not an Employment Contract.  The Executive  acknowledges that this
Agreement  does not constitute a contract of employment or impose on the Company
any  obligation to retain the  Executive as an employee and that this  Agreement
does not prevent the Executive from  terminating  employment at any time. If the
Executive's   employment  with  the  Company   terminates  for  any  reason  and
subsequently  a Change  in  Control  shall  occur,  the  Executive  shall not be
entitled to any  benefits  hereunder  except as otherwise  provided  pursuant to
Section 1.2.

          3.2 Termination of Employment.

               (a) If the Change in Control  Date  occurs  during the Term,  any
termination  of the  Executive's  employment  by the Company or by the Executive
within 18 months  following  the Change in Control  Date  (other than due to the
death of the Executive)  shall be  communicated by a written notice to the other
party hereto (the "Notice of Termination"),  given in accordance with Section 7.
Any Notice of Termination shall: (i) indicate the specific termination provision
(if any) of this Agreement relied upon by the party giving such notice,  (ii) to
the  extent   applicable,   set  forth  in  reasonable   detail  the  facts  and
circumstances  claimed to  provide a basis for  termination  of the  Executive's
employment  under the  provision  so  indicated  and (iii)  specify  the Date of
Termination (as defined below). The effective date of an employment  termination
(the "Date of Termination") shall be the close of business on the date specified
in the Notice of  Termination  (which  date may not be less than 15 days or more
than 120 days after the date of delivery of such Notice of Termination),  in the
case of a termination  other than one due to the Executive's  death, or the date
of the Executive's  death, as the case may be. In the event the Company fails to
satisfy the  requirements  of Section 3.2(a)  regarding a Notice of Termination,
the purported termination of the Executive's  employment pursuant to such Notice
of Termination shall not be effective for purposes of this Agreement.

               (b) The failure by the  Executive  or the Company to set forth in
the  Notice of  Termination  any fact or  circumstance  which  contributes  to a
showing of Good  Reason or Cause shall not waive any right of the  Executive  or
the Company,  respectively,  hereunder or preclude the Executive or the Company,
respectively,  from  asserting  any such fact or  circumstance  in enforcing the
Executive's or the Company's rights hereunder.

                                       5
<PAGE>


               (c) Any Notice of Termination for Cause given by the Company must
be given within 90 days of the  occurrence  of the  event(s) or  circumstance(s)
which  constitute(s)  Cause.  Prior to any Notice of Termination for Cause being
given (and prior to any  termination for Cause being  effective),  the Executive
shall be entitled to a hearing  before the Board of  Directors of the Company at
which the  Executive's  may, at the  Executive's  election,  be  represented  by
counsel and at which the  Executive  shall have a reasonable  opportunity  to be
heard.  Such hearing shall be held on not less than 15 days prior written notice
to the  Executive  stating the Board of  Directors'  intention to terminate  the
Executive  for  Cause  and  stating  in  detail  the   particular   event(s)  or
circumstance(s)  which the Board of  Directors  believes  constitutes  Cause for
termination.

               (d) Any  Notice  of  Termination  for  Good  Reason  given by the
Executive  must be given  within 90 days of the  occurrence  of the  event(s) or
circumstance(s) which constitute(s) Good Reason.

     4. Benefits to Executive.

               4.1 Stock  Acceleration.  If the  Change in Control  Date  occurs
during the Term,  then,  effective  upon the Change in  Control  Date,  (a) each
outstanding option to purchase shares of Common Stock of the Company held by the
Executive  shall become  immediately  exercisable  in full and will no longer be
subject  to a right  of  repurchase  by the  Company  and (b)  each  outstanding
restricted  stock award shall be deemed to be fully vested and will no longer be
subject to a right of repurchase by the Company.

               4.2 Compensation. If the Change in Control Date occurs during the
Term and the Executive's employment with the Company terminates within 18 months
following  the Change in Control Date,  the  Executive  shall be entitled to the
following benefits:

               (a)  Termination  Without  Cause  or  for  Good  Reason.  If  the
Executive's employment with the Company is terminated by the Company (other than
for Cause,  Disability  or Death) or by the  Executive for Good Reason within 18
months  following  the  Change in  Control  Date,  then the  Executive  shall be
entitled to the following benefits:

                    (i) the Company  shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:

                         (1) the sum of (A) the Executive's  base salary through
the Date of Termination, (B) the product of (x) the annual bonus paid or payable
(including any bonus or portion  thereof which has been earned but deferred) for
the most  recently  completed  fiscal year and (y) a fraction,  the numerator of
which is the  number of days in the  current  fiscal  year  through  the Date of
Termination,  and the  denominator  of  which is 365 and (C) the  amount  of any
compensation  previously  deferred by the Executive  (together  with any accrued

                                       6
<PAGE>


interest or earnings  thereon) and any accrued vacation pay, in each case to the
extent not  previously  paid (the sum of the amounts  described  in clauses (A),
(B), and (C) shall be hereinafter referred to as the "Accrued Obligations"); and

                         (2) the amount equal to the sum of (x) the  Executive's
highest  annual  base  salary in any  twelve-month  period (on a rolling  basis)
during the  five-year  period  prior to the  Change in Control  Date and (y) the
Executive's highest annual bonus in any twelve-month period (on a rolling basis)
during the five-year period prior to the Change in Control Date.

                    (ii) for one year  after  the Date of  Termination,  or such
longer period as may be provided by the terms of the appropriate plan,  program,
practice  or policy,  the  Company  shall  continue  to provide  benefits to the
Executive  and the  Executive's  family at least equal to those which would have
been provided to them if the Executive's employment had not been terminated,  in
accordance with the applicable  Benefit Plans in effect on the Measurement  Date
or, if more  favorable to the Executive and the  Executive's  family,  in effect
generally at any time  thereafter  with respect to other peer  executives of the
Company and its affiliated companies;  provided,  however, that if the Executive
becomes reemployed with another employer and is eligible to receive a particular
type of benefits (e.g.,  health insurance  benefits) from such employer on terms
at least as favorable to the Executive and the Executive's family as those being
provided by the Company, then the Company shall no longer be required to provide
those particular benefits to the Executive and the Executive's family;

                    (iii) to the extent not  previously  paid or  provided,  the
Company  shall  timely  pay or  provide to the  Executive  any other  amounts or
benefits  required to be paid or provided or which the  Executive is eligible to
receive  following the  Executive's  termination  of employment  under any plan,
program,  policy,  practice,  contract  or  agreement  of the  Company  and  its
affiliated  companies  (such other  amounts and  benefits  shall be  hereinafter
referred to as the "Other Benefits"); and

                    (iv) for purposes of  determining  eligibility  (but not the
time of commencement of benefits) of the Executive for retiree benefits to which
the Executive is entitled,  the  Executive  shall be considered to have remained
employed by the Company until one year after the Date of Termination.

               (b)  Resignation  without Good Reason;  Termination  for Death or
Disability.  If the Executive voluntarily  terminates his or her employment with
the Company within 18 months  following the Change in Control Date,  excluding a
termination for Good Reason,  or if the Executive's  employment with the Company
is terminated by reason of the Executive's  death or Disability within 18 months
following  the  Change  in  Control  Date,  then the  Company  shall (i) pay the
Executive (or the  Executive's  estate,  if  applicable),  in a lump sum in cash
within 30 days after the Date of Termination,  the Accrued  Obligations and (ii)
timely pay or provide to the Executive the Other Benefits.

                                       7
<PAGE>

               (c)  Termination  for  Cause.  If  the  Company   terminates  the
Executive's employment with the Company for Cause within 18 months following the
Change in Control Date, then the Company shall (i) pay the Executive,  in a lump
sum in cash  within 30 days  after the Date of  Termination,  the sum of (A) the
Executive's  annual base  salary  through  the Date of  Termination  and (B) the
amount of any compensation previously deferred by the Executive, in each case to
the extent not previously  paid, and (ii) timely pay or provide to the Executive
the Other Benefits.

          4.3 Taxes.

               (a)  In the  event  that  the  Company  undergoes  a  "Change  in
Ownership or Control" (as defined below), and thereafter,  the Executive becomes
eligible to receive  "Contingent  Compensation  Payments" (as defined below) the
Company shall, as soon as administratively  feasible after the Executive becomes
so eligible determine and notify the Executive (with reasonable detail regarding
the basis for its  determinations)  (i) which of the payments or benefits due to
the  Executive   following  such  Change  in  Ownership  or  Control  constitute
Contingent  Compensation  Payments,  (ii) the amount,  if any, of the excise tax
(the "Excise Tax") payable pursuant to Section 4999 of the Internal Revenue Code
of 1986,  as  amended  (the  "Code"),  by the  Executive  with  respect  to such
Contingent  Compensation  Payment and (iii) the amount of the "Gross-Up Payment"
(as  defined  below)  due to the  Executive  with  respect  to  such  Contingent
Compensation  Payment.  Within  30 days  after  delivery  of such  notice to the
Executive, the Executive shall deliver a response to the Company (the "Executive
Response")  stating  either (A) that the  Executive  agrees  with the  Company's
determination  pursuant  to the  preceding  sentence  or (B) that the  Executive
disagrees with such  determination,  in which case the Executive  shall indicate
which  payment  and/or  benefits  should  be   characterized   as  a  Contingent
Compensation  Payment,  the  amount  of the  Excise  Tax  with  respect  to such
Contingent  Compensation  Payment and the amount of the Gross-Up  Payment due to
the  Executive  with respect to such  Contingent  Compensation  Payment.  If the
Executive  states in the Executive  Response that the Executive  agrees with the
Company's  determination,  the Company  shall make the  Gross-Up  Payment to the
Executive  within three business days  following  delivery to the Company of the
Executive  Response.  If the Executive states in the Executive Response that the
Executive disagrees with the Company's  determination,  then, for a period of 15
days following delivery of the Executive Response, the Executive and the Company
shall use good faith  efforts to resolve  such  dispute.  If such dispute is not
resolved within such 15-day period, such dispute shall be settled exclusively by
arbitration  in  Boston,  Massachusetts,  in  accordance  with the  rules of the
American Arbitration  Association then in effect. Judgment may be entered on the
arbitrator's award in any court having  jurisdiction.  The Company shall, within
three business days following delivery to the Company of the Executive Response,
make to the Executive  those  Gross-Up  Payments as to which there is no dispute
between the Company and the Executive regarding whether they should be made. The
balance of the  Gross-Up  Payments  shall be made  within  three  business  days
following the resolution of such dispute.  The amount of any payments to be made
to the Executive  following the resolution of such dispute shall be increased by


                                       8
<PAGE>

the amount of the accrued  interest thereon computed at the prime rate announced
from time to time by The Wall Street  Journal  compounded  monthly from the date
that such payments originally were due. In the event that the Executive fails to
deliver an Executive  Response on or before the  required  date,  the  Company's
initial determination shall be final.

               (b) For purposes of this Section 4.3, the  following  terms shall
have the following respective meanings:

                    (i) "Change in Ownership or Control"  shall mean a change in
the  ownership  or  effective  control of the Company or in the  ownership  of a
substantial  portion of the assets of the Company  determined in accordance with
Section 280G(b)(2) of the Code.

                    (ii)  "Contingent   Compensation  Payment"  shall  mean  any
payment (or benefit) in the nature of compensation that is made or supplied to a
"disqualified  individual"  (as defined in Section 280G(c) of the Code) and that
is contingent (within the meaning of Section  280G(b)(2)(A)(i) of the Code) on a
Change in Ownership or Control of the Company.

                    (iii)  "Gross-Up  Payment" shall mean an amount equal to the
sum of (i) the amount of the Excise Tax  payable  with  respect to a  Contingent
Compensation  Payment and (ii) the amount  necessary to pay all additional taxes
imposed on (or economically borne by) the Executive (including the Excise Taxes,
state  and  federal   income  taxes  and  all  applicable   withholding   taxes)
attributable  to the  receipt of such  Gross-Up  Payment.  For  purposes  of the
preceding  sentence,  all taxes  attributable  to the  receipt  of the  Gross-Up
Payment  shall be computed  assuming  the  application  of the maximum tax rates
provided by law.

          4.4 Outplacement Services. In the event the Executive is terminated by
the  Company  (other  than for Cause,  Disability  or Death),  or the  Executive
terminates  employment for Good Reason, within 18 months following the Change in
Control Date,  the Company shall provide  outplacement  services  through one or
more outside  firms of the  Executive's  choosing up to an aggregate of $15,000,
with such  services to extend until the earlier of (i) 12 months  following  the
termination  of  Executive's  employment or (ii) the date the Executive  secures
full time employment.

          4.5  Mitigation.  The Executive  shall not be required to mitigate the
amount of any  payment or  benefits  provided  for in this  Section 4 by seeking
other  employment  or  otherwise.   Further,   except  as  provided  in  Section
4.2(a)(ii), the amount of any payment or benefits provided for in this Section 4
shall not be reduced by any compensation  earned by the Executive as a result of
employment by another employer,  by retirement  benefits,  by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.


                                       9
<PAGE>

     5. Disputes.


          5.1 Settlement of Disputes;  Arbitration.  All claims by the Executive
for benefits  under this  Agreement  shall be directed to and  determined by the
Board of  Directors  of the Company  and shall be in writing.  Any denial by the
Board of  Directors  of a claim  for  benefits  under  this  Agreement  shall be
delivered to the  Executive in writing and shall set forth the specific  reasons
for the denial and the specific  provisions of this  Agreement  relied upon. The
Board of Directors shall afford a reasonable  opportunity to the Executive for a
review of the  decision  denying a claim.  Any  further  dispute or  controversy
arising under or in connection with this Agreement shall be settled  exclusively
by arbitration  in Boston,  Massachusetts,  in accordance  with the rules of the
American Arbitration  Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.

          5.2  Expenses.  The  Company  agrees to pay as  incurred,  to the full
extent permitted by law, all legal, accounting and other fees and expenses which
the  Executive  may  reasonably  incur  as a  result  of any  claim  or  contest
(regardless  of the outcome  thereof) by the  Company,  the  Executive or others
regarding the validity or  enforceability  of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive  regarding the amount of any payment or benefits
pursuant to this  Agreement),  plus in each case interest on any delayed payment
at the  applicable  Federal rate  provided for in Section  7872(f)(2)(A)  of the
Code.

     6. Successors.

          6.1  Successor to Company.  The Company  shall  require any  successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially  all of the business or assets of the Company  expressly to
assume and agree to perform  this  Agreement to the same extent that the Company
would be required to perform it if no such  succession had taken place.  Failure
of the  Company to obtain an  assumption  of this  Agreement  at or prior to the
effectiveness  of any  succession  shall be a breach of this Agreement and shall
constitute Good Reason if the Executive elects to terminate  employment,  except
that for  purposes of  implementing  the  foregoing,  the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this  Agreement,  "Company"  shall mean the  Company  as  defined  above and any
successor  to its business or assets as  aforesaid  which  assumes and agrees to
perform this Agreement, by operation of law or otherwise.

          6.2 Successor to Executive.  This Agreement shall inure to the benefit
of and be  enforceable  by the  Executive's  personal or legal  representatives,
executors,   administrators,   successors,  heirs,  distributees,  devisees  and
legatees. If the Executive should die while any amount would still be payable to
the Executive or the Executive's family hereunder if the Executive had continued
to live, all such amounts,  unless otherwise  provided herein,  shall be paid in
accordance  with  the  terms  of  this  Agreement  to  the  executors,  personal
representatives or administrators of the Executive's estate.

                                       10
<PAGE>

     7.  Notice.  All  notices,  instructions  and  other  communications  given
hereunder  or in  connection  herewith  shall be in  writing.  Any such  notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide  overnight courier service, in each case addressed to the Company, at
81 Wyman Street, Waltham,  Massachusetts and to the Executive at the Executive's
principal  residence as currently reflected on the Company's records (or to such
other address as either the Company or the  Executive may have  furnished to the
other in  writing in  accordance  herewith).  Any such  notice,  instruction  or
communication shall be deemed to have been delivered five business days after it
is sent by registered  or certified  mail,  return  receipt  requested,  postage
prepaid,  or one  business  day  after  it is sent  via a  reputable  nationwide
overnight  courier  service.  Either party may give any notice,  instruction  or
other  communication  hereunder  using  any  other  means,  but no such  notice,
instruction or other  communication  shall be deemed to have been duly delivered
unless and until it actually is received by the party for whom it is intended.

     8. Miscellaneous.


          8.1 Severability.  The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or  enforceability  of any other
provision of this Agreement, which shall remain in full force and effect.

          8.2 Injunctive  Relief.  The Company and the Executive  agree that any
breach of this  Agreement  by the  Company  is  likely  to cause  the  Executive
substantial  and  irrevocable  damage  and  therefore,  in the event of any such
breach, in addition to such other remedies which may be available, the Executive
shall have the right to specific performance and injunctive relief.

          8.3 Governing  Law. The  validity,  interpretation,  construction  and
performance  of this  Agreement  shall be governed by the  internal  laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles.

          8.4 Waivers.  No waiver by the Executive at any time of any breach of,
or  compliance  with,  any  provision  of this  Agreement to be performed by the
Company  shall  be  deemed  a  waiver  of that  or any  other  provision  at any
subsequent time.

          8.5 Counterparts. This Agreement may be executed in counterparts, each
of which  shall be deemed to be an  original  but both of which  together  shall
constitute one and the same instrument.

          8.6 Tax Withholding. Any payments provided for hereunder shall be paid
net of any applicable  tax  withholding  required under federal,  state or local
law.

          8.7 Entire  Agreement.  This Agreement sets forth the entire agreement
of the parties  hereto in respect of the  subject  matter  contained  herein and
supersedes   all   prior   agreements,   promises,   covenants,    arrangements,
communications,  representations or warranties,  whether oral or written, by any


                                       11
<PAGE>

officer,  employee  or  representative  of any party  hereto in  respect  of the
subject matter contained  herein;  and any prior agreement of the parties hereto
in respect of the  subject  matter  contained  herein is hereby  terminated  and
cancelled.

          8.8  Amendments.  This  Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first set forth above.


                                THERMO ELECTRON CORPORATION


                                By:     /s/ Seth H. Hoogasian
                                        ---------------------------------
                                Name:   Seth H. Hoogasian
                                Title:  Vice President, General Counsel and
                                        Secretary

                                EXECUTIVE


                                /s/ Marc N. Casper
                                -----------------------------------
                                Marc N. Casper



                                       11
<PAGE>
                                                                       Exhibit C
                           THERMO ELECTRON CORPORATION

                            INDEMNIFICATION AGREEMENT


     This Agreement,  made and entered into as of the 26th day of November 2001,
("Agreement"),   by  and  between  Thermo  Electron   Corporation,   a  Delaware
corporation (the "Company"), and Marc N. Casper ("Indemnitee"):

     WHEREAS,  highly  competent  persons are becoming  more  reluctant to serve
publicly-held  corporations as directors or in other capacities  unless they are
provided with adequate protection through insurance or adequate  indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation;

     WHEREAS,  uncertainties  relating to the continued availability of adequate
directors and officers  liability  insurance ("D&O Insurance") and uncertainties
relating to  indemnification  have  increased the  difficulty of attracting  and
retaining such persons;

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that the  difficulty in attracting  and retaining such persons is detrimental to
the best interests of the Company's stockholders and that the Company should act
to assure such persons that there will be increased certainty of such protection
in the future;

     WHEREAS,  it is  reasonable,  prudent  and  necessary  for the  Company  to
obligate itself  contractually to indemnify such persons so that they will serve
or continue to serve the Company  free from undue  concern that they will not be
so indemnified;

     WHEREAS,  Indemnitee is willing to serve,  continue to serve and/or take on
additional  service for or on behalf of the Company on the condition  that he or
she be so indemnified and that such indemnification be so guaranteed;

     NOW,  THEREFORE,  in  consideration  of  the  premises  and  the  covenants
contained  herein,  the Company and  Indemnitee do hereby  covenant and agree as
follows:

     1. Services by Indemnitee.  Indemnitee agrees to serve or continue to serve
as a director or officer of the  Company.  This  Agreement  shall not impose any
obligation on Indemnitee or the Company to continue  Indemnitee's  position with
the Company beyond any period otherwise applicable.

     2. Indemnity.  The Company shall indemnify,  and shall advance Expenses (as
hereinafter  defined) to,  Indemnitee  as provided in this  Agreement and to the
fullest extent permitted by law.

     3. General.  Indemnitee shall be entitled to the rights of  indemnification
provided  in this  Section 3 if, by reason of his or her  Corporate  Status  (as
hereinafter defined), Indemnitee is, or is threatened to be made, a party to any
threatened, pending, or completed action, suit, arbitration, alternative dispute

<PAGE>

resolution proceeding, investigation, administrative hearing or other proceeding
whether civil, criminal,  administrative or investigative (other than an action,
suit or  proceeding  covered by Section 4 hereof).  Pursuant to this  Section 3,
Indemnitee shall be indemnified against Expenses,  judgments,  penalties,  fines
and/or amounts paid in settlement incurred by Indemnitee or on his or her behalf
in  connection  with  such  action,  suit,   arbitration,   alternative  dispute
resolution proceeding, investigation, administrative hearing or other proceeding
whether civil, criminal,  administrative or investigative or any claim, issue or
matter  therein  and  whether  or not  Indemnitee  is made a party  thereto,  if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company,  and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.

     4.  Proceedings  by or in the  Right  of the  Company.  In the  case of any
threatened,  pending or completed action,  suit or proceeding by or in the right
of the Company,  indemnification  shall be made to the maximum extent  permitted
under Delaware law.

     5.  Indemnification  for  Expenses  of a  Party  who is  Wholly  or  Partly
Successful. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his or her Corporate  Status, a party to and is
successful,  on the  merits or  otherwise,  in any  action,  suit,  arbitration,
alternative dispute resolution proceeding, investigation, administrative hearing
or other proceeding  whether civil,  criminal,  administrative or investigative,
Indemnitee shall be indemnified  against all Expenses  incurred by Indemnitee or
on his or her  behalf in  connection  therewith.  If  Indemnitee  is not  wholly
successful but is successful,  on the merits or otherwise, as to one or more but
less than all  claims,  issues or matters  in such  action,  suit,  arbitration,
alternative dispute resolution proceeding, investigation, administrative hearing
or other proceeding  whether civil,  criminal,  administrative or investigative,
the  Company  shall  indemnify  Indemnitee  against  all  Expenses  incurred  by
Indemnitee or on his or her behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without limitation, the
termination of any claim,  issue or matter by dismissal,  or withdrawal  with or
without  prejudice,  shall be deemed to be a successful result as to such claim,
issue or matter.

     6. Advance of Expenses.  The Company shall advance all Expenses incurred by
or on behalf of  Indemnitee in connection  with any action,  suit,  arbitration,
alternative dispute resolution proceeding, investigation, administrative hearing
or  other  proceeding  involving  his or her  Corporate  Status  whether  civil,
criminal,  administrative  or  investigative  within  twenty (20) days after the
receipt by the Company of a statement or statements from  Indemnitee  requesting
such  advance or  advances  from time to time,  whether  prior to or after final
disposition of such action,  suit,  arbitration,  alternative dispute resolution
proceeding,  investigation,  administrative  hearing or other proceeding whether
civil, criminal,  administrative or investigative.  Such statement or statements
shall reasonably  evidence the Expenses incurred by Indemnitee and shall include
or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to


                                       2
<PAGE>

repay any Expenses advanced if it shall ultimately be determined that Indemnitee
is not entitled to be indemnified against such Expenses, which undertaking shall
be accepted by or on behalf of the Company  without  reference to the  financial
ability of Indemnitee to make repayment.

     7. Procedure for Determination of Entitlement to Indemnification.

     (a) To obtain indemnification under this Agreement, Indemnitee shall submit
to  the  Company  a  written  request,   including  therein  or  therewith  such
documentation  and  information as is reasonably  available to Indemnitee and is
reasonably  necessary  to  determine  whether and to what extent  Indemnitee  is
entitled to indemnification.  The Secretary of the Company shall,  promptly upon
receipt of such a request for indemnification,  advise the Board in writing that
Indemnitee has requested indemnification.

     (b) Upon written  request by  Indemnitee  for  indemnification  pursuant to
Section  7(a)  hereof,  a  determination,  if  required  (but only to the extent
required)  by  applicable  law as a  precondition  to payment,  with  respect to
Indemnitee's  entitlement  thereto shall be made in the specific  case: (i) if a
Change in Control (as hereinafter  defined) shall have occurred,  by Independent
Counsel (as  hereinafter  defined) in a written  opinion to the Board, a copy of
which shall be delivered to  Indemnitee  (unless  Indemnitee  shall request that
such  determination be made by the Board or the stockholders,  in which case the
determination  shall be made in the manner  provided  below in  clauses  (ii) or
(iii)); (ii) if a Change of Control shall not have occurred, (A) by the Board by
a majority vote of  Disinterested  Directors (as hereinafter  defined),  even if
less than a quorum, or (B) by a committee of Disinterested  Directors designated
by a majority vote of Disinterested  Directors,  even if less than a quorum,  or
(C) if the  Disinterested  Directors  so  direct,  by  Independent  Counsel in a
written  opinion to the Board,  a copy of which shall be delivered to Indemnitee
or (D) by the stockholders of the Company;  or (iii) as provided in Section 8(b)
of this  Agreement;  and, if it is so determined  that Indemnitee is entitled to
indemnification,  payment to Indemnitee shall be made within ten (10) days after
such  determination.  Indemnitee  shall  cooperate  with the person,  persons or
entity making such  determination  with respect to  Indemnitee's  entitlement to
indemnification,  including  providing  to such  person,  persons or entity upon
reasonable  advance  request  any  documentation  or  information  which  is not
privileged  or  otherwise  protected  from  disclosure  and which is  reasonably
available to Indemnitee  and  reasonably  necessary to such  determination.  Any
costs or expenses  (including  attorney's  fees and  disbursements)  incurred by
Indemnitee in so cooperating shall be borne by the Company  (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

     (c) In the event the determination of entitlement to  indemnification is to
be made by Independent  Counsel pursuant to Section 7(b) of this Agreement,  the
Independent  Counsel  shall be selected as provided in this Section  7(c).  If a
Change of Control  shall not have  occurred,  the  Independent  Counsel shall be


                                       3
<PAGE>

selected by the Board,  and the Company shall give written  notice to Indemnitee
advising him or her of the identity of the Independent Counsel so selected. If a
Change of Control shall have occurred, the Independent Counsel shall be selected
by Indemnitee  (unless  Indemnitee  shall request that such selection be made by
the Board,  in which event the preceding  sentence shall apply),  and Indemnitee
shall give  written  notice to the Company  advising  it of the  identity of the
Independent Counsel so selected. In either event,  Indemnitee or the Company, as
the case may be,  may,  within  seven  (7) days  after  such  written  notice of
selection shall have been given, deliver to the Company or to Indemnitee, as the
case may be, a  written  objection  to such  selection.  Such  objection  may be
asserted  only on the ground that the  Independent  Counsel so selected does not
meet the requirements of "Independent  Counsel" as defined in Section 14 of this
Agreement,  and the  objection  shall set forth with  particularity  the factual
basis of such  assertion.  If such written  objection is made,  the  Independent
Counsel so  selected  may not serve as  Independent  Counsel  unless and until a
court has determined  that such  objection is without  merit.  If, within twenty
(20)  days  after   submission   by   Indemnitee   of  a  written   request  for
indemnification  pursuant to Section 7(a) hereof,  no Independent  Counsel shall
have been  selected or if selected,  shall have been  objected to, in accordance
with this Section 7(c),  either the Company or Indemnitee may petition the Court
of Chancery of the State of  Delaware or other court of  competent  jurisdiction
for  resolution  of any  objection  which shall have been made by the Company or
Indemnitee  to the  other's  selection  of  Independent  Counsel  and/or for the
appointment as Independent  Counsel of a person selected by the Court or by such
other person as the Court shall  designate,  and the person with respect to whom
an  objection  is  favorably  resolved or the person so  appointed  shall act as
Independent  Counsel under Section 7(b) hereof. The Company shall pay reasonable
fees and expenses of Independent  Counsel incurred in connection with its acting
in such capacity pursuant to Section 7(b) hereof.  The Company shall pay any and
all  reasonable  fees and expenses  incident to the  procedures  of this Section
7(c), regardless of the manner in which such Independent Counsel was selected or
appointed.  Upon the due commencement of any judicial  proceeding or arbitration
pursuant  to  Section  9(a) of this  Agreement,  Independent  Counsel  shall  be
discharged and relieved of any further  responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).

     8. Presumptions and Effect of Certain Proceedings.

     (a) If a Change of Control shall have occurred,  in making a  determination
with respect to entitlement to indemnification hereunder, the person, persons or
entity making such  determination  shall presume that  Indemnitee is entitled to
indemnification  under this  Agreement if Indemnitee has submitted a request for
indemnification  in  accordance  with  Section 7(a) of this  Agreement,  and the
Company  shall  have the  burden  of  proof  to  overcome  that  presumption  in
connection with the making by any person, persons or entity of any determination
contrary to that presumption.

     (b) If the person,  persons or entity empowered or selected under Section 7
of this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made such  determination  within sixty (60) days after receipt by
the Company of the request therefor, the requisite  determination of entitlement


                                       4
<PAGE>

to  indemnification  shall be deemed to have been made and  Indemnitee  shall be
entitled to such  indemnification,  absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make  Indemnitee's
statement  not  materially  misleading,  in  connection  with  the  request  for
indemnification,  or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 60-day period may be extended for a reasonable
time,  not to exceed an additional  thirty (30) days, if the person,  persons or
entity making the determination  with respect to entitlement to  indemnification
in good faith requires such  additional  time for the obtaining or evaluating of
documentation and/or information relating thereto; and provided,  further,  that
the  foregoing  provisions  of this  Section  8(b)  shall  not  apply (i) if the
determination  of  entitlement  to   indemnification   is  to  be  made  by  the
stockholders  pursuant  to  Section  7(b) of this  Agreement  and if (A)  within
fifteen  (15)  days  after  receipt  by the  Company  of the  request  for  such
determination  the  Board  has  resolved  to submit  such  determination  to the
stockholders  for their  consideration  at an annual meeting  thereof to be held
within one hundred  twenty (120) days after such receipt and such  determination
is made  thereat,  or (B) a special  meeting of  stockholders  is called  within
fifteen   (15)  days  after  such   receipt  for  the  purpose  of  making  such
determination,  such  meeting is held for such  purpose  within one hundred five
(105) days after having been so called and such  determination  is made thereat,
or (ii) if the determination of entitlement to  indemnification is to be made by
Independent Counsel pursuant to Section 7(b) of this Agreement.

     (c) The termination of any action, suit,  arbitration,  alternative dispute
resolution proceeding, investigation, administrative hearing or other proceeding
whether civil, criminal,  administrative or investigative or of any claim, issue
or matter therein by judgment,  order, settlement or conviction,  or upon a plea
of nolo contendere or its equivalent,  shall not (except as otherwise  expressly
provided in this Agreement) of itself  adversely  affect the right of Indemnitee
to  indemnification  or create a presumption that Indemnitee did not act in good
faith  and in a manner  which  Indemnitee  reasonably  believed  to be in or not
opposed to the best  interests  of the Company or, with  respect to any criminal
action or proceeding,  that Indemnitee had reasonable  cause to believe that his
or her conduct was unlawful.

     9. Remedies of Indemnitee.

     (a) In the event that (i) a determination  is made pursuant to Section 7 of
this Agreement  that  Indemnitee is not entitled to  indemnification  under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 6
of this Agreement,  (iii) the determination of entitlement to indemnification is
to be by Independent Counsel pursuant to Section 7(b) of this Agreement and such
determination shall not have been made and delivered in a written opinion within
ninety   (90)  days  after   receipt  by  the   Company  of  the   request   for
indemnification, (iv) payment of indemnification is not made pursuant to Section
5 of this  Agreement  within  ten (10) days after  receipt  by the  Company of a
written request therefor,  or (v) payment of  indemnification is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification  or such  determination  is deemed to have been made pursuant to
Section 8 of this Agreement,  Indemnitee shall be entitled to an adjudication in
an  appropriate  court  of the  State  of  Delaware,  or in any  other  court of
competent jurisdiction,  of Indemnitee's  entitlement to such indemnification or
advancement of Expenses.  Alternatively,  Indemnitee,  at his or her option, may
seek an award in arbitration to be conducted by a single arbitrator  pursuant to
the rules of the American  Arbitration  Association.  Indemnitee  shall commence
such proceeding  seeking an  adjudication or an award in arbitration  within one
hundred eighty (180) days following the date on which  Indemnitee  first has the
right to commence such  proceeding  pursuant to this Section  9(a).  The Company
shall not oppose  Indemnitee's  right to seek any such  adjudication or award in
arbitration.

     (b) In the event  that a  determination  shall have been made  pursuant  to
Section 7 of this Agreement that Indemnitee is not entitled to  indemnification,
any judicial  proceeding  or  arbitration  commenced  pursuant to this Section 9


                                       5
<PAGE>

shall be conducted in all respects as a de novo trial,  or  arbitration,  on the
merits  and  Indemnitee  shall  not be  prejudiced  by  reason  of that  adverse
determination.  If a Change of Control  shall  have  occurred,  in any  judicial
proceeding or arbitration commenced pursuant to this Section 9 the Company shall
have the burden of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.

     (c) If a  determination  shall  have  been made or deemed to have been made
pursuant  to Section 7 or 8 of this  Agreement  that  Indemnitee  is entitled to
indemnification,  the  Company  shall  be  bound  by such  determination  in any
judicial proceeding or arbitration  commenced pursuant to this Section 9, absent
(i) a  misstatement  by  Indemnitee  of a material  fact,  or an  omission  of a
material  fact   necessary  to  make   Indemnitee's   statement  not  materially
misleading,  in  connection  with the  request  for  indemnification,  or (ii) a
prohibition of such indemnification under applicable law.

     (d)  The  Company  shall  be  precluded  from  asserting  in  any  judicial
proceeding  or  arbitration  commenced  pursuant  to  this  Section  9 that  the
procedures  and  presumptions  of this  Agreement  are not  valid,  binding  and
enforceable  and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.

     (e) In the event  that  Indemnitee,  pursuant  to this  Section  9, seeks a
judicial  adjudication  of or an award in  arbitration  to enforce  Indemnitee's
rights under, or to recover  damages for breach of, this  Agreement,  Indemnitee
shall be entitled to recover from the Company,  and shall be  indemnified by the
Company against,  any and all expenses (of the types described in the definition
of Expenses in Section 14 of this Agreement) actually and reasonably incurred by
him or her in such judicial adjudication or arbitration,  but only if Indemnitee
prevails  therein.  If it shall be determined in said judicial  adjudication  or
arbitration  that  Indemnitee  is  entitled  to receive  part but not all of the
indemnification  or advancement  of expenses  sought,  the expenses  incurred by
Indemnitee in connection with such judicial adjudication or arbitration shall be
appropriately prorated.

                                       6
<PAGE>

     10.  Security.  To the extent  requested by Indemnitee  and approved by the
Board,  the Company shall at any time and from time to time provide  security to
Indemnitee for the Company's  obligations  hereunder through an irrevocable bank
line of  credit,  funded  trust or other  collateral.  Any such  security,  once
provided to Indemnitee, may not be revoked or released without the prior written
consent of Indemnitee.

     11. Non-Exclusivity; Duration of Agreement; Insurance; Subrogation.

     (a) The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement are in addition to and shall not be deemed  exclusive
of any  other  rights  to which  Indemnitee  may at any time be  entitled  under
applicable law, the Company's certificate of incorporation or by-laws, any other
agreement,  a vote of stockholders  or a resolution of directors,  or otherwise.
Without  limiting the foregoing,  the Company shall indemnify  Indemnitee to the
fullest extent permitted under Delaware law. This Agreement shall continue until
and  terminate  upon the  later  of (a) ten  (10)  years  after  the  date  that
Indemnitee shall have ceased to serve as a director or officer of the Company or
director,  officer or other  fiduciary  of any other  corporation,  partnership,
joint venture, trust, employee benefit plan or other enterprise which Indemnitee
served  at the  request  of the  Company;  or (b) the final  termination  of all
pending   actions,   suits,   arbitrations,   alternative   dispute   resolution
proceedings,  investigations,   administrative  hearings  or  other  proceedings
whether civil,  criminal,  administrative  or  investigative in respect of which
Indemnitee  is granted  rights of  indemnification  or  advancement  of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Section 9 of
this  Agreement  relating  thereto.  This  Agreement  shall be binding  upon the
Company  and its  successors  and  assigns  and shall  inure to the  benefit  of
Indemnitee and his or her heirs, executors and administrators.

     (b) To the extent  that the Company  maintains  D&O  Insurance,  Indemnitee
shall be  covered  by such D&O  Insurance  in  accordance  with its terms to the
maximum extent of the coverage  available for any director or officer under such
policy or policies.

     (c) In the event of any payment under this Agreement,  the Company shall be
subrogated  to the extent of such  payment to all of the rights of  recovery  of
Indemnitee,  who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.

     (d) The  Company  shall  not be liable  under  this  Agreement  to make any
payment of amounts otherwise  indemnifiable  hereunder if and to the extent that
Indemnitee  has  otherwise  actually  received  such payment under any insurance
policy, contract, agreement or otherwise.

     12.  Severability;  Reformation.  If any  provision or  provisions  of this
Agreement shall be held to be invalid,  illegal or unenforceable  for any reason
whatsoever:  (a) the  validity,  legality and  enforceability  of the  remaining
provisions of this Agreement (including without limitation,  each portion of any
Section of this  Agreement  containing  any such  provision  held to be invalid,


                                       7
<PAGE>

illegal or unenforceable,  that is not itself invalid, illegal or unenforceable)
shall not in any way be  affected or  impaired  thereby;  and (b) to the fullest
extent  possible,   the  provisions  of  this  Agreement   (including,   without
limitation,  each portion of any Section of this  Agreement  containing any such
provision  held to be  invalid,  illegal  or  unenforceable,  that is not itself
invalid,  illegal or  unenforceable)  shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.

     13.  Exception  to Right of  Indemnification  or  Advancement  of Expenses.
Notwithstanding  any other provision of this Agreement,  Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any action,  suit or  proceeding,  or any claim  therein,  initiated,
brought  or made by  Indemnitee  (i)  against  the  Company,  unless a Change in
Control shall have occurred,  or (ii) against any person other than the Company,
unless approved in advance by the Board.

     14. Definitions. For purposes of this Agreement:

     (a) "Change in Control"  means an event or occurrence  set forth in any one
or more of subsection  (i) through (iv) below  (including an event or occurrence
that  constitutes  a Change  in  Control  under one of such  subsections  but is
specifically exempted from another such subsection):

          (i) the  acquisition  by an  individual,  entity or group  (within the
     meaning of Section  13(d)(3) or 14(d)(2) of the Securities  Exchange Act of
     1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
     of any capital stock of the Company if, after such acquisition, such Person
     beneficially  owns (within the meaning of Rule 13d-3  promulgated under the
     Exchange  Act) 40% or more of  either  (A) the  then-outstanding  shares of
     common stock of the Company (the "Outstanding Company Common Stock") or (B)
     the combined voting power of the then-outstanding securities of the Company
     entitled to vote generally in the election of directors  (the  "Outstanding
     Company Voting Securities");  provided,  however, that for purposes of this
     subsection (i), the following acquisitions shall not constitute a Change in
     Control:  (A) any  acquisition by the Company,  (B) any  acquisition by any
     employee  benefit plan (or related  trust)  sponsored or  maintained by the
     Company  or  any  corporation   controlled  by  the  Company,  or  (C)  any
     acquisition  by any  corporation  pursuant to a transaction  which complies
     with clauses (A) and (B) of subsection (iii) of this Section 14(a); or

          (ii) such time as the  Continuing  Directors (as defined below) do not
     constitute  a  majority  of the  Board  (or,  if  applicable,  the Board of
     Directors  of a  successor  corporation  to the  Company),  where  the term
     "Continuing Director" means at any date a member of the Board (A) who was a
     member of the  Board on  September  23,  1999 or (B) who was  nominated  or
     elected subsequent to such date by at least a majority of the directors who
     were  Continuing  Directors  at the time of such  nomination  or  election;
     provided,  however,  that there shall be excluded  form this clause (B) any


                                       8
<PAGE>

     individual  whose initial  assumption of office  occurred as a result of an
     actual or  threatened  election  contest  with  respect to the  election or
     removal of directors or other actual or threatened  solicitation of proxies
     or consents, by or on behalf of a person other than the Board; or

          (iii) the  consummation  of a merger,  consolidation,  reorganization,
     recapitalization  or statutory  share  exchange  involving the Company or a
     sale or other  disposition of all or substantially all of the assets of the
     Company  in one or a series of  transactions  (a  "Business  Combination"),
     unless,  immediately  following  such  Business  Combination,  each  of the
     following two conditions is satisfied:  (A) all or substantially all of the
     individuals and entities who were the beneficial  owners of the Outstanding
     Company Common Stock and Outstanding Company Voting Securities  immediately
     prior  to  such  Business   Combination   beneficially   own,  directly  or
     indirectly,  more than 60% of the  then-outstanding  shares of common stock
     and the combined voting power of the  then-outstanding  securities entitled
     to vote  generally  in the  election  of  directors,  respectively,  of the
     resulting or acquiring  corporation  in such  Business  Combination  (which
     shall include,  without limitation, a corporation which as a result of such
     transaction owns the Company or  substantially  all of the Company's assets
     either  directly or through one or more  subsidiaries)  (such  resulting or
     acquiring corporation is referred to herein as the "Acquiring Corporation")
     in substantially the same proportions as their ownership, immediately prior
     to such Business  Combination,  of the Outstanding Company Common Stock and
     Outstanding  Company  Voting  Securities,  respectively;  and (B) no Person
     (excluding  the  Acquiring  Corporation  or any  employee  benefit plan (or
     related  trust)  maintained or sponsored by the Company or by the Acquiring
     Corporation) beneficially owns, directly or indirectly,  40% or more of the
     then outstanding shares of common stock of the Acquiring Corporation, or of
     the  combined  voting  power  of the  then-outstanding  securities  of such
     corporation entitled to vote generally in the election of directors; or

          (iv)  approval  by the  stockholders  of  the  Company  of a  complete
     liquidation or dissolution of the Company; or

     (b)  "Corporate  Status"  describes the status of a person who is or was or
has  agreed to become a  director  of the  Company,  or is or was an  officer or
fiduciary  of the  Company  or a  director,  officer or  fiduciary  of any other
corporation,  partnership,  joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.

     (c) "Disinterested Director" means a director of the Company who is not and
was not a party to the action, suit, arbitration, alternative dispute resolution
proceeding,  investigation,  administrative  hearing  or  any  other  proceeding
whether civil,  criminal,  administrative  or  investigative in respect of which
indemnification is sought by Indemnitee.

                                       9
<PAGE>

     (d) "Expenses"  shall include all reasonable  attorneys'  fees,  retainers,
court costs,  transcript costs, fees and expenses of experts,  including but not
limited to fees and expenses of investment  bankers and/or consultants which the
Company has authorized Indemnitee to hire and attorneys for such experts, travel
expenses,  duplicating  costs,  printing and binding costs,  telephone  charges,
postage,  deliver  service  fees,  a  reasonable  per  diem  fee  to  compensate
Indemnitee  for his or her  professional  time and all  other  disbursements  or
expenses of the types  customarily  incurred  in  connection  with  prosecuting,
defending,  preparing to prosecute or defend or investigating  an action,  suit,
arbitration,   alternative   dispute   resolution   proceeding,   investigation,
administrative   hearing  or  any  other  proceeding  whether  civil,  criminal,
administrative or investigative.

     (e) "Independent  Counsel" means a law firm, with over 100 lawyers, that is
experienced in matters of corporation  law and neither  currently is, nor in the
past five years has been, retained to represent:  (i) the Company (including any
subsidiary thereof) or Indemnitee in any matter material to either such party or
(ii) any other  party to the  action,  suit,  arbitration,  alternative  dispute
resolution  proceeding,  investigation,  administrative  hearing  or  any  other
proceeding whether civil, criminal,  administrative or investigative giving rise
to a claim for indemnification  hereunder.  Notwithstanding  the foregoing,  the
term  "Independent  Counsel"  shall  not  include  any  person  who,  under  the
applicable  standards  of  professional  conduct then  prevailing,  would have a
conflict of  interest in  representing  either the Company or  Indemnitee  in an
action to determine Indemnitee's rights under this Agreement.

     15. Headings. The headings of the paragraphs of this Agreement are inserted
for  convenience  only  and  shall  not be  deemed  to  constitute  part of this
Agreement or to affect the construction thereof.

     16.  Modification  and Waiver.  This  Agreement may be amended from time to
time to reflect  changes in Delaware law or for other  reasons.  No  supplement,
modification  or amendment of this Agreement shall be binding unless executed in
writing by both of the parties  hereto.  No waiver of any of the  provisions  of
this  Agreement  shall be  deemed  or shall  constitute  a waiver  of any  other
provision  hereof  (whether or not similar)  nor shall such waiver  constitute a
continuing waiver.

     17. Notice by Indemnitee.  Indemnitee agrees promptly to notify the Company
in writing upon being served with any summons,  citation,  subpoena,  complaint,
indictment,  information or other  document  relating to any matter which may be
subject  to  indemnification  or  advancement  of  Expenses  covered  hereunder;
provided, however, that the failure to give any such notice shall not disqualify
Indemnitee from indemnification hereunder.

     18.  Notices.  All  notices,  requests,  demands  and other  communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered  by hand and  receipted  for by the party to whom said notice or other
communication  shall  have  been  directed,  or  (ii)  mailed  by  certified  or
registered mail with postage  prepaid,  on the third business day after the date
on which it is so mailed:

                                       10
<PAGE>

               (a)  If to  Indemnitee,  to: The address shown beneath his or her
                                             signature on the last page hereof

                (b) If to the Company to:  Thermo Electron Corporation
                                            81 Wyman Street
                                            P.O. Box 9046
                                            Waltham, MA 02454-9046
                                            Attn: Corporate Secretary

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

     19.  Governing Law. The parties agree that this Agreement shall be governed
by, and  construed  and enforced in  accordance  with,  the laws of the State of
Delaware.

     20. Entire Agreement. This agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter  contained herein and supersedes
all  prior  agreements,  promises,  covenants,   arrangements,   communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto in respect of the subject matter contained
herein;  and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.

     IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on the
day and year first above written.

Attest:                                 THERMO ELECTRON CORPORATION


By:     /s/ Sheila J. Moylan            By:     /s/ Seth H. Hoogasian
      -----------------------           ----------------------------------------
                                        Name:   Seth H. Hoogasian
                                        Title:  Vice President, General Counsel
                                                and Secretary

                                        INDEMNITEE


                                        /s/ Marc N. Casper
                                        ----------------------------------------
                                        Marc N. Casper
                                        Address:  144 Clark Road
                                                  Brookline, MA  02445

                                       11
<PAGE>


                                                                       Exhibit D

Thermo Electron Corporation [logo]



                   COMPANY INFORMATION AND INVENTION AGREEMENT

     In consideration  and as a condition of my employment,  or if now employed,
the continuation of my employment by Thermo Electron Corporation or a subsidiary
thereof  (hereinafter  collectively  called the "Company") and the  compensation
paid therefor:

1.   I agree  not to  disclose  to others  or use for my own  benefit  during my
     employment  by the  Company  or  thereafter  any trade  secrets  or Company
     private information pertaining to any of the actual or anticipated business
     of the Company or any of its customers,  consultants, or licensees acquired
     by me during the period of my  employment,  except to such an extent as may
     be necessary in the ordinary  course of performing my particular  duties as
     an employee of the Company.

2.   I agree not to  disclose to the  Company,  or to induce the Company to use,
     any confidential information or material belonging to others.

3.   I understand that the making of inventions,  improvements,  and discoveries
     is one of the incidents of my employment,  or that if not I may nonetheless
     make  inventions  while  employed by the Company,  and I agree to assign to
     Thermo  Electron  Corporation  or its nominee my entire right,  title,  and
     interest in any invention,  idea, device, or process, whether patentable or
     not, hereafter made or conceived by me solely or jointly with others during
     the period of my  employment  by the Company in an  executive,  managerial,
     planning,  technical,  research,  engineering,  or other capacity and which
     relates in any manner to the  business  of the  Company,  or relates to its
     actual or planned research or development,  or is suggested or results from
     any task  assigned  to me or work  performed  by me for or in behalf of the
     Company,  except any  invention  or idea which  cannot be  assigned  by the
     Company  because  of  a  prior  agreement  with  ___none___________________
     effective  until  __________________________  (give  name and date or write
     "none").

4.   I agree, in connection with any invention, idea, device, or process covered
     by paragraph 3:

     a)   To disclose it promptly in writing to the proper  officers or attorney
          of the Company.

     b)   To execute promptly,  on request,  patent applications and assignments
          thereof to Thermo  Electron or its  nominees and to assist the Company
          in any reasonable  manner to enable it to secure a patent  therefor in
          the United  States and any  foreign  countries,  all  without  further
          compensation except as provided herein.
<PAGE>



5.   I further  agree that all papers and records of every kind  relating to any
     invention or improvement  included with the terms of the  Agreement,  which
     shall at any time come into my  possession  shall be the sole and exclusive
     property  of the Company  and shall be  surrendered  to the Company or upon
     request at any other time either  during or after the  termination  of such
     employment.

6.   I further  agree that the  obligations  and  undertakings  stated  above in
     paragraph 4b shall continue  beyond the termination of my employment by the
     Company,  but if I am  called  upon to  render  such  assistance  after the
     termination  of my  employment,  then I shall  be  entitled  to a fair  and
     reasonable per diem in addition to reimbursement  of any expenses  incurred
     at the request of the Company.

7.   I agree to identify in an  attachment to this  Agreement all  inventions or
     ideas related to the business or actual or planned  research or development
     of the Company in which I have right,  title,  or interest,  and which were
     conceived  either  wholly  or in part by me prior to my  employment  by the
     Company but neither  published  nor filed in the U.S.  Patent and Trademark
     Office.

8.   I  understand  that this  Agreement  supersedes  any  agreement  previously
     executed by me relating to the  disclosure,  assignment  and  patenting  of
     inventions,  improvements, and discoveries made during my employment by the
     Company.  This Agreement  shall inure to the benefits of the successors and
     assigns  of the  Company  and  shall be  binding  upon my  heirs,  assigns,
     administrators, and representatives.

9.   I  understand  that this  Agreement  does not apply to an  invention  which
     qualifies  fully under the  provisions of any statute or  regulation  which
     renders  unenforceable  the  required  assignment  or  transfer  of certain
     inventions made by an employee such as, but not limited to, Section 2870 of
     the California Labor Code.


                                        /s/ Marc N. Casper
                                        -----------------------------------
                                        Employee

/s/ Sheila J. Moylan                    November 29, 2001
- -----------------------                 -----------------------------------
Witness                                          Date

                                       THERMO ELECTRON CORPORATION


/s/ Sheila J. Moylan                    By:     /s/ Seth H. Hoogasian
- -----------------------                 -----------------------------------
Witness                                 Vice President, General Counsel and
                                        Secretary

                                        Date:   November 29, 2001

<PAGE>
                                                                       Exhibit E
Thermo Electron Corporation [logo]

                           Thermo Electron Corporation
                                Corporate Office
                       Pre-employment Drug Testing Policy

At Thermo  Electron  Corporation,  we are  committed to providing a  productive,
safe,  and drug free  workplace for our  employees.  As a result,  an employment
offer is conditional upon an applicant's  passing a pre-employment  examination,
which includes the collection and testing of the applicant's  urine specimen for
illegal drugs or controlled substances.  Failure to pass the test will result in
rejection for employment.

The  major  drug  and  drug   categories   tested  for  include:   amphetamines,
barbiturates,  benzodiazepines,  cocaine,  marijuana,  methadone,  methaqualone,
opiates,  phencyclidine,  and  propoxyphene.  The  testing  is  performed  by  a
reputable clinical laboratory  accredited by the College of American Pathologist
(CAP).  Comprehensive  and strict  procedures have been established to safeguard
confidentiality  and privacy for  prospective  employees.  When an initial  test
result  is  positive  (failing),  two  additional  tests,  (using  the  original
specimen) will be performed to confirm the test results.

The Human Resources  department will notify  applicants  regarding the status of
their  pre-employment  medical  examination.  Applicants who receive conditional
employment  offers are advised  against giving notice to their current  employer
until  medical  clearance  has  been  received.  Applicants  who do not pass the
drug-screening  test  will be  informed  that  they  cannot  be  considered  for
employment.

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

I have read the foregoing and hereby  authorize any company  designated  medical
examiner  to  conduct a drug  screening  test and  provide  the  results  to the
company, and I release the company and any designated institution or person from
any liability resulting from the medical examination.


                        Applicant's Name:  Marc N. Casper
                                           ------------------------------------

                        Signature: /s/ Marc N. Casper   Date:  11/21/01
                                   ------------------          -------------

                        Witness:   /s/ Sheila J. Moylan
                                   ------------------------

<PAGE>
                                                                       Exhibit F
                            --------------------------------------
[Thermo Electron
Corporation logo]     Title:  Business Conduct                Policies &
                              Policy                          Procedures

- -------------------------------------------------------------------------------
 Supersedes:          Date: March 26, 1999                    Total Pages:
 July 1, 1988                                                         4
                            No.
- -------------------------------------------------------------------------------


                             BUSINESS CONDUCT POLICY

POLICY

     It is the policy of Thermo Electron  Corporation  ("Thermo Electron" or the
"Company") to (i) require the highest standards of business ethics and integrity
on the part of all  employees  and (ii) to comply with all  applicable  laws and
regulations  in the conduct of its business.  To that end,  Thermo  Electron has
adopted and implemented this Business Conduct Policy.

     The Company's  management will vigorously enforce this Policy and will take
prompt and  appropriate  action,  which could include  termination,  against any
employee found to be in violation.

     The manager of each  Thermo  Electron  operating  unit is  responsible  for
providing  every  employee  in his  or her  operating  unit  with a copy  of the
Business  Conduct  Policy  and  establishing  reasonable  procedures  to promote
compliance with such policy.


SCOPE

     This policy applies to Thermo Electron Corporation and all of its worldwide
divisions, subsidiaries and affiliated companies.

<PAGE>

I. CONFLICTS OF INTEREST

     All employees are required to avoid any relationship with other individuals
or  organizations  that  might  impair,  or even  appear to  impair,  the proper
performance of their Company-related responsibilities.  Employees must avoid any
situation that might affect their  independence  of judgment with respect to any
business dealings between the Company and any other  organization or individual.
Any  employee  who  believes  that he or she may have such a  conflict,  whether
actual or potential, or who is aware of any conflict involving any other Company
employee,  must  report all  pertinent  details to his or her  Division or other
corporate  supervisor.  A conflict of interest situation can arise in many ways,
some of which are set forth below.

A. Related-Party Transactions

     Related-party  transactions are those in which the parties do not deal with
one another at arm's length. They include,  but are not limited to, any employee
of the Company who is in a position to influence a business  transaction between
the Company and: (1) an  individual  who is his or her spouse,  child,  sibling,
parent, partner,  present or former close business associate;  (2) a non-Company
organization  for which he or she  currently  serves as an  officer,  trustee or
partner, or for which he or she has recently served in such capacity; or (3) any
individual or organization  with whom he or she is negotiating,  or with whom he
or she has an arrangement, concerning prospective employment.

     The Company should avoid  significant  related-party  transactions.  If any
employee believes that a significant  related-party  transaction exists or might
occur, he or she must make full disclosure to the appropriate  executive.  After
such full disclosure, the existing or potential conflict will be reviewed, and a
decision  will  be  made  about  whether  the   related-party   transaction   is
appropriate, and whether the Company should proceed with the transaction.

B. Outside Business Interests

     Employees are expected to give their full and undivided  attention to their
Company duties. They should not use Company facilities or their association with
the  Company  to carry on a  private  business  or  profession.  Unless  express
approval  is obtained in advance  from his or her direct  supervisor,  employees
shall  not  engage  in a  profit-making  business,  or  become  involved  with a
nonprofit  organization,  outside of their employment with the Company,  if such
business or organization:

          o    Provides goods, services or assistance to a competitor,  customer
               or supplier of the Company; or

          o    Interferes with the employee's assigned duties at the Company.

                                       2
<PAGE>

C. Acceptance of Costly Entertainment or Gifts

     Employees are prohibited from accepting or giving costly  entertainment  or
gifts from or to suppliers, competitors or customers; such situations may create
either a conflict or the  appearance of a conflict  between the interests of the
employee and the Company. Where acceptance of such a gift is unavoidable because
of local  custom,  the  employee  must  report  the  matter to his or her direct
supervisor so a determination  can be made concerning the extent to which such a
gift can be considered the personal property of the recipient.

D. Confidential Business Information

     Confidential  business  information  is  information  acquired  by  Company
employees as a result of their position with the Company,  which pertains to the
Company,  and  which has not been  disclosed  to the  public.  The  Company  has
proprietary  rights  to  such  confidential  business  information.   Therefore,
employees are prohibited from using such confidential  business  information for
their financial gain, for the financial gain of any other person, or to obtain a
benefit of any kind.

     All Company employees are prohibited from engaging,  or assisting others in
engaging,  in any transactions  involving the securities of the Company,  or the
securities of any other entity with whom the Company is engaged, or with whom it
will be engaged, in a business transaction,  while in possession of any material
confidential  information  about the Company or the other entity.  Such acts may
constitute violations of the law and could result in criminal prosecution of the
individual and the Company, or result in serious fines or penalties.

II. COMPLIANCE WITH LAWS

     All Company  employees are prohibited  from engaging in any  transaction or
matter on behalf of the  Company  which  would  violate  any  applicable  law or
regulation.

III. USE OF COMPANY FUNDS

     The use of Company funds for any unlawful or unethical  purpose is strictly
prohibited. Employees are prohibited from making, or causing others to make, any
illegal  payment to anyone within the United States,  or to any officials of any
foreign  government,  including  for the  purpose  of  advancing,  promoting  or
expediting Company interests.  Such prohibited  payments include money,  favors,
gifts,  entertainment,  or use of Company facilities.  Similarly,  all employees
also must be careful that any acts of  hospitality  toward public  officials and
Government  employees avoid  compromising the integrity or the reputation of the
Company or the public official or Government employee.

IV. POLITICAL CONTRIBUTIONS

     Political contributions to U.S. federal election campaigns made directly or
indirectly  from  Company  funds  are  prohibited.  The  legality  of  political


                                       3
<PAGE>

contributions to state,  local or foreign campaigns or causes must be determined
on a  jurisdiction-by-jurisdiction  basis and,  therefore,  must be  approved in
advance by the Corporate Legal Department.  Political  contributions include any
donation,  gift,  or loan of Company  funds,  assets,  or property,  directly or
indirectly,  to or  for  the  benefit  of any  political  party,  committee,  or
candidate,  and any use of Company  funds,  assets,  or  property,  directly  or
indirectly to oppose or support any  Government or  subdivision  thereof,  or to
oppose  or to  support  any  candidate  or  office-holder.  This  includes:  (a)
donations,  gifts,  or loans of  funds,  assets  or  property  which are made by
employees or third persons,  such as agents, or consultants,  who are reimbursed
in any  way by the  Company;  (b) the  uncompensated  use of  Company  services,
facilities,  or property;  and (c) loans, loan guarantees or other extensions of
credit.

V. CONSULTANTS AND REPRESENTATIVES

     Consultants  and   representatives   shall  only  be  retained  for  proper
commercial  purposes and in accordance  with Company  policy.  Compensation  for
consultants and representatives  shall be comparable to that customarily paid in
the locale and commensurate with the nature and scope of the service.

VI. PROPER ACCOUNTING

     Compliance with accepted  accounting rules and internal accounting controls
is required at all times. The books and accounts,  documentation  supporting the
disbursement of funds, and all other Company  financial  records must accurately
and fairly reflect all transactions.

VII. ADMINISTRATION AND INTERPRETATION

     Considering  the  complexity  of  this  Business  Conduct  Policy,  and the
determination of the Company's  management and Board of Directors to comply with
both the  letter  and  spirit  of all  applicable  laws and  regulations,  it is
recognized that questions of interpretation  will arise. All questions  relating
to these  policies  are to be  addressed  to your  direct  supervisor  who shall
consult with other officers, as appropriate.

VIII. COMPLIANCE LINE

     Employees of all Thermo Electron companies, subsidiaries, and divisions who
observe or suspect a violation of law,  regulation,  or Thermo Electron Policies
and  Procedures,   may  contact  Thermo  Electron's  Compliance  Line.  Specific
information  related to the Compliance  Line may be found in the Compliance Line
Policy attached to this Policy as Appendix A.



                                       4
<PAGE>



                                                                      Appendix A




                         THERMO ELECTRON COMPLIANCE LINE


Policy

     Thermo  Electron is committed to  compliance  with the laws that affect the
conduct of our  business  and to the highest  standards  of business  ethics and
integrity. In order to help ensure compliance with the law and Company policies,
Thermo Electron has instituted a "hot-line" for employees of all Thermo Electron
companies  to use to report  conduct  that  might  involve  illegality  or other
violations of the Thermo Electron Policies and Procedures.

Scope

     This policy applies to employees of all Thermo Electron Corporation and all
of its worldwide divisions, subsidiaries, and affiliated companies.

Procedures

     If an employee  observes or suspects a violation of a law or  regulation or
other elements of the Thermo Electron Policies and Procedures,  the employee may
contact the Compliance  Line.  The  Compliance  Line may be reached by telephone
toll-free in the United States at 1-888-267-5255.  For employees located outside
of the U.S., the telephone number for the Compliance Line is  781-622-1226.  The
Compliance  Line staff will take your calls  between 9 a.m.  and 5 p.m.  Eastern
Time.  After normal  business  hours,  you may leave a voice mail message at the
same numbers and the Compliance  Line staff will return your call. If you prefer
to contact the Compliance Line in writing, the address is:

                           Thermo Electron Corporation
                           Attn: Compliance Line
                           P.O. Box 9046
                           81 Wyman Street
                           Waltham, MA 02454-9046

     All calls will be documented  by the  Compliance  Line staff,  and then the
subject is referred to Thermo  Electron's  Legal  Department,  which  determines
whether an investigation  is appropriate.  Callers may remain  anonymous.  Calls
will be treated confidentially to the extent it is legally permissible to do so.

     Callers to the Compliance Line should be prepared to describe the situation
as completely as they can, including dates, names, facilities and/or departments
involved, and names of other employees who would provide additional information.
Callers should  contact the Compliance  Line even if they do not have all of the


<PAGE>


facts or if they are unsure if there is a problem. The Compliance Line staff, in
conjunction  with the  Thermo  Electron  Legal  Department,  will  look into the
information provided, attempt to verify it, and take appropriate action.

     Contact the Compliance Line to report possible violations related to, among
other things:

                    Environmental Laws
                    Health and Safety Laws
                    Antitrust Laws
                    Export/Import Laws
                    Food and Drug Laws
                    Government Contracts Laws
                    Theft, Bribes, and Kickbacks
                    Fraudulent Transactions
                    Conflicts of Interest
                    Insider Trading and Other Securities Laws
                    Improper Political Contributions
                    Violations of the Thermo Electron Policies and Procedures,
                    Including the Business Conduct Policy

     Because  each  company,  subsidiary,  and  division  already has  extensive
compliance  procedures  for  employment  issues  relating to age,  race,  color,
national  origin,  religion,  sex, and  handicap,  it is not  expected  that the
Compliance  Line will  normally be used to resolve such issues.  The  Compliance
Line should not be  contacted  in lieu of an  employee's  local human  resources
department for employment-based issues.



<PAGE>

                                                July 16, 1999


All Employees of Thermo Electron Corporation and Subsidiaries


Re:      Thermo Electron Business Conduct Policy

     Since its  organization in 1956,  Thermo Electron  Corporation has required
the highest  standards of business  ethics and integrity of its  employees.  Our
adherence to strict ethical standards has contributed directly to the success of
our Company.

     Thermo Electron has grown  significantly,  both through internal  expansion
and through the  addition of acquired  companies.  This growth  means that large
numbers of new employees  are joining us who may be unfamiliar  with the conduct
expected of all Thermo Electron employees.

     It is  necessary,  therefore,  to  emphasize  from time to time the ethical
standards  that we strive to maintain.  These  standards  are  reflected in this
Business  Conduct Policy.  I ask you to read the Policy  carefully and to review
the rules that it sets forth,  not as  impediments to your job, but as necessary
components  of your  success as an employee and Thermo  Electron's  success as a
company.  The simple  fact is that only people and  companies  that do the right
thing do well in business over the long run.

     Please remember that no set of rules can cover all possible situations. Nor
can we foresee  future  changes,  in our  business or in society.  The  Business
Conduct  Policy is intended as a guide in the  performance  of your job. But, in
the end, we rely on you to apply these  guidelines  in good faith to the best of
your ability.

     It is my  practice to  maintain  an "open  door" for any  employee  who has
concerns about Company practices that the employee is unable to resolve with his
or her supervisors. We have established a "Compliance Line" where employees with
concerns  about  possible  improper  behavior may call toll free. The Compliance
Line Policy is attached to the  Business  Conduct  Policy as Appendix A. Despite
the existence of the Compliance Line,  please feel free to communicate with your
Company  President  or me in  writing,  on an  anonymous  basis if you wish,  to
discuss any matter pertaining to the Business Conduct Policy. Let me conclude by
reiterating that I strongly believe that high ethical  standards are an absolute
necessity  for success and that I appreciate in advance your help in making sure
we follow that approach.


Sincerely,

/S/

Richard F. Syron
President and Chief Executive Officer



<PAGE>
Exhibit G

Thermo Electron Corporation [logo]

                           THERMO ELECTRON CORPORATION

                  POLICY ON DRUGS AND ALCOHOL IN THE WORKPLACE

We wish to alert  employees  to the  dangers  of drug and  alcohol  abuse in the
workplace. These include the potential for workplace accidents and failures that
can pose a serious  threat to the health and safety of the  employee and others.
Drug and alcohol abuse affects an employee's  reliability,  stability,  and good
judgement  necessary for the safe performance of work for the Company.  Improper
use  of  alcohol,   controlled  substances,   or  illegal  drugs  increases  the
possibility  of workplace  thefts and of outside  pressure and coercion that can
pose a serious risk to an employee's  health,  safety,  and financial  security.
Problems of productivity,  reliability, and absenteeism can reduce an employee's
work effectiveness and result in job loss.

POLICY ON DRUGS AND ALCOHOL IN THE WORK PLACE

It is the Company's policy to maintain a productive and safe workplace free from
the influence of alcohol,  controlled  substances,  or illegal drugs. A drug and
alcohol  awareness  program will be conducted  periodically to inform  employees
about  the  dangers  of  workplace  drug and  alcohol  abuse,  the  terms of the
Company's policy,  the availability of counseling and  rehabilitation  services,
and the  penalties  that may be imposed on employees  for drug or alcohol  abuse
violations.  Employees who perform work on  government  contracts or pursuant to
government  grants are  required to sign a statement  that they have  received a
copy of the Company's policy and that they will abide by its terms.

REHABILITATION PROGRAMS

Drug and alcohol  abuse  rehabilitation  and  assistance  programs are available
through the Company's medical insurance program.  Employees with drug or alcohol
abuse problems are strongly encouraged to participate in these programs.

DISCIPLINE AND DISCHARGE

In accordance  with federal funding and  contracting  requirements,  the Company
strictly  prohibits  the  unlawful  manufacture,   distribution,   dispensation,
possession,  or use of alcohol by any  employee on Company  premises or vehicles
during working hours.  Use of alcohol,  illegal drugs, or controlled  substances
that affects workplace performance or conduct is likewise prohibited.

Violation  of this  policy  will  result in  appropriate  discipline,  up to and
including  immediate  discharge.  Employees are cautioned that discipline  under
this policy may include  participation  in a drug or alcohol  rehabilitation  or
assistance program as a condition of continued employment.
<PAGE>

NOTICE OF CONVICTION

Any employee who is  convicted  of violating  criminal  drug statute for conduct
occurring  in or near the  workplace  must notify the Company no later that five
days after  conviction.  Failure to notify the  Company in a timely  manner will
result in discharge.

We regret the necessity of these types of precautions, but the protection of our
employees, property, and general public certainly warrants such action.











</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>4
<FILENAME>tmok01ex10-31.txt
<TEXT>
                                                                   Exhibit 10.31


                    Amendments to Certain Stock Option Plans
               ---------------------------------------------------


Effective  as of  February  7, 2002,  all frozen  stock  option  plans of Thermo
Electron Corporation (the "Company") and all stock option plans of the Company's
subsidiaries  assumed by the  Company were amended as follows:

- -    to clarify the language  regarding  restricted stock awards to provide that
     any  dividends  received on  restricted  stock would also be subject to the
     restrictions of the restricted stock;

- -    to  delete  all  provisions  permitting  the  Company  to make a loan to an
     optionee in order to fund the  purchase of shares upon the  exercise of the
     option;

- -    to provide  that  options  can only be  exercised  in  accordance  with the
     instructions established by the plan administrator;

- -    to  provide  that  obligations  to pay any  federal,  state or local  taxes
     required  to be  withheld  in  accordance  with  the  plan  administrator's
     instructions;

- -    amended to provide  that stock  purchased  on the  exercise of an option be
     paid for in accordance with the plan administrator's instructions;

- -    to include a list of adjustments the Board may make upon recapitalizations,
     mergers  and  the  like  to  the  "adjustments  in  the  event  of  certain
     transactions" provision; and

- -    to  make  the  "administration"  provision  consistent  with  that  of  the
     Company's 2001 Equity Incentive Plan, as amended.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.2
<SEQUENCE>5
<FILENAME>tmok01ex4-2.txt
<TEXT>
                                                                     Exhibit 4.2



                                RIGHTS AGREEMENT



                          dated as of October 29, 2001

                                 by and between



                           THERMO ELECTRON CORPORATION



                                       and



                     AMERICAN STOCK TRANSFER & TRUST COMPANY

                                 as Rights Agent


<PAGE>

     RIGHTS AGREEMENT,  dated as of October 29, 2001 (the "Agreement"),  between
Thermo  Electron  Corporation,  a  Delaware  corporation  (the  "Company"),  and
American Stock Transfer & Trust Company, a New York corporation, as Rights Agent
(the "Rights Agent").

                               W I T N E S S E T H

WHEREAS,  on January  19,  1996,  the Board of  Directors  of the  Company  (the
"Board")  authorized and declared a dividend  distribution of one Right for each
share of Common Stock (as hereinafter defined) of the Company outstanding at the
close of business on January 29, 1996 (the "Record  Date"),  and  authorized the
issuance of one Right (as such number may  hereinafter  be adjusted  pursuant to
the  provisions  of Section  11(i) or Section  11(p)  hereof)  for each share of
Common Stock of the Company issued  between the Record Date (whether  originally
issued  or  delivered  from  the  Company's  treasury)  and the  earlier  of the
Distribution Date or the Expiration Date, each Right initially  representing the
right to purchase one ten-thousandth of a share of Series B Junior Participating
Preferred  Stock of the Company having the rights,  powers and  preferences  set
forth in the form of Certificate of  Designations  attached hereto as Exhibit A,
upon the  terms  and  subject  to the  conditions  hereinafter  set  forth  (the
"Rights");

NOW,  THEREFORE,  in  consideration  of the premises  and the mutual  agreements
herein set forth, the parties hereby agree as follows:

     Section  1.  Certain  Definitions.  For  purposes  of this  Agreement,  the
following terms have the meanings indicated:

     (a)  "Acquiring  Person" shall mean any Person who or which,  together with
all Affiliates and Associates of such Person,  shall be the Beneficial  Owner of
15% or more of the  shares  of  Common  Stock  then  outstanding,  but shall not
include (i) the Company, (ii) any Subsidiary of the Company,  (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, (iv) any Person
organized,  appointed or established by the Company for or pursuant to the terms
of any such plan, or (v) the Exempted Person. Notwithstanding the foregoing, (x)
no Person shall become an "Acquiring  Person" as the result of an acquisition of
Common Stock by the Company that, by reducing the number of shares  outstanding,
increases the proportionate  number of shares  beneficially owned by such Person
to 15% or more of the shares of Common  Stock of the Company  then  outstanding;
provided,  however, that if a Person shall become the Beneficial Owner of 15% or
more of the shares of Common Stock of the Company then outstanding as the result
of an  acquisition of Common Stock by the Company and shall,  following  written
notice from, or public  disclosure by the Company of such share purchases by the
Company  become  the  Beneficial  Owner of any  additional  Common  Stock of the
Company  and shall  then  beneficially  own 15% or more of the  shares of Common
Stock then  outstanding,  then such Person  shall be deemed to be an  "Acquiring
Person"  and (y) if the Board  determines  in good faith that a Person who would
otherwise  be an  "Acquiring  Person,"  as  defined  pursuant  to the  foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable  (as determined in good faith by the Board of
Directors),  but in any event  within 15  Business  Days,  following  receipt of
written  notice from the Company of such event,  of  Beneficial  Ownership  of a
sufficient  number of shares of Common Stock so that such Person would no longer
be an "Acquiring  Person," as defined  pursuant to the  foregoing  provisions of

<PAGE>

this  paragraph  (a),  then such Person shall not be deemed to be an  "Acquiring
Person" for any  purposes of this  Agreement  unless and until such Person shall
again become an "Acquiring Person."

     (b) "Act" shall mean the Securities Act of 1933, as amended.

     (c) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such  terms in Rule  12b-2 of the  General  Rules and  Regulations  under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") as in effect on
the date of this Agreement.

     (d)  "Adjustment  Shares"  shall  have the  meaning  set  forth in  Section
11(a)(ii).

     (e) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own," any securities:

          (i) that such Person or any of such Person's Affiliates or Associates,
     directly  or  indirectly,  owns or has the right to acquire  (whether  such
     right  is  exercisable  immediately  or only  after  the  passage  of time)
     pursuant  to  any  agreement,  arrangement  or  understanding  (other  than
     customary  agreements  with and  between  underwriters  and  selling  group
     members with respect to a bona fide public offering of securities), whether
     or not in writing,  or upon the  exercise of  conversion  rights,  exchange
     rights, other rights, warrants or options, or otherwise; provided, however,
     that a --------  ------- Person shall not be deemed the "Beneficial  Owner"
     of, or to "beneficially  own," (A) securities tendered pursuant to a tender
     or  exchange  offer  made by or on  behalf  of such  Person  or any of such
     Person's  Affiliates  or  Associates  until such  tendered  securities  are
     accepted for purchase or exchange, or (B) securities issuable upon exercise
     of Rights at any time prior to the occurrence of a Triggering Event, or (C)
     securities  issuable upon exercise of Rights from and after the  occurrence
     of a Triggering  Event which Rights were  acquired by such Person or any of
     such Person's  Affiliates or Associates prior to the  Distribution  Date or
     pursuant to Section  3(a) or Section 22 hereof (the  "Original  Rights") or
     pursuant to Section 11(i) hereof in connection with an adjustment made with
     respect to any Original Rights;

          (ii)  that  such  Person  or  any  of  such  Person's   Affiliates  or
     Associates,  directly or indirectly, has the right to vote or dispose of or
     has "beneficial  ownership" of (as determined pursuant to Rule 13d-3 of the
     General Rules and Regulations  under the Exchange Act, or any comparable or
     successor  rule),  including  pursuant  to any  agreement,  arrangement  or
     understanding   (other   than   customary   agreements   with  and  between
     underwriters  and selling  group members with respect to a bona fide public
     offering of securities), whether or not in writing; provided, however, that
     a Person shall not -------- ------- be deemed the "Beneficial Owner" of, or
     to  "beneficially  own," any  security  under this  subparagraph  (ii) as a
     result of an agreement,  arrangement or understanding to vote such security
     if such agreement,  arrangement or understanding:  (A) arises solely from a
     revocable  proxy or consent  given in response to a public proxy or consent
     solicitation  made  pursuant to, and in  accordance  with,  the  applicable
     provisions of the General Rules and Regulations under the Exchange Act, and


                                       2
<PAGE>

     (B) is not then  reportable  by such  Person  on  Schedule  13D  under  the
     Exchange Act (or any comparable or successor report); or

          (iii) that are  beneficially  owned,  directly or  indirectly,  by any
     other Person (or any Affiliate or Associate thereof) with which such Person
     (or any of such  Person's  Affiliates  or  Associates)  has any  agreement,
     arrangement  or  understanding  (other than customary  agreements  with and
     between  underwriters and selling group members with respect to a bona fide
     public offering of securities)  whether or not in writing,  for the purpose
     of acquiring,  holding,  voting  (except  pursuant to a revocable  proxy or
     consent as described in the proviso to subparagraph  (ii) of this paragraph
     (e)) or disposing of any voting securities of the Company.

For all purposes of this  Agreement,  any calculation of the number of shares of
Common Stock  outstanding  at any  particular  time,  including  for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial  Owner,  shall be made in accordance  with
the last sentence of Rule  13d-3(d)(l)(i)  of the General Rules and  Regulations
under the Exchange Act.

     (f) "Board"  shall have the meaning set forth in the WHEREAS  clause at the
beginning of this Agreement.

     (g)  "Business  Day" shall mean any day other than a Saturday,  Sunday or a
day on which  banking  institutions  in the State of New York are  authorized or
obligated by law or executive order to close.

     (h) "Close of  business"  on any given date shall mean 5:00 p.m.,  New York
time, on such date; provided,  however,  that if such date is not a Business Day
it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.

     (i) "Common  Stock" shall mean the common  stock,  $1.00 par value,  of the
Company, except that "Common Stock" when used with reference to any Person other
than the Company  shall mean the capital  stock of such Person with the greatest
voting power, or the equity  securities or other equity interest having power to
control or direct the management, of such Person.

     (j) "Common stock  equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.

     (k)  "Company"  shall  have  the  meaning  set  forth  in the  introductory
paragraph hereof.

     (l)  "Current  market  price"  shall have the  meaning set forth in Section
11(d)(i) hereof.

     (m) "Current Value" shall have the meaning set forth in Section  11(a)(iii)
hereof.

                                       3
<PAGE>

     (n)  "Distribution  Date" shall have the meaning set forth in Section  3(a)
hereof.

     (o)  "Equivalent  Preferred  Stock"  shall  have the  meaning  set forth in
Section 11(b) hereof.

     (p) "Exchange Act" shall have the meaning set forth in Section 1(c) hereof.

     (q)  "Exchange  Ratio"  shall have the meaning  set forth in Section  24(a)
hereof.

     (r)  "Expiration  Date" shall have the  meaning  set forth in Section  7(a)
hereof.

     (s) "Final Expiration Date" shall mean the close of business on January 29,
2006.

     (t)  "Permitted  Offer" shall mean a tender offer or an exchange  offer for
all outstanding shares of Common Stock at a price and on terms determined, prior
to the  consummation  of such  tender  offer or  exchange  offer,  by  directors
constituting  at least 75% of all of the members of the Board,  after  receiving
advice from a nationally  recognized  investment  banking  firm  selected by the
Board,  to be (a) at a price that is fair to  stockholders  (taking into account
all factors  that such  members of the Board deem  relevant  including,  without
limitation,  prices  that could  reasonably  be  achieved  if the Company or its
assets were sold on an orderly basis designed to realize  maximum value) and (b)
otherwise in the best interests of the Company and its stockholders.

     (u) "Person" shall mean any  individual,  firm,  corporation,  partnership,
trust, association, limited liability company or other entity.

     (v)  "Preferred  Stock" shall mean shares of Series B Junior  Participating
Preferred  Stock,  $100  par  value,  of  the  Company  having  the  rights  and
preferences  set forth in the form of  Certificate of  Designations  attached to
this  Agreement  as Exhibit A and, to the extent that there is not a  sufficient
number of shares of Series B Junior Participating  Preferred Stock authorized to
permit the full  exercise of the Rights,  any other series of  Preferred  Stock,
$100 par value,  of the Company  designated  for such purpose  containing  terms
substantially  similar  to  the  terms  of the  Series  B  Junior  Participating
Preferred Stock.

     (w)  "Principal  Party"  shall have the meaning set forth in Section  13(b)
hereof.

     (x)  "Purchase  Price"  shall have the  meaning  set forth in Section  4(a)
hereof.

     (y) "Record Date" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.

     (z)  "Redemption  Date" shall have the  meaning  set forth in Section  7(a)
hereof.

     (aa)  "Redemption  Price" shall have the meaning set forth in Section 23(a)
hereof.

                                       4
<PAGE>

     (bb) "Rights" shall have the meaning set forth in the WHEREAS clause at the
beginning of this Agreement.

     (cc) "Rights  Agent"  shall have the meaning set forth in the  introductory
paragraph hereof.

     (dd) "Rights Certificates" shall have the meaning set forth in Section 3(a)
hereof.

     (ee) "Section  11(a)(ii)  Event" shall mean an  acquisition of Common Stock
described in the first sentence of Section 11(a)(ii) hereof.

     (ff) "Section  11(a)(ii)  Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.

     (gg) Section 13 Event"  shall mean any event  described in clauses (x), (y)
or (z) of Section 13(a) hereof.

     (hh)  "Spread"  shall  have the  meaning  set forth in  Section  11(a)(iii)
hereof.

     (ii)  "Stock  Acquisition  Date"  shall  mean  the  first  date  of  public
announcement  (which,  for purposes of this definition,  shall include,  without
limitation,  a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an  Acquiring  Person that an  Acquiring  Person has become such;
provided,  however, that, if such Person is deemed not to be an Acquiring Person
pursuant to clause (y) of Section 1(a) hereof,  no Stock  Acquisition Date shall
be deemed to have occurred.

     (jj) "Subsidiary" shall mean, with reference to any Person, any corporation
or other entity of which an amount of voting  securities  sufficient to elect at
least a majority of the directors (or  comparable  body) of such  corporation or
other entity is beneficially owned,  directly or indirectly,  by such Person, or
otherwise controlled by such Person.

     (kk)  "Substitution  Period"  shall have the  meaning  set forth in Section
11(a)(iii) hereof.

     (ll)  "Trading  Day" shall have the meaning  set forth in Section  11(d)(i)
hereof.

     (mm)  "Triggering  Event"  shall mean any  Section  11(a)(ii)  Event or any

Section 13 Event.

     Section 2.  Appointment of Rights Agent.  The Company  hereby  appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof,  shall prior to the Distribution  Date also
be the holders of the Common Stock) in accordance  with the terms and conditions
hereof,  and the Rights Agent hereby accepts such  appointment.  The Company may
from time to time  appoint  such  Co-Rights  Agents as it may deem  necessary or
desirable  upon ten (10) days' prior  written  notice to the Rights  Agent.  The
Rights  Agent shall have no duty to  supervise,  and shall in no event be liable
for, the acts or omissions of any such co-Rights Agent.

                                       5
<PAGE>

Section 3.        Issuance of Rights.

     (a) Until the earlier of (i) the close of  business  on the tenth  Business
Day after the Stock  Acquisition  Date (or, if the tenth  Business Day after the
Stock  Acquisition  Date occurs before the Record Date, the close of business on
the Record  Date),  or (ii) the close of business on the tenth  Business Day (or
such later date as may be determined by action of the Board) after the date that
a tender or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company,  or any Person  organized,  appointed or established by the Company
for or  pursuant  to the terms of any such plan) is first  published  or sent or
given  within the  meaning of Rule 14d-2 of the  General  Rules and  Regulations
under the Exchange Act, if upon consummation  thereof,  such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock then  outstanding,
in either  instance other than pursuant to a Permitted Offer (the earlier of (i)
and (ii) being herein referred to as the  "Distribution  Date"),  (x) the Rights
will be evidenced by the  certificates  for the Common Stock  registered  in the
names of the holders of the Common  Stock (which  certificates  for Common Stock
shall  be  deemed  also to be  certificates  for  Rights)  and  not by  separate
certificates,  and (y) the Rights will be  transferable  only in connection with
the transfer of the underlying  shares of Common Stock  (including a transfer to
the Company).  As soon as practicable  after the  Distribution  Date, the Rights
Agent will send by  first-class,  insured,  postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Distribution Date,
at the address of such holder shown on the records of the  Company,  one or more
rights certificates,  in substantially the form of Exhibit B hereto (the "Rights
Certificates"),  evidencing  one Right for each  share of Common  Stock so held,
subject to adjustment as provided  herein.  With respect to certificates for the
Common Stock  outstanding as of the close of business on the Record Date,  until
the Distribution Date, the Rights will be evidenced by such certificates for the
Common  Stock and the  registered  holders of the Common Stock shall also be the
registered holders of the associated Rights. In addition, in connection with the
issuance or sale of shares of Common Stock following the  Distribution  Date and
prior to the redemption or expiration of the Rights, the Company (i) shall, with
respect to shares of Common Stock so issued or sold  pursuant to the exercise of
stock  options or under any employee  benefit plan or  arrangement,  or upon the
exercise,  conversion or exchange of securities granted or issued by the Company
prior to the  Distribution  Date,  and (ii) may,  in any other  case,  if deemed
necessary or appropriate by the Board,  issue Rights  Certificates  representing
the  appropriate  number of Rights in  connection  with such  issuance  or sale;
provided,  however,  that (x) no such Rights Certificate shall be issued if, and
to the extent that,  the Company  shall be advised by counsel that such issuance
would create a  significant  risk of material  adverse tax  consequences  to the
Company or the Person to whom such Rights  Certificate would be issued,  and (y)
no  such  Rights  Certificate  shall  be  issued  if,  and to the  extent  that,
appropriate  adjustment  shall  otherwise have been made in lieu of the issuance
thereof.  In the event that an  adjustment  in the number of Rights per share of
Common Stock has been made pursuant to Sections  11(i) or 11(p)  hereof,  at the
time of  distribution  of the Rights  Certificates,  the Company  shall make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights  Certificates  representing  only whole numbers of Rights
are  distributed  and cash is paid in lieu of any fractional  Rights.  As of and
after the Distribution  Date, the Rights will be evidenced solely by such Rights
Certificates.

                                       6
<PAGE>

     (b) As promptly as practicable  following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Stock, in substantially
the form attached hereto as Exhibit C, by first-class,  postage-prepaid mail, to
each record holder of the Common Stock as of the close of business on the Record
Date,  at the address of such holder  shown on the records of the  Company.  The
failure  to  send  a copy  of  the  Summary  of  Rights  shall  not  affect  the
enforceability  of any part of this Rights Agreement or the rights of any holder
of the Rights.

     (c) Rights  shall be issued  (i) in  respect of all shares of Common  Stock
that are issued (either as an original issuance or from the Company's  treasury)
after the Record Date but prior to the earlier of the  Distribution  Date or the
Expiration  Date and (ii) in  connection  with the issuance or sale of shares of
Common Stock  following  the  Distribution  Date and prior to the  redemption or
expiration of the Rights (x) with respect to shares of Common Stock so issued or
sold  pursuant to the exercise of stock  options or under any  employee  benefit
plan or arrangement, or upon the exercise, conversion or exchange of securities,
granted or issued by the  Company  prior to the  Distribution  Date and (y) with
respect to shares of Common Stock so issued or sold in any other case, if deemed
necessary or appropriate by the Board.  Certificates representing such shares of
Common Stock (including,  without limitation,  certificates issued upon transfer
or exchange of Common Stock) shall also be deemed to be certificates for Rights,
and shall bear the following legend:

               This certificate also evidences and entitles the holder hereof to
               certain  Rights  as set  forth in the  Rights  Agreement  between
               Thermo  Electron  Corporation  (the "Company") and American Stock
               Transfer & Trust Company (the "Rights  Agent") as such  Agreement
               may be amended  from time to time (the "Rights  Agreement"),  the
               terms of which are hereby  incorporated herein by reference and a
               copy of which is on file at the principal offices of the Company.
               Under  certain   circumstances,   as  set  forth  in  the  Rights
               Agreement, such Rights will be evidenced by separate certificates
               and will no longer be evidenced by this certificate.  The Company
               will mail to the holder of this  Certificate a copy of the Rights
               Agreement,  as in effect on the date of mailing,  without  charge
               promptly  after  receipt  of a written  request  therefor.  Under
               certain  circumstances set forth in the Rights Agreement,  Rights
               issued  to, or held by,  any  Person  who is,  was or  becomes an
               Acquiring  Person or any Affiliate or Associate  thereof (as such
               terms are  defined in the Rights  Agreement),  whether  currently
               held by or on behalf of such Person or by any subsequent  holder,
               may become null and void.

With respect to such  certificates  containing the foregoing  legend,  until the
earlier of (i) the  Distribution  Date and (ii) the Expiration  Date, the Rights
associated  with the Common  Stock  represented  by such  certificates  shall be
evidenced  by such  certificates  alone and  registered  holders of Common Stock
shall also be the registered holders of the associated  Rights.  Notwithstanding
this Section 3(c), the omission of a legend shall not affect the  enforceability
of any part of this Rights Agreement or the rights of any holder of the Rights.

                                       7
<PAGE>

     (d) Until the earlier of the Distribution Date and the Expiration Date, the
transfer of any certificates  representing  shares of Common Stock in respect of
which Rights have been issued shall also  constitute  the transfer of the Rights
associated  with such  shares of Common  Stock.  In the event  that the  Company
purchases or acquires any shares of Common Stock after the Record Date but prior
to the Distribution Date, any Rights associated with such shares of Common Stock
shall be deemed  cancelled and retired so that the Company shall not be entitled
to exercise  any Rights  associated  with the shares of Common Stock that are no
longer outstanding.

Section 4.        Form of Rights Certificates.


     (a) The  Rights  Certificates  (and the  forms  of  election  to  purchase,
certification and assignment to be printed on the reverse thereof) shall each be
substantially  in the form set forth in Exhibit B hereto and may have such marks
of  identification  or designation  and such legends,  summaries or endorsements
printed thereon as the Company may deem  appropriate and as are not inconsistent
with the provisions of this Agreement,  or as may be required to comply with any
applicable law or with any rule or regulation made pursuant  thereto or with any
rule or regulation of any stock exchange or over-the-counter market on which the
Rights may from time to time be listed,  or to conform to usage.  Subject to the
provisions of Sections 7, 11 and 22 hereof,  the Rights  Certificates,  whenever
distributed,  shall  entitle the holders  thereof to purchase such number of one
ten-thousandths  of a share of Preferred  Stock as shall be set forth therein at
the price set forth therein (such  exercise  price per one  ten-thousandth  of a
share, the "Purchase Price"), but the amount and type of securities  purchasable
upon the exercise of each Right and the Purchase  Price thereof shall be subject
to adjustment as provided herein.

     (b) Any Rights  Certificate  issued pursuant to Section 3, Section 11(i) or
Section 22 hereof that represents Rights  beneficially owned by persons known to
be: (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee  after the  Acquiring  Person  becomes such, or (iii) a
transferee of an Acquiring  Person (or of any such  Associate or Affiliate)  who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer  (whether or not
for  consideration)  from the Acquiring Person to holders of equity interests in
such Acquiring  Person or to any Person with whom such Acquiring  Person has any
continuing agreement,  arrangement or understanding  (whether or not in writing)
regarding the transferred Rights or (B) a transfer that the Board has determined
is part of a plan, arrangement or understanding (whether or not in writing) that
has as a primary  purpose or effect  avoidance of Section  7(e) hereof,  and any
Rights  Certificate  issued  pursuant  to Section 6 or  Section  11 hereof  upon
transfer,  exchange,  replacement or adjustment of any other Rights  Certificate
referred  to in this  sentence,  shall  contain  (to the  extent  feasible)  the
following legend:

                    The Rights  represented  by this Rights  Certificate  are or
                    were  beneficially  owned by a Person  who was or  became an
                    Acquiring   Person  or  an  Affiliate  or  Associate  of  an
                    Acquiring  Person (as such  terms are  defined in the Rights
                    Agreement).  Accordingly,  this Rights  Certificate  and the


                                       8
<PAGE>

                    Rights  represented  hereby may become  null and void in the
                    circumstances specified in Section 7(e) of such Agreement.

The  provisions  of Section 7(e) hereof  shall be  operative  whether or not the
foregoing legend is contained on any such Rights Certificate.

Section 5.        Countersignature and Registration.

     (a) The Rights  Certificates  shall be executed on behalf of the Company by
its Chairman of the Board,  President or any Vice President,  either manually or
by facsimile  signature,  and shall have affixed thereto the Company's seal or a
facsimile  thereof,  which shall be attested by the  Secretary  or an  Assistant
Secretary of the Company, either manually or by facsimile signature.  The Rights
Certificates  shall be manually  countersigned by the Rights Agent and shall not
be valid for any  purpose  unless so  countersigned.  In case any officer of the
Company who shall have signed any of the Rights  Certificates  shall cease to be
such  officer of the Company  before  countersignature  by the Rights  Agent and
issuance and delivery by the Company,  such Rights  Certificates,  nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though  the  person  who  signed  such  Rights
Certificates  had not ceased to be such officer of the  Company;  and any Rights
Certificates  may be signed on behalf of the  Company by any person  who, at the
actual  date of the  execution  of such  Rights  Certificate,  shall be a proper
officer of the Company to sign such Rights Certificate,  although at the date of
the execution of this Rights Agreement any such person was not such an officer.

     (b) Following the  Distribution  Date, the Rights Agent shall keep or cause
to be kept, at its office  designated as the appropriate  place for surrender of
Rights  Certificates  upon  exercise or  transfer,  books for  registration  and
transfer of the Rights Certificates issued hereunder.  Such books shall show the
names and addresses of the respective  holders of the Rights  Certificates,  the
number of Rights evidenced on its face by each of the Rights  Certificates,  the
Rights Certificate number and the date of each of the Rights Certificates.

Section 6. Transfer,  Split Up, Combination and Exchange of Rights Certificates;
           Mutilated, Destroyed, Lost or Stolen Rights Certificates.

     (a) Subject to the provisions of Section 4(b),  Section 7(e) and Section 14
hereof, at any time after the close of business on the Distribution Date, and at
or prior to the close of business on the Expiration Date, any Rights Certificate
or Certificates  (other than Rights  Certificates  representing Rights that have
become void pursuant to Section 7(e) hereof or that have been exchanged pursuant
to Section 24 hereof) may be  transferred,  split up,  combined or exchanged for
another Rights  Certificate or Certificates,  entitling the registered holder to
purchase a like number of one ten-thousandths of a share of Preferred Stock (or,
following a Triggering  Event,  Common Stock,  other  securities,  cash or other
assets,  as  the  case  may  be)  as  the  Rights  Certificate  or  Certificates
surrendered  then  entitled  such  holder  (or  former  holder  in the case of a
transfer) to purchase.  Any registered  holder  desiring to transfer,  split up,
combine or  exchange  any Rights  Certificate  or  Certificates  shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred,  split up, combined or exchanged,
with the form of  assignment  and  certificate  appropriately  executed,  at the


                                       9
<PAGE>

office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such  surrendered  Rights  Certificate  until the registered
holder shall have completed and signed the certificate  contained in the form of
assignment  on the  reverse  side of such  Rights  Certificate  and  shall  have
provided such  additional  evidence of the identity of the Beneficial  Owner (or
former  Beneficial  Owner) or Affiliates  or  Associates  thereof as the Company
shall reasonably request.  Thereupon the Rights Agent shall,  subject to Section
4(b), Section 7(e) and Section 14 hereof,  countersign and deliver to the Person
entitled thereto a Rights  Certificate or Rights  Certificates,  as the case may
be, as so  requested.  The Company may require  payment of a sum  sufficient  to
cover any tax or governmental  charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.

     (b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.

Section 7.        Exercise of Rights; Purchase Price; Expiration Date of Rights.

     (a) Subject to Section 7(e)  hereof,  the  registered  holder of any Rights
Certificate  may  exercise  the Rights  evidenced  thereby  (except as otherwise
provided   herein   including,   without   limitation,   the   restrictions   on
exercisability  set forth in Section  9(c),  Section  11(a)(iii)  and Section 23
hereof)  in  whole or in part at any  time  after  the  Distribution  Date  upon
surrender of the Rights  Certificate,  with the form of election to purchase and
the  certificate on the reverse side thereof duly executed,  to the Rights Agent
at the office of the Rights Agent  designated  for such  purpose,  together with
payment of the aggregate  Purchase Price with respect to the total number of one
ten-thousandths of a share of Preferred Stock (or other shares, securities, cash
or other  assets,  as the case may be) as to which such  surrendered  Rights are
then exercisable,  at or prior to the earliest of (i) the Final Expiration Date,
(ii) the time at which the Rights  expire as provided in Section  13(d)  hereof,
(iii) the time at which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption  Date") and (iv) the time at which such Rights are exchanged as
provided in Section 24 hereof (the earliest of (i),  (ii),  (iii) and (iv) being
herein referred to as the "Expiration Date").

     (b) The Purchase Price for each one  ten-thousandth of a share of Preferred
Stock  pursuant to the exercise of a Right shall  initially be $250.00 and shall
be subject to adjustment  from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in lawful  money of the United  States of America in
accordance with paragraph (c) below.

     (c) Upon receipt of a Rights Certificate  representing  exercisable Rights,
with the  form of  election  to  purchase  and the  certificate  duly  executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one  ten-thousandth  of a share of Preferred  Stock (or other  shares,
securities,  cash or other  assets,  as the case may be) to be purchased  and an


                                       10
<PAGE>

amount equal to any applicable transfer tax, the Rights Agent shall,  subject to
Section 20(k) hereof,  thereupon  promptly (i) (A) requisition from any transfer
agent of the shares of Preferred Stock (or make  available,  if the Rights Agent
is the transfer agent for such shares)  certificates for the total number of one
ten-thousandths  of a share of Preferred  Stock to be purchased  and the Company
hereby authorizes its transfer agent to comply with such requests, or (B) if the
Company  shall have  elected to deposit the total  number of shares of Preferred
Stock issuable upon exercise of the Rights  hereunder  with a depositary  agent,
requisition  from the depositary  agent depositary  receipts  representing  such
number  of one  ten-thousandths  of a  share  of  Preferred  Stock  as are to be
purchased  (in  which  case  certificates  for the  shares  of  Preferred  Stock
represented  by such receipts  shall be deposited by the transfer agent with the
depositary  agent) and the Company hereby directs the depositary agent to comply
with such  requests,  (ii)  requisition  from the Company the amount of cash, if
any,  to be paid in lieu of  fractional  shares in  accordance  with  Section 14
hereof, (iii) after receipt of such certificates or depositary  receipts,  cause
the same to be delivered to or upon the order of the  registered  holder of such
Rights  Certificate,  registered  in such name or names as may be  designated by
such holder,  and (iv) after receipt  thereof,  deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate.  The payment
of the  Purchase  Price (as such  amount  may be  reduced  pursuant  to  Section
11(a)(iii) hereof) may be made in cash or by certified bank check or money order
payable to the order of the Company.  In the event that the Company is obligated
to issue other  securities  (including  Common  Stock) of the Company,  pay cash
and/or distribute other property  pursuant to Section 11(a) hereof,  the Company
shall make all arrangements necessary so that such other securities, cash and/or
other property are available for  distribution  by the Rights Agent, if and when
appropriate.

     (d) In case the registered holder of any Rights  Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate  evidencing
Rights  equivalent to the Rights  remaining  unexercised  shall be issued by the
Rights Agent and  delivered to, or upon the order of, the  registered  holder of
such Rights  Certificate,  registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof.

     (e)  Notwithstanding  anything in this Agreement to the contrary,  from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an  Acquiring  Person or an  Associate or Affiliate of an Acquiring
Person,  (ii) a transferee of an Acquiring  Person (or of any such  Associate or
Affiliate) who becomes a transferee  after the Acquiring Person becomes such, or
(iii)  a  transferee  of an  Acquiring  Person  (or of  any  such  Associate  or
Affiliate) who becomes a transferee prior to or concurrently  with the Acquiring
Person  becoming such and receives such Rights pursuant to either (A) a transfer
(whether  or not for  consideration)  from the  Acquiring  Person to  holders of
equity  interests  in such  Acquiring  Person  or to any  Person  with  whom the
Acquiring  Person has any continuing  agreement,  arrangement  or  understanding
(whether or not in writing)  regarding the transferred  Rights or (B) a transfer
that the Board has determined is part of a plan,  arrangement  or  understanding
(whether or not in writing) that has as a primary purpose or effect avoidance of
this Section 7(e),  shall become null and void without any further action and no
holder of such  Rights  shall have any rights  whatsoever  with  respect to such
Rights,  whether under any provision of this  Agreement or otherwise.  No Rights
Certificate  shall be issued at any time upon the  transfer  of any Rights to an
Acquiring  Person whose Rights would be void pursuant to the preceding  sentence
or any  Associate  or  Affiliate  thereof or to any  nominee  of such  Acquiring


                                       11
<PAGE>

Person,  Associate or  Affiliate;  and any Rights  Certificate  delivered to the
Rights  Agent for  transfer to an  Acquiring  Person  whose Rights would be void
pursuant to the preceding sentence shall be cancelled. The Company shall use all
reasonable  efforts  to insure  that the  provisions  of this  Section  7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights  Certificates  or other  Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.

     (f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company  shall be  obligated  to undertake  any action with
respect to a registered holder upon the occurrence of any purported  transfer or
exercise as set forth in this Section 7 unless such registered holder shall have
(i)  completed  and signed the  certificate  following the form of assignment or
election to purchase  set forth on the  reverse  side of the Rights  Certificate
surrendered for such  assignment or exercise,  and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
any Affiliates or Associates thereof as the Company shall reasonably request.

Section 8.      Cancellation  and  Destruction  of Rights  Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer, split
up,  combination or exchange  shall, if surrendered to the Company or any of its
agents,  be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent,  shall be cancelled by it, and no Rights
Certificates  shall be issued in lieu thereof  except as expressly  permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement,  and the Rights Agent shall so cancel and
retire,  any other  Rights  Certificate  purchased  or  acquired  by the Company
otherwise  than upon the exercise  thereof.  The Rights Agent shall  deliver all
cancelled Rights  Certificates to the Company,  or shall, at the written request
of the Company,  destroy such cancelled  Rights  Certificates,  and in such case
shall deliver a certificate of destruction thereof to the Company.

Section 9.        Reservation and Availability of Capital Stock.


     (a) The Company  covenants and agrees that it will cause to be reserved and
kept  available out of its  authorized  and unissued  shares of Preferred  Stock
(and,  following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of Preferred Stock
(and,  following the occurrence of a Triggering Event, Common Stock and/or other
securities)  that, as provided in this Agreement  including  Section  11(a)(iii)
hereof,  will be  sufficient  to permit the exercise in full of all  outstanding
Rights.

     (b) So long as the shares of Preferred Stock (and, following the occurrence
of a Section 11(a)(ii) Event, Common Stock and/or other securities) issuable and
deliverable  upon the  exercise  of the  Rights  may be listed  on any  national
securities  exchange or automated  quotation  system,  the Company shall use its
best  efforts  to  cause,  from  and  after  such  time  as  the  Rights  become
exercisable, all shares reserved for such issuance to be so listed upon official
notice of issuance upon such exercise.

     (c) The  Company  shall  use  its  best  efforts  to (i)  file,  as soon as
practicable  following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the  consideration  to be delivered by the Company upon


                                       12
<PAGE>

exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case  may be, a  registration  statement  under  the Act,  with  respect  to the
securities  purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such  registration  statement to become  effective as soon as  practicable
after such filing,  (iii) cause such registration  statement to remain effective
(with a prospectus at all times meeting the  requirements  of the Act) until the
earlier  of (A) the date as of which the Rights  are no longer  exercisable  for
such  securities,  and (B) the Expiration  Date, and (iv) obtain such regulatory
approvals as may be necessary for it to issue  securities  purchasable  upon the
exercise  of the  Rights.  The  Company  will also  take  such  action as may be
appropriate  under, or to ensure  compliance  with, the securities or "blue sky"
laws of the various states in connection with the  exercisability of the Rights.
The Company may temporarily  suspend, for a period of time not to exceed 90 days
after the date set forth in clause  (i) of the first  sentence  of this  Section
9(c),  the  exercisability  of the  Rights  in order to  prepare  and file  such
registration  statement and permit it to become effective or to obtain any other
required  regulatory  approval  in  connection  with the  exercisability  of the
Rights. Upon any such suspension,  the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public  announcement  at such time as the  suspension  is no longer in
effect.  Notwithstanding  any provision of this  Agreement to the contrary,  the
Rights  shall  not be  exercisable  in any  jurisdiction  unless  the  requisite
registration or qualification in such  jurisdiction  shall have been effected or
obtained.

     (d) The Company  covenants  and agrees that it will take all such action as
may be necessary to ensure that all one  ten-thousandths of a share of Preferred
Stock (and,  following the occurrence of a Triggering Event, Common Stock and/or
other  securities)  delivered  upon  exercise  of Rights  shall,  at the time of
delivery of the certificates for such shares (subject to payment of the Purchase
Price),  be  duly  and  validly   authorized  and  issued  and  fully  paid  and
nonassessable.

     (e) The Company further  covenants and agrees that it will pay when due and
payable  any and all federal and state  transfer  taxes and charges  that may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any  certificates  for a number of one  ten-thousandths  of a share of Preferred
Stock (or Common  Stock and/or  other  securities,  as the case may be) upon the
exercise of Rights.  The Company shall not, however,  be required (i) to pay any
transfer  tax that may be  payable in respect of any  transfer  or  delivery  of
Rights  Certificates  to a Person  other than,  or the issuance or delivery of a
number of one  ten-thousandths  of a share of  Preferred  Stock (or Common Stock
and/or  other  securities,  as the case may be) in  respect of a name other than
that of, the  registered  holder of the  Rights  Certificate  evidencing  Rights
surrendered  for  exercise  or (ii) to issue or deliver any  certificates  for a
number of one  ten-thousandths  of a share of  Preferred  Stock (or Common Stock
and/or  other  securities,  as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time  of  surrender)  or  until  it  has  been   established  to  the  Company's
satisfaction that no such tax is due.

Section  10.  Preferred  Stock  Record  Date.  Each  Person  in  whose  name any
certificate  for a number of one  ten-thousandths  of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the


                                       13
<PAGE>

exercise of Rights shall for all purposes be deemed to have become the holder of
record of such  fractional  shares of  Preferred  Stock (or Common  Stock and/or
other  securities,  as the  case  may  be)  represented  thereby  on,  and  such
certificate  shall  be  dated,  the  date  upon  which  the  Rights  Certificate
evidencing  such  Rights was duly  surrendered  with the forms of  election  and
certification  duly  executed  and  payment  of  the  Purchase  Price  (and  all
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred  Stock (or Common Stock
and/or other  securities,  as the case may be) transfer books of the Company are
closed,  such Person  shall be deemed to have  become the record  holder of such
shares  (fractional or otherwise) on, and such  certificate  shall be dated, the
next  succeeding  Business  Day on which the  Preferred  Stock (or Common  Stock
and/or other  securities,  as the case may be) transfer books of the Company are
open.  Prior to the exercise of the Rights  evidenced  thereby,  the holder of a
Rights  Certificate,  as  such,  shall  not  be  entitled  to  any  rights  of a
stockholder of the Company with respect to securities for which the Rights shall
be exercisable,  including,  without  limitation,  the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company,  except
as provided herein.

Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.

          (a) (i) In the event the  Company  shall at any time after the date of
          this  Agreement (A) declare a dividend on the Preferred  Stock payable
          in shares of Preferred Stock, (B) subdivide the outstanding  Preferred
          Stock,  (C) combine  the  outstanding  Preferred  Stock into a smaller
          number of shares,  or (D) issue any shares of its  capital  stock in a
          reclassification   of  the  Preferred   Stock   (including   any  such
          reclassification in connection with a consolidation or merger in which
          the Company is the  continuing  or surviving  corporation),  except as
          otherwise  provided in this Section 11(a) and Section 7(e) hereof, the
          Purchase  Price  in  effect  at the time of the  record  date for such
          dividend or of the effective date of such subdivision,  combination or
          reclassification, and the number and kind of shares of Preferred Stock
          or capital stock, as the case may be, issuable on such date,  shall be
          proportionately  adjusted  so that the  holder of any Right  exercised
          after such time shall be  entitled  to  receive,  upon  payment of the
          Purchase Price then in effect, the aggregate number and kind of shares
          of Preferred Stock or capital stock, as the case may be, that, if such
          Right had been exercised  immediately prior to such date and at a time
          when the Preferred  Stock  transfer books of the Company were open, he
          would have owned upon such  exercise  and been  entitled to receive by
          virtue of such dividend, subdivision, combination or reclassification.
          If an event occurs that would  require an  adjustment  under both this
          Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
          for in this  Section  11(a)(i)  shall be in addition  to, and shall be
          made prior to, any adjustment  required  pursuant to Section 11(a)(ii)
          hereof.

                                       14
<PAGE>

               (ii) Subject to Section 24 of this  Agreement,  in the event that
          any  Person,  alone or together  with its  Affiliates  or  Associates,
          becomes an  Acquiring  Person  (other  than  pursuant  to a  Permitted
          Offer),  then,  promptly following the first occurrence of such event,
          proper  provision shall be made so that each holder of a Right (except
          as provided  below and in Section 7(e) hereof) shall  thereafter  have
          the right to receive  (subject to the last sentence of Section 23(a)),
          upon exercise thereof at the then current Purchase Price in accordance
          with  the  terms  of  this  Agreement,  in  lieu  of a  number  of one
          ten-thousandths  of a share of Preferred Stock,  such number of shares
          of Common Stock of the Company that equals the result  obtained by (x)
          multiplying the then current  Purchase Price by the then number of one
          ten-thousandths  of a share of  Preferred  Stock for which a Right was
          exercisable  immediately  prior to the first  occurrence  of a Section
          11(a)(ii) Event, and (y) dividing that product (which,  following such
          first  occurrence,  shall  thereafter  be referred to as the "Purchase
          Price" for each Right and for all purposes of this  Agreement)  by 50%
          of the current  market  price  (determined  pursuant to Section  11(d)
          hereof) per share of Common Stock on the date of such first occurrence
          (such number of shares, the "Adjustment Shares").

               (iii) In the event that the number of shares of Common Stock that
          are authorized by the Company's  Certificate of Incorporation  but not
          outstanding  or reserved for  issuance  for  purposes  other than upon
          exercise of the Rights are not  sufficient  to permit the  exercise in
          full of the Rights in accordance with the foregoing  subparagraph (ii)
          of this Section 11(a),  the Company shall: (A) determine the excess of
          (1) the value of the Adjustment Shares issuable upon the exercise of a
          Right (the "Current  Value") over (2) the Purchase Price (such excess,
          the  "Spread"),  and (B) with  respect to each  Right,  make  adequate
          provision to substitute for the Adjustment Shares, upon payment of the
          applicable  Purchase Price,  (1) cash, (2) a reduction in the Purchase
          Price,  (3) Common  Stock or other  equity  securities  of the Company
          (including,  without  limitation,  shares,  or  units  of  shares,  of
          preferred  stock  that the Board has  deemed to have the same value as
          shares of Common Stock (such shares of preferred stock,  "common stock
          equivalents")),  (4) debt securities of the Company, (5) other assets,
          or (6) any  combination  of the foregoing,  having an aggregate  value
          equal to the  Current  Value,  where  such  aggregate  value  has been
          determined  by  the  Board  based  upon  the  advice  of a  nationally
          recognized  investment  banking firm selected by the Board;  provided,
          however,  if the Company  shall not have made  adequate  provision  to
          deliver  value  pursuant to clause (B) above within 30 days  following
          the later of (x) the first occurrence of a Section 11(a)(ii) Event and


                                       15
<PAGE>

          (y) the date on which the Company's  right of  redemption  pursuant to
          Section  23(a)  expires  (the later of (x) and (y) being  referred  to
          herein as the  "Section  11(a)(ii)  Trigger  Date"),  then the Company
          shall be obligated to deliver,  upon the  surrender  for exercise of a
          Right and without requiring  payment of the Purchase Price,  shares of
          Common Stock (to the extent  available) and then, if necessary,  cash,
          which shares and/or cash have an aggregate  value equal to the Spread.
          If the Board  shall  determine  in good faith  that it is likely  that
          sufficient  additional  shares of Common Stock could be authorized for
          issuance  upon  exercise in full of the Rights,  the 30 day period set
          forth above may be extended to the extent necessary, but not more than
          90 days after the Section  11(a)(ii)  Trigger  Date, in order that the
          Company may seek  stockholder  approval for the  authorization of such
          additional   shares  (such  period,   as  it  may  be  extended,   the
          "Substitution Period"). To the extent that the Company determines that
          some  action  need  be  taken  pursuant  to the  first  and/or  second
          sentences of this Section  11(a)(iii),  the Company (x) shall provide,
          subject to Section 7(e) hereof, that such action shall apply uniformly
          to all outstanding  Rights,  and (y) may suspend the exercisability of
          the Rights until the expiration of the Substitution Period in order to
          seek any  authorization  of  additional  shares  and/or to decide  the
          appropriate  form of  distribution  to be made  pursuant to such first
          sentence and to determine the value thereof.  In the event of any such
          suspension, the Company shall issue a public announcement stating that
          the  exercisability of the Rights has been temporarily  suspended,  as
          well as a public  announcement  at such time as the  suspension  is no
          longer in effect. For purposes of this Section  11(a)(iii),  the value
          of the Common Stock shall be the current  market price (as  determined
          pursuant to Section 11(d) hereof) per share of the Common Stock on the
          Section  11(a)(ii)  Trigger  Date and the value of any  "common  stock
          equivalent" shall be deemed to have the same value as the Common Stock
          on such date.

     (b) In case the Company shall fix a record date for the issuance of rights,
options  or  warrants  to all  holders  of  Preferred  Stock  entitling  them to
subscribe for or purchase (for a period  expiring  within 45 calendar days after
such record date) Preferred Stock (or shares having the same rights,  privileges
and preferences as the shares of Preferred Stock ("equivalent preferred stock"))
or securities  convertible into Preferred Stock or equivalent preferred stock at
a price per share of Preferred Stock or per share of equivalent  preferred stock
(or  having a  conversion  price  per  share,  if a  security  convertible  into
Preferred  Stock or  equivalent  preferred  stock) less than the current  market
price (as  determined  pursuant to Section  11(d) hereof) per share of Preferred
Stock on such record date,  the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such  record date by a fraction,  the  numerator  of which shall be the
number of shares of Preferred  Stock  outstanding on such record date,  plus the
number of shares of Preferred  Stock that the  aggregate  offering  price of the
total number of shares of Preferred Stock and/or  equivalent  preferred stock so
to be offered (and/or the aggregate initial  conversion price of the convertible
securities so to be offered) would  purchase at such current  market price,  and
the  denominator  of which  shall be the  number of shares  of  Preferred  Stock
outstanding  on such  record  date,  plus the  number  of  additional  shares of
Preferred Stock and/or equivalent preferred stock to be offered for subscription
or  purchase  (or into which the  convertible  securities  so to be offered  are
initially convertible).  In case such subscription price may be paid by delivery
of  consideration  part or all of which may be in a form other  than  cash,  the
value of such  consideration  shall be as determined in good faith by the Board,
whose  determination  shall be  described  in a statement  filed with the Rights
Agent and shall be conclusive for all purposes.  Shares of Preferred Stock owned
by or held for the account of the Company  shall not be deemed  outstanding  for
the purpose of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights, options
or warrants are not so issued,  the  Purchase  Price shall be adjusted to be the
Purchase  Price that would  then be in effect if such  record  date had not been
fixed.

                                       16
<PAGE>

     (c) In case the Company shall fix a record date for a  distribution  to all
holders of Preferred Stock (including any such  distribution  made in connection
with  a  consolidation  or  merger  in  which  the  Company  is  the  continuing
corporation) of evidences of indebtedness,  cash (other than a regular quarterly
cash dividend out of the earnings or retained  earnings of the Company),  assets
(other than a dividend  payable in Preferred  Stock,  but including any dividend
payable in stock other than Preferred Stock) or subscription  rights or warrants
(excluding those referred to in Section 11(b) hereof),  the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price  in  effect  immediately  prior to such  record  date by a  fraction,  the
numerator of which shall be the current market price (as determined  pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board, whose determination
shall be  described  in a  statement  filed with the  Rights  Agent and shall be
conclusive for all purposes) of the portion of the cash,  assets or evidences of
indebtedness  so to be  distributed or of such  subscription  rights or warrants
applicable to a share of Preferred  Stock and the  denominator of which shall be
such current market price (as  determined  pursuant to Section 11(d) hereof) per
share of Preferred  Stock on such record date.  Such  adjustments  shall be made
successively  whenever  such a record date is fixed,  and in the event that such
distribution  is not so made,  the  Purchase  Price  shall be adjusted to be the
Purchase  Price that would have been in effect if such  record date had not been
fixed.

               (d) (i) For the purpose of any computation hereunder,  other than
          computations made pursuant to Section  11(a)(iii) hereof, the "current
          market price" per share of Common Stock on any date shall be deemed to
          be the  average of the daily  closing  prices per share of such Common
          Stock for the 30 consecutive Trading Days (as such term is hereinafter
          defined)   immediately  prior  to  such  date,  and  for  purposes  of
          computations made pursuant to Section  11(a)(iii) hereof, the "current
          market price" per share of Common Stock on any date shall be deemed to
          be the  average of the daily  closing  prices per share of such Common
          Stock for the ten (10) consecutive Trading Days immediately  following
          such  date;  provided,  however,  that in the event  that the  current
          market  price per share of the  Common  Stock is  determined  during a
          period  following the  announcement by the issuer of such Common Stock
          of (A) a dividend  or  distribution  on such Common  Stock  payable in
          shares of such Common Stock or securities  convertible  into shares of
          such Common  Stock (other than the  Rights),  or (B) any  subdivision,
          combination or reclassification of such Common Stock, and prior to the
          expiration  of the  requisite  30 Trading Day or ten (10)  Trading Day
          period,  as set  forth  above,  after  the  ex-dividend  date for such
          dividend or  distribution,  or the record  date for such  subdivision,
          combination or reclassification  occurs,  then, and in each such case,
          the "current  market  price"  shall be properly  adjusted to take into
          account ex-dividend or post record date trading. The closing price for
          each day shall be the last sale  price,  regular  way,  or, in case no
          such sale takes place on such day,  the average of the closing bid and
          asked prices, regular way, in either case as reported in the principal
          consolidated  transaction  reporting system with respect to securities
          listed or admitted  to trading on the  principal  national  securities
          exchange on which the shares of Common Stock are listed or admitted to
          trading  or, if the shares of Common  Stock are not listed or admitted
          to trading on any national securities exchange,  the last quoted price
          or, if not so  quoted,  the  average of the high bid and the low asked
          prices in the over-the-counter market, as reported by The Nasdaq Stock


                                       17
<PAGE>

          Market,  Inc.  ("Nasdaq")  or such other system then in use, or, if on
          any such date the  shares of Common  Stock are not  quoted by any such
          organization,  the  average  of the  closing  bid and asked  prices as
          furnished by a professional market maker making a market in the Common
          Stock selected by the Board. All references in this Section to closing
          prices,  last quoted  prices or other stock prices mean prices  during
          regular  trading hours,  without  giving effect to any  after-hours or
          extended hours trading.  If on any such date no market maker is making
          a market in the Common  Stock,  the fair value of such  shares on such
          date  shall  be as  determined  in  good  faith  by the  Board,  whose
          determination  shall be described in a statement filed with the Rights
          Agent and shall be conclusive for all purposes. The term "Trading Day"
          shall mean a day on which Nasdaq or any national  securities  exchange
          on which the shares of Common  Stock are listed or admitted to trading
          is open for the  transaction  of business  or, if the shares of Common
          Stock are not listed or admitted to trading on Nasdaq or any  national
          securities  exchange,  a  Business  Day.  If the  Common  Stock is not
          publicly held or not so listed or traded,  "current  market price" per
          share shall mean the fair value per share as  determined in good faith
          by the Board,  whose  determination  shall be described in a statement
          filed with the Rights Agent and shall be conclusive for all purposes.

               (ii) For the purpose of any computation  hereunder,  the "current
          market price" per share of Preferred  Stock shall be determined in the
          same manner as set forth  above for the Common  Stock in clause (i) of
          this Section  11(d)  (other than the last  sentence  thereof).  If the
          current market price per share of Preferred Stock cannot be determined
          in the manner provided above or if the Preferred Stock is not publicly
          held or listed or traded in a manner  described  in clause (i) of this
          Section 11(d), the "current market price" per share of Preferred Stock
          shall be conclusively  deemed to be an amount equal to 10,000 (as such
          number may be appropriately  adjusted for such events as stock splits,
          stock dividends and recapitalizations with respect to the Common Stock
          occurring after the date of this Agreement)  multiplied by the current
          market  price per share of the Common  Stock.  If  neither  the Common
          Stock nor the Preferred Stock is publicly held or so listed or traded,
          "current market price" per share of the Preferred Stock shall mean the
          fair value per share as determined  in good faith by the Board,  which
          determination  shall be described in a statement filed with the Rights
          Agent and shall be conclusive  for all  purposes.  For all purposes of
          this Agreement,  the "current market price" of one ten-thousandth of a
          share of Preferred  Stock shall be equal to the "current market price"
          of one share of Preferred Stock divided by 10,000.

     (e) Anything herein to the contrary  notwithstanding,  no adjustment in the
Purchase  Price  shall be  required  unless  such  adjustment  would  require an
increase  or  decrease  of at least  one  percent  (1%) in the  Purchase  Price;
provided, however, that any adjustments that by reason of this Section 11(e) are
not  required to be made shall be carried  forward and taken into account in any
subsequent  adjustment.  All calculations under this Section 11 shall be made to
the nearest cent or to the nearest  ten-millionth of a share of Preferred Stock,
or  hundred-thousandth of a share of Common Stock or other security, as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment


                                       18
<PAGE>

required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction  that mandates such  adjustment,  or (ii)
the Expiration Date.

     (f) If as a result of an adjustment  made pursuant to Section  11(a)(ii) or
Section 13(a) hereof, the holder of any Right thereafter  exercised shall become
entitled to receive any securities  other than Preferred  Stock,  thereafter the
number of such other securities so receivable upon exercise of any Right and the
Purchase  Price thereof  shall be subject to  adjustment  from time to time in a
manner and on terms as nearly  equivalent as practicable to the provisions  with
respect to the Preferred Stock contained in Sections 11(a),  (b), (c), (e), (g),
(h), (i),  (j), (k) and (m), and the  provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Stock shall apply on like terms to any such
other securities;  provided,  however,  that the Company shall not be liable for
its  inability to reserve and keep  available  for issuance upon exercise of the
Rights pursuant to Section  11(a)(ii) a number of shares of Common Stock greater
than the number then  authorized by the Company's  Certificate of  Incorporation
but not outstanding or reserved for other purposes.

     (g)  All  Rights  originally  issued  by  the  Company  subsequent  to  any
adjustment  made to the Purchase  Price  hereunder  shall  evidence the right to
purchase, at the adjusted Purchase Price, the number of one ten-thousandths of a
share of Preferred Stock  purchasable  from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.

     (h) Unless the Company  shall have  exercised  its  election as provided in
Section  11(i),  upon each  adjustment of the Purchase  Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding  immediately
prior to the making of such adjustment  shall  thereafter  evidence the right to
purchase,  at the adjusted Purchase Price, that number of one ten-thousandths of
a share of Preferred Stock (calculated to the nearest ten-millionth) obtained by
(i)  multiplying (x) the number of one  ten-thousandths  of a share covered by a
Right immediately prior to this adjustment,  by (y) the Purchase Price in effect
immediately  prior to such adjustment of the Purchase  Price,  and (ii) dividing
the product so obtained by the Purchase Price in effect  immediately  after such
adjustment of the Purchase Price.

     (i) The  Company  may elect on or after the date of any  adjustment  of the
Purchase Price to adjust the number of Rights,  in lieu of any adjustment in the
number of one ten-thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights  outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one ten-thousandths of a
share of Preferred Stock for which a Right was exercisable  immediately prior to
such  adjustment.  Each Right  held of record  prior to such  adjustment  of the
number of Rights shall become that number of Rights  (calculated  to the nearest
one-hundred-  thousandth)  obtained by  dividing  the  Purchase  Price in effect
immediately  prior to adjustment of the Purchase  Price by the Purchase Price in
effect  immediately  after  adjustment of the Purchase Price.  The Company shall
make a public  announcement  of its  election  to adjust  the  number of Rights,
indicating  the record date for the  adjustment,  and, if known at the time, the
amount of the  adjustment to be made.  This record date may be the date on which
the  Purchase  Price is  adjusted  or any day  thereafter,  but,  if the  Rights
Certificates  have been  issued,  shall be at least ten (10) days later than the
date of the public  announcement.  If Rights Certificates have been issued, upon


                                       19
<PAGE>

each  adjustment  of the number of Rights  pursuant to this Section  11(i),  the
Company shall, as promptly as practicable, cause to be distributed to holders of
record  of  Rights   Certificates  on  such  record  date  Rights   Certificates
evidencing,  subject to Section 14 hereof,  the additional  Rights to which such
holders shall be entitled as a result of such  adjustment,  or, at the option of
the  Company,  shall  cause to be  distributed  to such  holders  of  record  in
substitution  and replacement for the Rights  Certificates  held by such holders
prior to the date of adjustment,  and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall  be  entitled  after  such  adjustment.   Rights  Certificates  so  to  be
distributed  shall be issued,  executed and countersigned in the manner provided
for herein (and may bear,  at the option of the Company,  the adjusted  Purchase
Price) and shall be  registered  in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.

     (j)  Irrespective  of any adjustment or change in the Purchase Price or the
number of one  ten-thousandth  of a share of Preferred  Stock  issuable upon the
exercise of the  Rights,  the Rights  Certificates  theretofore  and  thereafter
issued may continue to express the Purchase  Price per one  ten-thousandth  of a
share and the number of one  ten-thousandths  of a share that were  expressed in
the initial Rights Certificates issued hereunder.

     (k) Before  taking any action that would cause an  adjustment  reducing the
Purchase  Price  below  the  then  par  value,  if  any,  of the  number  of one
ten-thousandths  of a share of Preferred  Stock  issuable  upon  exercise of the
Rights,  the Company shall take any corporate action that may, in the opinion of
its  counsel,  be  necessary  in order that the  Company may validly and legally
issue  such  number  of  one  ten-thousandths  of a  share  of  fully  paid  and
nonassessable Preferred Stock at such adjusted Purchase Price.

     (l) In any case in which this Section 11 shall  require that an  adjustment
in the  Purchase  Price be made  effective  as of a record  date for a specified
event,  the Company may elect to defer  until the  occurrence  of such event the
issuance to the holder of any Right  exercised after such record date the number
of one  ten-thousandths of a share of Preferred Stock and other capital stock or
securities  of the Company,  if any,  issuable upon such exercise over and above
the  number  of one  ten-thousandths  of a share of  Preferred  Stock  and other
capital stock or securities of the Company,  if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however,  that the  Company  shall  deliver  to such  holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares  (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.

     (m)  Anything  in this  Section  11 to the  contrary  notwithstanding,  the
Company  shall be entitled to make such  reductions  in the Purchase  Price,  in
addition to those adjustments  expressly  required by this Section 11, as and to
the extent that in their good faith  judgment  the Board shall  determine  to be
advisable in order that any (i)  consolidation  or  subdivision of the Preferred
Stock,  (ii) issuance  wholly for cash of any shares of Preferred  Stock at less
than the  current  market  price,  (iii)  issuance  wholly for cash of shares of
Preferred  Stock or  securities  that by their  terms  are  convertible  into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance
of rights, options or warrants referred to in this Section 11, hereafter made by
the  Company  to  holders of its  Preferred  Stock  shall not be taxable to such
stockholders.

                                       20
<PAGE>

     (n) The Company  covenants  and agrees that it shall not, at any time after
the  Distribution  Date,  (i)  consolidate  with any other Person  (other than a
Subsidiary  of the Company in a  transaction  that  complies  with Section 11(o)
hereof),  (ii) merge with or into any other Person  (other than a Subsidiary  of
the Company in a transaction that complies with Section 11(o) hereof),  or (iii)
sell or  transfer  (or  permit  any  Subsidiary  to sell  or  transfer),  in one
transaction,  or a series  of  related  transactions,  assets or  earning  power
aggregating  more than 50% of the assets or earning power of the Company and its
Subsidiaries  (taken as a whole) to any other Person or Persons  (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof),  if (x) at the time of or immediately after
such consolidation,  merger or sale there are any charter or bylaw provisions or
any  rights,   warrants  or  other  instruments  or  securities  outstanding  or
agreements in effect that would  substantially  diminish or otherwise  eliminate
the  benefits   intended  to  be  afforded  by  the  Rights  or  (y)  prior  to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes,  or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have  received a  distribution
of  Rights  previously  owned  by  such  Person  or  any of  its  Affiliates  or
Associates. The Company shall not consummate any consolidation,  merger, sale or
transfer  described in clause (i),  (ii) or (iii) of the prior  sentence  unless
prior  thereto  the  Company  and such  other  Person  shall have  executed  and
delivered to the Rights Agent a  supplemental  agreement  evidencing  compliance
with this Section 11(n).

     (o) The Company covenants and agrees that, after the Distribution  Date, it
will not,  except as permitted  by Section 23,  Section 24 or Section 27 hereof,
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably  foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.

     (p)  Anything in this  Agreement to the  contrary  notwithstanding,  in the
event that the Company  shall at any time after the Record Date and prior to the
Distribution  Date (i) declare or pay any dividend on the outstanding  shares of
Common Stock payable in shares of Common Stock,  (ii) subdivide the  outstanding
shares of Common Stock, or (iii) combine the outstanding  shares of Common Stock
into a smaller number of shares, the number of Rights associated with each share
of Common Stock then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be  proportionately  adjusted so that the number of
Rights thereafter  associated with each share of Common Stock following any such
event  shall  equal the  result  obtained  by  multiplying  the number of Rights
associated with each share of Common Stock  immediately prior to such event by a
fraction,  the  numerator of which shall be the number of shares of Common Stock
outstanding   immediately  prior  to  the  occurrence  of  such  event  and  the
denominator  of which shall be the number of shares of Common Stock  outstanding
immediately following the occurrence of such event.

Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever
an  adjustment  is made as  provided  in Section  11 or  Section 13 hereof,  the
Company shall promptly (a) prepare a certificate  setting forth such  adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent,  and with each transfer agent for the Preferred  Stock and the
Common Stock, a copy of such  certificate,  and (c) mail a brief summary thereof
to each holder of a Rights  Certificate (or, if prior to the Distribution  Date,
to each  holder  of a  certificate  representing  shares  of  Common  Stock)  in
accordance with Section 26 hereof.  The Rights Agent shall be fully protected in


                                       21
<PAGE>

relying on any such  certificate  and on any  adjustment  therein  contained and
shall not be deemed to have  knowledge  of any  adjustment  unless  and until it
shall have received such certificate.

Section  13.  Consolidation,  Merger or Sale or  Transfer  of Assets or  Earning
              Power.

     (a) In the event that,  at any time after a Person has become an  Acquiring
Person,  (x) the Company shall  consolidate  with,  or merge with and into,  any
other  Person  (other than a  Subsidiary  of the Company in a  transaction  that
complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving  corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary  of the Company in a  transaction  that  complies with Section
11(o) hereof) shall  consolidate  with, or merge with or into, the Company,  and
the  Company  shall  be  the   continuing  or  surviving   corporation  of  such
consolidation  or merger and, in connection with such  consolidation  or merger,
all or part of the  outstanding  shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its  Subsidiaries  shall sell or otherwise  transfer),  in one  transaction or a
series of related  transactions,  assets or earning power  aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons  (other than the Company or any  Subsidiary of
the Company in one or more  transactions  each of which  complies  with  Section
11(o) hereof), then, and in each such case and except as contemplated by Section
13(d)  hereof,  proper  provision  shall be made so that:  (i) each  holder of a
Right,  except as provided in Section 7(e)  hereof,  shall  thereafter  have the
right to receive,  upon the exercise  thereof at the then current Purchase Price
in  accordance  with  the  terms  of this  Agreement,  such  number  of  validly
authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), which
shall not be  subject  to any liens,  encumbrances,  rights of first  refusal or
other  adverse  claims,  as  shall  be  equal  to  the  result  obtained  by (1)
multiplying the then current Purchase Price by the number of one ten-thousandths
of a share of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section  11(a)(ii) Event
has occurred  prior to the first  occurrence of a Section 13 Event,  multiplying
the  number  of such  one  ten-thousandths  of a  share  for  which a Right  was
exercisable  immediately  prior to the first  occurrence of a Section  11(a)(ii)
Event  by  the  Purchase  Price  in  effect  immediately  prior  to  such  first
occurrence),   and  (2)  dividing  that  product  (which,  following  the  first
occurrence of a Section 13 Event,  shall be referred to as the "Purchase  Price"
for each Right and for all  purposes  of this  Agreement)  by 50% of the current
market price  (determined  pursuant to Section 11(d)(i) hereof) per share of the
Common Stock of such Principal Party on the date of consummation of such Section
13 Event;  (ii) such Principal  Party shall  thereafter be liable for, and shall
assume,  by virtue of such Section 13 Event,  all the  obligations and duties of
the  Company  pursuant  to  this  Agreement;  (iii)  the  term  "Company"  shall
thereafter be deemed to refer to such  Principal  Party,  it being  specifically
intended that,  subject to clause (v) below, the provisions of Section 11 hereof
shall apply only to such  Principal  Party  following the first  occurrence of a
Section 13 Event;  (iv) such Principal  Party shall take such steps  (including,
but not  limited to, the  reservation  of a  sufficient  number of shares of its
Common Stock) in connection with the consummation of any such transaction as may
be  necessary  to  assure  that  the  provisions   hereof  shall  thereafter  be
applicable,  as nearly as reasonably may be, in relation to its shares of Common
Stock  thereafter  deliverable  upon the  exercise  of the  Rights;  and (v) the


                                       22
<PAGE>

provisions of Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Section 13 Event.

     (b) "Principal Party" shall mean

          (i) in the case of any  transaction  described in clause (x) or (y) of
     the first sentence of Section  13(a),  the Person that is the issuer of any
     securities  into which shares of Common Stock of the Company are  converted
     in such merger or  consolidation,  and if no securities are so issued,  the
     Person that is the other party to such merger or consolidation; and

          (ii) in the case of any  transaction  described  in clause  (z) of the
     first sentence of Section 13(a), the Person that is the party receiving the
     greatest  portion of the assets or earning  power  transferred  pursuant to
     such transaction or transactions;

provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect  Subsidiary of another  Person the Common Stock of which is
and has been so registered,  "Principal Party" shall refer to such other Person;
(2) in case such Person is a Subsidiary,  directly or  indirectly,  of more than
one  Person,  the  Common  Stocks  of two or more of which  are and have been so
registered,  "Principal  Party"  shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest  aggregate  market value; and (3)
in case such Person is owned, directly or indirectly,  by a joint venture formed
by two or more Persons that are not owned,  directly or indirectly,  by the same
Person,  the rules set  forth in (1) and (2)  above  shall  apply to each of the
chains of  ownership  having an interest in such joint  venture as if such party
were a  "Subsidiary"  of both or all of such joint  ventures  and the  Principal
Parties in each such chain shall bear the  obligations set forth in this Section
13 in the same ratio as their  direct or indirect  interests in such Person bear
to the total of such interests.

     (c) The Company shall not consummate any such  consolidation,  merger, sale
or  transfer  unless  the  Principal  Party  shall have a  sufficient  number of
authorized  shares of its Common Stock that have not been issued or reserved for
issuance to permit the  exercise in full of the Rights in  accordance  with this
Section 13 and unless prior thereto the Company and such  Principal  Party shall
have  executed  and  delivered  to the  Rights  Agent a  supplemental  agreement
providing for the terms set forth in  paragraphs  (a) and (b) of this Section 13
and  further  providing  that,  as soon as  practicable  after  the  date of any
consolidation,  merger  or sale of assets  mentioned  in  paragraph  (a) of this
Section 13, the Principal Party will

          (i)  prepare and file a  registration  statement  under the Act,  with
     respect to the Rights and the securities  purchasable  upon exercise of the
     Rights on an appropriate  form, and will use its best efforts to cause such
     registration statement to (A) become effective as soon as practicable after
     such  filing  and (B)  remain  effective  (with a  prospectus  at all times
     meeting the requirements of the Act) until the Expiration Date;

                                       23
<PAGE>

          (ii) use its best  efforts to qualify or  register  the Rights and the
     securities  purchasable upon exercise of the Rights under the blue sky laws
     of such jurisdictions as may be necessary or appropriate; and

          (iii) deliver to holders of the Rights historical financial statements
     for the  Principal  Party  and each of its  Affiliates  that  comply in all
     respects  with the  requirements  for  registration  on Form 10  under  the
     Exchange Act.

The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall  occur at the same  time as, or at any time  after,  the  occurrence  of a
Section  11(a)(ii)  Event,  the Rights that have not theretofore  been exercised
shall thereafter become exercisable in the manner described in Section 13(a).

     (d) Notwithstanding anything in this Agreement to the contrary,  Section 13
shall not be applicable to a transaction  described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
(or a wholly owned subsidiary of any such Person or Persons) who acquired shares
of Common  Stock  pursuant  to a  Permitted  Offer,  (ii) the price per share of
Common  Stock paid in such  transaction  is not less than the price per share of
Common  Stock paid to all holders of shares of Common  Stock  whose  shares were
purchased  pursuant to such Permitted Offer, and (iii) the form of consideration
paid in such transaction is the same as the form of consideration  paid pursuant
to such Permitted Offer. Upon consummation of any such transaction  contemplated
by this Section 13(d), all Rights hereunder shall expire.

Section 14. Fractional Rights and Fractional Shares.

     (a) The Company shall not be required to issue fractions of Rights,  except
prior to the Distribution Date as provided in Section 11(i) or (p) hereof, or to
distribute Rights  Certificates that evidence fractional Rights. In lieu of such
fractional  Rights,  there shall be paid to the registered holders of the Rights
Certificates  with regard to which such  fractional  Rights  would  otherwise be
issuable,  an amount in cash equal to the same  fraction of the  current  market
value of a whole Right.  For purposes of this Section 14(a),  the current market
value of a whole Right shall be the closing  price of the Rights for the Trading
Day  immediately  prior to the date on which such  fractional  Rights would have
been  otherwise  issuable.  The closing price of the Rights for any day shall be
the last sale price,  regular  way, or, in case no such sale takes place on such
day,  the average of the closing bid and asked  prices,  regular  way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities  listed or admitted to trading on the  principal  national
securities exchange on which the Rights are listed or admitted to trading, or if
the Rights  are not listed or  admitted  to trading on any  national  securities
exchange,  the last quoted  price or, if not so quoted,  the average of the high
bid and the low asked  prices in the  over-the-counter  market,  as  reported by
Nasdaq or such other  system  then in use or, if on any such date the Rights are
not quoted by any such  organization,  the  average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board.  All references in this Section to closing  prices,  last
quoted prices or other stock prices means prices during  regular  trading hours,
without giving effect to any  after-hours  or extended hours trading.  If on any
such date no such market maker is making a market in the Rights,  the fair value
of the Rights on such date as  determined  in good  faith by the Board  shall be


                                       24
<PAGE>

used,  which  determination  shall be  described  in a statement  filed with the
Rights Agent and shall be conclusive for all purposes.

     (b) The  Company  shall not be  required  to issue  fractions  of shares of
Preferred  Stock  (other  than  fractions  that are  integral  multiples  of one
ten-thousandth  of a share of Preferred Stock) upon exercise of the Rights or to
distribute  certificates  that  evidence  fractional  shares of Preferred  Stock
(other than fractions  that are integral  multiples of one  ten-thousandth  of a
share of Preferred  Stock).  Fractional  shares of  Preferred  Stock in integral
multiples  of one  ten-thousandth  of a share of  Preferred  Stock  may,  at the
election of the Company, be evidenced by depositary receipts; provided, however,
that holders of such depositary  receipts shall have all of the designations and
the powers,  preferences  and rights,  and the  qualifications,  limitations and
restrictions  to which they are entitled as  beneficial  owners of the shares of
Preferred Stock represented by such depositary  receipts.  In lieu of fractional
shares of Preferred  Stock (other than fractions that are integral  multiples of
one  ten-thousandth of a share of Preferred Stock), the Company shall pay to the
registered holders of Rights  Certificates at the time such Rights are exercised
as herein  provided an amount in cash equal to the same  fraction of the current
market value of one  ten-thousandth  of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of one ten-thousandth of a share
of Preferred Stock shall be one  ten-thousandth  of the closing price of a share
of Preferred Stock (as determined  pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.

     (c) Following the occurrence of a Triggering  Event,  the Company shall not
be required to issue  fractions of shares of Common  Stock upon  exercise of the
Rights or to distribute  certificates that evidence  fractional shares of Common
Stock.  In lieu of fractional  shares of Common Stock,  the Company shall pay to
the  registered  holders  of Rights  Certificates  at the time such  Rights  are
exercised as herein provided an amount in cash equal to the same fraction of the
current market price of one (1) share of Common Stock (as determined pursuant to
Section  11(d)(i)  hereof) for the Trading Day immediately  prior to the date of
such exercise.

     (d) The holder of a Right by the acceptance of such Right expressly  waives
his right to  receive  any  fractional  Rights  or any  fractional  shares  upon
exercise of a Right, except as permitted by this Section 14.

Section 15. Rights of Action. All rights of action in respect of this Agreement,
except the rights of action  expressly  given to the Rights  Agent in Section 18
hereof,  are  vested  in  the  respective   registered  holders  of  the  Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution  Date, of the Common Stock),  without the consent of the Rights
Agent  or of the  holder  of any  other  Rights  Certificate  (or,  prior to the
Distribution Date, of the Common Stock),  may, in his own behalf and for his own
benefit,  enforce, and may institute and maintain any suit, action or proceeding
against  the Company to enforce,  or  otherwise  act in respect of, his right to
exercise the Rights evidenced by such Rights  Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or  any  remedies  available  to  the  holders  of  Rights,  it is  specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this  Agreement and shall be entitled to specific  performance


                                       25
<PAGE>

of the obligations  hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.

Section 16.  Agreement of Rights  Holders.  Every holder of a Right by accepting
the same  consents  and agrees with the  Company  and the Rights  Agent and with
every other holder of a Right that:

     (a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of Common Stock;

     (b) after the Distribution  Date, the Rights  Certificates are transferable
only on the registry  books of the Rights Agent if  surrendered at the office of
the Rights Agent designated for such purposes, duly endorsed or accompanied by a
proper  instrument of transfer and with the appropriate  forms and  certificates
duly completed and fully executed;

     (c) subject to Section 6(a) and Section  7(f)  hereof,  the Company and the
Rights  Agent may deem and treat the person in whose  name a Rights  Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered  as the absolute  owner thereof and of the Rights  evidenced  thereby
(notwithstanding   any   notations   of  ownership  or  writing  on  the  Rights
Certificates  or the associated  Common Stock  certificate  made by anyone other
than the Company or the Rights Agent) for all purposes  whatsoever,  and neither
the Company nor the Rights Agent, subject to the penultimate sentence of Section
7(e) hereof, shall be required to be affected by any notice to the contrary; and

     (d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights  Agent shall have any  liability to any holder of a Right
or other Person as a result of its  inability to perform any of its  obligations
under this  Agreement by reason of any  preliminary  or permanent  injunction or
other order, decree or ruling issued by a court of competent  jurisdiction or by
a  governmental,  regulatory  or  administrative  agency or  commission,  or any
statute,  rule,  regulation  or executive  order  promulgated  or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation;  provided, however, the Company must use its best efforts to prevent
the  issuance  of any such  order,  decree or ruling and to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.

Section 17. Rights  Certificate  Holder Not Deemed a Stockholder.  No holder, as
such, of any Rights  Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of one  ten-thousandths  of a
share of Preferred Stock or any other  securities of the Company that may at any
time be issuable on the exercise of the Rights  represented  thereby,  nor shall
anything  contained  herein or in any Rights  Certificate be construed to confer
upon the  holder of any  Rights  Certificate,  as such,  any of the  rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action,  or to receive notice of meetings or
other actions affecting  stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights  evidenced  by such  Rights  Certificate  shall  have been  exercised  in
accordance with the provisions hereof.

                                       26
<PAGE>

Section 18. Concerning the Rights Agent.

     (a) The Company agrees to pay to the Rights Agent  reasonable  compensation
for all services  rendered by it hereunder  and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements and
other  disbursements  incurred  in the  administration  and  execution  of  this
Agreement and the exercise and performance of its duties hereunder.  The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless  against,
any loss, liability or expense, incurred without gross negligence,  bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement,  including  the costs and expenses of defending  against any claim of
liability in the premises.

     (b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration  of this  Agreement in reliance  upon any Rights  Certificate  or
certificate for Common Stock or for other securities of the Company,  instrument
of assignment or transfer, power of attorney,  endorsement,  affidavit,  letter,
notice, direction, consent,  certificate,  statement, or other paper or document
believed by it to be genuine and to be signed,  executed and,  where  necessary,
verified or acknowledged, by the proper Person or Persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof.

Section 19. Merger or Consolidation or Change of Name of Rights Agent.

     (a) Any  corporation  into which the Rights Agent or any  successor  Rights
Agent may be merged or with  which it may be  consolidated,  or any  corporation
resulting  from any merger or  consolidation  to which the  Rights  Agent or any
successor  Rights Agent shall be a party, or any  corporation  succeeding to the
corporate  trust  business of the Rights Agent or any  successor  Rights  Agent,
shall be the  successor  to the Rights  Agent under this  Agreement  without the
execution  or filing of any paper or any  further  act on the part of any of the
parties hereto;  provided,  however, that such corporation would be eligible for
appointment  as a  successor  Rights  Agent under the  provisions  of Section 21
hereof.  In case at the time such  successor  Rights Agent shall  succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned  but not delivered,  any such successor Rights Agent may adopt the
countersignature   of  a  predecessor  Rights  Agent  and  deliver  such  Rights
Certificates  so  countersigned;  and in  case at that  time  any of the  Rights
Certificates shall not have been  countersigned,  any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the  successor  Rights  Agent;  and in all such  cases  such  Rights
Certificates  shall have the full force provided in the Rights  Certificates and
in this Agreement.

     (b) In case at any time the name of the Rights  Agent  shall be changed and
at such time any of the Rights  Certificates  shall have been  countersigned but
not delivered,  the Rights Agent may adopt the countersignature  under its prior
name and deliver Rights Certificates so countersigned;  and in case at that time
any of the Rights  Certificates  shall not have been  countersigned,  the Rights
Agent may countersign  such Rights  Certificates  either in its prior name or in
its changed name; and in all such cases such Rights  Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.

                                       27
<PAGE>

Section 20. Duties of Rights Agent.  The Rights Agent  undertakes the duties and
obligations  imposed by this Agreement upon the following  terms and conditions,
by all of which the  Company and the  holders of Rights  Certificates,  by their
acceptance thereof, shall be bound:

     (a) The  Rights  Agent may  consult  with legal  counsel  (who may be legal
counsel  for the  Company),  and the opinion of such  counsel  shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.

     (b)  Whenever in the  performance  of its duties under this  Agreement  the
Rights  Agent  shall  deem it  necessary  or  desirable  that any fact or matter
(including,  without  limitation,  the identity of any Acquiring  Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action  hereunder,  such fact or matter (unless
other  evidence in respect  thereof be herein  specifically  prescribed)  may be
deemed to be conclusively  proved and established by a certificate signed by the
Chairman of the Board,  the President,  any Vice President,  the Treasurer,  any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full  authorization
to the Rights  Agent for any action  taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

     (c) The  Rights  Agent  shall be  liable  hereunder  only for its own gross
negligence, bad faith or willful misconduct.

     (d) The  Rights  Agent  shall not be liable  for or by reason of any of the
statements  of fact or recitals  contained  in this  Agreement  or in the Rights
Certificates   or  be   required   to  verify   the  same   (except  as  to  its
countersignature  on such  Rights  Certificates),  but all such  statements  and
recitals are and shall be deemed to have been made by the Company only.

     (e) The Rights  Agent shall not be under any  responsibility  in respect of
the validity of this Agreement or the execution and delivery  hereof (except the
due  execution  hereof by the Rights  Agent) or in respect  of the  validity  or
execution of any Rights Certificate (except its countersignature  thereof);  nor
shall it be  responsible  for any  breach  by the  Company  of any  covenant  or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible  for any adjustment  required under the provisions of Section 11,
Section 13 or Section 24 hereof or responsible for the manner,  method or amount
of any such adjustment or the  ascertaining of the existence of facts that would
require  any such  adjustment  (except  with  respect to the  exercise of Rights
evidenced by Rights  Certificates after receipt of a certificate  describing any
such  adjustment,  delivered  pursuant to Section  12);  nor shall it by any act
hereunder  be  deemed  to  make  any   representation  or  warranty  as  to  the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights  Certificate or as to whether
any shares of Common Stock or Preferred Stock will,  when so issued,  be validly
authorized and issued, fully paid and nonassessable.

     (f) The  Company  agrees that it will  perform,  execute,  acknowledge  and
deliver or cause to be performed, executed,  acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying  out or  performing  by the Rights Agent of
the provisions of this Agreement.

                                       28
<PAGE>

     (g)  The  Rights  Agent  is  hereby   authorized  and  directed  to  accept
instructions  with respect to the  performance of its duties  hereunder from the
Chairman of the Board,  the President,  any Vice President,  the Secretary,  any
Assistant  Secretary,  the Treasurer or any Assistant  Treasurer of the Company,
and to apply to such officers for advice or  instructions in connection with its
duties,  and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance  with  instructions  of any such officer.  Any
application by the Rights Agent for written  instructions  from the Company may,
at the option of the Rights Agent,  set forth in writing any action  proposed to
be  taken  or  omitted  by the  Rights  Agent  with  respect  to its  duties  or
obligations  under this Rights Agreement and the date on and/or after which such
action  shall be taken or omitted  and the Rights  Agent shall not be liable for
any action taken or omitted in accordance  with a proposal  included in any such
application on or after the date specified therein (which date shall not be less
than five Business Days after the date any such officer  actually  receives such
application,  unless  any such  officer  shall have  consented  in writing to an
earlier  date) unless,  prior to taking or omitting any such action,  the Rights
Agent  has  received  written  instructions  in  response  to  such  application
specifying the action to be taken or omitted.

     (h) The Rights Agent and any stockholder,  director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other  securities
of the Company or become pecuniarily  interested in any transaction in which the
Company  may be  interested,  or  contract  with or lend money to the Company or
otherwise  act as fully and freely as though it were not Rights Agent under this
Agreement.  Nothing  herein  shall  preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.

     (i) The Rights  Agent may execute and  exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its  attorneys  or  agents,  and the Rights  Agent  shall not be  answerable  or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the  Company  resulting  from any such  act,  default,
neglect or misconduct;  provided,  however, reasonable care was exercised in the
selection and continued employment thereof.

     (j) No provision of this Agreement shall require the Rights Agent to expend
or risk  its own  funds  or  otherwise  incur  any  financial  liability  in the
performance  of any of its duties  hereunder or in the exercise of its rights if
there shall be reasonable  grounds for believing that repayment of such funds or
adequate  indemnification  against  such  risk or  liability  is not  reasonably
assured to it.

     (k) If, with respect to any Rights  Certificate  surrendered  to the Rights
Agent  for  exercise  or  transfer,  the  certificate  attached  to the  form of
assignment  or form of  election to  purchase,  as the case may be, has not been
completed,  the Company and the Rights Agent will deem the  beneficial  owner of
the rights evidenced by such Rights  Certificate to be an Acquiring Person or an
Affiliate or Associate  thereof and such assignment or election to purchase will
not be honored.

Section 21.  Change of Rights Agent.  The Rights Agent or any  successor  Rights
Agent may resign and be discharged  from its duties under this Agreement upon 30
days' notice in writing mailed to the Company, and to each transfer agent of the
Common Stock and Preferred  Stock,  by registered or certified  mail, and to the


                                       29
<PAGE>

holders of the Rights  Certificates by first-class  mail. The Company may remove
the Rights Agent or any successor  Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer  agent of the Common Stock and Preferred  Stock,  by registered or
certified  mail,  and to the holders of the Rights  Certificates  by first-class
mail. If the Rights Agent shall resign or be removed or shall  otherwise  become
incapable of acting,  the Company shall appoint a successor to the Rights Agent.
If the Company  shall fail to make such  appointment  within a period of 30 days
after giving  notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights  Certificate (who shall, with such notice,  submit his
Rights Certificate for inspection by the Company), then any registered holder of
any Rights Certificate may apply to any court of competent  jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the  Company or by such a court,  shall be (a) a  corporation  organized  and
doing  business  under  the laws of the  United  States  (or of any state of the
United States) in good standing, which is authorized under such laws to exercise
corporate  trust or stock  transfer  powers  and is subject  to  supervision  or
examination  by  federal  or state  authority  and  which has at the time of its
appointment  as  Rights  Agent  a  combined  capital  and  surplus  of at  least
$50,000,000 or (b) an affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the
same powers,  rights,  duties and  responsibilities as if it had been originally
named as Rights Agent without  further act or deed; but the  predecessor  Rights
Agent shall deliver and transfer to the  successor  Rights Agent any property at
the time held by it  hereunder,  and execute and deliver any further  assurance,
conveyance,  act or deed necessary for the purpose. Not later than the effective
date of any such  appointment,  the Company shall file notice thereof in writing
with the  predecessor  Rights Agent and each transfer  agent of the Common Stock
and the Preferred  Stock, and mail a notice thereof in writing to the registered
holders of the Rights  Certificates.  Failure to give any notice provided for in
this Section 21, however,  or any defect therein,  shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.

Section 22.  Issuance  of New Rights  Certificates.  Notwithstanding  any of the
provisions of this Agreement or of the Rights to the contrary,  the Company may,
at its option,  issue new Rights Certificates  evidencing Rights in such form as
may be approved by the Board to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other  securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement.

Section 23. Redemption.

     (a) The Board of Directors  of the Company may, at its option,  at any time
prior to the earlier of (i) the close of business on the tenth day following the
Stock  Acquisition  Date (or, if the Stock  Acquisition Date shall have occurred
prior to the Record Date,  the close of business on the tenth day  following the
Record Date), or (ii) the Final  Expiration  Date,  redeem all but not less than
all the then outstanding Rights at a redemption price of $.01 per Right, as such
amount may be appropriately  adjusted to reflect any stock split, stock dividend
or similar  transaction  occurring after the date hereof (such  redemption price
being hereinafter referred to as the "Redemption Price") and the Company may, at
its option,  pay the Redemption Price either in shares of Common Stock (based on


                                       30
<PAGE>

the "current market price," as defined in Section 11(d)(i) hereof, of the shares
of Common Stock at the time of  redemption)  or cash;  provided,  however,  that
notwithstanding   the  foregoing  if,   following  the  occurrence  of  a  Stock
Acquisition  Date and  following the  expiration of the right of redemption  set
forth above in this Section  23(a),  either  (i)(A) a Person who is an Acquiring
Person shall have  transferred  or  otherwise  disposed of a number of shares of
Common  Stock in one  transaction  or series of  transactions,  not  directly or
indirectly  involving  the  Company or any of its  Subsidiaries,  such that such
Person is thereafter a Beneficial Owner of 10% or less of the outstanding shares
of Common Stock, and (B) there are no other Persons,  immediately  following the
occurrence of the event described in clause (A), who are Acquiring Persons,  and
(C)  a  majority  of  the  members  of  the  Board  of  Directors   approve  the
reinstatement of the right of redemption pursuant to this Section 23, or (ii)(A)
the Board  Immediately  upon the action of the Board  ordering the redemption of
the Rights,  evidence  of which shall have been filed with the Rights  Agent and
without any further  action and  without any notice,  the right to exercise  the
Rights shall  terminate  and the only right  thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held.  Promptly after
the action of the Board ordering the redemption of the Rights, the Company shall
give notice of such  redemption  to the Rights Agent and the holders of the then
outstanding  Rights by mailing such notice to all such holders at each  holder's
last address as it appears upon the registry books of the Rights Agent or, prior
to the  Distribution  Date, on the registry  books of the Transfer Agent for the
Common Stock.  Any notice that is mailed in the manner herein  provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption  will state the method by which the payment of the  Redemption  Price
will be made.

     (b) In the event of a  redemption  of the  Rights in  accordance  with this
Agreement, the Company may, at its option, discharge all of its obligations with
respect to the Rights by (i) issuing a press  release  announcing  the manner of
redemption  of the Rights in  accordance  with this  Agreement  and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last  addresses  as they appear on the  registry  books of the Rights  Agent or,
prior to the  Distribution  Date, on the registry books of the Transfer Agent of
the  Common  Stock,  and upon such  action,  all  outstanding  Rights  and Right
Certificates shall be null and void without any further action by the Company.

Section 24. Exchange.

     (a) The Board may,  at its  option,  at any time after a Section  11(a)(ii)
Event,  exchange  all or part of the then  outstanding  and  exercisable  Rights
(which (i) shall not  include  Rights  that have  become  void  pursuant  to the
provisions of Section 7(e) hereof, and (ii) shall include,  without  limitation,
any Rights issued after the Distribution  Date) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar  transaction  occurring after
the date  hereof  (such  exchange  ratio  being  hereinafter  referred to as the
"Exchange  Ratio").  Notwithstanding  the  foregoing,  the  Board  shall  not be
empowered to effect such  exchange at any time after any Person  (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such  Subsidiary,  or any entity  holding Common Stock for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of such
Person,  becomes  the  Beneficial  Owner of 50% or more of the  shares of Common
Stock then outstanding.

                                       31
<PAGE>

     (b)  Immediately  upon the action of the Board ordering the exchange of any
Rights  pursuant to subsection  (a) of this Section 24,  evidence of which shall
have been  filed with the Rights  Agent,  and  without  any  further  action and
without any notice,  the right to exercise  such Rights shall  terminate and the
only right thereafter of a holder of such Rights shall be to receive that number
of shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio.  The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice  shall not affect the  validity  of such  exchange.  The Company
promptly  shall mail a notice of any such exchange to all of the holders of such
Rights at their last  addresses  as they appear upon the  registry  books of the
Rights Agent.  Any notice that is mailed in the manner herein  provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange  shall state the method by which the exchange of shares of Common Stock
for Rights will be  effected  and,  in the event of any  partial  exchange,  the
number of Rights that will be exchanged.  Any partial exchange shall be effected
pro rata based on the number of Rights  (other than Rights that have become void
pursuant  to the  provisions  of Section  7(e)  hereof)  held by each  holder of
Rights.

     (c) In any  exchange  pursuant  to this  Section  24, the  Company,  at its
option, may substitute  Preferred Stock (or equivalent  preferred stock, as such
term is defined in Section 11(b) hereof) for shares of Common Stock exchangeable
for Rights,  at the initial rate of one  ten-thousandth  of a share of Preferred
Stock  (or  equivalent  preferred  stock)  for each  share of Common  Stock,  as
appropriately  adjusted  to  reflect  adjustments  in the  voting  rights of the
Preferred  Stock  pursuant to Section 3(A) of the  Certificate  of  Designations
attached hereto as Exhibit A, so that the fraction of a share of Preferred Stock
(or equivalent  preferred stock) delivered in lieu of each share of Common Stock
shall have the same voting rights as one share of Common Stock.

     (d) In the event that there shall not be sufficient  shares of Common Stock
or Preferred  Stock issued but not  outstanding  or  authorized  but unissued to
permit any exchange of Rights as  contemplated  in accordance  with this Section
24, the Company  shall take all such  action as may be  necessary  to  authorize
additional  shares of Common Stock or Preferred Stock for issuance upon exchange
of the Rights.

     (e) The  Company  shall not be  required  to issue  fractions  of shares of
Common Stock or to distribute  certificates  that evidence  fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock,  there shall be
paid to the registered  holders of the Right  Certificates  with regard to which
such fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the current  market value of a whole share of
Common Stock.  For the purposes of this subsection (e), the current market value
of a whole share of Common Stock shall be the closing  price per share of Common
Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately  prior to the date of exchange  pursuant to this
Section 24.

Section 25. Notice of Certain Events.

     (a) In case the Company shall propose,  at any time after the  Distribution
Date,  (i) to pay any  dividend  payable in stock of any class to the holders of
Preferred  Stock or to make any other  distribution  to the holders of Preferred


                                       32
<PAGE>

Stock (other than a regular  quarterly cash dividend out of earnings or retained
earnings of the  Company),  or (ii) to offer to the holders of  Preferred  Stock
rights or warrants to  subscribe  for or to purchase  any  additional  shares of
Preferred Stock or shares of stock of any class or any other securities,  rights
or  options,  or (iii) to effect any  reclassification  of its  Preferred  Stock
(other than a  reclassification  involving  only the  subdivision of outstanding
shares of Preferred  Stock),  or (iv) to effect any consolidation or merger into
or  with  any  other  Person  (other  than  a  Subsidiary  of the  Company  in a
transaction  that complies with Section 11(o) hereof),  or to effect any sale or
other transfer (or to permit one or more of its  Subsidiaries to effect any sale
or other transfer),  in one transaction or a series of related transactions,  of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more  transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation,  dissolution or winding
up of the  Company,  then,  in each such case,  the  Company  shall give to each
holder of a Rights  Certificate,  to the extent  feasible and in accordance with
Section 26 hereof,  a notice of such  proposed  action,  which shall specify the
record date for the purposes of such stock  dividend,  distribution of rights or
warrants,  or the date on which such  reclassification,  consolidation,  merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of  participation  therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed,  and such notice  shall be so given in the case
of any action  covered by clause (i) or (ii) above at least 20 days prior to the
record  date for  determining  holders  of the  shares  of  Preferred  Stock for
purposes of such action,  and in the case of any such other action,  at least 20
days  prior to the date of the  taking  of such  proposed  action or the date of
participation therein by the holders of the shares of Preferred Stock, whichever
shall be the earlier.

     (b) In case a Section 11(a)(ii) Event shall occur,  then, in any such case,
(i) the Company shall as soon as practicable thereafter give to each holder of a
Rights  Certificate,  to the extent  feasible and in accordance  with Section 26
hereof, a notice of the occurrence of such event,  which shall specify the event
and the  consequences of the event to holders of Rights under Section  11(a)(ii)
hereof,  and (ii) all references in the preceding  paragraph to Preferred  Stock
shall be deemed thereafter to refer also to Common Stock and/or, if appropriate,
other securities; provided that the failure to give such notice shall not affect
the validity of such consent.

Section 26. Notices. Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights  Certificate to or on
the Company shall be  sufficiently  given or made if sent by  first-class  mail,
postage  prepaid,  addressed (until another address is filed in writing with the
Rights Agent) as follows:

                                    Thermo Electron Corporation
                                    81 Wyman Street
                                    Waltham, Massachusetts 02454
                                    Attention: Corporate Secretary

Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement  to be given or made by the  Company  or by the  holder of any  Rights
Certificate  to or on the Rights  Agent shall be  sufficiently  given or made if
sent by first-class mail,  postage prepaid,  addressed (until another address is
filed in writing with the Company) as follows:

                                       33
<PAGE>
                                    American Stock Transfer & Trust Company
                                    59 Maiden Lane
                                    New York, NY  10038
                                    Attention:  Corporate Trust Department

Notices  or  demands  authorized  by this  Agreement  to be given or made by the
Company or the Rights  Agent to the holder of any  Rights  Certificate  (or,  if
prior to the  Distribution  Date,  to the  holder of  certificates  representing
shares  of  Common  Stock)  shall  be  sufficiently  given  or  made  if sent by
first-class  mail,  postage prepaid,  addressed to such holder at the address of
such holder as shown on the registry books of the Company.

Section 27.  Supplements and  Amendments.  Except as provided in the penultimate
sentence of this Section 27, for so long as the Rights are then redeemable,  the
Company may, in its sole and absolute discretion, and the Rights Agent shall, if
the Company so directs,  supplement or amend any provision of this  Agreement in
any respect without the approval of any holders of the Rights.  At any time when
the Rights  are no longer  redeemable,  except as  provided  in the  penultimate
sentence of this Section 27, the Company may, by approval of at least 75% of the
members of the Board,  and the Rights  Agent  shall,  if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
in  order  (i) to cure  any  ambiguity  or (ii) to  correct  or  supplement  any
provision contained herein which may be defective or inconsistent with any other
provisions herein, provided that no such supplement or amendment shall adversely
affect the  interests  of the holders of Rights as such (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring  Person).  Upon the delivery
of a certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made that changes the Redemption Price. Prior to the Distribution Date,
the  interests  of the  holders of Rights  shall be deemed  coincident  with the
interests of the holders of Common Stock.

Section 28. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the  Company or the Rights  Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.

Section 29. Actions by the Board,  etc. The Board shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically  granted to the Board or to the Company,  or as may be necessary or
advisable  in  the   administration  of  this  Agreement,   including,   without
limitation,  the  right  and  power  to (i)  interpret  the  provisions  of this
Agreement,  and (ii) make all  determinations  deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend this Agreement).  All such actions,  calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing)  that are done or made by the Board
in good faith,  shall (x) be final,  conclusive and binding on the Company,  the
Rights  Agent,  the  holders of the Rights  and all other  parties,  and (y) not
subject the Board to any liability to the holders of the Rights.

                                       34
<PAGE>

Section  30.  Benefits of this  Agreement.  Nothing in this  Agreement  shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered  holders of the Rights  Certificates  (and, prior to the Distribution
Date,  registered  holders of the Common  Stock) any legal or  equitable  right,
remedy or claim under this  Agreement;  but this Agreement shall be for the sole
and  exclusive  benefit  of the  Company,  the Rights  Agent and the  registered
holders  of the  Rights  Certificates  (and,  prior  to the  Distribution  Date,
registered holders of the Common Stock).

Section 31.  Severability.  If any term,  provision,  covenant or restriction of
this Agreement is held by a court of competent  jurisdiction  or other authority
to be invalid,  void or unenforceable,  the remainder of the terms,  provisions,
covenants  and  restrictions  of this  Agreement  shall remain in full force and
effect  and shall in no way be  affected,  impaired  or  invalidated;  provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid,  void or unenforceable and the Board determines in its good faith
judgment that  severing the invalid,  void or  unenforceable  language from this
Agreement  would adversely  affect the purpose or effect of this Agreement,  the
right of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire  until the close of business on the tenth day  following  the date of
such determination by the Board.

Section  32.  Governing  Law.  This  Agreement,   each  Right  and  each  Rights
Certificate  issued  hereunder  shall be deemed to be a contract  made under the
laws of the State of  Delaware  and for all  purposes  shall be  governed by and
construed in accordance  with the laws of Delaware  applicable to contracts made
and to be performed entirely within Delaware.

Section  33.  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts and each of such  counterparts  shall for all purposes be deemed to
be an original,  and all such counterparts shall together constitute but one and
the same instrument.

Section 34. Descriptive  Headings.  Descriptive headings of the several Sections
of this  Agreement  are inserted for  convenience  only and shall not control or
affect the meaning or construction of any of the provisions hereof.

                                       35
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed and their  respective  corporate seals to be hereunto  affixed and
attested, all as of the day and year first above written.

Attest:                                 THERMO ELECTRON CORPORATION



By:                                     By:
   ------------------------                      -------------------------------
Name:                                   Name:
      ---------------------                      -------------------------------
Title:                                  Title:
      ---------------------                      -------------------------------


Attest:                                 AMERICAN STOCK TRANSFER & TRUST COMPANY



By:                                     By:
   ------------------------                      -------------------------------
Name:                                   Name:
      ---------------------                      -------------------------------
Title:                                  Title:
      ---------------------                      -------------------------------

                                       36
<PAGE>
                                                                       EXHIBIT A


                                     FORM OF

                           CERTIFICATE OF DESIGNATIONS

                                       OF

                  SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

                                       OF

                           THERMO ELECTRON CORPORATION

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

Thermo Electron Corporation, a corporation organized and existing under the laws
of  the  State  of  Delaware  (hereinafter  called  the  "Corporation"),  hereby
certifies that the following resolution was adopted by the Board of Directors of
the Corporation at a meeting duly called and held on January 19, 1996:

 RESOLVED:          That pursuant to the authority  granted to and vested in the
                    Board of Directors of the  Corporation  (hereinafter  called
                    the  "Board")  in  accordance  with  the  provisions  of the
                    Certificate of Incorporation,  as amended,  the Board hereby
                    creates a series of  Preferred  Stock,  $100 par value  (the
                    "Preferred Stock"), of the Corporation and hereby states the
                    designation  and  number of shares,  and fixes the  relative
                    rights, preferences and limitations thereof as follows:

     Series B Junior Participating Preferred Stock:

     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 Forty Thousand  (40,000).  Such number of shares may be increased
or decreased by  resolution  of the Board prior to issuance;  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 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


                                      A-1
<PAGE>

"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  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

                                      A-2
<PAGE>

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 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, 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
members of the Board 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

                                      A-3
<PAGE>

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
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.

     (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 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:

                                      A-4
<PAGE>

          (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) to all holders of
such shares upon such terms as the Board, 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.

     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,

                                      A-5
<PAGE>

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 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 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

                                      A-6
<PAGE>

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.

     Section 10. Amendment. The Certificate of Incorporation, as amended, of the
Corporation  shall not be amended in any manner that 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 that 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.

     IN WITNESS WHEREOF,  this Certificate of Designations is executed on behalf
of the Corporation by its President and Chief Executive Officer this 19th day of
January, 1996.

                                THERMO ELECTRON CORPORATION



                                By:     /s/ George N. Hatsopoulos
                                        --------------------------------------
                                        George N. Hatsopoulos
                                        Chairman of the Board and President






<PAGE>

                                                                       EXHIBIT B
                          [Form of Rights Certificate]

Certificate No. R-                                                 ______ Rights

NOT  EXERCISABLE  AFTER  JANUARY 29, 2006 OR EARLIER IF REDEEMED OR EXCHANGED BY
THE  COMPANY.  THE RIGHTS ARE  SUBJECT  TO  REDEMPTION  AT $.01 PER RIGHT AND TO
EXCHANGE  ON  THE  TERMS  SET  FORTH  IN THE  RIGHTS  AGREEMENT.  UNDER  CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS  AGREEMENT) AND ANY  SUBSEQUENT  HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS  REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY  OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING  PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS  AGREEMENT).   ACCORDINGLY,   THIS  RIGHTS  CERTIFICATE  AND  THE  RIGHTS
REPRESENTED  HEREBY MAY BECOME NULL AND VOID IN THE  CIRCUMSTANCES  SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]*

                               Rights Certificate

                           THERMO ELECTRON CORPORATION

This certifies  that , or registered  assigns,  is the  registered  owner of the
number of Rights set forth  above,  each of which  entitles  the owner  thereof,
subject to the terms,  provisions and conditions of the Rights Agreement,  dated
as of January 19, 1996 (as  amended,  the "Rights  Agreement"),  between  Thermo
Electron Corporation, a Delaware corporation (the "Company"), and American Stock
Transfer & Trust  Company (the  "Rights  Agent"),  to purchase  from the Company
after the  Distribution  Date (as such term is defined on the Rights  Agreement)
and at any time  prior to 5:00 P.M.  (Boston  time) on January  29,  2006 at the
office of the Rights Agent  designated  for such purpose,  or its  successors as
Rights Agent, one ten-thousandth of a fully paid, non-assessable share of Series
B Junior  Participating  Preferred Stock (the "Preferred Stock") of the Company,
$100 par  value  per  share,  at a  purchase  price of  $250.00  in cash per one
ten-thousandth  of  a  share  (the  "Purchase  Price"),  upon  presentation  and
surrender of this Rights  Certificate  with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one ten-thousandths of a share of Preferred Stock
which may be purchased upon exercise  hereof) set forth above,  and the Purchase
Price set forth  above,  are the  number and  Purchase  Price as of the close of
business on January 29, 1996,  based on the Preferred  Stock as  constituted  at
- -----------------------

* The portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.

                               B-1
<PAGE>

such date.  Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in the Rights Agreement.

     Upon the occurrence of a Section  11(a)(ii)  Event, if the Rights evidenced
by this Rights  Certificate are beneficially owned by (i) an Acquiring Person or
an  Affiliate  or  Associate  of any such  Acquiring  Person  (as such terms are
defined  in the  Rights  Agreement),  (ii) a  transferee  of any such  Acquiring
Person,  Associate or Affiliate  who becomes a  transferee  after the  Acquiring
Person  becomes  an  Acquiring  Person,  or (iii)  under  certain  circumstances
specified in the Rights  Agreement,  a transferee of a person who,  concurrently
with or after such  transfer,  became an  Acquiring  Person,  or an Affiliate or
Associate of an Acquiring Person,  such Rights shall become null and void and no
holder  hereof  shall have any right with  respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.

     As provided in the Rights Agreement,  the Purchase Price and the number and
kind of shares of  Preferred  Stock or other  securities  which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification  and adjustment upon the happening of certain events,  including
Section 11(a)(ii) Events.

     This  Rights  Certificate  is subject to all of the terms,  provisions  and
conditions of the Rights Agreement,  which terms,  provisions and conditions are
hereby  incorporated  herein by  reference  and made a part  hereof and to which
Rights Agreement  reference is hereby made for a full description of the rights,
limitations  of rights,  obligations,  duties and  immunities  hereunder  of the
Rights  Agent,  the Company and the  holders of the Rights  Certificates,  which
limitations of rights include the temporary  suspension of the exercisability of
such Rights under the specific  circumstances set forth in the Rights Agreement.
Copies of the  Rights  Agreement  are on file at the  principal  offices  of the
Company and are available upon written request to the Company.

     This Rights Certificate,  with or without other Rights  Certificates,  upon
surrender at the office of the Rights Agent  designated  for such purpose,  with
the Form of  Election  and  Certificate  set  forth  on the  reverse  side  duly
executed, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate  number of one  ten-thousandths  of a share of Preferred  Stock as the
Rights evidenced by the Rights  Certificate or Rights  Certificates  surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.

     Subject to the provisions of the Rights Agreement,  the Rights evidenced by
this  Certificate  may be redeemed by the Company at its option at a  redemption
price  of $.01  per  Right at any time  prior  to the  earlier  of the  close of
business on (i) the tenth day following the Stock Acquisition Date (as such time
period may be  extended  pursuant to the Rights  Agreement),  and (ii) the Final
Expiration Date.

     Subject to the provisions of the Rights Agreement,  the Company may, at its
option, at any time after a Section 11(a)(ii) Event, exchange all or part of the
Rights evidenced by this Certificate for shares of the Company's Common Stock or
for Preferred  Stock (or shares of a class or series of the Company's  preferred
stock  having the same  rights,  privileges  and  preferences  as the  Preferred
Stock).

                                      B-2
<PAGE>

     No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights  evidenced  hereby (other than fractions  which are integral
multiples of one ten-thousandth of a share of Preferred Stock, which may, at the
election of the  Company,  be  evidenced by  depositary  receipts),  but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.

     No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock  or of any  other  securities  of the  Company  which  may at any  time be
issuable on the  exercise  hereof,  nor shall  anything  contained in the Rights
Agreement or herein be construed to confer upon the holder hereof,  as such, any
of the  rights  of a  stockholder  of the  Company  or any right to vote for the
election  of  directors  or upon any matter  submitted  to  stockholders  at any
meeting thereof,  or to give or withhold consent to any corporate  action, or to
receive notice of meetings or other actions  affecting  stockholders  (except as
provided  in the Rights  Agreement),  or to receive  dividends  or  subscription
rights,  or  otherwise,  until  the  Right or Rights  evidenced  by this  Rights
Certificate shall have been exercised as provided in the Rights Agreement.

     This Rights  Certificate  shall not be valid or obligatory  for any purpose
until it shall have been countersigned by the Rights Agent.

     WITNESS the facsimile  signature of the proper  officers of the Company and
its corporate seal.

     Dated as of _______________, _____



ATTEST:                                     THERMO ELECTRON CORPORATION



                                           By:
Secretary                                  Title:


COUNTERSIGNED:

American Stock Transfer & Trust Company, as Rights Agent



By:

         Authorized Signature


                                      B-3
<PAGE>

                          FORM OF ELECTION TO PURCHASE



                  (To be executed if holder desires to exercise
                  Rights represented by the Rights Certificate)

To: American Stock Transfer & Trust Company

     The  undersigned  hereby  irrevocably  elects to exercise  ________  Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable  upon the  exercise  of the  Rights (or such  other  securities  of the
Company or of any other  person  which may be issuable  upon the exercise of the
Rights) and requests that  certificates for such shares be issued in the name of
and delivered to:

Please insert social security ___________________________________
or other identifying number _____________________________________

 -----------------------------------------------------------------
                         (Please print name and address)
 -----------------------------------------------------------------

     If such  number of Rights  shall not be all the  Rights  evidenced  by this
Rights  Certificate,  a new Rights  Certificate  for the  balance of such Rights
shall be registered in the name of and delivered to:

Please insert social security ___________________________________
or other identifying number______________________________________

  -----------------------------------------------------------------
                         (Please print name and address)
- ----------------------------------------------------------------

Dated:


                                    -----------------------
                                    Signature

Signature Guaranteed:


                                      B-4
<PAGE>




                                   Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the Rights  evidenced  by this Rights  Certificate  [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an  Affiliate or  Associate  thereof (as such terms are defined  pursuant to the
Rights Agreement);

     (2) after due inquiry and to the best knowledge of the undersigned,  it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or became an  Acquiring  Person or an  Affiliate or Associate
thereof.

Dated: ______________, __



                                    ---------------------------
                                    Signature

Signature Guaranteed:


                                     NOTICE

     The signature to the foregoing  Election to Purchase and  Certificate  must
correspond  to the name as written upon the face of this Rights  Certificate  in
every particular, without alteration or enlargement or any change whatsoever.


                                      B-5
<PAGE>


                  [Form of Reverse Side of Rights Certificate]



                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
               holder desires to transfer the Rights Certificate)


FOR VALUE RECEIVED_______________________________________________
hereby sells, assigns and transfers unto_________________________
        -----------------------------------------------------------------
                  (Please print name and address of transferee)
        -----------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.

Dated: __________________, ____


                                    --------------------------
                                    Signature


Signature Guaranteed:


                                   Certificate

     The undersigned  hereby  certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).

Dated:  ___________, ____


                                    ----------------------------
                                    Signature

Signature Guaranteed:



                                      B-6

<PAGE>

                                                                       EXHIBIT C

                  SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK



     On January 19, 1996, the Board of Directors of Thermo Electron  Corporation
(the  "Company")  declared  a  dividend  distribution  of  one  Right  for  each
outstanding share of the Company's Common Stock to stockholders of record at the
close of business on January 29, 1996. Each Right entitles the registered holder
to purchase from the Company a unit consisting of one  ten-thousandth of a share
(a "Unit") of Series B Junior Participating Preferred Stock, $100 par value (the
"Preferred  Stock") at a Purchase Price of $250.00 in cash per Unit,  subject to
adjustment.  The  description  and terms of the Rights are set forth in a Rights
Agreement (as amended,  the "Rights Agreement") between the Company and American
Stock Transfer & Trust Company, as Rights Agent.

     Initially,  the Rights will be attached  to all Common  Stock  certificates
representing  shares then outstanding,  and no separate Rights Certificates will
be  distributed.   The  Rights  will  separate  from  the  Common  Stock  and  a
Distribution  Date will occur upon the earlier of (i) 10 days following a public
announcement  that a person or group of  affiliated  or  associated  persons (an
"Acquiring Person") has acquired,  or obtained the right to acquire,  beneficial
ownership of 15% or more of the  outstanding  shares of Common Stock (the "Stock
Acquisition  Date"),  or (ii) 10 business days following the  commencement  of a
tender  offer  or  exchange  offer  that  would  result  in a  person  or  group
beneficially  owning  15% or more of such  outstanding  shares of Common  Stock.
Until the  Distribution  Date,  (i) the Rights will be  evidenced  by the Common
Stock  certificates and will be transferred with and only with such Common Stock
certificates,  (ii) new  Common  Stock  certificates  will  contain  a  notation
incorporating  the Rights  Agreement by reference  and (iii) the  surrender  for
transfer of any certificates  for Common Stock  outstanding will also constitute
the transfer of the Rights  associated with the Common Stock represented by such
certificate.

     The Rights are not exercisable  until the Distribution Date and will expire
at the close of  business  on January  29,  2006,  unless  earlier  redeemed  or
exchanged by the Company as described below.

     As soon as practicable  after the Distribution  Date,  Rights  Certificates
will be mailed to  holders  of  record  of the  Common  Stock as of the close of
business  on  the  Distribution  Date  and,  thereafter,   the  separate  Rights
Certificates alone will represent the Rights.  Except as otherwise determined by
the Board of  Directors  and except in  connection  with shares of Common  Stock
issued upon the  exercise  of  employee  stock  options,  issuances  under other
employee  stock  benefit  plans or issuances  upon the  exercise,  conversion or
exchange of securities  issued prior to the  Distribution  Date,  only shares of
Common Stock issued prior to the Distribution Date will be issued with Rights.

     In the event that a Person becomes the  beneficial  owner of 15% or more of
the then outstanding shares of Common Stock, except pursuant to an offer for all
outstanding  shares of Common  Stock  that at least a  majority  of the Board of

                                      C-1
<PAGE>

Directors  determines  to be fair to, and  otherwise in the best  interests  of,
stockholders,  each holder of a Right will thereafter have the right to receive,
upon  exercise,   that  number  of  shares  of  Common  Stock  (or,  in  certain
circumstances,  cash,  property or other securities of the Company) which equals
the exercise  price of the Right divided by one-half of the current market price
(as  defined in the  Rights  Agreement)  of the Common  Stock at the date of the
occurrence of the event. However, Rights are not exercisable following the event
set forth  above until such time as the Rights are no longer  redeemable  by the
Company as set forth below. Notwithstanding any of the foregoing,  following the
occurrence of such event,  all Rights that are, or (under certain  circumstances
specified in the Rights  Agreement)  were,  beneficially  owned by any Acquiring
Person will be null and void.  The event set forth in this paragraph is referred
to as a "Section 11(a)(ii) Event."

     For  example,  at an exercise  price of $250.00  per Right,  each Right not
owned by an Acquiring Person (or by certain related parties)  following an event
set forth in the  preceding  paragraph  would entitle its holder to purchase for
$250.00 such number of shares of Common Stock (or other consideration,  as noted
above) as equals  $250.00  divided by one-half of the current  market  price (as
defined in the Rights  Agreement) of the Common Stock.  Assuming that the Common
Stock had a per share  value of $50.00 at such  time,  the  holder of each valid
Right would be entitled to purchase ten shares of Common Stock for $250.00.

     In the event  that,  at any time after any  person has become an  Acquiring
Person,  (i) the Company is acquired in a merger or other  business  combination
transaction in which the Company is not the surviving  corporation or its Common
Stock is  changed  or  exchanged  (other  than a merger  which  follows an offer
determined  by the  Board of  Directors  to be fair as  described  in the  first
sentence  of the  second  preceding  paragraph),  or  (ii)  50% or  more  of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except  Rights  which  previously  have been voided as set forth  above)  shall
thereafter  have the right to receive,  upon exercise,  that number of shares of
common stock of the  acquiring  company  which equals the exercise  price of the
Right  divided by one-half of the current  market  price of such common stock at
the date of the occurrence of the event.

     For  example,  at an  exercise  price of  $250.00  per  Right,  each  Right
following an event set forth in the preceding paragraph would entitle its holder
to purchase for $250.00  such number of shares of common stock of the  acquiring
company as equals  $250.00  divided by one-half of the current  market price (as
defined in the Rights Agreement) of such common stock. Assuming that such common
stock had a per share  value of $100.00  at such time,  the holder of each valid
Right would be entitled to purchase five shares of common stock of the acquiring
company for $250.00.

     At any time after the occurrence of a Section 11(a)(ii) Event, the Board of
Directors  of the Company may  exchange  the Rights  (other than Rights owned by
such  Acquiring  Person  that  have  become  void),  in whole or in part,  at an
exchange ratio of one share of Common Stock, or one ten-thousandth of a share of
Preferred  Stock (or of a share of a class or series of the Company's  preferred

                                      C-2
<PAGE>

stock having equivalent rights, preferences and privileges),  per Right (subject
to adjustment).

     The Purchase Price payable,  and the number of Units of Preferred  Stock or
other securities or property  issuable,  upon exercise of the Rights are subject
to adjustment from time to time to prevent  dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock,  (ii) if holders of the  Preferred  Stock are granted  certain  rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred  Stock, or (iii) upon the distribution
to  holders  of the  Preferred  Stock of  evidences  of  indebtedness  or assets
(excluding  regular  quarterly  cash  dividends)  or of  subscription  rights or
warrants (other than those referred to above).

     The number of Rights  associated  with each  share of Common  Stock is also
subject to  adjustment  in the event of a stock  split of the Common  Stock or a
stock  dividend on the Common  Stock  payable in Common  Stock or  subdivisions,
consolidations  or  combinations  of Common Stock  occurring,  in any such case,
prior to the Distribution Date. As a result of the Company's three-for-two stock
split  in the form of a 50%  stock  dividend  in  1996,  the  number  of  Rights
associated  with each share of Common  Stock has been reduced from one Right per
share of Common Stock to two-thirds of a Right per share of Common Stock.

     Preferred  Stock  purchasable  upon  exercise  of the  Rights  will  not be
redeemable.  Each  share  of  Preferred  Stock  will be  entitled  to a  minimum
preferential  quarterly  dividend payment of $100 per share and will be entitled
to an  aggregate  dividend of 10,000  times the  dividend  declared per share of
Common Stock.  In the event of  liquidation,  the holders of the Preferred Stock
will be entitled to a minimum preferential liquidating payment of $100 per share
and will be entitled to an  aggregate  payment of 10,000  times the payment made
per share of Common Stock. Each share of Preferred Stock will have 10,000 votes,
voting  together  with the Common  Stock.  Finally,  in the event of any merger,
consolidation  or  other  transaction  in  which  Common  Stock  is  changed  or
exchanged,  each share of  Preferred  Stock will be entitled  to receive  10,000
times the amount received per share of Common Stock.  These rights are protected
by customary antidilution  provisions and, in accordance therewith,  in light of
the Company's  stock  dividend in 1996,  currently  provide for (i) an aggregate
dividend per share of Preferred Stock of 15,000 times the dividend  declared per
share of Common Stock,  (ii) an aggregate  payment per share of Preferred Stock,
in the event of  liquidation,  of 15,000  times  the  payment  made per share of
Common  Stock  and (iii)  15,000  votes per  share of  Preferred  Stock,  voting
together with the Common Stock.

     Because of the nature of the Preferred  Stock's  dividend,  liquidation and
voting rights,  the value of one  ten-thousandth  of a share of Preferred  Stock
purchasable  upon  exercise of each Right  should  approximate  the value of one
share of Common Stock.  With certain  exceptions,  no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at least 1% of the
Purchase  Price.  No fractional  Units will be issued and, in lieu  thereof,  an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.

                                      C-3
<PAGE>

     At any time  until ten days  following  the  Stock  Acquisition  Date,  the
Company may redeem the Rights in whole,  but not in part, at a price of $.01 per
Right  (payable in cash or stock).  Immediately  upon the action of the Board of
Directors  ordering  redemption of the Rights, the Rights will terminate and the
only right of the  holders  of Rights  will be to  receive  the $.01  redemption
price. The Rights may also be redeemable  following certain other  circumstances
specified in the Rights Agreement.

     Until a Right is  exercised,  the  holder  thereof,  as such,  will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive  dividends.  While the distribution of the Rights will not
be taxable to stockholders or to the Company,  stockholders may,  depending upon
the circumstances,  recognize taxable income in the event that the Rights become
exercisable  for Common  Stock (or other  consideration)  of the  Company or for
common stock of the acquiring company as set forth above.

     Prior to the  Distribution  Date,  the terms of the Rights  are  subject to
amendment  by the Board of  Directors  without the consent of the holders of the
Rights,  except  that the  redemption  price of the  Rights  is not  subject  to
amendment.  After the  Distribution  Date,  only limited terms of the Rights are
subject to amendment by the Board.

     As long as the Rights are attached to the Common Stock,  one Right (as such
number may be adjusted pursuant to the provisions of the Rights Agreement) shall
be deemed to be delivered  for each share of Common Stock issued or delivered by
the  Company,  except  that  following  the  Distribution  Date and prior to the
expiration or redemption of the Rights,  the Company (a) shall issue Rights only
in respect of shares of common stock  issued upon the exercise of stock  options
or under any employee plan or arrangement,  or upon the exercise,  conversion or
exchange of securities issued before the Distribution Date and (b) may otherwise
issue Rights when it issues Common Stock only if the Board of Directors deems it
to be necessary or  appropriate;  provided  that no Rights will be issued if the
Company is advised by counsel that such issuance would create a significant risk
of material  adverse tax  consequences  to the Company or the  recipient  of the
Rights.

     A copy of the  Rights  Agreement  has been filed  with the  Securities  and
Exchange Commission as an Exhibit to a Registration  Statement on Form 8-A dated
January 25, 1996, as amended.  A copy of the Rights  Agreement is available free
of charge from the  Company.  This  summary  description  of the Rights does not
purport to be complete  and is  qualified  in its  entirety by  reference to the
Rights Agreement.

                                      C-4




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>6
<FILENAME>tmok01ex4-3.txt
<TEXT>

                                                                     Exhibit 4.3



                           THERMO ELECTRON CORPORATION

                       Amendment No. 1 to Rights Agreement



     THIS  AMENDMENT  NO. 1,  executed as of  February  7, 2002,  is made to the
RIGHTS AGREEMENT, dated as of October 29, 2001 (the "Agreement"), between Thermo
Electron Corporation, a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company, a New York banking  corporation,  as Rights Agent (the
"Rights Agent").

     In  accordance  with the  provisions  of Section 27 of the  Agreement,  the
Agreement is hereby amended as follows:

     1. Section 23 is amended by adding the  following new  subparagraph  (d) at
the end thereof:

     "(d) The  Shareholder  Rights  Plan  Committee  of the  Company's  Board of
          Directors shall review this Agreement in order to consider whether the
          maintenance of this Agreement continues to be in the best interests of
          the Company and its  stockholders.  The  committee  shall conduct such
          review periodically when, as and in such manner as the committee deems
          appropriate,  after giving due regard to all  relevant  circumstances;
          provided,  however, that the committee shall take such action at least
          once every three years. Following each such review, the committee will
          report  its  conclusions  to the Board of  Directors  of the  Company,
          including  any  recommendation  in light  thereof as to  whether  this
          Agreement  should be modified or the Rights  should be  redeemed.  The
          committee  is  authorized  to retain  such  legal  counsel,  financial
          advisors and other  advisors as the  committee  deems  appropriate  in
          order  to  assist  the   committee  in  carrying  out  its   foregoing
          responsibilities under this Agreement.  The committee shall consist of
          directors  who are eligible to serve on the  committee  in  accordance
          with the Company's bylaws."

     2. Except as amended hereby, the Agreement shall remain unchanged and shall
remain in full force and effect.

     3. This Amendment may be executed in any number of counterparts and each of
such  counterparts  shall for all purposes be deemed to be an original,  and all
such counterparts shall together constitute but one and the same instrument.



<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be
duly executed as of the day and year first above written.

Attest:                                 THERMO ELECTRON CORPORATION



By:                                       By:
Name:                                    Name:
Title:                                  Title:



Attest:                                 AMERICAN STOCK TRANSFER & TRUST COMPANY



By:                                   By:
Name:                                 Name:
Title:                                Title:





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>7
<FILENAME>tmok01ex10-10.txt
<TEXT>
                                                                   Exhibit 10.10
                           THERMO ELECTRON CORPORATION

                              EQUITY INCENTIVE PLAN

            As amended and restated effective as of February 7, 2002


1.       Purpose

          The purpose of this Equity  Incentive  Plan (the  "Plan") is to secure
for  Thermo  Electron  Corporation  (the  "Company")  and its  Stockholders  the
benefits arising from capital stock ownership by employees and directors of, and
consultants  to, the  Company  and its  subsidiaries  or other  persons  who are
expected to make  significant  contributions to the future growth and success of
the Company and its subsidiaries. The Plan is intended to accomplish these goals
by  enabling  the  Company  to  offer  such  persons   equity-based   interests,
equity-based incentives or performance-based stock incentives in the Company, or
any combination thereof ("Awards").

2.       Administration

          The Plan will be administered by the Board of Directors of the Company
(the  "Board").  The Board shall have full power to interpret and administer the
Plan, to prescribe, amend and rescind rules and regulations relating to the Plan
and  Awards,  and full  authority  to select the  persons to whom Awards will be
granted ("Participants"),  determine the type and amount of Awards to be granted
to Participants  (including any combination of Awards),  determine the terms and
conditions of Awards  granted  under the Plan  (including  terms and  conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture,  restrictions,  dividends and interest, if any,
on deferred  amounts),  waive compliance by a participant with any obligation to
be  performed  by him or her under an Award,  waive any term or  condition of an
Award,  cancel  an  existing  Award in whole or in part  with the  consent  of a
Participant,  grant replacement  Awards,  accelerate the vesting or lapse of any
restrictions of any Award, correct any defect,  supply any omission or reconcile
any  inconsistency in the Plan or in any Award and adopt the form of instruments
evidencing  Awards  under the Plan and change such forms from time to time.  Any
interpretation by the Board of the terms and provisions of the Plan or any Award
thereunder and the  administration  thereof,  and all action taken by the Board,
shall be final,  binding and  conclusive on all parties and any person  claiming
under or  through  any  party.  No  Director  shall be liable  for any action or
determination made in good faith. The Board may, to the full extent permitted by
law, delegate any or all of its  responsibilities  under the Plan to a committee
(the "Committee") appointed by the Board and consisting of members of the Board.
All references in the Plan to the "Board" shall mean the Board or a Committee of
the Board to the extent that the Board's powers or authority under the Plan have
been delegated to such Committee.

3.       Effective Date

          The Plan shall be effective as of the date first approved by the Board
of  Directors,  subject  to the  approval  of  the  Plan  by  the  Corporation's


                                       1
<PAGE>

Stockholders.  Grants of Awards under the Plan made prior to such approval shall
be effective when made (unless  otherwise  specified by the Board at the time of
grant), but shall be conditioned on and subject to such approval of the Plan.

4.       Shares Subject to the Plan

          Subject to adjustment as provided in Section 10.6, the total number of
shares of  common  stock of the  Company,  par  value  $1.00 per share  ("Common
Stock"),  reserved  and  available  for  distribution  under  the Plan  shall be
15,575,000 shares.  Such shares may consist,  in whole or in part, of authorized
and unissued shares or treasury shares.

          If any  Award of  shares of Common  Stock  requiring  exercise  by the
Participant  for delivery of such shares  expires or terminates  without  having
been  exercised  in full,  is forfeited  or is  otherwise  terminated  without a
payment being made to the  Participant  in the form of Common  Stock,  or if any
shares of Common Stock subject to  restrictions  are  repurchased by the Company
pursuant to the terms of any Award or are otherwise reacquired by the Company to
satisfy  obligations  arising  by  virtue of any  Award,  such  shares  shall be
available for distribution in connection with future Awards under the Plan.

5.       Eligibility

          Employees and Directors  of, and  consultants  to, the Company and its
subsidiaries,   or  other   persons  who  are   expected  to  make   significant
contributions  to  the  future  growth  and  success  of  the  Company  and  its
subsidiaries  shall be eligible to receive Awards under the Plan. The Board,  or
other  appropriate  committee or person to the extent permitted  pursuant to the
last  sentence  of Section 2,  shall  from time to time  select  from among such
eligible persons those who will receive Awards under the Plan.

6.       Types of Awards

          The Board may offer Awards under the Plan in any form of  equity-based
interest,  equity-based incentive or performance-based stock incentive in Common
Stock of the Company or any combination  thereof. The type, terms and conditions
and  restrictions  of an Award shall be determined by the Board at the time such
Award is made to a  Participant;  provided  however  that the maximum  number of
shares  permitted to be granted under any Award or  combination of Awards to any
Participant  during any one  calendar  year may not exceed  1,500,000  shares of
Common Stock.

          An Award shall be made at the time specified by the Board and shall be
subject to such  conditions or  restrictions  as may be imposed by the Board and
shall  conform to the  general  rules  applicable  under the Plan as well as any
special  rules then  applicable  under  federal tax laws or  regulations  or the
federal securities laws relating to the type of Award granted.

          Without  limiting the foregoing,  Awards may take the following  forms
and shall be subject to the following rules and conditions:


                                       2
<PAGE>

          6.1 Options

          An option is an Award that entitles the holder on exercise  thereof to
purchase Common Stock at a specified  exercise price.  Options granted under the
Plan may be either incentive stock options ("incentive stock options") that meet
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the  "Code"),  or options  that are not  intended to meet the  requirements  of
Section 422 ("non-statutory options").

          6.1.1 Option  Price.  The price at which Common Stock may be purchased
upon exercise of an option shall be determined by the Board,  provided  however,
the exercise price shall not be less than 85% of the fair market value per share
of Common Stock as of the date of grant.  The Board shall not have the authority
to reprice  outstanding stock options granted to directors or executive officers
of the Company, except to the extent permitted under Section 10.6 of the Plan in
connection with adjustments in the event of certain transactions.

          6.1.2 Option Grants. The granting of an option shall take place at the
time  specified by the Board.  Options shall be evidenced by option  agreements.
Such agreements  shall conform to the  requirements of the Plan, and may contain
such other  provisions  (including  but not  limited to vesting  and  forfeiture
provisions,  acceleration, change of control, protection in the event of merger,
consolidations,   dissolutions  and   liquidations)  as  the  Board  shall  deem
advisable.  Option  agreements  shall expressly state whether an option grant is
intended to qualify as an incentive stock option or non-statutory option.

          6.1.3 Option Period. An option will become exercisable at such time or
times  (which may be  immediately  or in such  installments  as the Board  shall
determine)  and on such terms and  conditions  as the Board shall  specify.  The
option agreements shall specify the terms and conditions applicable in the event
of an option holder's termination of employment during the option's term.

          Any exercise of an option must be in accordance with the  instructions
described  in "The Guide for  Employees  of Thermo  Electron  Corporation  Stock
Option Plans," as may be amended from time to time (the "Guide").

          6.1.4  Payment of Exercise  Price.  Stock  purchased on exercise of an
option shall be paid for in accordance  with the  instructions  described in the
Guide.

          6.1.5 Buyout Provision. The Board may at any time offer to buy out for
a payment in cash,  shares of Common Stock,  deferred stock or restricted stock,
an option  previously  granted,  based on such terms and conditions as the Board
shall establish and communicate to the option holder at the time that such offer
is made.

          6.1.6 Special Rules for Incentive Stock Options. Each provision of the
Plan and each option  agreement  evidencing  an incentive  stock option shall be
construed so that each incentive stock option shall be an incentive stock option
as  defined  in  Section  422 of the Code or any  statutory  provision  that may
replace such  Section,  and any  provisions  thereof that cannot be so construed
shall be  disregarded.  Instruments  evidencing  incentive  stock  options shall


                                       3
<PAGE>

contain such provisions as are required under applicable provisions of the Code.
Incentive  stock options may be granted only to employees of the Company and its
subsidiaries.  The exercise price of an incentive stock option shall not be less
than 100% (110% in the case of an incentive  stock option granted to a more than
ten percent  stockholder  of the Company) of the fair market value of the Common
Stock on the date of grant,  as  determined  by the Board.  An  incentive  stock
option may not be granted after the tenth  anniversary  of the date on which the
Plan was  adopted by the Board and the latest date on which an  incentive  stock
option may be exercised shall be the tenth anniversary  (fifth  anniversary,  in
the case of any  incentive  stock  option  granted  to a more  than ten  percent
stockholder of the Company) of the date of grant, as determined by the Board.

          6.2 Restricted and Unrestricted Stock

          An Award of restricted stock entitles the recipient thereof to acquire
shares  of  Common  Stock  upon  payment  of  the  purchase   price  subject  to
restrictions specified in the instrument evidencing the Award.

          6.2.1  Restricted  Stock Awards.  Awards of restricted  stock shall be
evidenced by restricted stock  agreements.  Such agreements shall conform to the
requirements  of the Plan,  and may  contain  such other  provisions  (including
restriction  and  forfeiture  provisions,  change of control,  protection in the
event of mergers,  consolidations,  dissolutions and  liquidations) as the Board
shall deem advisable.

          6.2.2 Restrictions.  Until the restrictions  specified in a restricted
stock  agreement  shall  lapse,  restricted  stock  may not be  sold,  assigned,
transferred,  pledged or otherwise  encumbered  or disposed of, and upon certain
conditions  specified in the restricted stock  agreement,  must be resold to the
Company for the price,  if any,  specified in such agreement.  The  restrictions
shall  lapse at such time or  times,  and on such  conditions,  as the Board may
specify. The Board may at any time accelerate the time at which the restrictions
on all or any part of the shares shall lapse.

          6.2.3 Rights as a Stockholder.  A Participant  who acquires  shares of
restricted  stock will have all of the rights of a  stockholder  of the  Company
with  respect  to such  shares  except  as  otherwise  limited  pursuant  to the
Participant's restricted stock agreement. Unless the Board otherwise determines,
certificates evidencing shares of restricted stock will remain in the possession
of the Company until such shares are free of all restrictions under the Plan.

          6.2.4 Purchase Price. The purchase price of shares of restricted stock
shall be determined by the Board, in its sole discretion.

          6.2.5  Other  Awards  Settled  With  Restricted  Stock.  The Board may
provide that any or all the Common Stock delivered  pursuant to an Award will be
restricted stock.

          6.2.6 Unrestricted Stock. The Board may, in its sole discretion,  sell
to any Participant  shares of Common Stock free of  restrictions  under the Plan
for a price  determined  by the  Board,  but  which may not be less than the par
value per share of the Common Stock.

                                       4
<PAGE>


          6.3 Deferred Stock

          6.3.1  Deferred  Stock  Award.  A deferred  stock Award  entitles  the
recipient  to receive  shares of  deferred  stock,  which is Common  Stock to be
delivered  in the future.  Delivery of the Common  Stock will take place at such
time or times, and on such conditions,  as the Board may specify.  The Board may
at any time  accelerate  the time at  which  delivery  of all or any part of the
Common Stock will take place.

          6.3.2 Other Awards Settled with Deferred Stock.  The Board may, at the
time any Award described in this Section 6 is granted, provide that, at the time
Common Stock would otherwise be delivered pursuant to the Award, the Participant
will instead  receive an instrument  evidencing the right to future  delivery of
deferred stock.

          6.4 Performance Awards

          6.4.1  Performance  Awards. A performance Award entitles the recipient
to receive, without payment, an amount, in cash or Common Stock or a combination
thereof (such form to be determined by the Board),  following the  attainment of
performance  goals.  Performance  goals may be related to personal  performance,
corporate  performance,  departmental  performance  or  any  other  category  of
performance  deemed by the Board to be  important to the success of the Company.
The Board will  determine the  performance  goals,  the period or periods during
which  performance  is to  be  measured  and  all  other  terms  and  conditions
applicable to the Award.

          6.4.2 Other Awards Subject to Performance  Conditions.  The Board may,
at the time any  Award  described  in this  Section  6 is  granted,  impose  the
condition (in addition to any conditions specified or authorized in this Section
6 of the  Plan)  that  performance  goals  be  met  prior  to the  Participant's
realization of any payment or benefit under the Award.

7.       Purchase Price and Payment

          Except as otherwise provided in the Plan, the purchase price of Common
Stock to be acquired  pursuant to an Award shall be the price  determined by the
Board,  provided  that  such  price  shall not be less than the par value of the
Common Stock.  Except as otherwise provided in the Plan, the Board may determine
the  method of  payment  of the  exercise  price or  purchase  price of an Award
granted under the Plan and the form of payment. The Board may determine that all
or any part of the purchase  price of Common Stock pursuant to an Award has been
satisfied by past services  rendered by the Participant.  The Board may agree at
any  time,  upon  request  of the  Participant,  to defer  the date on which any
payment under an Award will be made.


                                       5
<PAGE>

8.       Intentionally Omitted

9.       Change in Control

          9.1 Impact of Event

          In the event of a "Change in Control" as defined in Section  9.2,  the
following  provisions  shall apply,  unless the agreement  evidencing  the Award
otherwise  provides (by specific explicit  reference to Section 9.2 below). If a
Change in Control occurs while any Awards are outstanding,  then, effective upon
the Change in Control,  (i) each outstanding  stock option or other  stock-based
Award  awarded  under the Plan that was not  previously  exercisable  and vested
shall become immediately  exercisable in full and will no longer be subject to a
right of repurchase by the Company, (ii) each outstanding restricted stock award
or other  stock-based  Award subject to restrictions and to the extent not fully
vested,  shall be deemed to be fully vested,  free of restrictions and no longer
subject to a right of repurchase by the Company,  and (iii) deferral limitations
and conditions that relate solely to the passage of time,  continued  employment
or  affiliation  will be waived and  removed  as to  deferred  stock  Awards and
performance  Awards;  performance  of other  conditions  (other than  conditions
relating  solely to the passage of time,  continued  employment or  affiliation)
will continue to apply unless otherwise provided in the agreement evidencing the
Award or in any other  agreement  between  the  Participant  and the  Company or
unless otherwise agreed by the Board.

          9.2 Definition of "Change in Control"

          "Change in Control"  means an event or occurrence set forth in any one
or more of subsections  (a) through (d) below  (including an event or occurrence
that  constitutes  a Change  in  Control  under one of such  subsections  but is
specifically exempted from another such subsection):

          (a) the  acquisition  by an  individual,  entity or group  (within the
meaning of Section  13(d)(3) or 14(d)(2) of the  Exchange  Act) (a  "Person") of
beneficial  ownership  of any  capital  stock  of  Thermo  Electron  Corporation
("Thermo  Electron") if, after such acquisition,  such Person  beneficially owns
(within the meaning of Rule 13d-3  promulgated  under the  Exchange  Act) 40% or
more of  either  (i) the  then-outstanding  shares  of  common  stock of  Thermo
Electron (the  "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in  the  election  of  directors  (the  "Outstanding  TMO  Voting  Securities");
provided,  however,  that for purposes of this  subsection  (a),  the  following
acquisitions  shall not constitute a Change in Control:  (i) any  acquisition by
Thermo  Electron,  (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation  controlled
by Thermo  Electron,  or (iii) any acquisition by any corporation  pursuant to a
transaction  which  complies with clauses (i) and (ii) of subsection (c) of this
definition; or

          (b) such time as the  Continuing  Directors (as defined  below) do not
constitute a majority of the Board of Directors of Thermo  Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo  Electron),  where  the term  "Continuing  Director"  means at any date a


                                       6
<PAGE>

member of the Thermo  Board (i) who was a member of the Thermo  Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall
be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

          (c)  the  consummation  of a  merger,  consolidation,  reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or  other  disposition  of all or  substantially  all of the  assets  of  Thermo
Electron in one or a series of transactions (a "Business Combination"),  unless,
immediately  following  such  Business  Combination,  each of the  following two
conditions is satisfied:  (i) all or  substantially  all of the  individuals and
entities who were the beneficial  owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly,  more than 60% of the then-outstanding
shares of common  stock and the combined  voting  power of the  then-outstanding
securities   entitled  to  vote   generally  in  the   election  of   directors,
respectively,  of the  resulting  or  acquiring  corporation  in  such  Business
Combination (which shall include,  without limitation,  a corporation which as a
result of such transaction  owns Thermo Electron or substantially  all of Thermo
Electron's  assets either  directly or through one or more  subsidiaries)  (such
resulting  or  acquiring  corporation  is referred  to herein as the  "Acquiring
Corporation")  in  substantially   the  same  proportions  as  their  ownership,
immediately  prior to such Business  Combination,  of the Outstanding TMO Common
Stock and Outstanding TMO Voting  Securities,  respectively;  and (ii) no Person
(excluding the Acquiring  Corporation  or any employee  benefit plan (or related
trust)   maintained  or  sponsored  by  Thermo  Electron  or  by  the  Acquiring
Corporation) beneficially owns, directly or indirectly,  40% or more of the then
outstanding  shares  of common  stock of the  Acquiring  Corporation,  or of the
combined  voting power of the  then-outstanding  securities of such  corporation
entitled to vote generally in the election of directors; or

          (d)  approval  by the  stockholders  of Thermo  Electron of a complete
 liquidation or dissolution of Thermo Electron.

10.      General Provisions

          10.1 Documentation of Awards

          Awards  will be  evidenced  by written  instruments,  which may differ
among Participants,  prescribed by the Board from time to time. Such instruments
may be in the form of agreements to be executed by both the  Participant and the
Company  or  certificates,  letters  or  similar  instruments  which need not be
executed by the participant  but acceptance of which will evidence  agreement to
the terms thereof.  Such  instruments  shall conform to the  requirements of the
Plan and may contain such other  provisions  (including  provisions  relating to
events of merger, consolidation, dissolution and liquidations, change of control


                                       7
<PAGE>

and  restrictions  affecting  either the  agreement  or the Common  Stock issued
thereunder), as the Board deems advisable.

          10.2 Rights as a Stockholder

          Except  as  specifically  provided  by  the  Plan  or  the  instrument
evidencing the Award, the receipt of an Award will not give a Participant rights
as a stockholder  of the Company with respect to any shares  covered by an Award
until  the date of  issue of a stock  certificate  to the  participant  for such
shares.

          10.3 Conditions on Delivery of Stock

          The  Company  will not be  obligated  to deliver  any shares of Common
Stock pursuant to the Plan or to remove any restriction  from shares  previously
delivered  under  the Plan (a)  until  all  conditions  of the  Award  have been
satisfied or removed,  (b) until, in the opinion of the Company's  counsel,  all
applicable  federal and state laws and regulations  have been complied with, (c)
if the  outstanding  Common  Stock is at the time listed on any stock  exchange,
until the shares have been listed or  authorized  to be listed on such  exchange
upon  official  notice of  issuance,  and (d) until all other  legal  matters in
connection  with the issuance and delivery of such shares have been  approved by
the Company's counsel. If the sale of Common Stock has not been registered under
the Securities Act of 1933, as amended,  the Company may require, as a condition
to exercise of the Award, such  representations or agreements as counsel for the
Company may consider  appropriate to avoid violation of such act and may require
that the  certificates  evidencing such Common Stock bear an appropriate  legend
restricting transfer.

          If an Award is exercised by the  participant's  legal  representative,
the Company will be under no obligation to deliver Common Stock pursuant to such
exercise   until  the  Company  is  satisfied  as  to  the   authority  of  such
representative.

          10.4 Tax Withholding

          The Company will  withhold  from any cash payment made  pursuant to an
Award an amount  sufficient to satisfy all federal,  state and local withholding
tax requirements (the "withholding requirements").

          In the  case  of an  Award  pursuant  to  which  Common  Stock  may be
delivered,  the Board will have the right to  require  that the  participant  or
other  appropriate  person remit to the Company an amount  sufficient to satisfy
the withholding  requirements,  or make other  arrangements  satisfactory to the
Board with  regard to such  requirements,  prior to the  delivery  of any Common
Stock.  If and to the extent that such  withholding  is required,  the Board may
permit the  participant  or such other  person to elect at such time and in such
manner as the Board provides to have the Company hold back from the shares to be
delivered,  or to deliver to the Company, Common Stock having a value calculated
to satisfy the withholding requirement.

          10.5 Transferability of Awards

          Except as may be authorized by the Board, in its sole  discretion,  no
Award (other than an Award in the form of an outright transfer of cash or Common


                                       8
<PAGE>

Stock not subject to any  restrictions) may be transferred other than by will or
the laws of descent and  distribution,  and during a  Participant's  lifetime an
Award requiring exercise may be exercised only by him or her (or in the event of
incapacity,  the  person  or  persons  properly  appointed  to act on his or her
behalf). The Board may, in its discretion,  determine the extent to which Awards
granted to a Participant shall be transferable,  and such provisions  permitting
or acknowledging transfer shall be set forth in the written agreement evidencing
the  Award  executed  and  delivered  by or on  behalf  of the  Company  and the
Participant.

          10.6 Adjustments in the Event of Certain Transactions

          (a) In the event of a stock  dividend,  stock split or  combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends,  the Board will make (i)  appropriate  adjustments to the
maximum  number of shares that may be delivered  under the Plan under  Section 4
above,  and (ii)  appropriate  adjustments  to the  number and kind of shares of
stock or securities subject to Awards then outstanding or subsequently  granted,
any  exercise  prices  relating  to Awards  and any other  provisions  of Awards
affected by such change.

          (b) In the  event of any  recapitalization,  merger  or  consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company or any similar  transaction,  as  determined by the
Board,  the  Board  in  its  discretion  may  make  appropriate  adjustments  to
outstanding  Awards,   including,   without   limitation:   (i)  accelerate  the
exercisability of the Option, or (ii) adjust the terms of the Option (whether or
not in a manner that complies  with the  requirements  of Section  424(a) of the
Internal Revenue Code of 1986, as amended (the "Code")),  or (iii) if there is a
survivor or acquiror  entity,  provide for the  assumption of the Option by such
survivor  or acquiror  or an  affiliate  thereof or for the grant of one or more
replacement  options by such  survivor or acquiror or an affiliate  thereof,  in
each case on such terms (which may, but need not,  comply with the  requirements
of Section 424(a) of the Code) as the Board may determine, or (iv) terminate the
Option  (provided,  that if the  Board  terminates  the  Option,  it  shall,  in
connection  therewith,  either (A) accelerate the  exercisability  of the Option
prior to such  termination,  or (B)  provide  for a payment to the holder of the
Option of cash or other  property or a combination  of cash or other property in
an amount  reasonably  determined by the Board to  approximate  the value of the
Option  assuming an exercise  immediately  prior to the  transaction,  or (C) if
there is a survivor  or  acquiror  entity,  provide for the grant of one or more
replacement options pursuant to clause (iii) above), or (v) provide for none of,
or any combination of, the foregoing.

          (c) No fraction of a share or fractional  shares shall be  purchasable
or deliverable pursuant to this Section 10.6.

          10.7 Employment Rights

          Neither  the  adoption of the Plan nor the grant of Awards will confer
upon any  person  any right to  continued  employment  with the  Company  or any


                                       9
<PAGE>

subsidiary  or interfere in any way with the right of the Company or  subsidiary
to terminate any employment  relationship at any time or to increase or decrease
the compensation of such person. Except as specifically provided by the Board in
any particular  case, the loss of existing or potential profit in Awards granted
under  the Plan  will not  constitute  an  element  of  damages  in the event of
termination  of  an  employment  relationship  even  if  the  termination  is in
violation of an obligation of the Company to the employee.

          Whether an  authorized  leave of  absence,  or absence in  military or
government  service,   shall  constitute  termination  of  employment  shall  be
determined  by the Board at the time.  For  purposes  of this Plan,  transfer of
employment  between  the  Company  and  its  subsidiaries  shall  not be  deemed
termination of employment.

          10.8 Other Employee Benefits

          The value of an Award granted to a Participant who is an employee, and
the amount of any compensation  deemed to be received by an employee as a result
of any  exercise  or purchase  of Common  Stock  pursuant to an Award or sale of
shares received under the Plan, will not constitute "earnings" or "compensation"
with  respect  to  which  any  other  employee  benefits  of such  employee  are
determined,  including  without  limitation  benefits  under any pension,  stock
ownership, stock purchase, life insurance, medical, health, disability or salary
continuation plan.

          10.9 Legal Holidays

          If any day on or  before  which  action  under  the Plan must be taken
falls on a Saturday,  Sunday or legal  holiday,  such action may be taken on the
next succeeding day not a Saturday, Sunday or legal holiday.

          10.10 Foreign Nationals

          Without  amending  the Plan,  Awards may be granted to persons who are
foreign  nationals or employed  outside the United States or both, on such terms
and  conditions  different  from those  specified  in the Plan,  as may,  in the
judgment of the Board,  be  necessary or desirable to further the purpose of the
Plan.

11.      Termination and Amendment

          The Plan shall remain in full force and effect until terminated by the
Board.  Subject to the last  sentence  of this  Section 11, the Board may at any
time or times amend the Plan or any  outstanding  Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards.  No amendment of the Plan or any agreement  evidencing
Awards under the Plan may adversely  affect the rights of any participant  under
any Award previously granted without such participant's consent.





                                       10


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>8
<FILENAME>tmok01ex10-11.txt
<TEXT>
                                                                   Exhibit 10.11
                           THERMO ELECTRON CORPORATION

                           2001 EQUITY INCENTIVE PLAN

                 As amended and restated as of February 7, 2002


     1. Purpose

     The purpose of this 2001 Equity  Incentive  Plan (the  "Plan") is to secure
for  Thermo  Electron  Corporation  (the  "Company")  and its  Stockholders  the
benefits arising from capital stock ownership by employees and directors of, and
consultants  to, the  Company  and its  subsidiaries  or other  persons  who are
expected to make  significant  contributions to the future growth and success of
the Company and its subsidiaries. The Plan is intended to accomplish these goals
by  enabling  the  Company  to  offer  such  persons   equity-based   interests,
equity-based incentives or performance-based stock incentives in the Company, or
any combination thereof ("Awards").

     2. Administration

     The Plan will be administered by the Board of Directors of the Company (the
"Board").  The Board shall have full power to interpret and administer the Plan,
to prescribe,  amend and rescind rules and regulations  relating to the Plan and
Awards,  and full authority to select the persons to whom Awards will be granted
("Participants"),  determine  the type and  amount of Awards  to be  granted  to
Participants  (including  any  combination  of Awards),  determine the terms and
conditions of Awards  granted  under the Plan  (including  terms and  conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture,  restrictions,  dividends and interest, if any,
on deferred  amounts),  waive compliance by a participant with any obligation to
be  performed  by him or her under an Award,  waive any term or  condition of an
Award,  cancel  an  existing  Award in whole or in part  with the  consent  of a
Participant,  grant replacement  Awards,  accelerate the vesting or lapse of any
restrictions of any Award, correct any defect,  supply any omission or reconcile
any  inconsistency in the Plan or in any Award and adopt the form of instruments
evidencing  Awards  under the Plan and change such forms from time to time.  Any
interpretation by the Board of the terms and provisions of the Plan or any Award
thereunder and the  administration  thereof,  and all action taken by the Board,
shall be final,  binding and  conclusive on all parties and any person  claiming
under or  through  any  party.  No  Director  shall be liable  for any action or
determination made in good faith. The Board may, to the full extent permitted by
law, delegate any or all of its  responsibilities  under the Plan to a committee
(the "Committee") appointed by the Board and consisting of members of the Board.
All references in the Plan to the "Board" shall mean the Board or a Committee of
the Board to the extent that the Board's powers or authority under the Plan have
been delegated to such Committee.

                                      -1-
<PAGE>


     3. Effective Date

     The Plan shall be  effective  as of the date first  approved  by the Board,
subject to the approval of the Plan by the Corporation's Stockholders. Grants of
Awards under the Plan made prior to such approval  shall be effective  when made
(unless  otherwise  specified  by the Board at the time of grant),  but shall be
conditioned on and subject to such approval of the Plan.

     4. Shares Subject to the Plan

     Subject to  adjustment  as provided in Section  10.6,  the total  number of
shares of  common  stock of the  Company,  par  value  $1.00 per share  ("Common
Stock"),  reserved and available for  distribution  under the Plan shall be five
million shares.  Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares.

     If  any  Award  of  shares  of  Common  Stock  requiring  exercise  by  the
Participant  for delivery of such shares  expires or terminates  without  having
been  exercised  in full,  is forfeited  or is  otherwise  terminated  without a
payment being made to the  Participant  in the form of Common  Stock,  or if any
shares of Common Stock subject to  restrictions  are  repurchased by the Company
pursuant to the terms of any Award or are otherwise reacquired by the Company to
satisfy  obligations  arising  by  virtue of any  Award,  such  shares  shall be
available for distribution in connection with future Awards under the Plan.

     5. Eligibility

     Employees  and  Directors  of,  and  consultants  to, the  Company  and its
subsidiaries,   or  other   persons  who  are   expected  to  make   significant
contributions  to  the  future  growth  and  success  of  the  Company  and  its
subsidiaries  shall be eligible to receive Awards under the Plan. The Board,  or
other  appropriate  committee or person to the extent permitted  pursuant to the
last  sentence  of Section 2,  shall  from time to time  select  from among such
eligible persons those who will receive Awards under the Plan.

     6. Types of Awards

     The  Board  may offer  Awards  under  the Plan in any form of  equity-based
interest,  equity-based incentive or performance-based stock incentive in Common
Stock of the Company or any combination  thereof. The type, terms and conditions
and  restrictions  of an Award shall be determined by the Board at the time such
Award is made to a  Participant;  provided  however  that the maximum  number of
shares  permitted to be granted under any Award or  combination of Awards to any
Participant  during any one  calendar  year may not exceed  1,500,000  shares of
Common Stock. In addition, the maximum number of shares of Common Stock that may
be issued pursuant to all Awards that are not stock options,  including  without
limitation  restricted  stock Awards,  may not exceed  500,000  shares of Common
Stock in any calendar year.  Further,  the number of restricted  stock awards or
other  non-option  awards  granted  under  the Plan  that are not  subject  to a
restriction on resale that lapses in equal annual  installments over three years

                                      -2-
<PAGE>

(or such  longer  period as the Board may  specify)  shall not exceed 10% of the
number of shares authorized to be issued under the Plan.

     An Award  shall be made at the time  specified  by the  Board  and shall be
subject to such  conditions or  restrictions  as may be imposed by the Board and
shall  conform to the  general  rules  applicable  under the Plan as well as any
special  rules then  applicable  under  federal tax laws or  regulations  or the
federal securities laws relating to the type of Award granted.

     Without  limiting the  foregoing,  Awards may take the following  forms and
shall be subject to the following rules and conditions:

     6.1 Options

     An option is an Award  that  entitles  the  holder on  exercise  thereof to
purchase Common Stock at a specified  exercise price.  Options granted under the
Plan may be either incentive stock options ("incentive stock options") that meet
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the  "Code"),  or options  that are not  intended to meet the  requirements  of
Section 422 ("non-statutory options").

     6.1.1 Option Price.  The price at which Common Stock may be purchased  upon
exercise of an option shall be determined by the Board,  provided  however,  the
exercise price shall not be less than 100% of the fair market value per share of
Common Stock as of the date of grant.  The Board shall not have the authority to
adjust the exercise price of any  outstanding  stock options  granted under this
plan to an  exercise  price that is lower than the  original  exercise  price (a
"repricing"),  except to the extent  permitted under Section 10.6 of the Plan in
connection with adjustments in the event of certain transactions.

     6.1.2 Option Grants. The granting of an option shall take place at the time
specified by the Board.  Options shall be evidenced by option  agreements.  Such
agreements  shall conform to the  requirements of the Plan, and may contain such
other   provisions   (including  but  not  limited  to  vesting  and  forfeiture
provisions,  acceleration, change of control, protection in the event of merger,
consolidations,   dissolutions  and   liquidations)  as  the  Board  shall  deem
advisable.  Option  agreements  shall expressly state whether an option grant is
intended to qualify as an incentive stock option or non-statutory option.

     6.1.3  Option  Period.  An option will become  exercisable  at such time or
times  (which may be  immediately  or in such  installments  as the Board  shall
determine) and on such terms and conditions as the Board shall specify; provided
however that the term of an option  during which it may be  exercisable  may not
exceed ten years.  The option  agreements shall specify the terms and conditions
applicable in the event of an option holder's  termination of employment  during
the option's term.

                                      -3-
<PAGE>

     Any  exercise  of an option  must be in  accordance  with the  instructions
described  in "The Guide for  Employees  of Thermo  Electron  Corporation  Stock
Option Plans," as may be amended from time to time (the "Guide").

     6.1.4 Payment of Exercise  Price.  Stock purchased on exercise of an option
shall be paid for in accordance with the instructions described in the Guide.

     6.1.5  Buyout  Provision.  The Board may at any time offer to buy out for a
payment in cash, shares of Common Stock,  deferred stock or restricted stock, an
option previously granted, based on such terms and conditions as the Board shall
establish  and  communicate  to the option holder at the time that such offer is
made.

     6.1.6 Special Rules for Incentive Stock Options. Each provision of the Plan
and  each  option  agreement  evidencing  an  incentive  stock  option  shall be
construed so that each incentive stock option shall be an incentive stock option
as  defined  in  Section  422 of the Code or any  statutory  provision  that may
replace such  Section,  and any  provisions  thereof that cannot be so construed
shall be  disregarded.  Instruments  evidencing  incentive  stock  options shall
contain such provisions as are required under applicable provisions of the Code.
Incentive  stock options may be granted only to employees of the Company and its
subsidiaries.  The exercise price of an incentive stock option shall not be less
than 100% (110% in the case of an incentive  stock option granted to a more than
ten percent  stockholder  of the Company) of the fair market value of the Common
Stock on the date of grant,  as  determined  by the Board.  An  incentive  stock
option may not be granted after the tenth  anniversary  of the date on which the
Plan was  adopted by the Board and the latest date on which an  incentive  stock
option may be exercised shall be the tenth anniversary  (fifth  anniversary,  in
the case of any  incentive  stock  option  granted  to a more  than ten  percent
stockholder of the Company) of the date of grant, as determined by the Board.

     6.2 Restricted Stock

     An Award of  restricted  stock  entitles the  recipient  thereof to acquire
shares  of  Common  Stock  upon  payment  of  the  purchase   price  subject  to
restrictions specified in the instrument evidencing the Award.

     6.2.1  Restricted  Stock  Awards.  Awards  of  restricted  stock  shall  be
evidenced by restricted stock  agreements.  Such agreements shall conform to the
requirements  of the Plan,  and may  contain  such other  provisions  (including
restriction  and  forfeiture  provisions,  change of control,  protection in the
event of mergers,  consolidations,  dissolutions and  liquidations) as the Board
shall deem advisable.

     6.2.2 Restrictions.  Until the restrictions specified in a restricted stock
agreement shall lapse, restricted stock may not be sold, assigned,  transferred,
pledged or otherwise  encumbered  or disposed  of, and upon  certain  conditions
specified in the restricted stock  agreement,  must be resold to the Company for
the price, if any, specified in such agreement.  The restrictions shall lapse in
equal annual  installments over three years, unless the Board specifies a longer
restriction  period,  provided  however,  that the Board may grant a  restricted

                                      -4-
<PAGE>

stock  Award that does not  conform to the  restriction  period  stated  herein,
provided that the aggregate number of shares underlying all such  non-conforming
Award  granted  under  the Plan  may not  exceed  10% of the  number  of  shares
authorized to be issued under the Plan. The Board may at any time accelerate the
time at which the restrictions on all or any part of the shares shall lapse.

     6.2.3  Rights  as a  Stockholder.  A  Participant  who  acquires  shares of
restricted  stock will have all of the rights of a  stockholder  of the  Company
with  respect  to such  shares  except  as  otherwise  limited  pursuant  to the
Participant's restricted stock agreement. Unless the Board otherwise determines,
certificates evidencing shares of restricted stock will remain in the possession
of the Company until such shares are free of all restrictions under the Plan.

     6.2.4  Purchase  Price.  The purchase  price of shares of restricted  stock
shall be determined by the Board, in its sole discretion

     6.2.5 Other Awards  Settled With  Restricted  Stock.  The Board may provide
that  any or all  the  Common  Stock  delivered  pursuant  to an  Award  will be
restricted stock.

     6.3 Deferred Stock

     6.3.1  Deferred  Stock Award. A deferred stock Award entitles the recipient
to receive  shares of deferred  stock,  which is Common Stock to be delivered in
the future.  Delivery of the Common Stock will take place at such time or times,
and on such  conditions,  as the  Board may  specify.  The Board may at any time
accelerate  the time at which  delivery  of all or any part of the Common  Stock
will take place.

     6.3.2 Other Awards Settled with Deferred Stock.  The Board may, at the time
any Award  described in this  Section 6 is granted,  provide  that,  at the time
Common Stock would otherwise be delivered pursuant to the Award, the Participant
will instead  receive an instrument  evidencing the right to future  delivery of
deferred stock.

     6.4 Performance Awards

     6.4.1  Performance  Awards.  A performance  Award entitles the recipient to
receive,  without payment,  an amount,  in cash or Common Stock or a combination
thereof (such form to be determined by the Board),  following the  attainment of
performance  goals.  Performance  goals may be related to personal  performance,
corporate  performance,  departmental  performance  or  any  other  category  of
performance  deemed by the Board to be  important to the success of the Company.
The Board will  determine the  performance  goals,  the period or periods during
which  performance  is to  be  measured  and  all  other  terms  and  conditions
applicable to the Award.

     6.4.2 Other Awards Subject to Performance Conditions. The Board may, at the
time any Award described in this Section 6 is granted,  impose the condition (in
addition to any  conditions  specified  or  authorized  in this Section 6 of the
Plan) that performance  goals be met prior to the  Participant's  realization of
any payment or benefit under the Award.

                                       5
<PAGE>


     7. Purchase Price and Payment

     Except as  otherwise  provided in the Plan,  the  purchase  price of Common
Stock to be acquired  pursuant to an Award shall be the price  determined by the
Board,  provided  that  such  price  shall not be less than the par value of the
Common Stock.  Except as otherwise provided in the Plan, the Board may determine
the  method of  payment  of the  exercise  price or  purchase  price of an Award
granted under the Plan and the form of payment. The Board may determine that all
or any part of the purchase  price of Common Stock pursuant to an Award has been
satisfied by past services  rendered by the Participant.  The Board may agree at
any  time,  upon  request  of the  Participant,  to defer  the date on which any
payment under an Award will be made.

     8. Intentionally Omitted

     9. Change in Control

     9.1 Impact of Event

     In the event of a "Change  in  Control"  as defined  in  Section  9.2,  the
following  provisions  shall apply,  unless the agreement  evidencing  the Award
otherwise  provides (by specific explicit  reference to Section 9.2 below). If a
Change in Control occurs while any Awards are outstanding,  then, effective upon
the Change in Control,  (i) each outstanding  stock option or other  stock-based
Award  awarded  under the Plan that was not  previously  exercisable  and vested
shall become immediately  exercisable in full and will no longer be subject to a
right of repurchase by the Company, (ii) each outstanding restricted stock award
or other  stock-based  Award subject to restrictions and to the extent not fully
vested,  shall be deemed to be fully vested,  free of restrictions and no longer
subject to a right of repurchase by the Company,  and (iii) deferral limitations
and conditions that relate solely to the passage of time,  continued  employment
or  affiliation  will be waived and  removed  as to  deferred  stock  Awards and
performance  Awards;  performance  of other  conditions  (other than  conditions
relating  solely to the passage of time,  continued  employment or  affiliation)
will continue to apply unless otherwise provided in the agreement evidencing the
Award or in any other  agreement  between  the  Participant  and the  Company or
unless otherwise agreed by the Board.

     9.2 Definition of "Change in Control"

     "Change in Control"  means an event or  occurrence  set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes  a  Change  in  Control  under  one  of  such   subsections  but  is
specifically exempted from another such subsection):

                                      -6-
<PAGE>

     (a) the  acquisition by an individual,  entity or group (within the meaning
of Section  13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership  of  any  capital  stock  of  Thermo  Electron   Corporation  ("Thermo
Electron") if, after such acquisition, such Person beneficially owns (within the
meaning of Rule 13d-3  promulgated under the Exchange Act) 40% or more of either
(i) the  then-outstanding  shares  of  common  stock  of  Thermo  Electron  (the
"Outstanding  TMO  Common  Stock")  or (ii)  the  combined  voting  power of the
then-outstanding securities of Thermo Electron entitled to vote generally in the
election of  directors  (the  "Outstanding  TMO Voting  Securities");  provided,
however,  that for purposes of this subsection  (a), the following  acquisitions
shall  not  constitute  a Change  in  Control:  (i) any  acquisition  by  Thermo
Electron,  (ii) any acquisition by any employee  benefit plan (or related trust)
sponsored or  maintained  by Thermo  Electron or any  corporation  controlled by
Thermo  Electron,  or (iii) any  acquisition  by any  corporation  pursuant to a
transaction  which  complies with clauses (i) and (ii) of subsection (c) of this
definition; or

     (b)  such  time as the  Continuing  Directors  (as  defined  below)  do not
constitute a majority of the Board of Directors of Thermo  Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo  Electron),  where  the term  "Continuing  Director"  means at any date a
member of the Thermo  Board (i) who was a member of the Thermo  Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall
be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

     (c)  the   consummation   of  a  merger,   consolidation,   reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or  other  disposition  of all or  substantially  all of the  assets  of  Thermo
Electron in one or a series of transactions (a "Business Combination"),  unless,
immediately  following  such  Business  Combination,  each of the  following two
conditions is satisfied:  (i) all or  substantially  all of the  individuals and
entities who were the beneficial  owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly,  more than 60% of the then-outstanding
shares of common  stock and the combined  voting  power of the  then-outstanding
securities   entitled  to  vote   generally  in  the   election  of   directors,
respectively,  of the  resulting  or  acquiring  corporation  in  such  Business
Combination (which shall include,  without limitation,  a corporation which as a
result of such transaction  owns Thermo Electron or substantially  all of Thermo
Electron's  assets either  directly or through one or more  subsidiaries)  (such
resulting  or  acquiring  corporation  is referred  to herein as the  "Acquiring
Corporation")  in  substantially   the  same  proportions  as  their  ownership,
immediately  prior to such Business  Combination,  of the Outstanding TMO Common
Stock and Outstanding TMO Voting  Securities,  respectively;  and (ii) no Person

                                      -7-
<PAGE>

(excluding the Acquiring  Corporation  or any employee  benefit plan (or related
trust)   maintained  or  sponsored  by  Thermo  Electron  or  by  the  Acquiring
Corporation) beneficially owns, directly or indirectly,  40% or more of the then
outstanding  shares  of common  stock of the  Acquiring  Corporation,  or of the
combined  voting power of the  then-outstanding  securities of such  corporation
entitled to vote generally in the election of directors; or

     (d)  approval  by  the  stockholders  of  Thermo  Electron  of  a  complete
liquidation or dissolution of Thermo Electron.

     10. General Provisions

     10.1 Documentation of Awards

     Awards will be  evidenced  by written  instruments,  which may differ among
Participants, prescribed by the Board from time to time. Such instruments may be
in the form of agreements to be executed by both the Participant and the Company
or certificates,  letters or similar  instruments  which need not be executed by
the  participant  but  acceptance of which will evidence  agreement to the terms
thereof.  Such instruments shall conform to the requirements of the Plan and may
contain  such  other  provisions  (including  provisions  relating  to events of
merger,  consolidation,  dissolution  and  liquidations,  change of control  and
restrictions   affecting  either  the  agreement  or  the  Common  Stock  issued
thereunder), as the Board deems advisable.

     10.2 Rights as a Stockholder

     Except as  specifically  provided by the Plan or the instrument  evidencing
the  Award,  the  receipt of an Award  will not give a  Participant  rights as a
stockholder  of the Company with respect to any shares covered by an Award until
the date of issue of a stock certificate to the participant for such shares.

     10.3 Conditions on Delivery of Stock

     The Company  will not be  obligated  to deliver any shares of Common  Stock
pursuant  to the  Plan or to  remove  any  restriction  from  shares  previously
delivered  under  the Plan (a)  until  all  conditions  of the  Award  have been
satisfied or removed,  (b) until, in the opinion of the Company's  counsel,  all
applicable  federal and state laws and regulations  have been complied with, (c)
if the  outstanding  Common  Stock is at the time listed on any stock  exchange,
until the shares have been listed or  authorized  to be listed on such  exchange
upon  official  notice of  issuance,  and (d) until all other  legal  matters in
connection  with the issuance and delivery of such shares have been  approved by
the Company's counsel. If the sale of Common Stock has not been registered under
the Securities Act of 1933, as amended,  the Company may require, as a condition
to exercise of the Award, such  representations or agreements as counsel for the
Company may consider  appropriate to avoid violation of such act and may require
that the  certificates  evidencing such Common Stock bear an appropriate  legend
restricting transfer.

                                      -8-
<PAGE>


     If an Award is exercised by the  participant's  legal  representative,  the
Company will be under no  obligation  to deliver  Common Stock  pursuant to such
exercise   until  the  Company  is  satisfied  as  to  the   authority  of  such
representative.

     10.4 Tax Withholding

     The Company will  withhold  from any cash payment made pursuant to an Award
an amount  sufficient to satisfy all federal,  state and local  withholding  tax
requirements (the "withholding requirements").

     In the case of an Award  pursuant to which Common  Stock may be  delivered,
the  Board  will  have  the  right to  require  that  the  participant  or other
appropriate  person  remit to the  Company an amount  sufficient  to satisfy the
withholding  requirements,  or make other arrangements satisfactory to the Board
with regard to such requirements,  prior to the delivery of any Common Stock. If
and to the extent that such  withholding  is required,  the Board may permit the
participant or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirement.

     10.5 Transferability of Awards

     Except as may be authorized by the Board, in its sole discretion,  no Award
(other than an Award in the form of an outright transfer of cash or Common Stock
not subject to any  restrictions)  may be transferred  other than by will or the
laws of descent and distribution,  and during a Participant's  lifetime an Award
requiring  exercise  may be  exercised  only by him or her (or in the  event  of
incapacity,  the  person  or  persons  properly  appointed  to act on his or her
behalf). The Board may, in its discretion,  determine the extent to which Awards
granted to a Participant shall be transferable,  and such provisions  permitting
or acknowledging transfer shall be set forth in the written agreement evidencing
the  Award  executed  and  delivered  by or on  behalf  of the  Company  and the
Participant.

     10.6 Adjustments in the Event of Certain Transactions

     (a) In the event of a stock dividend, stock split or combination of shares,
or other  distribution with respect to holders of Common Stock other than normal
cash dividends,  the Board will make (i) appropriate  adjustments to the maximum
number of shares that may be delivered  under the Plan under Section 4 above and
the  participant  limit  set  forth in  Section  6 above,  and (ii)  appropriate
adjustments  to the number and kind of shares of stock or securities  subject to
Awards then outstanding or subsequently granted, any exercise prices relating to
Awards and any other provisions of Awards affected by such change.

                                      -9-
<PAGE>

     (b) In the event of any recapitalization, merger or consolidation involving
the  Company,  any  transaction  in which the Company  becomes a  subsidiary  of
another entity, any sale or other disposition of all or a substantial portion of
the assets of the  Company or any  similar  transaction,  as  determined  by the
Board,  the  Board  in  its  discretion  may  make  appropriate  adjustments  to
outstanding  Awards,   including,   without   limitation:   (i)  accelerate  the
exercisability of the Option, or (ii) adjust the terms of the Option (whether or
not in a manner that complies  with the  requirements  of Section  424(a) of the
Internal Revenue Code of 1986, as amended (the "Code")),  or (iii) if there is a
survivor or acquiror  entity,  provide for the  assumption of the Option by such
survivor  or acquiror  or an  affiliate  thereof or for the grant of one or more
replacement  options by such  survivor or acquiror or an affiliate  thereof,  in
each case on such terms (which may, but need not,  comply with the  requirements
of Section 424(a) of the Code) as the Board may determine, or (iv) terminate the
Option  (provided,  that if the  Board  terminates  the  Option,  it  shall,  in
connection  therewith,  either (A) accelerate the  exercisability  of the Option
prior to such  termination,  or (B)  provide  for a payment to the holder of the
Option of cash or other  property or a combination  of cash or other property in
an amount  reasonably  determined by the Board to  approximate  the value of the
Option  assuming an exercise  immediately  prior to the  transaction,  or (C) if
there is a survivor  or  acquiror  entity,  provide for the grant of one or more
replacement options pursuant to clause (iii) above), or (v) provide for none of,
or any combination of, the foregoing.

     (c) No fraction of a share or  fractional  shares shall be  purchasable  or
deliverable pursuant to this Section 10.6.

     10.7 Employment Rights

     Neither  the  adoption of the Plan nor the grant of Awards will confer upon
any person any right to continued  employment with the Company or any subsidiary
or interfere in any way with the right of the Company or subsidiary to terminate
any  employment  relationship  at  any  time  or to  increase  or  decrease  the
compensation of such person. Except as specifically provided by the Board in any
particular  case,  the loss of existing or  potential  profit in Awards  granted
under  the Plan  will not  constitute  an  element  of  damages  in the event of
termination  of  an  employment  relationship  even  if  the  termination  is in
violation of an obligation of the Company to the employee.

     Whether  an  authorized  leave  of  absence,  or  absence  in  military  or
government  service,   shall  constitute  termination  of  employment  shall  be
determined  by the Board at the time.  For  purposes  of this Plan,  transfer of
employment  between  the  Company  and  its  subsidiaries  shall  not be  deemed
termination of employment.

     10.8 Other Employee Benefits

     The value of an Award granted to a Participant who is an employee,  and the
amount of any  compensation  deemed to be received by an employee as a result of
any exercise or purchase of Common Stock  pursuant to an Award or sale of shares
received under the Plan, will not constitute  "earnings" or "compensation"  with
respect to which any other  employee  benefits of such employee are  determined,

                                      -10-
<PAGE>

including without limitation benefits under any pension, stock ownership,  stock
purchase,  life insurance,  medical,  health,  disability or salary continuation
plan.

     10.9 Legal Holidays

     If any day on or before  which action under the Plan must be taken falls on
a  Saturday,  Sunday  or legal  holiday,  such  action  may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.

     10.10 Foreign Nationals

     Without amending the Plan, Awards may be granted to persons who are foreign
nationals  or  employed  outside  the United  States or both,  on such terms and
conditions  different from those  specified in the Plan, as may, in the judgment
of the Board, be necessary or desirable to further the purpose of the Plan.

     11. Termination and Amendment

     The Plan  shall  remain in full force and effect  until  terminated  by the
Board.  Subject to the last  sentence  of this  Section 11, the Board may at any
time or times amend the Plan or any  outstanding  Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards; provided that, to the extent required by law or deemed
necessary by the Board,  any amendment  that would (i)  materially  increase the
benefits accruing to participants  under the Plan, (ii) materially  increase the
number of shares under the Plan or (iii) materially  modify the requirements for
eligibility  under  the Plan,  shall be  subject  to  Stockholder  approval.  No
amendment  of the Plan or any  agreement  evidencing  Awards  under the Plan may
adversely  affect  the  rights of any  participant  under  any Award  previously
granted without such participant's consent.







                                      -11-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>9
<FILENAME>tmok01ex10-13.txt
<TEXT>
                                                                   Exhibit 10.13

Thermo Electron Corporation
Deferred Compensation Plan
Master Plan Document
- --------------------------------------------------------------------------------




                           Effective November 1, 2001








                               Copyright (C) 2001
            By Clark/Bardes Consulting - Compensation Resource Group,
                        A division of Clark/Bardes, Inc.
                               All Rights Reserved


<PAGE>


Thermo Electron Corporation
Deferred Compensation Plan
Master Plan Document
- --------------------------------------------------------------------------------

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                 <C>                                                                                            <C>
Purpose        1


ARTICLE 1           Definitions....................................................................................1


ARTICLE 2           Selection, Enrollment, Eligibility.............................................................6

           2.1      Selection by Committee.........................................................................6
           2.2      Enrollment Requirements........................................................................6
           2.3      Eligibility; Commencement of Participation.....................................................6
           2.4      Termination of Participation and/or Deferrals..................................................6

ARTICLE 3           Deferral Commitments/Company Contribution/Crediting/Taxes......................................7

           3.1      Minimum Deferrals..............................................................................7
           3.2      Maximum Deferral...............................................................................7
           3.3      Election to Defer; Effect of Election Form.....................................................7
           3.4      Withholding of Annual Deferral Amounts.........................................................8
           3.5      Annual Company Contribution Amount.............................................................8
           3.6      Investment of Trust Assets.....................................................................8
           3.7      Vesting........................................................................................8
           3.8      Crediting/Debiting of Account Balances.........................................................9
           3.9      FICA and Other Taxes..........................................................................10

ARTICLE 4           Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election...................11

           4.1      Short-Term Payout.............................................................................11
           4.2      Other Benefits Take Precedence Over Short-Term................................................11
           4.3      Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies.........................11
           4.4      Withdrawal Election...........................................................................11

ARTICLE 5           Retirement Benefit............................................................................12

           5.1      Retirement Benefit............................................................................12
           5.2      Payment of Retirement Benefit.................................................................12
           5.3      Death Prior to Completion of Retirement Benefit...............................................12

ARTICLE 6           Pre-Retirement Survivor Benefit...............................................................12

           6.1      Pre-Retirement Survivor Benefit...............................................................12
           6.2      Payment of Pre-Retirement Survivor Benefit....................................................12

                                      -i-
<PAGE>

ARTICLE 7           Termination Benefit...........................................................................13

           7.1      Termination Benefit...........................................................................13
           7.2      Payment of Termination Benefit................................................................13

ARTICLE 8           Disability Waiver and Benefit.................................................................13

           8.1      Disability Waiver.............................................................................13
           8.2      Continued Eligibility; Disability Benefit.....................................................13

ARTICLE 9           Beneficiary Designation.......................................................................14

           9.1      Beneficiary...................................................................................14
           9.2      Beneficiary Designation; Change...............................................................14
           9.3      Acknowledgement...............................................................................14
           9.4      No Beneficiary Designation....................................................................14
           9.5      Doubt as to Beneficiary.......................................................................14
           9.6      Discharge of Obligations......................................................................14

ARTICLE 10          Leave of Absence..............................................................................15

           10.1     Paid Leave of Absence.........................................................................15
           10.2     Unpaid Leave of Absence.......................................................................15

ARTICLE 11          Termination, Amendment or Modification........................................................15

           11.1     Termination...................................................................................15
           11.2     Amendment.....................................................................................15
           11.3     Plan Agreement................................................................................16
           11.4     Effect of Payment.............................................................................16

ARTICLE 12          Administration................................................................................16

           12.1     Committee Duties..............................................................................16
           12.2     Administration Upon Change In Control.........................................................16
           12.3     Agents........................................................................................17
           12.4     Binding Effect of Decisions...................................................................17
           12.5     Indemnity of Committee........................................................................17
           12.6     Employer Information..........................................................................17

ARTICLE 13          Other Benefits and Agreements.................................................................17

           13.1     Coordination with Other Benefits..............................................................17

ARTICLE 14          Claims Procedures.............................................................................17
                                      -ii-
<PAGE>
           14.1     Presentation of Claim.........................................................................17
           14.2     Notification of Decision......................................................................18
           14.3     Review of a Denied Claim......................................................................18
           14.4     Decision on Review............................................................................18
           14.5     Legal Action..................................................................................19

ARTICLE 15          Trust.........................................................................................19

           15.1     Establishment of the Trust....................................................................19
           15.2     Interrelationship of the Plan and the Trust...................................................19
           15.3     Distributions From the Trust..................................................................19

ARTICLE 16          Miscellaneous.................................................................................19

           16.1     Status of Plan................................................................................19
           16.2     Unsecured General Creditor....................................................................19
           16.3     Employer's Liability..........................................................................19
           16.4     Nonassignability..............................................................................20
           16.5     Not a Contract of Employment..................................................................20
           16.6     Furnishing Information........................................................................20
           16.7     Terms.........................................................................................20
           16.8     Captions......................................................................................20
           16.9     Governing Law.................................................................................20
           16.10    Notice........................................................................................20
           16.11    Successors....................................................................................21
           16.12    Spouse's Interest.............................................................................21
           16.13    Validity......................................................................................21
           16.14    Incompetent...................................................................................21
           16.15    Court Order...................................................................................21
           16.16    Distribution in the Event of Taxation.........................................................21
           16.17    Insurance.....................................................................................22
                                     -iii-
</TABLE>

<PAGE>


Thermo Electron Corporation
Deferred Compensation Plan
Master Plan Document
- -------------------------------------------------------------------------------


                           THERMO ELECTRON CORPORATION
                           DEFERRED COMPENSATION PLAN
                           Effective November 1, 2001

                                     Purpose

     The purpose of this Plan is to provide specified benefits to a select group
of management or highly compensated  Employees who contribute  materially to the
continued  growth,  development and future  business  success of Thermo Electron
Corporation,  a Delaware corporation,  and its subsidiaries.  This Plan shall be
unfunded for tax purposes and for purposes of Title I of ERISA.


                                    ARTICLE 1
                                   Definitions

     For the purposes of this Plan,  unless otherwise  clearly apparent from the
context,  the  following  phrases or terms  shall have the  following  indicated
meanings:

1.1  "Account  Balance" shall mean,  with respect to a Participant,  a credit on
     the records of the Employer  equal to the sum of (i) the  Deferral  Account
     balance  and (ii) the Company  Contribution  Account  balance.  The Account
     Balance,  and each other specified account balance,  shall be a bookkeeping
     entry only and shall be utilized solely as a device for the measurement and
     determination  of the  amounts to be paid to a  Participant,  or his or her
     designated Beneficiary, pursuant to this Plan.

1.2  "Annual Company Contribution Amount" shall mean, for any one Plan Year, the
     amount determined in accordance with Section 3.5.

1.3  "Annual  Deferral  Amount" shall mean that portion of a Participant's  Base
     Salary  and  Annual  Incentive  that a  Participant  elects  to have and is
     deferred in  accordance  with Article 3 for any one Plan Year. In the event
     of a Participant's Retirement, Disability (if deferrals cease in accordance
     with Section 8.1), death or a Termination of Employment prior to the end of
     a Plan Year,  such year's Annual Deferral Amount shall be the actual amount
     withheld prior to such event.

1.4  "Annual Incentive" shall mean any compensation,  in addition to Base Salary
     relating to services  performed  during any calendar  year,  whether or not
     paid in such calendar  year or included on the Federal  Income Tax Form W-2
     for such calendar  year,  payable to a Participant as an Employee under any
     Employer's  annual  bonus and cash  incentive  plans,  or any  other  bonus
     arrangement  designated  by the  Committee,  excluding  stock  options  and
     restricted stock.

1.5  "Annual Installment Method" shall be an annual installment payment over the
     number of years selected by the  Participant in accordance  with this Plan,
     calculated as follows:  the vested Account Balance of the Participant shall
     be  calculated  as of the close of business on the last business day of the
     year.  The annual  installment  shall be  calculated  by  multiplying  this
     balance by a fraction, the numerator of which is one and the denominator of
     which is the remaining  number of annual payments due the  Participant.  By
     way  of  example,  if  the  Participant  elects  a  ten  (10)  year  Annual


                                       1
<PAGE>

     Installment  Method,  the first payment shall be 1/10 of the vested Account
     Balance,  calculated as described in this  definition.  The following year,
     the  payment  shall be 1/9 of the vested  Account  Balance,  calculated  as
     described  in this  definition.  Each annual  installment  shall be paid no
     later than sixty (60) days after the last  business  day of the  applicable
     year.

1.6  "Base Salary" shall mean the annual cash compensation  relating to services
     performed  during any calendar  year,  whether or not paid in such calendar
     year or included on the Federal Income Tax Form W-2 for such calendar year,
     excluding bonuses,  commissions,  overtime, fringe benefits, stock options,
     restricted  stock,  relocation  expenses,  Annual  Incentive,  non-monetary
     awards,  directors fees and other fees, and automobile and other allowances
     paid to a Participant for employment services rendered (whether or not such
     allowances are included in the Employee's gross income).  Base Salary shall
     be calculated  before  reduction for compensation  voluntarily  deferred or
     contributed by the Participant  pursuant to all qualified or  non-qualified
     plans of any  Employer  and shall be  calculated  to  include  amounts  not
     otherwise  included in the  Participant's  gross income under Code Sections
     125,  402(e)(3),  402(h),  or 403(b)  pursuant to plans  established by any
     Employer;  provided,  however,  that all such  amounts  will be included in
     compensation  only to the  extent  that had there  been no such  plan,  the
     amount would have been payable in cash to the Employee.

1.7  "Beneficiary"  shall  mean one or more  persons,  trusts,  estates or other
     entities,  designated  in  accordance  with Article 9, that are entitled to
     receive benefits under this Plan upon the death of a Participant.

1.8  "Beneficiary Designation Form" shall mean the form established from time to
     time by the Committee  that a Participant  completes,  signs and returns to
     the Committee to designate one or more Beneficiaries.

1.9  "Board" shall mean the board of directors of the Company.

1.10 "Change in Control"  shall mean an event or occurrence set forth in any one
     or more of  subsections  (a)  through  (d)  below  (including  an  event or
     occurrence  that  constitutes  a  Change  in  Control  under  one  of  such
     subsections but is specifically exempted from another such subsection):

     (a)  The acquisition by an individual,  entity or group (within the meaning
          of Section  13(d)(3)  and 14(d)(2) of the  Securities  Exchange Act of
          1934,  as amended (the  "Exchange  Act")) (a  "Person") of  beneficial
          ownership  of  any  capital  stock  of  the  Company  if,  after  such
          acquisition, such Person beneficially owns (within the meaning of Rule
          13d-3  promulgated  under the Exchange  Act) 40% or more of either (i)
          the  then-outstanding  shares  of  common  stock of the  Company  (the
          "Outstanding  Company Common Stock") or (ii) the combined voting power
          of the  then-outstanding  securities  of the Company  entitled to vote
          generally  in the  election of  directors  (the  "Outstanding  Company
          Voting  Securities");  provided,  however,  that for  purposes of this
          subsection  (a), the  following  acquisitions  shall not  constitute a
          Change  in  Control:  (i) any  acquisition  by the  Company,  (ii) any
          acquisition by any employee  benefit plan (or related trust) sponsored
          or  maintained  by the Company or any  corporation  controlled  by the


                                       2
<PAGE>

          Company,  or (iii) any  acquisition by any  corporation  pursuant to a
          transaction which complies with clauses (i) and (ii) of subsection (c)
          of this Section 1.10; or

     (b)  Such  time as the  Continuing  Directors  (as  defined  below)  do not
          constitute  a majority of the Board (or, if  applicable,  the board of
          directors of a successor  corporation to the Company),  where the term
          "Continuing  Director" means at any date a member of the Board (i) who
          was a member  of the Board on the date of the  execution  of this Plan
          document or (ii) who was nominated or elected  subsequent to such date
          by at least a majority of the directors who were Continuing  Directors
          at the time of such  nomination  or election or whose  election to the
          Board  was  recommended  or  endorsed  by at least a  majority  of the
          directors who were Continuing Directors at the time of such nomination
          or election; provided, however, that there shall be excluded from this
          clause (ii) any individual whose initial assumption of office occurred
          as a result of an actual or threatened  election  contest with respect
          to the election or removal of directors or other actual or  threatened
          solicitation of proxies or consents, by or on behalf of a person other
          than the Board; or

     (c)  The   consummation   of  a  merger,   consolidation,   reorganization,
          recapitalization  or statutory share exchange involving the Company or
          a sale or other  disposition of all or substantially all of the assets
          of the  Company  in one  or a  series  of  transactions  (a  "Business
          Combination"),    unless,    immediately   following   such   Business
          Combination,  each of the following two  conditions is satisfied:  (i)
          all or substantially  all of the individuals and entities who were the
          beneficial  owners  of  the  Outstanding   Company  Common  Stock  and
          Outstanding  Company  Voting  Securities  immediately  prior  to  such
          Business  Combination  beneficially own, directly or indirectly,  more
          than  60% of the  then-outstanding  shares  of  common  stock  and the
          combined voting power of the  then-outstanding  securities entitled to
          vote  generally in the  election of  directors,  respectively,  of the
          resulting or acquiring corporation in such Business Combination (which
          shall include,  without limitation, a corporation which as a result of
          such  transaction  owns  the  Company  or  substantially  all  of  the
          Company's assets either directly or through one or more  subsidiaries)
          (such resulting or acquiring  corporation is referred to herein as the
          "Acquiring  Corporation")  in  substantially  the same  proportions as
          their ownership,  immediately prior to such Business  Combination,  of
          the Outstanding  Company Common Stock and  Outstanding  Company Voting
          Securities,  respectively; and (ii) no person (excluding the Acquiring
          Corporation or any employee benefit plan (or related trust) maintained
          or  sponsored  by  the  Company  or  by  the  Acquiring   Corporation)
          beneficially  owns,  directly or  indirectly,  40% or more of the then
          outstanding shares of common stock of the Acquiring Corporation, or of
          the combined voting power of the  then-outstanding  securities of such
          corporation  entitled to vote  generally in the election of directors;
          or

     (d)  Approval by the stockholders of the Company of a complete  liquidation
          or dissolution of the Company.

1.11 "Claimant" shall have the meaning set forth in Section 14.1.

1.12 "Code" shall mean the Internal  Revenue Code of 1986,  as it may be amended
     from time to time.

                                       3
<PAGE>

1.13 "Committee" shall mean the committee described in Article 12.

1.14 "Company" shall mean Thermo Electron  Corporation,  a Delaware corporation,
     and any successor to all or  substantially  all of the Company's  assets or
     business.

1.15 "Company  Contribution Account" shall mean (i) the sum of the Participant's
     Annual Company Contribution  Amounts, plus (ii) amounts credited or debited
     in accordance with all the applicable  crediting and debiting provisions of
     this Plan that relate to the Participant's  Company  Contribution  Account,
     less  (iii)  all  distributions  made  to  the  Participant  or  his or her
     Beneficiary pursuant to this Plan that relate to the Participant's  Company
     Contribution Account.

1.16 "Deduction  Limitation" shall mean the following described  limitation on a
     benefit that may otherwise be  distributable  pursuant to the provisions of
     this Plan. Except as otherwise  provided,  this limitation shall be applied
     to all distributions  that are "subject to the Deduction  Limitation" under
     this Plan.  If an  Employer  determines  in good faith prior to a Change in
     Control that there is a reasonable likelihood that any compensation paid to
     a Participant for a taxable year of the Employer would not be deductible by
     the Employer solely by reason of the limitation  under Code Section 162(m),
     then to the extent  deemed  necessary  by the  Employer  to ensure that the
     entire amount of any distribution to the Participant  pursuant to this Plan
     prior to the Change in Control is deductible, the Employer may defer all or
     any  portion  of a  distribution  under  this Plan.  Any  amounts  deferred
     pursuant to this  limitation  shall  continue to be  credited/debited  with
     additional  amounts in  accordance  with  Section  3.8 below,  even if such
     amount is being  paid out in  installments.  The  amounts so  deferred  and
     amounts  credited thereon shall be distributed to the Participant or his or
     her Beneficiary (in the event of the  Participant's  death) at the earliest
     possible  date, as  determined by the Employer in good faith,  on which the
     deductibility  of  compensation  paid or payable to the Participant for the
     taxable year of the Employer during which the distribution is made will not
     be limited by Section 162(m) or, if earlier, the effective date of a Change
     in  Control.  Notwithstanding  anything to the  contrary in this Plan,  the
     Deduction  Limitation  shall not apply to any  distributions  made  after a
     Change in Control.

1.17 "Deferral Account" shall mean (i) the sum of all of a Participant's  Annual
     Deferral  Amounts,  plus (ii) amounts  credited in accordance  with all the
     applicable  crediting  and debiting  provisions of this Plan that relate to
     the Participant's  Deferral Account,  less (iii) all distributions  made to
     the Participant or his or her Beneficiary pursuant to this Plan that relate
     to his or her Deferral Account.

1.18 "Disability"  shall mean a period of disability  during which a Participant
     qualifies  for  disability  benefits  under  the  Participant's  Employer's
     long-term  disability  plan, or, if a Participant  does not  participate in
     such a plan, a period of disability during which the Participant would have
     qualified for  disability  benefits  under such a plan had the  Participant
     been a participant in such a plan, as determined in the sole  discretion of
     the Committee.  If the Participant's Employer does not sponsor such a plan,
     or discontinues to sponsor such a plan,  Disability  shall be determined by
     the Committee in its sole discretion.

1.19 "Disability Benefit" shall mean the benefit set forth in Article 8.

                                       4
<PAGE>

1.20 "Election  Form" shall mean the form  established  from time to time by the
     Committee that a Participant completes,  signs and returns to the Committee
     to make an election under the Plan.

1.21 "Employee" shall mean a person who is an employee of any Employer.

1.22 "Employer(s)" shall mean the Company and/or any of its subsidiaries (now in
     existence or hereafter  formed or acquired)  that have been selected by the
     Board to participate in the Plan.

1.23 "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
     it may be amended from time to time.

1.24 "First  Plan  Year"  shall mean the  period  beginning  January 1, 2002 and
     ending December 31, 2002.

1.25 "Participant" shall mean any Employee (i) who is selected to participate in
     the Plan,  (ii) who elects to  participate  in the Plan,  (iii) who signs a
     Plan Agreement,  an Election Form and a Beneficiary  Designation Form, (iv)
     whose signed Plan Agreement, Election Form and Beneficiary Designation Form
     are accepted by the Committee, (v) who commences participation in the Plan,
     and (vi) whose Plan Agreement has not terminated. A spouse or former spouse
     of a Participant  shall not be treated as a Participant in the Plan or have
     an account balance under the Plan, even if he or she has an interest in the
     Participant's  benefits  under  the Plan as a result of  applicable  law or
     property settlements resulting from legal separation or divorce.

1.26 "Plan" shall mean the Company's Deferred  Compensation Plan, which shall be
     evidenced by this  instrument  and by each Plan  Agreement,  as they may be
     amended from time to time.

1.27 "Plan  Agreement"  shall mean a written  agreement,  as may be amended from
     time to time,  which is  entered  into by and  between  an  Employer  and a
     Participant.  Each  Plan  Agreement  executed  by  a  Participant  and  the
     Participant's  Employer  shall provide for the entire benefit to which such
     Participant is entitled under the Plan;  should there be more than one Plan
     Agreement,  the Plan Agreement bearing the latest date of acceptance by the
     Employer shall supersede all previous Plan Agreements in their entirety and
     shall  govern  such  entitlement.  The terms of any Plan  Agreement  may be
     different  for  any  Participant,   and  any  Plan  Agreement  may  provide
     additional  benefits  not set  forth  in the  Plan or  limit  the  benefits
     otherwise  provided  under  the  Plan;  provided,  however,  that  any such
     additional  benefits or benefit  limitations  must be agreed to by both the
     Employer and the Participant.

1.28 "Plan Year"  shall mean a period  beginning  on January 1 of each  calendar
     year and continuing  through  December 31 of such calendar year,  beginning
     with the First Plan Year.

1.29 "Pre-Retirement  Survivor  Benefit"  shall  mean the  benefit  set forth in
     Article 6.

1.30 "Retirement",  "Retire(s)"  or  "Retired"  shall mean,  with  respect to an
     Employee, severance from employment from all Employers for any reason other
     than a leave of absence, death or Disability on or after the earlier of the
     attainment of (a) age sixty-five  (65) or (b) age fifty-five  (55) with ten
     (10) Years of Service.

1.31 "Retirement Benefit" shall mean the benefit set forth in Article 5.

1.32 "Short-Term Payout" shall mean the payout set forth in Section 4.1.

                                       5
<PAGE>

1.33 "Termination Benefit" shall mean the benefit set forth in Article 7.

1.34 "Termination of Employment"  shall mean the severing of employment with all
     Employers,   voluntarily  or  involuntarily,  for  any  reason  other  than
     Retirement, Disability, death or an authorized leave of absence.

1.35 "Trust" shall mean one or more trusts established  pursuant to that certain
     Master  Trust  Agreement,  dated as of November 1, 2001 between the Company
     and the trustee named therein, as amended from time to time.

1.36 "Unforeseeable  Financial Emergency" shall mean an unanticipated  emergency
     that is caused by an event beyond the control of the Participant that would
     result in severe financial hardship to the Participant resulting from (i) a
     sudden and unexpected illness or accident of the Participant or a dependent
     of the  Participant,  (ii) a loss  of  the  Participant's  property  due to
     casualty, or (iii) such other extraordinary and unforeseeable circumstances
     arising as a result of events beyond the control of the Participant, all as
     determined in the sole discretion of the Committee.

1.37 "Years of  Service"  shall  mean the total  number of full years in which a
     Participant  has been  employed by one or more  Employers.  For purposes of
     this definition, a year of employment shall be a 365 day period (or 366 day
     period in the case of a leap year) that,  for the first year of employment,
     commences on the  Employee's  date of hiring and that,  for any  subsequent
     year,  commences on an anniversary of that hiring date. Any partial year of
     employment shall not be counted.


                                    ARTICLE 2
                       Selection, Enrollment, Eligibility

2.1  Selection  by  Committee.  Participation  in the Plan shall be limited to a
     select  group  of  management  and  highly  compensated  Employees  of  the
     Employers, as determined by the Committee in its sole discretion. From that
     group,  the Committee shall select,  in its sole  discretion,  Employees to
     participate in the Plan.

2.2  Enrollment  Requirements.  As a condition to  participation,  each selected
     Employee  shall  complete,  execute  and  return  to the  Committee  a Plan
     Agreement,  an Election Form and a Beneficiary Designation Form, all within
     thirty (30) days after he or she is selected to participate in the Plan. In
     addition,  the  Committee  shall  establish  from time to time  such  other
     enrollment  requirements  as it  determines  in  its  sole  discretion  are
     necessary.

2.3  Eligibility;  Commencement of Participation.  Provided an Employee selected
     to participate in the Plan has met all enrollment requirements set forth in
     this Plan and required by the Committee,  including  returning all required
     documents to the Committee within the specified time period,  that Employee
     shall  commence  participation  in the Plan on the  first  day of the month
     following  the  month  in  which  the  Employee  completes  all  enrollment
     requirements. If an Employee fails to meet all such requirements within the
     period required, in accordance with Section 2.2, that Employee shall not be
     eligible  to  participate  in the Plan until the first day of the Plan Year
     following  the delivery to and  acceptance by the Committee of the required
     documents.

                                       6
<PAGE>

2.4  Termination of Participation and/or Deferrals.  If the Committee determines
     in good  faith  that a  Participant  no longer  qualifies  as a member of a
     select group of management or highly compensated  employees,  as membership
     in such group is determined in accordance with Sections  201(2),  301(a)(3)
     and  401(a)(1) of ERISA,  the Committee  shall have the right,  in its sole
     discretion, to (i) terminate any deferral election the Participant has made
     for the  remainder of the Plan Year in which the  Participant's  membership
     status changes,  (ii) prevent the  Participant  from making future deferral
     elections and/or (iii) immediately distribute the Participant's then vested
     Account  Balance as a Termination  Benefit and terminate the  Participant's
     participation in the Plan.


                                    ARTICLE 3
            Deferral Commitments/Company Contribution/Crediting/Taxes

3.1  Minimum Deferrals.

     (a)  Base Salary and Annual  Incentive.  For each Plan Year, a  Participant
          may elect to defer, as his or her Annual Deferral Amount, an aggregate
          minimum  of $5,000  of Base  Salary  and/or  Annual  Incentive.  If an
          election is made for less than the stated  minimum  amounts,  or if no
          election is made, the amount deferred shall be zero.

     (b)  Short Plan Year. Notwithstanding the foregoing, if a Participant first
          becomes a Participant  after the first day of a Plan Year, the minimum
          Annual  Deferral  Amount  shall be an amount  equal to the minimum set
          forth above,  multiplied by a fraction,  the numerator of which is the
          number  of  complete  months  remaining  in  the  Plan  Year  and  the
          denominator of which is 12.

3.2  Maximum Deferral.

     (a)  Base Salary and Annual  Incentive.  For each Plan Year, a  Participant
          may elect to defer, as his or her Annual Deferral Amount,  Base Salary
          and/or Annual  Incentive up to the following  maximum  percentages for
          each deferral elected:

- -------------------------------------- ----------------------------------
            Deferral                       Maximum Amount
- -------------------------------------- ----------------------------------
          Base Salary                           90%
- -------------------------------------- ----------------------------------
- -------------------------------------- ----------------------------------
        Annual Incentive                       100%
- -------------------------------------- ----------------------------------

     (b)  Short Plan Year. Notwithstanding the foregoing, if a Participant first
          becomes a Participant  after the first day of a Plan Year, the maximum
          Annual  Deferral  Amount,  with  respect  to Base  Salary  and  Annual
          Incentive  shall be  limited  to the  amount of  compensation  not yet
          earned by the  Participant  as of the date the  Participant  submits a
          Plan Agreement and Election Form to the Committee for acceptance.

3.3  Election to Defer; Effect of Election Form.

     (a)  First Plan Year. In connection  with a  Participant's  commencement of
          participation  in the Plan, the Participant  shall make an irrevocable
          deferral election for the Plan Year in which the Participant commences


                                       7
<PAGE>

          participation  in the Plan,  along  with such other  elections  as the
          Committee  deems  necessary  or  desirable  under the Plan.  For these
          elections to be valid,  the Election Form must be completed and signed
          by the  Participant,  timely delivered to the Committee (in accordance
          with Section 2.2 above) and accepted by the Committee.

     (b)  Subsequent  Plan Years.  For each succeeding Plan Year, an irrevocable
          deferral  election for that Plan Year, and such other elections as the
          Committee deems  necessary or desirable under the Plan,  shall be made
          by timely  delivering to the Committee,  in accordance  with its rules
          and  procedures,  before the end of the Plan Year  preceding  the Plan
          Year for which the election is made, a new Election  Form.  If no such
          Election Form is timely delivered for a Plan Year, the Annual Deferral
          Amount shall be zero for that Plan Year.

3.4  Withholding of Annual Deferral Amounts. For each Plan Year, the Base Salary
     portion of the Annual Deferral Amount shall be withheld from each regularly
     scheduled Base Salary  payroll in equal  amounts,  as adjusted from time to
     time for  increases  and  decreases  in Base Salary.  The Annual  Incentive
     portion of the Annual  Deferral  Amount  shall be  withheld at the time the
     Annual Incentive is or otherwise would be paid to the Participant,  whether
     or not this occurs during the Plan Year itself.

3.5  Annual Company Contribution Amount. For each Plan Year, an Employer, in its
     sole discretion,  may, but is not required to, credit any amount it desires
     to any Participant's  Company  Contribution  Account under this Plan, which
     amount shall be for that Participant the Annual Company Contribution Amount
     for that Plan Year. The amount so credited to a Participant  may be smaller
     or larger than the amount credited to any other Participant, and the amount
     credited to any Participant for a Plan Year may be zero, even though one or
     more other Participants  receive an Annual Company  Contribution Amount for
     that Plan Year. The Annual Company  Contribution  Amount,  if any, shall be
     credited  as of the last  day of the Plan  Year.  If a  Participant  is not
     employed  by an  Employer  as of the last day of a Plan Year  other than by
     reason of his or her Retirement or death while employed, the Annual Company
     Contribution Amount for that Plan Year shall be zero.

3.6  Investment of Trust Assets.  The Trustee of the Trust shall be  authorized,
     upon written instructions received from the Committee or investment manager
     appointed by the Committee,  to invest and reinvest the assets of the Trust
     in  accordance  with  the  applicable   Trust   Agreement,   including  the
     disposition  of  stock  and  reinvestment  of the  proceeds  in one or more
     investment vehicles designated by the Committee.

3.7  Vesting.

     (a)  A Participant shall at all times be 100% vested in his or her Deferral
          Account.

     (b)  The Committee, in its sole discretion, will determine over what period
          of time and in what percentage  increments a Participant shall vest in
          his or her Company Contribution Account. The Committee may credit some
          Participants  with larger or smaller  vesting  percentages  than other
          Participants,  and the vesting percentage  credited to any Participant


                                       8
<PAGE>


          for  a  Plan  Year  may  be  zero,  even  though  one  or  more  other
          Participants  have a greater vesting  percentage  credited to them for
          that Plan Year.

     (c)  Notwithstanding  anything to the  contrary  contained  in this Section
          3.7,  in the  event  of a Change  in  Control  and/or a  Participant's
          Retirement,   a  Participant's   Company  Contribution  Account  shall
          immediately  become  100%  vested  (if it is  not  already  vested  in
          accordance with the above vesting schedules).

     (d)  Notwithstanding   subsection   (c),   the  vesting   schedule   for  a
          Participant's Company Contribution Account shall not be accelerated to
          the extent that the Committee  determines that such acceleration would
          cause the deduction  limitations of Section 280G of the Code to become
          effective.   In  the  event  that  all  of  a  Participant's   Company
          Contribution  Account is not vested pursuant to such a  determination,
          the   Participant   may  request   independent   verification  of  the
          Committee's  calculations  with respect to the  application of Section
          280G.  In such case,  the  Committee  must provide to the  Participant
          within 15 business days of such a request an opinion from a nationally
          recognized   accounting   firm  selected  by  the   Participant   (the
          "Accounting  Firm").  The opinion  shall state the  Accounting  Firm's
          opinion  that any  limitation  in the vested  percentage  hereunder is
          necessary to avoid the limits of Section  280G and contain  supporting
          calculations.  The  cost  of such  opinion  shall  be paid  for by the
          Company.

3.8  Crediting/Debiting of Account Balances. In accordance with, and subject to,
     the  rules and  procedures  that are  established  from time to time by the
     Committee, in its sole discretion,  amounts shall be credited or debited to
     a Participant's Account Balance in accordance with the following rules:

     (a)  Election of Measurement  Funds. A Participant,  in connection with his
          or her initial  deferral  election in accordance  with Section  3.3(a)
          above,  shall elect,  on the Election  Form,  one or more  Measurement
          Fund(s) (as described in Section 3.8(c) below) to be used to determine
          the amounts to be  credited or debited to his or her Account  Balance.
          The  Participant  may (but is not required to) elect, by submitting an
          Election Form to the Committee that is accepted by the  Committee,  to
          add or delete one or more Measurement  Fund(s) to be used to determine
          the amounts to be  credited or debited to his or her Account  Balance,
          or to change the portion of his or her Account  Balance  allocated  to
          each previously or newly elected  Measurement  Fund. If an election is
          made in accordance  with the previous  sentence,  it shall apply as of
          the first business day deemed reasonably practicable by the Committee,
          in its sole  discretion,  and continue  thereafter for each subsequent
          day in which the Participant  participates in the Plan, unless changed
          in accordance with the previous sentence.  The Participant may make no
          more than four (4) such elections in any Plan Year.

     (b)  Proportionate  Allocation. In making any election described in Section
          3.8(a) above,  the Participant  shall specify on the Election Form, in
          increments of five  percentage  points (5%),  the percentage of his or
          her Account  Balance to be allocated to a Measurement  Fund (as if the
          Participant  was making an  investment in that  Measurement  Fund with
          that portion of his or her Account Balance).

                                       9
<PAGE>

     (c)  Measurement  Funds.  A  Participant  may  elect  one  or  more  of the
          measurement  funds  selected by the  Committee in its sole  discretion
          (the  "Measurement  Funds"),  based on certain  mutual funds,  for the
          purpose of  crediting  or  debiting  additional  amounts to his or her
          Account  Balance.  As  necessary,  the  Committee  may,  in  its  sole
          discretion,  discontinue,  substitute or add a Measurement  Fund. Each
          such  action  will take  effect  as of the  first day of the  calendar
          quarter  that  follows  by  thirty  (30)  days  the day on  which  the
          Committee gives Participants advance written notice of such change.

     (d)  Crediting  or  Debiting  Method.   The  performance  of  each  elected
          Measurement  Fund (either  positive or negative) will be determined by
          the Committee, in its reasonable discretion,  based on the performance
          of the Measurement Funds themselves.  A Participant's  Account Balance
          shall be credited or debited on a daily basis based on the performance
          of each Measurement Fund selected by the Participant, such performance
          being determined by the Committee in its sole discretion.

     (e)  No Actual Investment. Notwithstanding any other provision of this Plan
          that may be interpreted to the contrary,  the Measurement Funds are to
          be used for measurement purposes only, and a Participant's election of
          any  such  Measurement  Fund,  the  allocation  to his or her  Account
          Balance  thereto,  the  calculation  of  additional  amounts  and  the
          crediting  or  debiting  of such  amounts to a  Participant's  Account
          Balance  shall not be  considered  or  construed  in any  manner as an
          actual   investment  of  his  or  her  Account  Balance  in  any  such
          Measurement  Fund.  In the event that the  Company or the  Trustee (as
          that term is defined in the Trust), in its own discretion,  decides to
          invest funds in any or all of the  Measurement  Funds,  no Participant
          shall have any rights in or to such  investments  themselves.  Without
          limiting the foregoing,  a Participant's  Account Balance shall at all
          times  be a  bookkeeping  entry  only  and  shall  not  represent  any
          investment made on his or her behalf by the Company or the Trust;  the
          Participant  shall at all times  remain an  unsecured  creditor of the
          Company.

3.9  FICA and Other Taxes.

     (a)  Annual  Deferral  Amounts.  For each  Plan  Year in  which  an  Annual
          Deferral   Amount  is  being   withheld   from  a   Participant,   the
          Participant's  Employer(s)  shall  withhold  from that  portion of the
          Participant's  Base  Salary  and  Annual  Incentive  that is not being
          deferred, in a manner determined by the Employer(s), the Participant's
          share of FICA and  other  employment  taxes  on such  Annual  Deferral
          Amount.  If necessary,  the  Committee may reduce the Annual  Deferral
          Amount in order to comply with this Section 3.9.

     (b)  Company Contribution  Amounts.  When a participant becomes vested in a
          portion of his or her Company Contribution  Account, the Participant's
          Employer(s) shall withhold from the  Participant's  Base Salary and/or
          Annual Incentive that is not deferred,  in a manner  determined by the
          Employer(s),  the  Participant's  share of FICA and  other  employment
          taxes.  If necessary,  the Committee may reduce the vested  portion of
          the Participant's Company Contribution Account in order to comply with
          this Section 3.9.

                                       10
<PAGE>

     (c)  Distributions.  The Participant's  Employer(s),  or the trustee of the
          Trust,  shall  withhold from any payments made to a Participant  under
          this Plan all federal,  state and local income,  employment  and other
          taxes  required to be withheld by the  Employer(s),  or the trustee of
          the Trust,  in  connection  with such  payments,  in amounts  and in a
          manner to be determined in the sole  discretion of the Employer(s) and
          the trustee of the Trust.


                                    ARTICLE 4
             Short-Term Payout; Unforeseeable Financial Emergencies;
                               Withdrawal Election

4.1  Short-Term  Payout.  In  connection  with each  election to defer an Annual
     Deferral  Amount,  a Participant may irrevocably  elect to receive a future
     "Short-Term  Payout" from the Plan with respect to all or a portion of such
     Annual Deferral Amount, including amounts credited or debited in the manner
     provided  in Section  3.8 above on that  amount.  Subject to the  Deduction
     Limitation,  the Short-Term Payout shall be a lump sum payment in an amount
     that is equal to the portion of the Annual  Deferral Amount the Participant
     elected  to have  distributed  to him or her as a  Short-Term  Payout  plus
     amounts  credited or debited in the manner provided in Section 3.8 above on
     that amount,  determined  at the time that the  Short-Term  Payout  becomes
     payable.  Subject  to the  Deduction  Limitation  and the  other  terms and
     conditions of this Plan, each  Short-Term  Payout elected shall be paid out
     during a sixty (60) day period commencing immediately after the last day of
     any Plan Year  designated  by the  Participant  that is at least three Plan
     Years after the Plan Year in which the Annual  Deferral  Amount is actually
     deferred.  By way of example,  if a three year Short-Term Payout is elected
     for Annual  Deferral  Amounts that are deferred in the Plan Year commencing
     January 1, 2002,  the three year  Short-Term  Payout would  become  payable
     during a sixty (60) day period commencing January 1, 2006.

4.2  Other Benefits Take Precedence Over Short-Term.  Should an event occur that
     triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral  Amount,
     plus amounts credited or debited  thereon,  that is subject to a Short-Term
     Payout  election  under  Section 4.1 shall not be paid in  accordance  with
     Section  4.1 but  shall be paid in  accordance  with the  other  applicable
     Article.

4.3  Withdrawal  Payout/Suspensions for Unforeseeable Financial Emergencies.  If
     the  Participant  experiences an  Unforeseeable  Financial  Emergency,  the
     Participant  may  petition  the  Committee  to (i)  suspend  any  deferrals
     required to be made by a Participant  and/or (ii) receive a partial or full
     payout  from the Plan.  The  payout  shall  not  exceed  the  lesser of the
     Participant's  vested Account  Balance,  calculated as if such  Participant
     were receiving a Termination  Benefit,  or the amount  reasonably needed to
     satisfy the  Unforeseeable  Financial  Emergency.  If,  subject to the sole
     discretion of the Committee, the petition for a suspension and/or payout is
     approved,  suspension  shall take effect upon the date of approval  and any
     payout shall be made within  sixty (60) days of the date of  approval.  The
     payment of any amount  under this  Section  4.3 shall not be subject to the
     Deduction Limitation.

4.4  Withdrawal  Election.  Provided a  Participant's  vested Account Balance is
     $25,000 or greater, a Participant (or, after a Participant's  death, his or
     her  Beneficiary)  may elect,  at any time,  to withdraw  all of his or her
     vested Account  Balance,  calculated as if there had occurred a Termination


                                       11
<PAGE>

     of  Employment  as of the day of the  election,  less a withdrawal  penalty
     equal to 10% of such  amount  (the net amount  shall be  referred to as the
     "Withdrawal  Amount").  A Participant (or, after a Participant's death, his
     or her  Beneficiary)  may also elect, at any time, to withdraw a minimum of
     $25,000  or a  larger  portion  of  his  or  her  vested  Account  Balance,
     calculated as if there had occurred a  Termination  of Employment as of the
     day of the election,  less a withdrawal penalty equal to 10% of such amount
     (the net amount  shall be referred  to as the  "Withdrawal  Amount").  This
     election can be made at any time, before or after  Retirement,  Disability,
     death or Termination of Employment,  and whether or not the Participant (or
     Beneficiary)  is in the process of being paid  pursuant  to an  installment
     payment  schedule.  The Participant (or his or her Beneficiary)  shall make
     this  election  by  giving  the  Committee  advance  written  notice of the
     election  in a form  determined  from  time to time by the  Committee.  The
     Participant (or his or her Beneficiary) shall be paid the Withdrawal Amount
     within sixty (60) days of his or her election.  Once the Withdrawal  Amount
     is paid, the Participant's participation in the Plan shall be suspended for
     the  remainder  of the Plan Year in which the  withdrawal  is elected.  The
     payment of this  Withdrawal  Amount  shall not be subject to the  Deduction
     Limitation.

                                    ARTICLE 5
                               Retirement Benefit

5.1  Retirement Benefit.  Subject to the Deduction Limitation, a Participant who
     Retires shall receive, as a Retirement  Benefit,  his or her vested Account
     Balance.

5.2  Payment of Retirement Benefit. A Participant, in connection with his or her
     commencement of  participation in the Plan, shall elect on an Election Form
     to receive  the  Retirement  Benefit in a lump sum or pursuant to an Annual
     Installment  Method  of 5, 10 or 15 years.  The  Participant  may  annually
     change his or her election to an  allowable  alternative  payout  period by
     submitting a new Election  Form to the  Committee,  provided  that any such
     Election  Form is submitted  at least 13 months prior to the  Participant's
     Retirement  and is accepted by the  Committee in its sole  discretion.  The
     Election  Form most  recently  accepted by the  Committee  shall govern the
     payout  of the  Retirement  Benefit.  If a  Participant  does  not make any
     election with respect to the payment of the Retirement  Benefit,  then such
     benefit shall be payable in a lump sum. The lump sum payment shall be made,
     or installment payments shall commence, no later than sixty (60) days after
     the earlier of (i) the March 1st  immediately  following the  Participant's
     Retirement,   or  (ii)  the   September  1st   immediately   following  the
     Participant's  Retirement.  Any  payment  made  shall  be  subject  to  the
     Deduction Limitation.

5.3  Death Prior to  Completion  of Retirement  Benefit.  If a Participant  dies
     after  Retirement  but before the  Retirement  Benefit is paid in full, the
     Participant's Beneficiary shall receive a lump sum payment that is equal to
     the Participant's unpaid remaining vested Account Balance.


                                       12
<PAGE>

                                    ARTICLE 6
                         Pre-Retirement Survivor Benefit

6.1  Pre-Retirement Survivor Benefit.  Subject to the Deduction Limitation,  the
     Participant's  Beneficiary shall receive a Pre-Retirement  Survivor Benefit
     equal to the  Participant's  vested Account Balance if the Participant dies
     before he or she  Retires,  experiences  a  Termination  of  Employment  or
     suffers a Disability.

6.2  Payment of Pre-Retirement Survivor Benefit. If a Participant dies before he
     or she  Retires,  experiences  a  Termination  of  Employment  or suffers a
     Disability,  the  Pre-Retirement  Survivor  Benefit  shall  be  paid to the
     Participant's  Beneficiary  in a lump sum  payment no later than sixty (60)
     days after the last day of the Plan Year in which the Committee is provided
     with proof  that is  satisfactory  to the  Committee  of the  Participant's
     death. Any payment made shall be subject to the Deduction Limitation.


                                    ARTICLE 7
                               Termination Benefit

7.1  Termination Benefit.  Subject to the Deduction Limitation,  the Participant
     shall  receive  a  Termination  Benefit,   which  shall  be  equal  to  the
     Participant's  vested  Account  Balance  if  a  Participant  experiences  a
     Termination  of  Employment  prior  to  his  or her  Retirement,  death  or
     Disability.

7.2  Payment of Termination Benefit. The Participant's Termination Benefit shall
     be paid in a lump sum payment;  provided,  however, that the Committee,  in
     its sole discretion,  may pay a Participant's  Termination Benefit pursuant
     to an Annual Installment Method, over a number of years to be determined by
     the Committee, but not to exceed five (5) years. The lump sum payment shall
     be made, or installment  payments shall commence,  no later than sixty (60)
     days  after  the  last  day of the  Plan  Year  in  which  the  Participant
     experiences  the  Termination  of  Employment.  Any  payment  made shall be
     subject to the Deduction Limitation.

                                       13
<PAGE>


                                    ARTICLE 8
                          Disability Waiver and Benefit

8.1      Disability Waiver.

     (a)  Waiver of Deferral.  A Participant  who is determined by the Committee
          to be  suffering  from a Disability  shall be excused from  fulfilling
          that  portion  of the Annual  Deferral  Amount  commitment  that would
          otherwise have been withheld from a  Participant's  Base Salary and/or
          Annual Incentive for the Plan Year during which the Participant  first
          suffers a Disability. During the period of Disability, the Participant
          shall not be allowed to make any additional  deferral  elections,  but
          will continue to be considered a Participant for all other purposes of
          this Plan.

     (b)  Return  to  Work.  If a  Participant  returns  to  employment  with an
          Employer after a Disability ceases, the Participant may elect to defer
          an  Annual  Deferral  Amount  for the Plan Year  following  his or her
          return to  employment  or service  and for every Plan Year  thereafter
          while a Participant in the Plan;  provided such deferral elections are
          otherwise allowed and an Election Form is delivered to and accepted by
          the Committee  for each such  election in accordance  with Section 3.3
          above.

8.2  Continued  Eligibility;  Disability  Benefit.  A  Participant  suffering  a
     Disability  shall,  for benefit  purposes  under this Plan,  continue to be
     considered  to be employed and shall be eligible for the benefits  provided
     for in Articles 4, 5, 6 or 7 in  accordance  with the  provisions  of those
     Articles. Notwithstanding the above, the Committee shall have the right to,
     in its sole and absolute discretion and for purposes of this Plan only, and
     must in the case of a Participant who is otherwise eligible to Retire, deem
     the Participant to have experienced a Termination of Employment,  or in the
     case of a Participant  who is eligible to Retire,  to have Retired,  at any
     time (or in the case of a Participant who is eligible to Retire, as soon as
     practicable)  after  such  Participant  is  determined  to be  suffering  a
     Disability,  in which  case the  Participant  shall  receive  a  Disability
     Benefit  equal  to his or her  vested  Account  Balance  at the time of the
     Committee's determination;  provided,  however, that should the Participant
     otherwise  have  been  eligible  to  Retire,  he or she  shall  be  paid in
     accordance  with Article 5. The Disability  Benefit shall be paid in a lump
     sum within sixty (60) days of the Committee's  exercise of such right.  Any
     payment made shall be subject to the Deduction Limitation.


                                    ARTICLE 9
                             Beneficiary Designation

9.1  Beneficiary.  Each  Participant  shall  have the  right,  at any  time,  to
     designate his or her Beneficiary(ies)  (both primary as well as contingent)
     to receive any benefits  payable under the Plan to a  beneficiary  upon the
     death of a Participant.  The Beneficiary  designated under this Plan may be
     the same as or different from the Beneficiary  designation  under any other
     plan of an Employer in which the Participant participates.

                                       14
<PAGE>

9.2  Beneficiary  Designation;  Change. A Participant shall designate his or her
     Beneficiary by completing and signing the Beneficiary Designation Form, and
     returning it to the Committee or its designated  agent. A Participant shall
     have the right to change a Beneficiary by completing, signing and otherwise
     complying  with  the  terms  of the  Beneficiary  Designation  Form and the
     Committee's rules and procedures,  as in effect from time to time. Upon the
     acceptance  by the Committee of a new  Beneficiary  Designation  Form,  all
     Beneficiary  designations previously filed shall be canceled. The Committee
     shall be entitled to rely on the last Beneficiary Designation Form filed by
     the Participant and accepted by the Committee prior to his or her death.

9.3  Acknowledgment.  No  designation  or change in designation of a Beneficiary
     shall be  effective  until  received  and  acknowledged  in  writing by the
     Committee or its designated agent.

9.4  No  Beneficiary  Designation.   If  a  Participant  fails  to  designate  a
     Beneficiary  as  provided  in  Sections  9.1,  9.2 and 9.3 above or, if all
     designated  Beneficiaries  predecease  the  Participant  or  die  prior  to
     complete distribution of the Participant's benefits, then the Participant's
     designated  Beneficiary  shall be deemed to be his or her surviving spouse.
     If the Participant has no surviving  spouse,  the benefits  remaining under
     the Plan to be paid to a  Beneficiary  shall be payable to the  executor or
     personal representative of the Participant's estate.

9.5  Doubt as to  Beneficiary.  If the  Committee has any doubt as to the proper
     Beneficiary to receive payments  pursuant to this Plan, the Committee shall
     have the right,  exercisable in its discretion,  to cause the Participant's
     Employer to  withhold  such  payments  until this matter is resolved to the
     Committee's satisfaction.

9.6  Discharge  of  Obligations.  The  payment of  benefits  under the Plan to a
     Beneficiary  shall fully and  completely  discharge  all  Employers and the
     Committee from all further  obligations under this Plan with respect to the
     Participant,  and that  Participant's  Plan Agreement  shall terminate upon
     such full payment of benefits.


                                   ARTICLE 10
                                Leave of Absence

10.1 Paid Leave of Absence.  If a Participant is authorized by the Participant's
     Employer for any reason to take a paid leave of absence from the employment
     of the Employer,  the Participant shall continue to be considered  employed
     by the  Employer  and the  Annual  Deferral  Amount  shall  continue  to be
     withheld during such paid leave of absence in accordance with Section 3.3.

10.2 Unpaid  Leave  of  Absence.   If  a   Participant   is  authorized  by  the
     Participant's  Employer  for any reason to take an unpaid  leave of absence
     from the employment of the Employer,  the Participant  shall continue to be
     considered  employed by the Employer and the  Participant  shall be excused
     from  making  deferrals  until the earlier of the date the leave of absence
     expires or the Participant  returns to a paid employment status.  Upon such
     expiration or return,  deferrals shall resume for the remaining  portion of
     the Plan  Year in which  the  expiration  or  return  occurs,  based on the
     deferral election, if any, made for that Plan Year. If no election was made
     for that Plan Year, no deferral shall be withheld.

                                       15
<PAGE>


                                   ARTICLE 11
                     Termination, Amendment or Modification

11.1 Termination.  Although each Employer  anticipates that it will continue the
     Plan for an  indefinite  period  of time,  there is no  guarantee  that any
     Employer  will continue the Plan or will not terminate the Plan at any time
     in the future. Accordingly, each Employer reserves the right to discontinue
     its  sponsorship  of the Plan and/or to terminate the Plan at any time with
     respect to any or all of its participating Employees.  Upon the termination
     of the Plan  with  respect  to any  Employer,  the Plan  Agreements  of the
     affected Participants who are employed by that Employer shall terminate and
     their  Account  Balances  determined  (i)  as if  they  had  experienced  a
     Termination of Employment on the date of Plan termination;  or (ii) if Plan
     termination  occurs after the date upon which a Participant was eligible to
     Retire,  then with respect to that  Participant as if he or she had Retired
     on the  date  of  Plan  termination.  Such  benefits  shall  be paid to the
     Participants  as  follows:  (i) prior to a Change in  Control,  an Employer
     shall have the  right,  in its sole  discretion,  and  notwithstanding  any
     elections  made by the  Participant,  to pay such benefits in a lump sum or
     pursuant  to an Annual  Installment  Method of up to five (5)  years,  with
     amounts  credited  and debited  during the  installment  period as provided
     herein;  or (ii) after a Change in Control,  the Employer shall be required
     to pay such benefits in a lump sum. The  termination  of the Plan shall not
     adversely  affect any Participant or Beneficiary who has become entitled to
     the payment of any benefits  under the Plan as of the date of  termination;
     provided  however,  that the  Employer  shall have the right to  accelerate
     installment  payments without a premium or prepayment penalty by paying the
     vested Account  Balance in a lump sum or pursuant to an Annual  Installment
     Method using fewer years.

11.2 Amendment. Any Employer may, at any time, amend or modify the Plan in whole
     or in part with respect to that Employer;  provided,  however, that: (i) no
     amendment  or  modification  shall be effective to decrease or restrict the
     value of a  Participant's  vested Account  Balance in existence at the time
     the amendment or modification is made, calculated as if the Participant had
     experienced  a Termination  of  Employment as of the effective  date of the
     amendment or modification or, if the amendment or modification occurs after
     the date upon which the Participant was eligible to Retire, the Participant
     had Retired as of the effective date of the amendment or modification,  and
     (ii) no amendment or  modification  of this Section 11.2 or Section 12.2 of
     the Plan shall be  effective.  The  amendment or  modification  of the Plan
     shall not affect any  Participant or Beneficiary who has become entitled to
     the payment of benefits  under the Plan as of the date of the  amendment or
     modification;  provided, however, that the Employer shall have the right to
     accelerate  installment  payments by paying the vested Account Balance in a
     lump sum or pursuant to an Annual Installment Method using fewer years.

11.3 Plan Agreement.  Despite the provisions of Sections 11.1 and 11.2 above, if
     a Participant's  Plan Agreement  contains  benefits or limitations that are
     not in this Plan  document,  the Employer may only amend or terminate  such
     provisions with the consent of the Participant.

11.4 Effect  of  Payment.  The full  payment  of the  applicable  benefit  under
     Articles  4,  5,  6, 7 or 8 of the  Plan  shall  completely  discharge  all
     obligations to a Participant and his or her designated  Beneficiaries under
     this Plan and the Participant's Plan Agreement shall terminate.

                                       16
<PAGE>


                                   ARTICLE 12
                                 Administration

12.1 Committee  Duties.  Except as  otherwise  provided in this Article 12, this
     Plan shall be administered by a Committee which shall consist of the Board,
     or  such  other  person(s)  as the  Board  shall  appoint.  Members  of the
     Committee may be  Participants  under this Plan.  The Committee  shall also
     have the  discretion  and  authority  to (i) make,  amend,  interpret,  and
     enforce all appropriate  rules and regulations  for the  administration  of
     this  Plan and (ii)  decide  or  resolve  any and all  questions  including
     interpretations of this Plan, as may arise in connection with the Plan. Any
     individual  serving on the Committee who is a Participant shall not vote or
     act on any matter  relating  solely to himself or  herself.  When  making a
     determination  or  calculation,  the Committee shall be entitled to rely on
     information furnished by a Participant or the Company.

12.2 Administration  Upon Change In  Control.  For  purposes  of this Plan,  the
     Company shall be the  "Administrator"  at all times prior to the occurrence
     of a Change  in  Control.  Upon and  after  the  occurrence  of a Change in
     Control,  the "Administrator"  shall be an independent third party selected
     by the Trustee and approved by the  individual  who,  immediately  prior to
     such  event,  was the  Company's  Chief  Executive  Officer  or,  if not so
     identified,  the Company's  highest  ranking  officer (the  "Ex-CEO").  The
     Administrator shall have the discretionary power to determine all questions
     arising  in  connection  with  the  administration  of  the  Plan  and  the
     interpretation of the Plan and Trust including,  but not limited to benefit
     entitlement   determinations;   provided,   however,  upon  and  after  the
     occurrence of a Change in Control, the Administrator shall have no power to
     direct the  investment  of Plan or Trust  assets or select  any  investment
     manager  or  custodial  firm for the Plan or  Trust.  Upon  and  after  the
     occurrence of a Change in Control, the Company must: (1) pay all reasonable
     administrative  expenses and fees of the  Administrator;  (2) indemnify the
     Administrator  against  any  costs,  expenses  and  liabilities  including,
     without limitation, attorney's fees and expenses arising in connection with
     the  performance  of the  Administrator  hereunder,  except with respect to
     matters  resulting from the gross  negligence or willful  misconduct of the
     Administrator  or its  employees or agents;  and (3) supply full and timely
     information to the  Administrator  on all matters relating to the Plan, the
     Trust, the Participants  and their  Beneficiaries,  the Account Balances of
     the Participants, the date of circumstances of the Retirement,  Disability,
     death or  Termination  of  Employment of the  Participants,  and such other
     pertinent information as the Administrator may reasonably require. Upon and
     after a Change in  Control,  the  Administrator  may be  terminated  (and a
     replacement appointed) by the Trustee only with the approval of the Ex-CEO.
     Upon and after a Change in Control, the Administrator may not be terminated
     by the Company.

12.3 Agents. In the administration of this Plan, the Committee may, from time to
     time, employ agents and delegate to them such  administrative  duties as it
     sees fit (including acting through a duly appointed representative) and may
     from time to time consult with counsel who may be counsel to any Employer.

12.4 Binding  Effect of Decisions.  The decision or action of the  Administrator
     with  respect to any  question  arising  out of or in  connection  with the


                                       17
<PAGE>

     administration,  interpretation  and  application of the Plan and the rules
     and  regulations  promulgated  hereunder  shall be final and conclusive and
     binding upon all persons having any interest in the Plan.

12.5 Indemnity of Committee.  The Company shall  indemnify and hold harmless the
     members of the Committee,  any Employee to whom the duties of the Committee
     may be delegated, and the Administrator against any and all claims, losses,
     damages,  expenses or liabilities arising from any action or failure to act
     with respect to this Plan, except in the case of willful  misconduct by the
     Committee, any of its members, any such Employee or the Administrator.

12.6 Employer  Information.  To enable the  Committee  and/or  Administrator  to
     perform its functions,  the Company and each Employer shall supply full and
     timely information to the Committee and/or  Administrator,  as the case may
     be, on all matters  relating to the compensation of its  Participants,  the
     date and circumstances of the Retirement,  Disability, death or Termination
     of Employment of its Participants,  and such other pertinent information as
     the Committee or Administrator may reasonably require.


                                   ARTICLE 13
                          Other Benefits and Agreements

13.1 Coordination  with Other Benefits.  The benefits provided for a Participant
     and  Participant's  Beneficiary under the Plan are in addition to any other
     benefits  available to such Participant under any other plan or program for
     employees of the  Participant's  Employer.  The Plan shall  supplement  and
     shall not supersede,  modify or amend any other such plan or program except
     as may otherwise be expressly provided.


                                   ARTICLE 14
                                Claims Procedures

14.1 Presentation  of  Claim.  Any  Participant  or  Beneficiary  of a  deceased
     Participant  (such  Participant or Beneficiary being referred to below as a
     "Claimant")   may  deliver  to  the   Committee  a  written   claim  for  a
     determination  with respect to the amounts  distributable  to such Claimant
     from the Plan. If such a claim relates to the contents of a notice received
     by the  Claimant,  the claim must be made within sixty (60) days after such
     notice was received by the  Claimant.  All other claims must be made within
     180 days of the date on which  the  event  that  caused  the claim to arise
     occurred. The claim must state with particularity the determination desired
     by the Claimant.

14.2 Notification of Decision.  The Committee shall consider a Claimant's  claim
     within a reasonable time, and shall notify the Claimant in writing:

     (a)  that the Claimant's  requested  determination  has been made, and that
          the claim has been allowed in full; or

     (b)  that the Committee has reached a conclusion  contrary,  in whole or in
          part, to the Claimant's requested determination,  and such notice must
          set forth in a manner calculated to be understood by the Claimant:

                                       18
<PAGE>

          (i)  the specific  reason(s) for the denial of the claim,  or any part
               of it;

          (ii) specific  reference(s)  to pertinent  provisions of the Plan upon
               which such denial was based;

          (iii)a  description   of  any   additional   material  or  information
               necessary  for  the  Claimant  to  perfect  the  claim,   and  an
               explanation of why such material or information is necessary; and

          (iv) an explanation of the claim review procedure set forth in Section
               14.3 below.

14.3 Review of a Denied Claim.  Within sixty (60) days after  receiving a notice
     from the  Committee  that a claim has been  denied,  in whole or in part, a
     Claimant (or the Claimant's duly authorized  representative)  may file with
     the  Committee  a written  request for a review of the denial of the claim.
     Thereafter,  but not later than thirty (30) days after the review procedure
     began, the Claimant (or the Claimant's duly authorized representative):

     (a)  may review pertinent documents;

     (b)  may submit written comments or other documents; and/or

     (c)  may request a hearing,  which the Committee,  in its sole  discretion,
          may grant.

14.4 Decision  on Review.  The  Committee  shall  render its  decision on review
     promptly,  and not later than sixty (60) days after the filing of a written
     request for review of the denial, unless a hearing is held or other special
     circumstances  require  additional  time,  in which  case  the  Committee's
     decision  must be rendered  within 120 days after such date.  Such decision
     must be written in a manner  calculated  to be  understood by the Claimant,
     and it must contain:

     (a)  specific reasons for the decision;

     (b)  specific  reference(s) to the pertinent Plan provisions upon which the
          decision was based; and

     (c)  such other matters as the Committee deems relevant.

14.5 Legal Action. A Claimant's compliance with the foregoing provisions of this
     Article 14 is a mandatory  prerequisite  to a Claimant's  right to commence
     any legal action with respect to any claim for benefits under this Plan.


                                   ARTICLE 15
                                      Trust

15.1 Establishment of the Trust. The Company shall establish the Trust, and each
     Employer shall at least annually  transfer over to the Trust such assets as
     the Employer determines, in its sole discretion,  are necessary to provide,
     on a present value basis,  for its respective  future  liabilities  created
     with respect to the Annual Deferral Amounts and Annual Company Contribution
     Amounts  for such  Employer's  Participants  for all  periods  prior to the
     transfer,  as well as any debits and credits to the  Participants'  Account
     Balances for all periods prior to the transfer,  taking into  consideration
     the value of the assets in the trust at the time of the transfer.

                                       19
<PAGE>

15.2 Interrelationship of the Plan and the Trust. The provisions of the Plan and
     the Plan  Agreement  shall  govern the rights of a  Participant  to receive
     distributions  pursuant  to the Plan.  The  provisions  of the Trust  shall
     govern the rights of the Employers,  Participants  and the creditors of the
     Employers to the assets  transferred  to the Trust.  Each Employer shall at
     all times remain liable to carry out its obligations under the Plan.

15.3 Distributions  From the Trust.  Each Employer's  obligations under the Plan
     may be satisfied with Trust assets distributed pursuant to the terms of the
     Trust, and any such  distribution  shall reduce the Employer's  obligations
     under this Plan.


                                   ARTICLE 16
                                  Miscellaneous

16.1 Status of Plan.  The Plan is  intended  to be a plan that is not  qualified
     within the  meaning of Code  Section  401(a) and that "is  unfunded  and is
     maintained by an employer  primarily for the purpose of providing  deferred
     compensation  for a  select  group  of  management  or  highly  compensated
     employee"  within  the  meaning of ERISA  Sections  201(2),  301(a)(3)  and
     401(a)(1).  The Plan shall be  administered  and  interpreted to the extent
     possible in a manner consistent with that intent.

16.2 Unsecured General Creditor.  Participants and their  Beneficiaries,  heirs,
     successors and assigns shall have no legal or equitable  rights,  interests
     or claims in any  property or assets of an  Employer.  For  purposes of the
     payment of benefits  under this Plan,  any and all of an Employer's  assets
     shall be, and remain,  the general,  unpledged  unrestricted  assets of the
     Employer.  An Employer's  obligation under the Plan shall be merely that of
     an unfunded and unsecured promise to pay money in the future.

16.3 Employer's  Liability.  An Employer's liability for the payment of benefits
     shall be defined only by the Plan and the Plan  Agreement,  as entered into
     between  the  Employer  and  a  Participant.  An  Employer  shall  have  no
     obligation to a Participant under the Plan except as expressly  provided in
     the Plan and his or her Plan Agreement.

16.4 Nonassignability. Neither a Participant nor any other person shall have any
     right to commute, sell, assign, transfer, pledge,  anticipate,  mortgage or
     otherwise encumber, transfer, hypothecate, alienate or convey in advance of
     actual  receipt,  the  amounts,  if any,  payable  hereunder,  or any  part
     thereof,  which are, and all rights to which are expressly  declared to be,
     unassignable  and  non-transferable.  No part of the amounts payable shall,
     prior to actual payment, be subject to seizure, attachment,  garnishment or
     sequestration for the payment of any debts, judgments,  alimony or separate
     maintenance  owed by a Participant or any other person,  be transferable by
     operation  of law in the event of a  Participant's  or any  other  person's
     bankruptcy or insolvency  or be  transferable  to a spouse as a result of a
     property settlement or otherwise.

16.5 Not a Contract of  Employment.  The terms and conditions of this Plan shall
     not be deemed to constitute a contract of  employment  between any Employer
     and the  Participant.  Such employment is hereby  acknowledged to be an "at
     will"  employment  relationship  that can be terminated at any time for any
     reason,  or no reason,  with or without cause,  and with or without notice,


                                       20
<PAGE>

     unless expressly  provided in a written  employment  agreement.  Nothing in
     this Plan shall be deemed to give a Participant the right to be retained in
     the service of any Employer, or to interfere with the right of any Employer
     to discipline or discharge the Participant at any time.

16.6 Furnishing  Information.  A  Participant  or his or  her  Beneficiary  will
     cooperate  with  the  Committee  by  furnishing  any  and  all  information
     requested by the  Committee and take such other actions as may be requested
     in order to facilitate the  administration  of the Plan and the payments of
     benefits  hereunder,  including  but not  limited to taking  such  physical
     examinations as the Committee may deem necessary.

16.7 Terms.  Whenever any words are used herein in the masculine,  they shall be
     construed as though they were in the feminine in all cases where they would
     so apply;  and whenever any words are used herein in the singular or in the
     plural,  they shall be  construed as though they were used in the plural or
     the singular, as the case may be, in all cases where they would so apply.

16.8 Captions.  The captions of the  articles,  sections and  paragraphs of this
     Plan are for  convenience  only and shall not control or affect the meaning
     or construction of any of its provisions.

16.9 Governing  Law.  Subject  to ERISA,  the  provisions  of this Plan shall be
     construed   and   interpreted   according  to  the  internal  laws  of  the
     Commonwealth  of  Massachusetts  without  regard to its  conflicts  of laws
     principles.

16.10Notice.  Any  notice or filing  required  or  permitted  to be given to the
     Committee   under  this  Plan  shall  be   sufficient  if  in  writing  and
     hand-delivered,  or sent by  registered  or certified  mail, to the address
     below:

                      Deferred Compensation Plan Committee
        -----------------------------------------------------------------
                           Thermo Electron Corporation
        -----------------------------------------------------------------
                                 81 Wyman Street
        -----------------------------------------------------------------
                                Waltham, MA 02454
        -----------------------------------------------------------------

     or   such  other  address  as  the  Company  indicates  by  notice  to  the
          Participants.


     Such  notice  shall  be  deemed  given as of the date of  delivery  or,  if
     delivery  is made by mail,  as of the date  shown  on the  postmark  on the
     receipt for registration or certification.

     Any notice or filing  required or  permitted  to be given to a  Participant
     under this Plan shall be  sufficient if in writing and  hand-delivered,  or
     sent by mail, to the last known address of the Participant.

16.11Successors. The provisions of this Plan shall bind and inure to the benefit
     of the  Participant's  Employer  and its  successors  and  assigns  and the
     Participant and the Participant's designated Beneficiaries.

16.12Spouse's Interest.  The interest in the benefits hereunder of a spouse of a
     Participant who has predeceased the Participant shall automatically pass to
     the Participant and shall not be transferable by such spouse in any manner,
     including  but not limited to such spouse's  will,  nor shall such interest
     pass under the laws of intestate succession.

                                       21
<PAGE>

16.13Validity.  In case any  provision  of this Plan shall be illegal or invalid
     for any  reason,  said  illegality  or  invalidity  shall  not  affect  the
     remaining parts hereof, but this Plan shall be construed and enforced as if
     such illegal or invalid provision had never been inserted herein.

16.14Incompetent.  If the Committee  determines in its discretion that a benefit
     under this Plan is to be paid to a minor, a person declared  incompetent or
     to a  person  incapable  of  handling  the  disposition  of  that  person's
     property, the Committee may direct payment of such benefit to the guardian,
     legal  representative  or person having the care and custody of such minor,
     incompetent  or  incapable  person.  The  Committee  may  require  proof of
     minority,  incompetence,   incapacity  or  guardianship,  as  it  may  deem
     appropriate prior to distribution of the benefit.  Any payment of a benefit
     shall be a payment for the account of the Participant and the Participant's
     Beneficiary,  as the case may be, and shall be a complete  discharge of any
     liability under the Plan for such payment amount.

16.15Court Order.  The Committee is authorized to make any payments  directed by
     court order in any action in which the Plan or the Committee has been named
     as a party.  In  addition,  if a court  determines  that a spouse or former
     spouse of a Participant has an interest in the Participant's benefits under
     the  Plan in  connection  with a  property  settlement  or  otherwise,  the
     Committee,  in its sole discretion,  shall have the right,  notwithstanding
     any election made by a Participant,  to immediately distribute the spouse's
     or former spouse's interest in the Participant's benefits under the Plan to
     that spouse or former spouse.

16.16 Distribution in the Event of Taxation.

     (a)  In General.  If, for any reason, all or any portion of a Participant's
          benefits under this Plan becomes taxable to the  Participant  prior to
          receipt,  a Participant may petition the Committee  before a Change in
          Control, or the trustee of the Trust after a Change in Control,  for a
          distribution  of that  portion of his or her  benefit  that has become
          taxable.  Upon the grant of such a petition,  which grant shall not be
          unreasonably  withheld  (and,  after a  Change  in  Control,  shall be
          granted), a Participant's Employer shall distribute to the Participant
          immediately  available funds in an amount equal to the taxable portion
          of his or her benefit  (which amount shall not exceed a  Participant's
          unpaid  vested  Account  Balance  under the Plan).  If the petition is
          granted,  the tax liability  distribution shall be made within 90 days
          of the  date  when  the  Participant's  petition  is  granted.  Such a
          distribution  shall  affect and reduce the  benefits  to be paid under
          this Plan.

     (b)  Trust.  If the  Trust  terminates  in  accordance  with its  terms and
          benefits are distributed from the Trust to a Participant in accordance
          therewith, the Participant's benefits under this Plan shall be reduced
          to the extent of such distributions.

16.17Insurance.  The Employers,  on their own behalf or on behalf of the trustee
     of the Trust,  and,  in their sole  discretion,  may apply for and  procure
     insurance on the life of the Participant, in such amounts and in such forms
     as the Employers may choose.  The Employers or the trustee of the Trust, as
     the  case  may be,  shall be the sole  owner  and  beneficiary  of any such
     insurance.  The Participant  shall have no interest  whatsoever in any such
     policy or  policies,  and at the request of the  Employers  shall submit to
     medical examinations and supply such information and execute such documents
     as may be  required  by the  insurance  company  or  companies  to whom the
     Employers have applied for insurance.

                                       22
<PAGE>


     IN WITNESS  WHEREOF,  the  Company  has  signed  this Plan  document  as of
November 1, 2001.


                            "Company"
                            Thermo Electron Corporation, a Delaware corporation



                            By:
                                        ------------------------------------
                            Title:


                                       23

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>10
<FILENAME>tmok01ex10-3.txt
<TEXT>
                                                                    Exhibit 10.3
                           THERMO ELECTRON CORPORATION

                          EXECUTIVE SEVERANCE AGREEMENT


THIS  AGREEMENT  by  and  between  THERMO  ELECTRON   CORPORATION,   a  Delaware
corporation (the "Company"), and Theo Melas-Kyriazi (the "Executive") is made as
of January 27, 2000 (the "Effective Date").

     WHEREAS,  the Company recognizes that the uncertainty  regarding the future
employment   prospects  for  key  personnel  may  result  in  the  departure  or
distraction   of  key  personnel  to  the  detriment  of  the  Company  and  its
stockholders;

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that appropriate  steps should be taken to reinforce and encourage the continued
employment  and  dedication of the Company's key personnel  without  distraction
from such uncertainty and related events and circumstances; and

     NOW, THEREFORE,  as an inducement for and in consideration of the Executive
remaining in its employ, the Company agrees that the Executive shall receive the
severance  benefits  set forth in this  Agreement  in the event the  Executive's
employment  with the Company is  terminated  under the  circumstances  described
below.

     1. Key Definitions.

         As used herein, the following terms shall have the following respective
meanings:

               1.1 "Change in Control" means an event or occurrence set forth in
any one or more of  subsections  (a)  through (d) below  (including  an event or
occurrence  that  constitutes a Change in Control under one of such  subsections
but is specifically exempted from another such subsection):

                    (a)  the  acquisition  by an  individual,  entity  or  group
(within the meaning of Section  13(d)(3) or 14(d)(2) of the Securities  Exchange
Act of 1934,  as  amended  (the  "Exchange  Act")) (a  "Person")  of  beneficial
ownership of any capital stock of the Company if, after such  acquisition,  such
Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange  Act) 40% or more of either (i) the  then-outstanding  shares of common
stock of the  Company  (the  "Outstanding  Company  Common  Stock")  or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding  Company Voting
Securities");  provided,  however, that for purposes of this subsection (a), the
following  acquisitions  shall  not  constitute  a Change  in  Control:  (i) any
acquisition by the Company,  (ii) any  acquisition by any employee  benefit plan
(or related  trust)  sponsored or maintained  by the Company or any  corporation
controlled by the Company, or (iii) any acquisition by any corporation  pursuant
to a transaction  which  complies with clauses (i) and (ii) of subsection (c) of
this Section 1.1; or

<PAGE>




                    (b) such time as the Continuing Directors (as defined below)
do not  constitute  a majority  of the Board (or,  if  applicable,  the Board of
Directors of a successor corporation to the Company), where the term "Continuing
Director"  means at any date a member  of the  Board (i) who was a member of the
Board on the date of the  execution of this  Agreement or (ii) who was nominated
or elected  subsequent  to such date by at least a majority of the directors who
were  Continuing  Directors at the time of such  nomination or election or whose
election to the Board was  recommended or endorsed by at least a majority of the
directors  who  were  Continuing  Directors  at the time of such  nomination  or
election;  provided, however, that there shall be excluded from this clause (ii)
any  individual  whose initial  assumption of office  occurred as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened  solicitation of proxies or consents, by
or on behalf of a person other than the Board; or

                    (c)   the   consummation   of   a   merger,   consolidation,
reorganization,  recapitalization  or statutory  share  exchange  involving  the
Company or a sale or other disposition of all or substantially all of the assets
of the Company in one or a series of  transactions  (a "Business  Combination"),
unless,  immediately following such Business Combination,  each of the following
two conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding  Company Common Stock
and Outstanding  Company Voting  Securities  immediately  prior to such Business
Combination  beneficially  own,  directly  or  indirectly,  more than 60% of the
then-outstanding  shares of common  stock and the  combined  voting power of the
then-outstanding  securities  entitled  to vote  generally  in the  election  of
directors,  respectively,  of the  resulting  or acquiring  corporation  in such
Business  Combination (which shall include,  without  limitation,  a corporation
which as a result of such transaction  owns the Company or substantially  all of
the Company's assets either directly or through one or more subsidiaries)  (such
resulting  or  acquiring  corporation  is referred  to herein as the  "Acquiring
Corporation")  in  substantially   the  same  proportions  as  their  ownership,
immediately  prior to such  Business  Combination,  of the  Outstanding  Company
Common Stock and Outstanding Company Voting Securities,  respectively;  and (ii)
no Person (excluding the Acquiring  Corporation or any employee benefit plan (or
related  trust)  maintained  or  sponsored  by the  Company or by the  Acquiring
Corporation) beneficially owns, directly or indirectly,  40% or more of the then
outstanding  shares  of common  stock of the  Acquiring  Corporation,  or of the
combined  voting power of the  then-outstanding  securities of such  corporation
entitled to vote generally in the election of directors; or

                    (d)  approval  by  the  stockholders  of  the  Company  of a
complete liquidation or dissolution of the Company.

               1.2 "Cause" means the Executive's  willful  engagement in illegal
conduct or gross misconduct  which is materially and  demonstrably  injurious to
the  Company.  For purposes of this Section 1.2, no act or failure to act by the
Executive  shall be  considered  "willful"  unless it is done,  or omitted to be

<PAGE>

done, in bad faith and without  reasonable belief that the Executive's action or
omission was in the best interests of the Company.

     2. Term of Agreement. This Agreement, and all rights and obligations of the
parties  hereunder,  shall take effect upon the Effective  Date and shall expire
upon the first to occur of (a) the  expiration of the Term (as defined below) or
(b) the  fulfillment by the Company of all of its  obligations  under Sections 4
and 5.2 if the Executive's  employment with the Company  terminates prior to the
expiration  of the Term.  "Term"  shall  mean the  period  commencing  as of the
Effective Date and continuing in effect through December 31, 2002.

     3.  Not an  Employment  Contract.  The  Executive  acknowledges  that  this
Agreement  does not constitute a contract of employment or impose on the Company
any  obligation to retain the  Executive as an employee and that this  Agreement
does not prevent the Executive from terminating employment at any time.

     4. Benefits to Executive.


               4.1 Compensation.

               (a) Termination Without Cause. If the Executive's employment with
the  Company is  terminated  by the  Company  (other  than for  Cause)  then the
Executive shall be entitled to the following benefits:

                    (i) the Company  shall pay to the Executive in a lump sum in
cash within 30 days after the date of termination the aggregate of the following
amounts:

                         (1) the sum of (A) two  times  the  Executive's  annual
base salary as in effect  immediately prior to the date of termination,  and (B)
the  amount  of any  cash  compensation  previously  deferred  by the  Executive
(together  with any  accrued  interest  or  earnings  thereon)  and any  accrued
vacation pay, in each case to the extent not previously paid; and

                    (ii) for two years  after the date of  termination,  or such
longer period as may be provided by the terms of the appropriate plan,  program,
practice  or policy,  the  Company  shall  continue  to provide  benefits to the
Executive  and the  Executive's  family at least equal to those which would have
been provided to them if the Executive's employment had not been terminated,  in
accordance  with  the  applicable  benefit  plans  in  effect  on  the  date  of
termination or, if more favorable to the Executive and the  Executive's  family,
in effect generally at any time thereafter with respect to other peer executives
of the Company and its  affiliated  companies;  provided,  however,  that if the
Executive becomes  reemployed with another employer and is eligible to receive a
particular type of benefits (e.g., health insurance benefits) from such employer
on terms at least as favorable to the  Executive and the  Executive's  family as

<PAGE>

those  being  provided  by the  Company,  then the  Company  shall no  longer be
required  to  provide  those  particular  benefits  to  the  Executive  and  the
Executive's family;

                    (iii) to the extent not  previously  paid or  provided,  the
Company  shall  timely  pay or  provide to the  Executive  any other  amounts or
benefits  required to be paid or provided or which the  Executive is eligible to
receive  following the  Executive's  termination  of employment  under any plan,
program,  policy,  practice,  contract  or  agreement  of the  Company  and  its
affiliated  companies  (such other  amounts and  benefits  shall be  hereinafter
referred to as the "Other Benefits"); and

                    (iv) for purposes of  determining  eligibility  (but not the
time of commencement of benefits) of the Executive for retiree benefits to which
the Executive is entitled,  the  Executive  shall be considered to have remained
employed by the Company until two years after the date of termination.

               (b)  Termination  for  Cause.  If  the  Company   terminates  the
Executive's  employment  with the Company for Cause,  then the Company shall (i)
pay the  Executive,  in a lump  sum in cash  within  30 days  after  the date of
termination,  the sum of (A) the  Executive's  base  salary  through the date of
termination and (B) the amount of any cash compensation  previously  deferred by
the Executive,  in each case to the extent not  previously  paid and (ii) timely
pay or provide to the Executive the Other Benefits.

               4.2  Mitigation.  The Executive shall not be required to mitigate
the amount of any payment or benefits  provided for in this Section 4 by seeking
other  employment  or  otherwise.   Further,   except  as  provided  in  Section
4.1(a)(ii), the amount of any payment or benefits provided for in this Section 4
shall not be reduced by any compensation  earned by the Executive as a result of
employment by another employer,  by retirement  benefits,  by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.

     5. Disputes.


               5.1  Settlement  of  Disputes;  Arbitration.  All  claims  by the
Executive for benefits under this Agreement  shall be directed to and determined
by the Board of Directors of the Company and shall be in writing.  Any denial by
the Board of  Directors of a claim for benefits  under this  Agreement  shall be
delivered to the  Executive in writing and shall set forth the specific  reasons
for the denial and the specific  provisions of this  Agreement  relied upon. The
Board of Directors shall afford a reasonable  opportunity to the Executive for a
review of the  decision  denying a claim.  Any  further  dispute or  controversy
arising under or in connection with this Agreement shall be settled  exclusively
by arbitration  in Boston,  Massachusetts,  in accordance  with the rules of the
American Arbitration  Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.

               5.2 Expenses.  The Company agrees to pay as incurred, to the full
extent permitted by law, all legal, accounting and other fees and expenses which

<PAGE>

the  Executive  may  reasonably  incur  as a  result  of any  claim  or  contest
(regardless  of the outcome  thereof) by the  Company,  the  Executive or others
regarding the validity or  enforceability  of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive  regarding the amount of any payment or benefits
pursuant to this  Agreement),  plus in each case interest on any delayed payment
at the  applicable  Federal rate  provided for in Section  7872(f)(2)(A)  of the
Internal Revenue Code.

     6. Successors.


               6.1 Successor to Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially  all of the business or assets of the Company  expressly to
assume and agree to perform  this  Agreement to the same extent that the Company
would be required to perform it if no such  succession had taken place.  As used
in this  Agreement,  "Company"  shall mean the Company as defined  above and any
successor  to its business or assets as  aforesaid  which  assumes and agrees to
perform this Agreement, by operation of law or otherwise.

               6.2 Successor to  Executive.  This  Agreement  shall inure to the
benefit  of  and  be   enforceable   by  the   Executive's   personal  or  legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
devisees and legatees.  If the Executive should die while any amount would still
be payable to the Executive or the Executive's family hereunder if the Executive
had continued to live, all such amounts, unless otherwise provided herein, shall
be paid in  accordance  with  the  terms  of this  Agreement  to the  executors,
personal representatives or administrators of the Executive's estate.

     7.  Notice.  All  notices,  instructions  and  other  communications  given
hereunder  or in  connection  herewith  shall be in  writing.  Any such  notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide  overnight courier service, in each case addressed to the Company, at
81 Wyman Street, Waltham,  Massachusetts and to the Executive at the Executive's
principal  residence as currently reflected on the Company's records (or to such
other address as either the Company or the  Executive may have  furnished to the
other in  writing in  accordance  herewith).  Any such  notice,  instruction  or
communication shall be deemed to have been delivered five business days after it
is sent by registered  or certified  mail,  return  receipt  requested,  postage
prepaid,  or one  business  day  after  it is sent  via a  reputable  nationwide
overnight  courier  service.  Either party may give any notice,  instruction  or
other  communication  hereunder  using  any  other  means,  but no such  notice,
instruction or other  communication  shall be deemed to have been duly delivered
unless and until it actually is received by the party for whom it is intended.



<PAGE>


     8. Miscellaneous.


               8.1  Severability.  The  invalidity  or  unenforceability  of any
provision of this Agreement shall not affect the validity or  enforceability  of
any other  provision  of this  Agreement,  which shall  remain in full force and
effect.

               8.2 Injunctive  Relief.  The Company and the Executive agree that
any breach of this  Agreement  by the  Company is likely to cause the  Executive
substantial  and  irrevocable  damage  and  therefore,  in the event of any such
breach, in addition to such other remedies which may be available, the Executive
shall have the right to specific performance and injunctive relief.

               8.3 Governing Law. The validity, interpretation, construction and
performance  of this  Agreement  shall be governed by the  internal  laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles.

               8.4 Waivers. No waiver by the Executive at any time of any breach
of, or compliance  with,  any provision of this Agreement to be performed by the
Company  shall  be  deemed  a  waiver  of that  or any  other  provision  at any
subsequent time.

               8.5 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.

               8.6 Tax Withholding. Any payments provided for hereunder shall be
paid net of any applicable  tax  withholding  required  under federal,  state or
local law.

               8.7  Entire  Agreement.  This  Agreement  sets  forth the  entire
agreement  of the  parties  hereto in respect of the  subject  matter  contained
herein and supersedes all prior agreements,  promises, covenants,  arrangements,
communications,  representations or warranties,  whether oral or written, by any
officer,  employee  or  representative  of any party  hereto in  respect  of the
subject matter contained  herein,  and any prior agreement of the parties hereto
in respect of the  subject  matter  contained  herein is hereby  terminated  and
cancelled,  except  as  provided  in  the  next  sentence.  Notwithstanding  the
foregoing  sentence,  if the Executive is party to an agreement with the Company
providing  for the  payment of benefits in the event  employment  is  terminated
after a Change in Control (a "Change  in  Control  Agreement"),  such  Change in
Control  Agreement  shall not be terminated  or cancelled by this  Agreement and
such  Change  in  Control  Agreement  shall  survive  and  remain  in  effect in
accordance  with its own terms.  In the event the  Executive  actually  receives
benefits under the Change in Control Agreement,  the Executive shall not also be
entitled to receive benefits under this Agreement.

               8.8 Amendments. This Agreement may be amended or modified only by
a written instrument executed by both the Company and the Executive.
<PAGE>

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first set forth above.


                                THERMO ELECTRON CORPORATION



                                By:     /s/ Anne Pol
                                        ------------------------------------
                                        Anne Pol
                                        Senior Vice President, Human Resources

                                EXECUTIVE:


                                        /s/ Theo Melas-Kyriazi
                                        -----------------------------------
                                        Theo Melas-Kyriazi





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>11
<FILENAME>tmok01ex10-7.txt
<TEXT>
                                                                    Exhibit 10.7

                           THERMO ELECTRON CORPORATION

                           DIRECTORS STOCK OPTION PLAN

            As amended and restated effective as of February 7, 2002

1. Purpose

     The purpose of this  Directors  Stock  Option  Plan (the  "Plan") of Thermo
Electron Corporation (the "Company") is to encourage ownership in the Company by
outside directors of the Company whose services are considered  essential to the
Company's  growth and progress  and to provide them with a further  incentive to
become  directors  and to  continue as  directors  of the  Company.  The Plan is
intended to be a nonstatutory stock option plan.

2. Administration

     The Board of Directors,  or a Committee (the "Committee") consisting of one
or more  directors  of the Company  appointed by the Board of  Directors,  shall
supervise and  administer  the Plan.  Grants of stock options under the Plan and
the amount  and  nature of the  options  to be  granted  shall be  automatic  in
accordance with Section 5. However,  all questions of interpretation of the Plan
or of any stock  options  granted  under it shall be  determined by the Board of
Directors or the  Committee  and such  determination  shall be final and binding
upon all persons having an interest in the Plan.

3. Participation in the Plan

     Directors  of the  Company  who are not  employees  of the  Company  or any
subsidiary  or parent of the Company  shall be eligible  to  participate  in the
Plan. Directors who receive grants of stock options in accordance with this Plan
are sometimes referred to herein as "Optionees."

4. Stock Subject to the Plan

     The  maximum  number of shares  that may be issued  under the Plan shall be
675,000 shares of the Company's  Common Stock (the "Common  Stock"),  subject to
adjustment  as provided  in Section 9. Shares to be issued upon the  exercise of
options  granted under the Plan may be either  authorized but unissued shares or
shares held by the Company in its treasury.  If any option expires or terminates
for any reason without having been  exercised in full,  the  unpurchased  shares
subject thereto shall again be available for options thereafter to be granted.

5. Terms and Conditions

     A. Annual Stock Option Grants

     Each  Director of the Company who meets the  requirements  of Section 3 and
who is holding office  immediately  following the Annual Meeting of Stockholders
commencing with the Annual Meeting of  Stockholders  held in calendar year 1993,
shall be granted an option to purchase 1,000 shares of Common Stock at the close


                                       1
<PAGE>

of business on the date of such Annual Meeting.

     B. General Terms and Conditions Applicable to All Grants.

          1.   Options  shall be  immediately  exercisable  at any time from and
               after the grant date and prior to the date which is the  earliest
               of:

               (a) seven years  after the grant date,  (b) three years after the
               Optionee  ceases to serve as a director  of the  Company,  or any
               subsidiary  of the  Company  (one year in the event the  Optionee
               ceases to meet the  requirements  of this Subsection by reason of
               his or her death),  or (c) the date of dissolution or liquidation
               of the Company.

          2.   The exercise price at which Options are granted  hereunder  shall
               be the average of the  closing  prices  reported by the  national
               securities  exchange  on which the  Common  Stock is  principally
               traded  for the  five  trading  days  immediately  preceding  and
               including  the date the option is granted or, if such security is
               not traded on an exchange,  the average last  reported sale price
               for the five-day  period on the NASDAQ  National  Market List, or
               the  average of the closing  bid prices for the  five-day  period
               last   quoted   by   an   established   quotation   service   for
               over-the-counter securities, or if none of the above shall apply,
               the last price paid for shares of the Common Stock by independent
               investors in a private placement.

          3.   All  options   shall  be   evidenced   by  a  written   agreement
               substantially  in such form as shall be  approved by the Board of
               Directors  or   Committee,   containing   terms  and   conditions
               consistent with the provisions of this Plan.

6. Exercise of Options

     A. Exercise/Consideration

     An option may be exercised in accordance with the instructions described in
"The  Guide for  Employees  of  Thermo  Electron  Stock  Option  Plans"  and any
supplement thereto as they may be amended from time to time (the "Guide").  Upon
exercise of the option in accordance with the aforementioned  instructions,  the
Company  shall  deliver or cause to be  delivered  to the Optionee the number of
shares then being  purchased,  registered  in the name of the  Optionee or other
person  exercising  the  option.  If any  law or  applicable  regulation  of the
Securities  and Exchange  Commission  or other body having  jurisdiction  in the
premises  shall  require  the  Company  or the  Director  to take any  action in
connection with shares being purchased upon exercise of the option,  exercise of
the option and delivery of the certificate or certificates for such shares shall
be postponed until completion of the necessary  action,  which shall be taken at
the Company's expense.



                                       2
<PAGE>

     B. Tax Withholding

     No later  than the date on  which  part or all of the  value of any  shares
received upon the exercise of an option first  becomes  includible in your gross
income for income tax purposes,  you shall satisfy your  obligations  to pay any
federal,  state or local  taxes  required to be  withheld  with  respect to such
income in  accordance  with the  provisions  of the Guide.  Notwithstanding  the
foregoing,  no election to use shares for the payment of withholding taxes shall
be effective unless made in compliance with any applicable  requirements of Rule
16b-3.

7. Transferability

     Except as may be authorized by the Board, in its sole discretion, no Option
may be transferred  other than by will or the laws of descent and  distribution,
and during an Optionee's  lifetime an Option may be exercised only by him or her
(or in the event of incapacity,  the person or persons properly appointed to act
on his or her behalf). The Board may, in its discretion, determine the extent to
which Options granted to an Optionee shall be transferable,  and such provisions
permitting or acknowledging transfer shall be set forth in the written agreement
evidencing the Option  executed and delivered by or on behalf of the Company and
the Optionee.

8. Limitation of Rights to Continue as a Director

     Neither the Plan,  nor the  quantity of shares  subject to options  granted
under  the  Plan,  nor any  other  action  taken  pursuant  to the  Plan,  shall
constitute or be evidence of any agreement or understanding, express or implied,
that the  Company  will  retain a  Director  for any  period of time,  or at any
particular rate of compensation.

9. Adjustments in the Event of Certain Transactions

     (a) In the event of a stock dividend, stock split or combination of shares,
or other  distribution with respect to holders of Common Stock other than normal
cash dividends,  the Board will make (i) appropriate  adjustments to the maximum
number of shares that may be delivered under the Plan under Section 4 above, and
(ii)  appropriate  adjustments  to the  number  and kind of  shares  of stock or
securities  subject to Options then  outstanding or  subsequently  granted,  any
exercise prices relating to Options and any other provisions of Options affected
by such change.

     (b) In the event of any recapitalization, merger or consolidation involving
the  Company,  any  transaction  in which the Company  becomes a  subsidiary  of
another entity, any sale or other disposition of all or a substantial portion of
the assets of the  Company or any  similar  transaction,  as  determined  by the
Board,  the  Board  in  its  discretion  may  make  appropriate  adjustments  to
outstanding  Awards,   including,   without   limitation:   (i)  accelerate  the
exercisability of the Option, or (ii) adjust the terms of the Option (whether or
not in a manner that complies  with the  requirements  of Section  424(a) of the
Internal Revenue Code of 1986, as amended (the "Code")),  or (iii) if there is a
survivor or acquiror  entity,  provide for the  assumption of the Option by such
survivor  or acquiror  or an  affiliate  thereof or for the grant of one or more
replacement  options by such  survivor or acquiror or an affiliate  thereof,  in
each case on such terms (which may, but need not,  comply with the  requirements


                                       3
<PAGE>

of Section 424(a) of the Code) as the Board may determine, or (iv) terminate the
Option  (provided,  that if the  Board  terminates  the  Option,  it  shall,  in
connection  therewith,  either (A) accelerate the  exercisability  of the Option
prior to such  termination,  or (B)  provide  for a payment to the holder of the
Option of cash or other  property or a combination  of cash or other property in
an amount  reasonably  determined by the Board to  approximate  the value of the
Option  assuming an exercise  immediately  prior to the  transaction,  or (C) if
there is a survivor  or  acquiror  entity,  provide for the grant of one or more
replacement options pursuant to clause (iii) above), or (v) provide for none of,
or any combination of, the foregoing.

     (c) No fraction of a share or  fractional  shares shall be  purchasable  or
deliverable pursuant to this Section 9.

10. Limitation of Rights in Option Stock

     The Optionee  shall have no rights as a stockholder in respect of shares as
to which his or her options shall not have been exercised,  certificates  issued
and  delivered and payment as herein  provided  made in full,  and shall have no
rights with respect to such shares not  expressly  conferred by this Plan or the
written agreement evidencing options granted hereunder.

11. Stock Reserved

     The Company  shall at all times during the term of the options  reserve and
keep  available  such number of shares of the Common Stock as will be sufficient
to permit the exercise in full of all options  granted under this Plan and shall
pay  all  other  fees  and  expenses  necessarily  incurred  by the  Company  in
connection therewith.

12. Securities Laws Restrictions

     A. Investment Representations.

     The  Company  may  require  any person to whom an option is  granted,  as a
condition of exercising such option, to give written assurances in substance and
form satisfactory to the Company to the effect that such person is acquiring the
Common Stock subject to the option for his or her own account for investment and
not with any present  intention of selling or otherwise  distributing  the same,
and to such other effects as the Company deems necessary or appropriate in order
to comply with federal and applicable state securities laws.

     B. Compliance with Securities Laws.

     Each  option  shall be  subject  to the  requirement  that if, at any time,
counsel  to the  Company  shall  determine  that the  listing,  registration  or
qualification of the shares subject to such option upon any securities  exchange
or  under  any  state  or  federal  law,  or  the  consent  or  approval  of any
governmental   or  regulatory   body,  or  that  the  disclosure  of  non-public
information  or the  satisfaction  of any  other  condition  is  necessary  as a
condition  of,  or in  connection  with,  the  issuance  or  purchase  of shares
thereunder,  such option may not be exercised,  in whole or in part, unless such


                                       4
<PAGE>

listing,  registration,  qualification,  consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions  acceptable to
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply  for or to obtain  such  listing,  registration  or  qualification,  or to
satisfy such condition.

13. Change in Control

     A. Impact of Event

     In the event of a "Change in  Control"  as defined  in Section  13(A),  the
following  provisions  shall apply,  unless the agreement  evidencing  the Award
otherwise provides (by specific explicit reference to Section 13(B) below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the  Change in  Control,  each  outstanding  Option  under the Plan that was not
previously  exercisable and vested shall become immediately  exercisable in full
and will no longer be subject to a right of repurchase by the Company.

     B. Definition of "Change in Control"

     "Change in Control"  means an event or  occurrence  set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes  a  Change  in  Control  under  one  of  such   subsections  but  is
specifically exempted from another such subsection):

     (a) the  acquisition by an individual,  entity or group (within the meaning
of Section  13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership  of  any  capital  stock  of  Thermo  Electron   Corporation  ("Thermo
Electron") if, after such acquisition, such Person beneficially owns (within the
meaning of Rule 13d-3  promulgated under the Exchange Act) 40% or more of either
(i) the  then-outstanding  shares  of  common  stock  of  Thermo  Electron  (the
"Outstanding  TMO  Common  Stock")  or (ii)  the  combined  voting  power of the
then-outstanding securities of Thermo Electron entitled to vote generally in the
election of  directors  (the  "Outstanding  TMO Voting  Securities");  provided,
however,  that for purposes of this subsection  (a), the following  acquisitions
shall  not  constitute  a Change  in  Control:  (i) any  acquisition  by  Thermo
Electron,  (ii) any acquisition by any employee  benefit plan (or related trust)
sponsored or  maintained  by Thermo  Electron or any  corporation  controlled by
Thermo  Electron,  or (iii) any  acquisition  by any  corporation  pursuant to a
transaction  which  complies with clauses (i) and (ii) of subsection (c) of this
definition; or

     (b)  such  time as the  Continuing  Directors  (as  defined  below)  do not
constitute a majority of the Board of Directors of Thermo  Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo  Electron),  where  the term  "Continuing  Director"  means at any date a
member of the Thermo  Board (i) who was a member of the Thermo  Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall


                                       5
<PAGE>

be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

     (c)  the   consummation   of  a  merger,   consolidation,   reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or  other  disposition  of all or  substantially  all of the  assets  of  Thermo
Electron in one or a series of transactions (a "Business Combination"),  unless,
immediately  following  such  Business  Combination,  each of the  following two
conditions is satisfied:  (i) all or  substantially  all of the  individuals and
entities who were the beneficial  owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly,  more than 60% of the then-outstanding
shares of common  stock and the combined  voting  power of the  then-outstanding
securities   entitled  to  vote   generally  in  the   election  of   directors,
respectively,  of the  resulting  or  acquiring  corporation  in  such  Business
Combination (which shall include,  without limitation,  a corporation which as a
result of such transaction  owns Thermo Electron or substantially  all of Thermo
Electron's  assets either  directly or through one or more  subsidiaries)  (such
resulting  or  acquiring  corporation  is referred  to herein as the  "Acquiring
Corporation")  in  substantially   the  same  proportions  as  their  ownership,
immediately  prior to such Business  Combination,  of the Outstanding TMO Common
Stock and Outstanding TMO Voting  Securities,  respectively;  and (ii) no Person
(excluding the Acquiring  Corporation  or any employee  benefit plan (or related
trust)   maintained  or  sponsored  by  Thermo  Electron  or  by  the  Acquiring
Corporation) beneficially owns, directly or indirectly,  40% or more of the then
outstanding  shares  of common  stock of the  Acquiring  Corporation,  or of the
combined  voting power of the  then-outstanding  securities of such  corporation
entitled to vote generally in the election of directors; or

     (d)  approval  by  the  stockholders  of  Thermo  Electron  of  a  complete
liquidation or dissolution of Thermo Electron.

14. Amendment of the Plan

     The  provisions  of Sections 3 and 5 of the Plan shall not be amended  more
than once every six months,  other than to comport with changes in the Code, the
Employee  Retirement  Income  Security  Act of 1974,  or the  rules  thereunder.
Subject to the foregoing,  the Board of Directors may at any time, and from time
to time, modify or amend the Plan in any respect, except that if at any time the
approval of the Stockholders of the Company is required as to such  modification
or  amendment  under Rule  16b-3,  the Board of  Directors  may not effect  such
modification or amendment without such approval.

     The  termination  or any  modification  or amendment of the Plan shall not,
without the  consent of an  Optionee,  affect his or her rights  under an option
previously  granted to him or her. With the consent of the  Optionees  affected,
the Board of Directors may amend  outstanding  option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify the terms and provisions of the Plan and of any outstanding  option to
the extent necessary to ensure the qualification of the Plan under Rule 16b-3.

                                       6
<PAGE>

15. Effective Date of the Plan

     The Plan shall become effective when adopted by the Board of Directors, but
no option granted under the Plan shall become exercisable until six months after
the Plan is approved by the Stockholders of the Company.

16. Notice

     Any written notice to the Company  required by any of the provisions of the
Plan  shall be  addressed  to the  Secretary  of the  Company  and shall  become
effective when it is received.

17. Governing Law

     The Plan and all  determinations  made and actions  taken  pursuant  hereto
shall be governed by the laws of the State of Delaware.


                                       7





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(II)
<SEQUENCE>12
<FILENAME>tmok01ex3-2.txt
<TEXT>

                                                                     Exhibit 3.2

                                 As amended and effective as of February 7, 2002

                           THERMO ELECTRON CORPORATION

                                     BY-LAWS

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>     <C>             <C>                                                                             <C>

Title                                                                                                   Page
- -------------------------------------------------------------------------------------------------------------
Article I - Stockholders                                                                                 1
         Section 1.        Annual Meeting                                                                1
         Section 2.        Special Meetings                                                              1
         Section 3.        Notice of Meetings                                                            1
         Section 4.        Quorum; Adjournments                                                          1
         Section 5.        Voting; Proxies                                                               2
         Section 6         Inspectors of Elections                                                       2
         Section 7.        Presiding Officer and Secretary                                               2
         Section 8.        List of Stockholders                                                          3
         Section 9.        Advance Notice of Stockholder Nominations and Proposals                       3
         Section 10.       Action Without Meeting                                                        5


Article II- Directors                                                                                    6
         Section 1.        General Powers                                                                6
         Section 2.        Number and Qualification                                                      6
         Section 3.        Classes of Directors                                                          6
         Section 4.        Terms of Office                                                               6
         Section 5.        Vacancies                                                                     7
         Section 6.        Resignations                                                                  7
         Section 7.        Meetings                                                                      7
         Section 8.        Notice of Meetings                                                            7
         Section 9.        Quorum                                                                        7
         Section 10.       Action at Meeting                                                             7
         Section 11.       Action by Consent                                                             8
         Section 12.       Meetings by Telephone Conference Call                                         8
         Section 13.       Compensation of Directors                                                     8
         Section 14.       Committees                                                                    8




                                      (i)

<PAGE>


Title                                                                                                 Page
- -------------------------------------------------------------------------------------------------------------
Article III - Officers                                                                                   9
         Section 1.        General Provisions; Qualification                                             9
         Section 2.        Election                                                                      9
         Section 3.        Tenure                                                                        9
         Section 4.        Resignation and Removal                                                       9
         Section 5.        Vacancies                                                                     9
         Section 6.        The Chief Executive Officer                                                   9
         Section 7.        The President                                                                 9
         Section 8.        Vice Presidents                                                              10
         Section 9.        Chief Financial Officer                                                      10
         Section 10.       General Counsel                                                              10
         Section 11.       The Treasurer                                                                10
         Section 12.       The Secretary                                                                10
         Section 13.       Assistant Treasurers                                                         10
         Section 14.       Assistant Secretaries                                                        11
         Section 15.       Other Officers                                                               11
         Section 16.       Delegation of Duties                                                         11
         Section 17.       Salaries                                                                     11


Article IV - Capital Stock 11
         Section 1.        Certificates for Shares                                                      11
         Section 2.        Transfer of Shares of Stock                                                  11
         Section 3.        Lost, Stolen or Destroyed Certificates                                       11
         Section 4.        Record Date                                                                  11
         Section 5.        Regulations                                                                  12


Article V - General Provisions                                                                          13
         Section 1.        Fiscal Year                                                                  13
         Section 2.        Corporate Seal                                                               13
         Section 3.        Waiver of Notice                                                             13
         Section 4.        Voting of Securities                                                         13
         Section 5.        Evidence of Authority                                                        13
         Section 6.        Certificate of Incorporation                                                 13
         Section 7.        Transactions with Interested Parties                                         13
         Section 8.        Severability                                                                 14
         Section 9.        Limitation on Stock Option Repricing                                         14

Article VI - Amendments    14
         Section 1.        By the Board of Directors                                                    14
         Section 2.        By the Stockholders                                                          14
         Section 3.        Certain Provisions                                                           15

</TABLE>

                                      (ii)
<PAGE>


                           THERMO ELECTRON CORPORATION

                                     BY-LAWS


                            ARTICLE I - STOCKHOLDERS

     Section 1. Annual Meeting. The annual meeting of the stockholders,  for the
election  of  directors  to  succeed  those  whose  terms  expire  and  for  the
transaction  of such other  business as may  properly  come before the  meeting,
shall be held at such  place,  on such  date,  and at such  time as the Board of
Directors may each year fix.

     Section 2. Special Meetings. Special meetings of stockholders may be called
only by the Board of Directors,  the Chairman of the Board of Directors,  or the
Chief  Executive  Officer.  Special  meetings may be held at such place, on such
date,  and at such  time as the  person(s)  calling  the  meeting  may  specify.
Business  transacted at any special meeting of stockholders  shall be limited to
matters relating to the purpose or purposes stated in the notice of meeting. The
Board of Directors may postpone or reschedule any previously  scheduled  special
meeting.

     Section 3. Notice of Meetings.  Written notice of the place, date, and time
of all meetings of the  stockholders  shall be given, not less than ten (10) nor
more than sixty (60) days before the date on which the meeting is to be held, to
each stockholder entitled to vote at such meeting,  except as otherwise required
by the Delaware  General  Corporation Law (meaning,  here and  hereinafter,  the
General Corporation Law of the State of Delaware,  as amended and in effect from
time to time, the "Delaware General Corporation Law").

     Section 4. Quorum;  Adjournments.  At any meeting of the stockholders,  the
holders of a majority of all of the shares of the stock  entitled to vote at the
meeting,  present  in person  or by proxy,  shall  constitute  a quorum  for all
purposes,  unless or except to the extent that the  presence of a larger  number
may be required by the  Certificate  of  Incorporation  or the Delaware  General
Corporation  Law.  Where a  separate  vote by a class or  classes  or  series is
required, a majority of the shares of such class or classes or series present in
person or represented by proxy shall constitute a quorum entitled to take action
with respect to that vote on that matter.

     If a quorum shall fail to attend any  meeting,  the  presiding  officer may
adjourn the meeting to another place, date, or time. When a meeting is adjourned
to  another  place,  date or  time,  written  notice  need  not be  given of the
adjourned  meeting if the place,  date and time  thereof  are  announced  at the
meeting at which the adjournment is taken;  provided,  however, that if the date
of any adjourned  meeting is more than thirty (30) days after the date for which
the meeting  was  originally  noticed,  or if a new record date is fixed for the
adjourned meeting,  written notice of the place, date, and time of the adjourned
meeting shall be given in conformity  herewith.  At any adjourned  meeting,  any
business  may be  transacted  that could have been  transacted  at the  original
meeting.


<PAGE>

     Section 5. Voting;  Proxies.  Each stockholder shall have one vote for each
share of stock  entitled  to vote  held of  record  by such  stockholder  unless
otherwise provided by the Delaware General Corporation Law or the Certificate of
Incorporation.  Each  stockholder  of record  entitled  to vote at a meeting  of
stockholders,  or to express  consent or dissent to corporate  action in writing
without a meeting,  may vote or express such consent or dissent in person or may
authorize  another  person  or  persons  to vote or act for the  stockholder  by
written proxy executed by the stockholder or the stockholder's  authorized agent
and delivered to the Secretary of the Corporation.  No such proxy shall be voted
or acted upon after three years from the date of its execution, unless the proxy
expressly provides for a longer period.

     When a quorum is present at any meeting, the affirmative vote of holders of
a majority of the stock present or  represented  and entitled to vote and voting
affirmatively  or negatively on a matter (or if there are two or more classes or
series of stock entitled to vote as separate  classes,  then in the case of each
such class or  series,  the  holders  of a  majority  of the stock of that class
present or represented and voting affirmatively or negatively on a matter) shall
constitute stockholder action on any matter to be voted upon by the stockholders
at such  meeting,  except  when a different  vote is  required  by the  Delaware
General  Corporation  Law, the  Certificate of  Incorporation  or these By-laws.
Except as may be otherwise  required by the  Certificate of  Incorporation,  any
election by  stockholders of directors shall be determined by a plurality of the
votes cast by the stockholders entitled to vote at the election.

     Section 6. Inspectors of Elections.  The Corporation may, and to the extent
required by the  Delaware  General  Corporation  Law,  shall,  in advance of any
meeting  of the  stockholders,  appoint  one or  more  inspectors  to act at the
meeting  and make a written  report  thereof  and  perform  the other  duties of
inspectors  at meetings of  stockholders  as set forth in the  Delaware  General
Corporation  Law. The Corporation may designate one or more persons as alternate
inspectors  to  replace  any  inspector  who fails to act.  If no  inspector  or
alternate is able to act at a meeting of  stockholders,  the person presiding at
the meeting may, and to the extent required by the Certificate of  Incorporation
or the Delaware General  Corporation Law, shall,  appoint one or more persons to
act at the  meeting.  Each  inspector,  before  entering  the  discharge  of the
inspector's duties, shall take and sign an oath faithfully to execute the duties
of  inspector  with  strict  impartiality  and  according  to  the  best  of the
inspector's ability.

     Section 7. Presiding  Officer and Secretary.  The Chairman of the Board, or
in the  Chairman's  absence,  the  Chief  Executive  Officer,  or in  the  Chief
Executive Officer's absence,  the President,  or in the President's absence, the
Chief Financial Officer,  in such order, shall call meetings of the stockholders
to order,  and shall act as presiding  officer of such  meeting.  The  presiding
officer  shall  determine  the order of business and the  procedure at meetings,
including such  regulation of the manner of voting and the conduct of discussion
as seem to the presiding  officer in order. The presiding officer shall have the
power to adjourn meetings to another place, date, and time. The date and time of
the opening and closing of the polls for each matter upon which the stockholders
will vote at a meeting  shall be announced at the meeting.  The Secretary of the
Corporation,  or in the Secretary's absence, any Assistant Secretary,  shall act
as the secretary at all meetings of the stockholders,  but in the absence of the
Secretary and any  Assistant  Secretary,  the presiding  officer may appoint any
person to act as secretary of the meeting.


                                       2
<PAGE>

     Section 8. List of Stockholders.  The Secretary shall prepare,  at least 10
days before every meeting of  stockholders,  a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each  stockholder and the number of shares  registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting,  during ordinary  business hours,  for a
period of at least 10 days  prior to the  meeting,  at a place  within  the city
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting  during the whole time of the meeting,  and may be
inspected by any stockholder who is present.

     Section 9. Advance Notice of Stockholder Nominations and Proposals.

     1.  Nominations  of persons for election to the Board of Directors  and the
proposal of  business to be  transacted  by the  stockholders  may be made at an
annual meeting of  stockholders  (a) pursuant to the  Corporation's  notice with
respect to such  meeting,  (b) by or at the direction of the Board or (c) by any
stockholder of record of the  Corporation who was a stockholder of record at the
time of the giving of the notice provided for in the following paragraph, who is
entitled to vote at the meeting and who has complied with the notice  procedures
set forth in this Section 9.

     2. For  nominations  or other  business  to be properly  brought  before an
annual  meeting  by a  stockholder  pursuant  to  clause  (c) of  the  foregoing
paragraph,  (1) the stockholder must have given timely notice thereof in writing
to the Secretary of the  Corporation,  (2) such business must be a proper matter
for stockholder  action under the Delaware  General  Corporation Law, (3) if the
stockholder,  or the  beneficial  owner on whose  behalf  any such  proposal  or
nomination is made, has provided the Corporation with a Solicitation  Notice, as
that term is defined in subclause  (c)(iii) of this paragraph,  such stockholder
or  beneficial  owner must,  in the case of a proposal,  have  delivered a proxy
statement  and form of proxy  to  holders  of at  least  the  percentage  of the
Corporation's  voting shares required under the Delaware General Corporation Law
to carry any such proposal, or, in the case of a nomination or nominations, have
delivered a proxy  statement and form of proxy to holders of a percentage of the
Corporation's   voting  shares  reasonably   believed  by  such  stockholder  or
beneficial  holder to be sufficient to elect the nominee or nominees proposed to
be nominated by such  stockholder,  and must,  in either case,  have included in
such  materials  the  Solicitation  Notice,  and (4) if no  Solicitation  Notice
relating  thereto  has been  timely  provided  pursuant  to this  Section 9, the
stockholder or beneficial  owner  proposing such business or nomination must not
have  solicited a number of proxies  sufficient to have required the delivery of
such a Solicitation  Notice under this Section 9. To be timely,  a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the  Corporation  not  less  than 60 or more  than 75 days  prior  to the  first
anniversary  (the  "Anniversary")  of the date on which  the  Corporation  first
mailed  its  proxy  materials  for  the  preceding   year's  annual  meeting  of
stockholders;  provided,  however,  that if the date of the  annual  meeting  is
advanced  more than 30 days  prior to or  delayed by more than 30 days after the
anniversary of the preceding year's annual meeting, notice by the stockholder to
be timely must be so delivered not later than the close of business on the later
of (i) the 90th day prior to such annual  meeting or (ii) the 10th day following
the day on which public  announcement of the date of such meeting is first made.
Such  stockholder's  notice  shall  set  forth  (a) as to each  person  whom the


                                       3
<PAGE>

stockholder  proposes to nominate for election or  reelection  as a director all
information  relating to such person as would be  required  to be  disclosed  in
solicitations of proxies for the election of such nominees as directors pursuant
to  Regulation  14A under the  Securities  Exchange Act of 1934, as amended (the
"Exchange  Act"),  and such person's  written  consent to serve as a director if
elected;  (b) as to any other  business that the  stockholder  proposes to bring
before the  meeting,  a brief  description  of such  business,  the  reasons for
conducting  such  business  at the  meeting  and any  material  interest in such
business of such  stockholder and the beneficial  owner, if any, on whose behalf
the nomination or proposal is made; (c) as to the stockholder  giving the notice
and the beneficial owner, if any, on whose behalf the nomination is made (i) the
name and address of such stockholder, as they appear on the Corporation's books,
and of such  beneficial  owner,  (ii) the  class  and  number  of  shares of the
Corporation  that are owned  beneficially  and of record by such stockholder and
such beneficial  owner,  and (iii) whether either such stockholder or beneficial
owner  intends to deliver a proxy  statement and form of proxy to holders of, in
the case of a proposal,  at least the  percentage  of the  Corporation's  voting
shares required under the Delaware General Corporation Law to carry the proposal
or, in the case of a nomination or nominations,  a sufficient  number of holders
of the  Corporation's  voting  shares to elect  such  nominee  or  nominees  (an
affirmative statement of such intent, a "Solicitation Notice").

     3. Notwithstanding  anything in the second sentence of the second paragraph
of this Section 9 to the contrary,  in the event that the number of directors to
be elected to the Board is increased and there is no public  announcement naming
all of the nominees for director or specifying  the size of the increased  Board
made  by  the  Corporation  at  least  70  days  prior  to  the  Anniversary,  a
stockholder's  notice  required by this By-law shall also be considered  timely,
but  only  with  respect  to  nominees  for any new  positions  created  by such
increase,  if it shall be delivered to the Secretary at the principal  executive
offices of the  Corporation not later than the close of business on the 10th day
following  the day on  which  such  public  announcement  is  first  made by the
Corporation.

     4. Only persons  nominated in accordance  with the  procedures set forth in
this  Section 9 shall be eligible to serve as directors  and only such  business
shall be  conducted  at an annual  meeting  of  stockholders  as shall have been
brought  before the meeting in accordance  with the procedures set forth in this
Section 9. The  presiding  officer of the  meeting  shall have the power and the
duty to determine  whether a nomination  or any business  proposed to be brought
before the meeting has been made in accordance  with the procedures set forth in
these  By-laws and, if any proposed  nomination or business is not in compliance
with  these  By-laws,  to  declare  that such  defective  proposed  business  or
nomination  shall not be  presented  for  stockholder  action at the meeting and
shall be disregarded.

     5.  Only  such  business  shall  be  conducted  at  a  special  meeting  of
stockholders  as shall have been  brought  before the  meeting  pursuant  to the
Corporation's  notice of meeting.  Nominations  of persons  for  election to the
Board may be made at a special meeting of stockholders at which directors are to
be elected  pursuant  to the  Corporation's  notice of meeting  (a) by or at the
direction of the Board or (b) by any  stockholder  of record of the  Corporation
who is a stockholder  of record at the time of giving of notice  provided for in
this  paragraph,  who shall be entitled to vote at the meeting and who  complies
with the procedures set forth in this Section 9, including,  without limitation,


                                       4
<PAGE>

the procedures regarding  Solicitation  Notices.  Nominations by stockholders of
persons  for  election  to the Board may be made at such a  special  meeting  of
stockholders if the  stockholder's  notice  required by the second  paragraph of
this Section 9 shall be delivered to the  Secretary at the  principal  executive
offices of the  Corporation not later than the close of business on the later of
the 90th day prior to such special  meeting or the 10th day following the day on
which public  announcement  is first made of the date of the special meeting and
of the nominees proposed by the Board to be elected at such meeting.

     For purposes of this Section 9, "public announcement" shall mean disclosure
in a press release reported by the Dow Jones News Service, Associated Press or a
comparable  national  news  service  or in a  document  publicly  filed  by  the
Corporation with the Securities and Exchange  Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.

     Notwithstanding  the foregoing  provisions of this Section 9, a stockholder
shall also comply with all applicable  requirements  of the Exchange Act and the
rules and  regulations  thereunder  with  respect to  matters  set forth in this
Section  9.  Nothing  in this  Section 9 shall be deemed to affect any rights of
stockholders  to request  inclusion  of  proposals  in the  Corporation's  proxy
statement pursuant to Rule 14a-8 under the Exchange Act.

     Section  10.  Action  Without  Meeting.  Unless  otherwise  provided in the
Certificate of  Incorporation,  any action  required or permitted to be taken by
stockholders for or in connection with any corporate action may be taken without
a meeting,  without prior notice and without a vote, if a consent or consents in
writing,  setting  forth the action so taken,  shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary  to  authorize  or take such  action at a meeting  at which all shares
entitled to vote  thereon  were  present and voted and shall be delivered to the
Corporation  by delivery to its  registered  office in Delaware,  its  principal
place of business,  or an officer or agent of the Corporation  having custody of
the  book in  which  proceedings  of  meetings  of  stockholders  are  recorded.
Deliveries made to the  Corporation's  registered office in Delaware shall be by
hand or  certified or  registered  mail,  return  receipt  requested.  Each such
written  consent shall bear the date of signature of each  stockholder who signs
the consent.  No written consent shall be effective to take the corporate action
referred to therein unless written  consents  signed by a number of stockholders
sufficient  to take such action are delivered to the  Corporation  in the manner
specified in this paragraph within sixty (60) days of the earliest dated consent
so delivered.

     If action is taken by consent of  stockholders  and in accordance  with the
foregoing, there shall be filed with the records of the meetings of stockholders
the writing or writings comprising such consent.

     If action is taken by less than unanimous  consent of stockholders,  prompt
notice of the taking of such  action  without a meeting  shall be given to those
who have not  consented in writing and a  certificate  signed and attested to by
the Secretary of the Corporation  that such notice was given shall be filed with
the records of the meetings of stockholders.

     In the event that the action  consented  to is such as would have  required
the  filing  of a  certificate  under  any  provision  of the  Delaware  General


                                       5
<PAGE>

Corporation  Law,  if such action had been voted upon by the  stockholders  at a
meeting thereof, the certificate filed under such provision shall state, in lieu
of any statement  required by such provision  concerning a vote of stockholders,
that written  consent has been given under  Section 228 of the Delaware  General
Corporation Law.


                             ARTICLE II - DIRECTORS

     Section 1. General  Powers.  The  business  and affairs of the  Corporation
shall be  managed by or under the  direction  of a Board of  Directors,  who may
exercise all of the powers of the  Corporation  except as otherwise  provided by
the Certificate of Incorporation or the Delaware General Corporation Law. In the
event of a vacancy in the Board of Directors, the remaining directors, except as
otherwise  provided by the Certificate of  Incorporation or the Delaware General
Corporation  Law, may  exercise the powers of the full Board of Directors  until
the  vacancy is filled.  The Board of  Directors  may  appoint a Chairman of the
Board.  The Chairman of the Board shall  preside at all meetings of the Board of
Directors  and shall perform such duties and possess such powers as are assigned
to the Chairman by the Board of Directors.

     Section 2. Number and  Qualification.  Except as otherwise  required by the
Certificate of Incorporation,  the number of directors that shall constitute the
whole Board of  Directors  shall be  determined  by  resolution  of the Board of
Directors, but in no event shall be less than three (3). The number of directors
may be increased at any time by resolution of the Board of Directors. The number
of directors may be decreased at any time and from time to time by a majority of
the directors then in office, but only to eliminate vacancies existing by reason
of the  death,  resignation,  removal or  expiration  of the term of one or more
directors.  A majority of the Board of Directors shall be comprised of directors
who  are  outside  directors  within  the  meaning  of  Treasury  Regulation  of
ss.1/162-27 as in effect on January 1, 2002.

     Section 3. Classes of  Directors.  The Board of Directors  shall be divided
into three  classes as nearly as equal in number as  possible.  If the number of
directors is changed,  any increase or decrease shall be  apportioned  among the
classes so as to  maintain  the number of  directors  in each class as nearly as
equal as possible.  Such  classes  shall  consist of one class of directors  who
shall be  elected  for a  three-year  term  expiring  at the  annual  meeting of
stockholders  held in 1986; a second class of directors who shall be elected for
a three-year term expiring at the annual meeting of  stockholders  held in 1987;
and a third  class of  directors  who shall be  elected  for a  three-year  term
expiring  at the annual  meeting of  stockholders  held in 1988.  At each annual
meeting  of  stockholders  beginning  in 1986,  the  successors  of the class of
directors  whose term  expires at that  annual  meeting  shall be elected  for a
three-year term.

     Section 4. Terms of Office.  Subject to Section 5 of this  Article II, each
director  shall serve for a term ending on the date of the third annual  meeting
following the annual  meeting at which such director was elected;  provided that
the term of each director shall be subject to the election and  qualification of
such director's  successor and to such director's earlier death,  resignation or
removal.


                                       6
<PAGE>

     Section 5.  Vacancies.  Except as otherwise  required by the Certificate of
Incorporation or the Delaware General  Corporation Law, any vacancy in the Board
of Directors,  however occurring,  or any newly-created  directorship  resulting
from an enlargement of the size of the Board of Directors,  shall be filled only
by vote of a  majority  of the  directors  then in  office,  even if less than a
quorum,  or by the  sole  remaining  director  and  not by the  stockholders.  A
director  elected to fill a vacancy shall be elected for the  unexpired  term of
such  director's  predecessor in office,  and a director  chosen to fill a newly
created  directorship shall hold office until the next election of the class for
which such director shall have been chosen, subject in each case to the election
and  qualification  of the director's  successor and to the  director's  earlier
death, resignation or removal.

     Section 6.  Resignations.  Any director may resign by  delivering a written
resignation to the Corporation at its principal office or to the Chief Executive
Officer or Secretary. Such resignation shall be effective upon receipt unless it
is specified  to be  effective at some other time or upon the  happening of some
other event.

     Section 7. Meetings. Regular meetings of the Board of Directors may be held
without  notice at such time and place,  either  within or without  the State of
Delaware, as shall be determined from time to time by the Board of Directors.  A
regular meeting of the Board of Directors may be held without notice immediately
after and at the same  place as the  annual  meeting  of  stockholders.  Special
meetings of the Board of  Directors  may be called by the Chairman of the Board,
the Chief Executive  Officer,  a majority of the total number of the whole Board
of  Directors,  or by one  director  in the  event  that  there is only a single
director  in office  and may held at any time and place,  within or without  the
State of Delaware, as specified by the person(s) calling the meeting.

     Section 8.  Notice of  Meetings.  No notice of the annual or other  regular
meetings of the Board of Directors need be given.  Notice of any special meeting
of directors  shall be given to each director by the  Secretary.  Notice to each
director  shall be duly  given by  mailing  the same not later  than the  second
business  day before the  meeting,  or by giving  notice in person,  by fax,  by
telephone, or by any other electronic means not later than four hours before the
meeting.  No notice of a meeting need be given if all  directors  are present in
person. Any business may be transacted at any meeting of the Board of Directors,
whether or not specified in a notice of the meeting.

     Section 9.  Quorum.  A majority  of the total  number of the whole Board of
Directors  shall  constitute a quorum at all meetings of the Board of Directors.
In the  absence of a quorum at any such  meeting,  a majority  of the  directors
present may adjourn the meeting from time to time to a different date, place, or
time without further notice (or waiver of notice) other than announcement at the
meeting, until a quorum shall be present.

     Section 10. Action at Meeting.  At any meeting of the Board of Directors at
which a quorum is present, the vote of a majority of the directors present shall
be  sufficient to take any action,  unless a different  vote is specified by the
Delaware  General  Corporation  Law, the Certificate of  Incorporation  or these
By-laws.

                                       7
<PAGE>

     Section 11. Action by Consent. Any action required or permitted to be taken
at any meeting of the Board of  Directors  or of any  committee  of the Board of
Directors  may be taken  without  a  meeting,  if all  members  of the  Board of
Directors or  committee,  as the case may be,  consent to the action in writing,
and the written  consents are filed with the minutes of proceedings of the Board
of Directors or committee.

     Section 12. Meetings by Telephone Conference Call. Directors or any members
of any committee designated by the directors may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or similar
communications  equipment  by means of which all  persons  participating  in the
meeting can hear each other,  and  participation  by such means shall constitute
presence in person at such meeting.

     Section  13.  Compensation  of  Directors.   Directors  may  be  paid  such
compensation  for  their  services  and  such   reimbursement  for  expenses  of
attendance  at meetings of the Board of Directors or  committees of the Board of
Directors  as the Board of  Directors  or any  committee  to which the Board has
delegated responsibility for establishing director compensation may from time to
time  determine.  No such payment  shall  preclude any director from serving the
Corporation or any of its parent,  subsidiary,  or affiliate corporations in any
other capacity and receiving compensation for such service.

     Section 14.  Committees.  The Board of Directors  may designate one or more
committees,  each  committee  to consist of one or more of the  directors of the
Corporation.  "In addition to other committees that the Board may designate from
time to time, the Board shall  designate a Human Resources  Committee,  an Audit
Committee,  a Nominating  and Corporate  Governance  Committee and a Shareholder
Rights Plan Committee,  each of which shall be, as of January 1, 2003, comprised
only of directors of the Corporation who shall have been determined by the Board
of Directors to be outside  directors within the meaning of Treasury  Regulation
ss.1.162-27  as in effect on  January  1,  2002."  The  Board of  Directors  may
designate one or more directors as alternate  members of any committee,  who may
replace any absent or  disqualified  member at any meeting of the committee.  In
the  absence  or  disqualification  of a member of a  committee,  the  member or
members  of the  committee  present at any  meeting  and not  disqualified  from
voting,  whether  or  not  the  member  or  members  constitute  a  quorum,  may
unanimously  appoint  another  member  of the Board of  Directors  to act at the
meeting  in the  place of any  such  absent  or  disqualified  member.  Any such
committee,  to the extent  provided in the  resolution of the Board of Directors
and subject to the  provisions of the Delaware  General  Corporation  Law, shall
have and may exercise all the powers and  authority of the Board of Directors in
the management of the business and affairs of the  Corporation and may authorize
the seal of the  Corporation  to be affixed to all papers  that may  require it.
Each such  committee  shall keep  minutes and make such  reports as the Board of
Directors  may from time to time  request.  Except as the Board of Directors may
otherwise  determine,  any  committee  may make  rules  for the  conduct  of its
business,  but unless otherwise  provided by the directors or in such rules, its
business  shall be  conducted  as nearly as  possible  in the same  manner as is
provided in these By-laws for the Board of Directors.  A majority of the members
of a committee shall constitute a quorum unless the committee  consist of one or
two members,  in which event, one member shall constitute a quorum.  All matters
shall be determined by a majority vote of the committee members present.


                                       8
<PAGE>

                             ARTICLE III - OFFICERS

     Section  1.  General  Provisions;   Qualification.   The  officers  of  the
Corporation shall be a Chief Executive Officer,  a President,  a Chief Financial
Officer, a General Counsel, a Treasurer and a Secretary,  and may include one or
more Vice Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries  and  such  other  officers  as the  Board  of  Directors  may  deem
appropriate. Any two or more offices may be held by the same person.

     Section 2. Election. The Chief Executive Officer, the President,  the Chief
Financial  Officer,  the General  Counsel,  the Treasurer and Secretary shall be
elected  annually by the Board of Directors at its first  meeting  following the
annual meeting of stockholders.  Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.

     Section 3.  Tenure.  Except as otherwise  provided by the Delaware  General
Corporation Law, by the Certificate of  Incorporation or by these By-laws,  each
officer  shall  hold  office  until such  officer's  successor  is  elected  and
qualified,  unless  a  different  term is  specified  in the  vote  choosing  or
appointing such officer,  or until such officer's earlier death,  resignation or
removal.

     Section 4. Resignation and Removal.  Any officer may resign by delivering a
written  resignation to the Corporation at its principal  office or to the Chief
Executive  Officer or the Secretary.  Such  resignation  shall be effective upon
receipt  unless it is  specified  to be effective at some other time or upon the
happening of some other event.  Any officer may be removed at any time,  with or
without cause by vote of the Board of Directors.

     Section  5.  Vacancies.  The  Board of  Directors  may at any time fill any
vacancy  occurring in any office for any reason.  Each such successor shall hold
office for the unexpired  term of such  successor's  predecessor  and until such
successor's  successor  is elected  and  qualified,  or until  such  successor's
earlier death, resignation or removal.

     Section 6. The Chief Executive  Officer.  The Chief Executive Officer shall
be the principal executive officer of the Corporation. Subject to the control of
the Board of Directors, the Chief Executive Officer shall have general charge of
the business and affairs of the Corporation.  The Chief Executive  Officer shall
employ and  discharge  employees and agents of the  Corporation,  except such as
shall hold their offices by appointment of the Board of Directors, but the Chief
Executive  Officer may delegate  these powers to other  officers as to employees
under their immediate  supervision.  The Chief Executive Officer shall have such
other powers and perform such other duties as may be  prescribed by the Board of
Directors.

     Section 7. The President.  The Board of Directors may appoint an officer of
the  Corporation  to serve as the  President of the  Corporation.  The President
shall  perform  such  of  the  duties  of the  Chief  Executive  Officer  of the
Corporation  on behalf of the  Corporation  as may be assigned to the  President
from time to time by the Board of Directors or the Chief Executive  Officer.  In
the absence or inability of the Chief  Executive  Officer to act, the  President
shall have and possess all of the powers and  discharge all of the duties of the
Chief Executive Officer, subject to the control of the Board of Directors.

                                       9
<PAGE>

     Section 8. Vice Presidents.  Each Vice President shall have such powers and
perform such duties as the Board of Directors,  the Chief Executive Officer,  or
the President may from time to time prescribe.

     Section 9. Chief Financial Officer. The Board of Directors shall appoint an
officer to serve as the Chief Financial  Officer of the  Corporation.  The Chief
Financial  Officer shall be responsible for the  Corporation's  public financial
reporting  obligations  and shall  have such  further  powers  and duties as are
incident to the position of Chief Financial Officer, subject to the direction of
the Chief Executive Officer and the Board of Directors.

     Section  10.  General  Counsel.  The Board of  Directors  shall  appoint an
officer to serve as the General Counsel of the Corporation.  The General Counsel
shall be the chief legal officer of the Corporation and shall be responsible for
all legal  affairs of the  Corporation,  and shall have such further  powers and
duties as are incident to the position of General Counsel.

     Section 11. The  Treasurer.  The  Treasurer  shall  perform such duties and
shall have such powers as may from time to time be assigned to the  Treasurer by
the Board of Directors or the Chief Executive Officer.  In addition,  subject to
the direction of the Board of Directors, the Treasurer shall perform such duties
and have such  powers as are  incident  to the office of  treasurer,  including,
without limitation,  the duty and power to keep and be responsible for all funds
and  securities  of the  Corporation,  to deposit  funds of the  Corporation  in
depositories, to disburse such funds, to make proper accounts of such funds, and
to render statements of all such transactions and of the financial  condition of
the  Corporation.  The Treasurer  shall report  directly to the Chief  Executive
Officer.

     Section  12. The  Secretary.  The  Secretary  shall keep the minutes of all
meetings of the Board of Directors and of the  stockholders  and shall attend to
the giving and serving of all notices of the  Corporation.  The Secretary  shall
have  custody  of the seal of the  Corporation  and shall  affix the seal to all
certificates  of shares of stock of the  Corporation and to such other papers or
documents as may be proper and, when the seal is so affixed, the Secretary shall
attest the same by the Secretary's  signature wherever  required.  The Secretary
shall  have  charge of the stock  certificate  book,  transfer  book,  and stock
ledger,  and such other books and papers as the Board of  Directors  may direct.
The Secretary shall, in general, perform all the duties of secretary, subject to
the control of the Board of Directors.

     Section  13.  Assistant  Treasurers.  In the  absence or  inability  of the
Treasurer  to act,  any  Assistant  Treasurer  may  perform  all the  duties and
exercise all of the powers of the Treasurer, subject to the control of the Board
of Directors. An Assistant Treasurer shall also perform such other duties as the
Board of Directors,  the Chief Executive Officer, or the Treasurer may from time
to time prescribe.


                                       10
<PAGE>

     Section  14.  Assistant  Secretaries.  In the absence or  inability  of the
Secretary  to act,  any  Assistant  Secretary  may  perform  all the  duties and
exercise all the powers of the Secretary, subject to the control of the Board of
Directors.  An Assistant  Secretary  shall also perform such other duties as the
Board of Directors,  the Chief Executive Officer, or the Secretary may from time
to time prescribe.

     Section 15. Other  Officers.  Other  officers shall perform such duties and
have such  powers as may from time to time be  assigned  to them by the Board of
Directors.

     Section 16.  Delegation of Duties. In case of the absence of any officer of
the  Corporation,  or for any other reason that the Board of Directors  may deem
sufficient, the Board of Directors may confer, for the time being, the powers or
duties,  or any of them,  of such  officer upon any other  officer,  or upon any
director.

     Section 17. Salaries. Officers of the Corporation shall be entitled to such
salaries,  compensation, or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.

                           ARTICLE IV - CAPITAL STOCK

     Section 1. Certificates for Shares. Each stockholder shall be entitled to a
certificate signed by, or in the name of the Corporation by, the Chairman of the
Board, the Chief Executive Officer, or the President or a Vice President, and by
the Secretary or an Assistant Secretary, or Treasurer or an Assistant Treasurer,
certifying  the class and number of shares of record owned by such  stockholder.
Any or all of the signatures may be a facsimile.

     Section 2.  Transfer of Shares of Stock.  Transfers  of stock shall be made
only  upon  the  transfer  books of the  Corporation  kept at an  office  of the
Corporation or by transfer agents  designated to transfer shares of the stock of
the Corporation. Except where a certificate is issued in accordance with Section
3 of this Article IV of these By-laws, an outstanding certificate for the number
of  shares  involved  shall  be  surrendered  for  cancellation   before  a  new
certificate is issued therefor.

     Section  3. Lost,  Stolen or  Destroyed  Certificates.  In the event of the
loss, theft or destruction of any certificate of stock, another may be issued in
its place  pursuant to such  regulations  as the Board of  Directors or transfer
agent may establish  concerning  proof of such loss,  theft,  or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.

     Section 4. Record Date.

     (a) In order that the Corporation may determine the  stockholders  entitled
to notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any  change,  conversion,  or  exchange of stock or for the
purpose  of any other  lawful  action,  the Board of  Directors  may,  except as
otherwise  required by the Delaware General  Corporation Law, fix a record date,
which record date shall not precede the date on which the resolution  fixing the
record date is adopted  and which  record date shall not be more than sixty (60)
nor less than ten (10) days before the date of any meeting of stockholders,  nor
more  than  sixty  (60)  days  prior  to the  time  for  such  other  action  as


                                       11
<PAGE>

hereinbefore  described;  provided,  however, that if no record date is fixed by
the Board of Directors, the record date for determining stockholders entitled to
notice  of or to vote at a  meeting  of  stockholders  shall be at the  close of
business  on the day next  preceding  the day on which  notice  is given  or, if
notice is waived,  at the close of business on the day next preceding the day on
which the meeting is held, and, for determining stockholders entitled to receive
payment of any  dividend  or other  distribution  or  allotment  of rights or to
exercise any rights of change, conversion, or exchange of stock or for any other
purpose,  the record  date shall be at the close of business on the day on which
the Board of Directors adopts a resolution  relating thereto. A determination of
stockholders  of  record  entitled  to  notice  of or to  vote at a  meeting  of
stockholders shall apply to any adjournment of the meeting;  provided,  however,
that the Board of Directors may fix a new record date for the adjourned meeting.

     (b) In order that the Corporation may determine the  stockholders  entitled
to  consent to  corporate  action in  writing  without a  meeting,  the Board of
Directors  may fix a record  date,  which record date shall not precede the date
upon which the  resolution  fixing  the  record  date is adopted by the Board of
Directors,  and which  date  shall not be more than ten (10) days after the date
upon which the  resolution  fixing  the  record  date is adopted by the Board of
Directors.  Any stockholder of record seeking to have the stockholders authorize
or take  corporate  action by written  consent  shall,  by written notice to the
Secretary  of the  Corporation,  request the Board of  Directors to fix a record
date. The Board of Directors shall  promptly,  but in all events within ten (10)
days after the date on which such a request is received by the Secretary,  adopt
a  resolution  fixing the record  date.  If no record date has been fixed by the
Board of  Directors  within ten (10) days of the date on which such a request is
received,  the record date for determining  stockholders  entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by applicable  law,  shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the  Corporation by delivery to its registered  office in the State
of Delaware,  its  principal  place of business,  or any officer or agent of the
Corporation  having  custody  of the book in which  proceeding  of  meetings  of
stockholders are recorded.  Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail,  return receipt  requested.
If no record date has been fixed by the Board of  Directors  and prior action by
the Board of  Directors  is  required  by  applicable  law,  the record date for
determining  stockholders  entitled  to consent to  corporate  action in writing
without a meeting  shall be at the  close of  business  on the date on which the
Board of Directors adopts the resolution taking such prior action.

     Section 5. Regulations. The issue, transfer, conversion and registration of
certificates  of stock shall be governed by such other  regulations as the Board
of Directors may establish.


                         ARTICLE V - General Provisions

     Section 1. Fiscal Year. Except as from time to time otherwise designated by
the Board of  Directors,  the fiscal  year of the  Corporation  shall end on the
Saturday closest to December 31.

                                       12
<PAGE>

     Section 2. Corporate  Seal. The corporate seal shall be in such form as may
be approved by the Board of Directors.  The  corporate  seal may be altered from
time to time by the Board.  Section 3.  Waiver of  Notice.  Whenever  any notice
whatsoever is required to be given by the Delaware  General  Corporation Law, by
the Certificate of Incorporation  or by these By-laws,  a written waiver of such
notice  signed by the  person  entitled  to such  notice or such  person's  duly
authorized  attorney,  whether  before  or after the time of the event for which
notice is to be given shall be deemed  equivalent  to the notice  required to be
given to such  person.  Neither the business nor the purpose of any meeting need
be specified in such a waiver.  The appearance of such person at such meeting in
person or by proxy,  shall constitute waiver of notice except attendance for the
sole purpose of objecting to the timeliness or lack of notice.

     Section 4. Voting of Securities.  Subject always to the specific directions
of the Board of Directors,  any officer of the  Corporation may waive notice of,
and  act  as,  or  appoint   any   person  or  persons  to  act  as,   proxy  or
attorney-in-fact  for this  Corporation  (with or without power of substitution)
at, any meeting of  stockholders  or  shareholders  of any other  corporation or
organization, the securities of which may be held by this Corporation. The Board
of Directors,  by resolution  from time to time, may confer like powers upon any
other person or persons.

     Section 5. Evidence of Authority.  A certificate  by the  Secretary,  or an
Assistant  Secretary as to any action taken by the  stockholders,  directors,  a
committee or any officer or  representative  of the Corporation  shall as to all
persons who rely on the certificate in good faith be conclusive evidence of such
action.

     Section 6. Certificate of Incorporation. All references in these By-laws to
the Certificate of  Incorporation  shall be deemed to refer to the Third Amended
and  Restated  Certificate  of  Incorporation  of the  Corporation,  as amended,
restated and in effect from time to time.

     Section 7. Transactions with Interested Parties. No contract or transaction
between the Corporation and one or more of the directors or officers, or between
the Corporation  and any other  corporation,  partnership,  association or other
organization  in which one or more of the directors or officers are directors or
officers,  or have a financial  interest,  shall be void or voidable  solely for
this  reason,  or solely  because  the  director  or  officer  is  present at or
participates  in the meeting of the Board of  Directors  or a  committee  of the
Board of Directors that authorizes the contract or transaction or solely because
the interested directors' votes are counted for such purpose, if:

               (1)  The  material  facts  as  to  the  director's  or  officer's
          relationship  or interest  and as to the contract or  transaction  are
          disclosed or are known to the Board of Directors or the committee, and
          the Board of  Directors  or  committee  in good faith  authorizes  the
          contract or transaction by the affirmative  votes of a majority of the
          disinterested  directors,  even though the disinterested  directors be
          less than a quorum;

               (2)  The  material  facts  as  to  the  director's  or  officer's
          relationship  or interest  and as to the contract or  transaction  are


                                       13
<PAGE>

          disclosed or are known to the  stockholders  entitled to vote thereon,
          and the contract or transaction is specifically approved in good faith
          by vote of the stockholders; or

               (3) The contract or transaction is fair as to the  Corporation as
          of the time it is  authorized,  approved or ratified,  by the Board of
          Directors, a committee of the Board of Directors, or the stockholders.

     Common or interested  directors may be counted in determining  the presence
of a quorum  at a meeting  of the  Board of  Directors  or of a  committee  that
authorizes the contract or transaction.

     Section 8.  Severability.  Any  determination  that any  provision of these
By-laws is for any reason inapplicable, illegal, or ineffective shall not affect
or invalidate any other provision of these By-laws.

     Section 9. Limitation on Stock Option Repricing. No stock option granted to
an officer or director of the Corporation shall, after issuance,  be repriced to
a  lower  exercise  price  (other  than  adjustments  for  stock  splits,  stock
dividends,  spinoffs,  recapitalizations  and like  events),  without  the prior
affirmative  vote of the holders of a majority of the shares of capital stock of
the  Corporation  present  at a  stockholders  meeting in person or by proxy and
entitled to vote thereon."


                             ARTICLE VI - AMENDMENTS

     Section 1. By the Board of Directors.  In furtherance and not in limitation
of the  powers  conferred  by the  Delaware  General  Corporation  Law  and  the
Certificate of Incorporation,  the Board of Directors is expressly authorized to
alter, amend or repeal any provision of these By-laws or make new by-laws.

     Section 2. By the Stockholders.  Except as otherwise  provided in Section 3
of this Article VI, the stockholders of the Corporation  shall have the power to
alter,  amend or repeal any  provision  of these  By-laws or make new by-laws by
affirmative  vote of the holders of a majority of the shares of capital stock of
the Corporation  issued and outstanding and entitled to vote, voting together as
a single class; provided, however, that the power of the stockholders to, alter,
amend or repeal  any  provision  of these  By-laws  or make any new  by-laws  is
further subject to any affirmative  vote of the holders of any particular  class
or series of capital stock of the Corporation as may be required by the Delaware
General Corporation Law, the Certificate of Incorporation, or these By-laws.

                                       14
<PAGE>

     Section 3. Certain  Provisions.  Notwithstanding any other provision of the
Delaware  General  Corporation Law, the Certificate of  Incorporation,  or these
By-laws  (including  Section 2 of this Article VI), the affirmative  vote of the
holders of at least sixty-six and two-thirds  percent (66 2/3%) of the shares of
capital stock of the  Corporation  issued and  outstanding  and entitled to vote
shall  be  required  to  alter,  amend  or  repeal,  or  make  any  new  by-laws
inconsistent with, Article II or this Article VI of these By-laws.  This Section
3 is not  intended  to abrogate  or  otherwise  affect the power of the Board of
Directors  to amend  Article  II or  Article  VI  pursuant  to Section 1 of this
Article VI.



                                       15


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>14
<FILENAME>tmok01ex13.txt
<TEXT>
                                                                      Exhibit 13


















                           Thermo Electron Corporation

                        Consolidated Financial Statements

                                      2001



<PAGE>
<TABLE>
<CAPTION>
<S>                                                                             <C>          <C>         <C>


Thermo Electron Corporation                                                           2001 Financial Statements

                                      Consolidated Statement of Operations


(In thousands except per share amounts)                                          2001         2000         1999
- ---------------------------------------------------------------------------------------------------------------

Revenues (Notes 3 and 16)                                                  $2,188,210   $2,280,522   $2,294,620
                                                                           ----------   ----------   ----------

Costs and Operating Expenses:
 Cost of revenues (Note 15)                                                 1,229,588    1,258,686    1,245,773
 Selling, general, and administrative expenses                                620,104      646,920      658,297
 Research and development expenses                                            171,614      176,756      171,100
 Restructuring and other unusual costs (income), net (Note 15)                132,702      (67,855)      37,346
                                                                           ----------   ----------   ----------

                                                                            2,154,008    2,014,507    2,112,516
                                                                           ----------   ----------   ----------

Operating Income                                                               34,202      266,015      182,104
Other Income (Expense), Net (Notes 4 and 15)                                   36,479      (81,184)     (57,345)
                                                                           ----------   ----------   ----------

Income from Continuing Operations Before Provision for Income Taxes,
 Minority Interest, Extraordinary Item, and Cumulative Effect of
 Change in Accounting Principle                                                70,681      184,831      124,759
Provision for Income Taxes (Note 6)                                           (26,929)    (112,217)     (64,428)
Minority Interest Income (Expense)                                              5,840      (10,567)     (23,048)
                                                                           ----------   ----------   ----------

Income from Continuing Operations Before Extraordinary Item and
 Cumulative Effect of Change in Accounting Principle                           49,592       62,047       37,283
Income (Loss) from Discontinued Operations (net of income tax provision
 (benefit) and minority interest of $12,249 and $(107,089); Note 17)                -       14,228     (163,325)
Provision for Loss on Disposal of Discontinued Operations, Net (net of
 income tax provision (benefit) of $(22,741), $(104,000), and $174,000;
 Note 17)                                                                     (50,440)    (100,000)     (50,000)
                                                                           ----------   ----------   ----------

Loss Before Extraordinary Item and Cumulative Effect of Change in
 Accounting Principle                                                            (848)     (23,725)    (176,042)
Extraordinary Item (net of income tax provision and minority interest of
 $637, $333, and $900; Note 10)                                                 1,061          532        1,469
                                                                           ----------   ----------   ----------

Income (Loss) Before Cumulative Effect of Change in Accounting Principle          213      (23,193)    (174,573)
Cumulative Effect of Change in Accounting Principle (net of income
 tax benefit and minority interest of $663 and $8,986; Notes 1 and 16)           (994)     (12,918)           -
                                                                           ----------   ----------   ----------

Net Loss                                                                   $     (781)  $  (36,111)  $ (174,573)
                                                                           ==========   ==========   ==========

Earnings per Share from Continuing Operations Before Extraordinary
 Item and Cumulative Effect of Change in Accounting Principle (Note 7)
   Basic                                                                   $      .27   $      .37   $      .24
                                                                           ==========   ==========   ==========
   Diluted                                                                 $      .27   $      .36   $      .22
                                                                           ==========   ==========   ==========

Loss per Share (Note 7)
   Basic                                                                   $        -   $     (.22)  $    (1.10)
                                                                           ==========   ==========   ==========
   Diluted                                                                 $        -   $     (.22)  $    (1.12)
                                                                           ==========   ==========   ==========

Weighted Average Shares (Note 7)
   Basic                                                                      180,560      167,462      157,987
                                                                           ==========   ==========   ==========
   Diluted                                                                    183,916      170,519      158,223
                                                                           ==========   ==========   ==========


The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
<
                                       2
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                                                                      <C>        <C>

Thermo Electron Corporation                                                      2001 Financial Statements

                                      Consolidated Balance Sheet

(In thousands)                                                                           2001         2000
- ----------------------------------------------------------------------------------------------------------

Assets
Current Assets:
 Cash and cash equivalents                                                         $  297,557   $  505,524
 Short-term available-for-sale investments, at quoted market value
   (amortized cost of $697,757 and $510,312; Notes 9 and 15)                          744,321      521,329
 Accounts receivable, less allowances of $26,525 and $30,593                          410,960      431,476
 Unbilled contract costs and fees                                                      24,071       18,520
 Inventories (Note 15)                                                                337,041      394,152
 Deferred tax asset (Note 6)                                                           82,766      148,051
 Other current assets                                                                  68,494       75,007
 Net assets of discontinued operations (Note 17)                                            -      371,470
                                                                                   ----------   ----------

                                                                                    1,965,210    2,465,529
                                                                                   ----------   ----------

Property, Plant, and Equipment, at Cost, Net (Note 15)                                270,712      285,878
                                                                                   ----------   ----------

Long-term Available-for-sale Investments, at Quoted Market Value
 (amortized cost of $5,729 and $9,883; Notes 9 and 15)                                  9,360       17,110
                                                                                   ----------   ----------

Other Assets (Notes 2 and 15)                                                         231,395      183,974
                                                                                   ----------   ----------

Goodwill (Notes 2, 6, and 15)                                                       1,348,393    1,378,663
                                                                                   ----------   ----------

Long-term Net Assets of Discontinued Operations (Note 17)                                   -      531,823
                                                                                   ----------   ----------

                                                                                   $3,825,070   $4,862,977
                                                                                   ==========   ==========



<
                                       3
<PAGE>
>


Thermo Electron Corporation                                                      2001 Financial Statements

                                  Consolidated Balance Sheet (continued)

(In thousands except share amounts)                                                      2001         2000
- ----------------------------------------------------------------------------------------------------------

Liabilities and Shareholders' Investment
Current Liabilities:
 Short-term obligations and current maturities of long-term
   obligations (Notes 10 and 19)                                                   $  528,988   $  103,356
 Advance payable to affiliates (Note 10)                                                    -       16,088
 Accounts payable                                                                     111,950      139,662
 Accrued payroll and employee benefits                                                 79,403       78,483
 Accrued income taxes                                                                  30,797       95,344
 Deferred revenue                                                                      48,166       50,341
 Accrued installation and warranty costs                                               33,024       37,058
 Accrued restructuring costs (Note 15)                                                 60,685       21,024
 Other accrued expenses (Note 2)                                                      183,610      187,195
 Net liabilities of discontinued operations (Note 17)                                  65,416            -
                                                                                   ----------   ----------

                                                                                    1,142,039      728,551
                                                                                   ----------   ----------

Deferred Income Taxes (Note 6)                                                          7,907       10,691
                                                                                   ----------   ----------

Other Deferred Items                                                                   32,579       36,539
                                                                                   ----------   ----------

Long-term Obligations (Notes 10 and 19):
 Senior convertible obligations                                                       145,414      172,500
 Senior notes                                                                         128,725      150,000
 Subordinated convertible obligations                                                 445,377    1,177,565
 Other                                                                                  7,986       28,418
                                                                                   ----------   ----------

                                                                                      727,502    1,528,483
                                                                                   ----------   ----------

Minority Interest (Note 17)                                                             6,901       24,737
                                                                                   ----------   ----------

Commitments and Contingencies (Note 11)

Shareholders' Investment (Notes 5 and 12):
 Preferred stock, $100 par value, 50,000 shares authorized; none issued Common
 stock, $1 par value, 350,000,000 shares authorized; 199,816,264 and
   195,877,421 shares issued                                                          199,816      195,877
 Capital in excess of par value                                                     1,758,567    1,681,452
 Retained earnings (Note 17)                                                          509,681    1,005,857
 Treasury stock at cost, 23,458,555 and 13,708,863 shares                            (457,475)    (246,228)
 Deferred compensation                                                                 (3,157)      (6,640)
 Accumulated other comprehensive items (Note 8)                                       (99,290)     (96,342)
                                                                                   ----------   ----------

                                                                                    1,908,142    2,533,976
                                                                                   ----------   ----------

                                                                                   $3,825,070   $4,862,977
                                                                                   ==========   ==========


The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
<
                                       4
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                                                       <C>          <C>         <C>


Thermo Electron Corporation                                                      2001 Financial Statements

                                  Consolidated Statement of Cash Flows


(In thousands)                                                             2001         2000         1999
- ---------------------------------------------------------------------------------------------------------

Operating Activities
 Net loss                                                             $    (781)   $ (36,111)   $(174,573)
 Adjustments to reconcile net loss to income from
   continuing operations:
     (Income) loss from discontinued operations (Note 17)                     -      (14,228)     163,325
     Provision for loss on disposal of discontinued
       operations, net (Note 17)                                         50,440      100,000       50,000
                                                                      ---------    ---------    ---------

 Income from continuing operations                                       49,659       49,661       38,752

 Adjustments to reconcile income from continuing operations
   to net cash provided by operating activities:
     Depreciation and amortization                                       98,521       97,486       91,429
     Noncash restructuring and other unusual costs, net (Note 15)        41,144       22,865       30,214
     Provision for losses on accounts receivable                          6,316        9,264        8,614
     Minority interest (income) expense                                  (5,840)      10,567       23,048
     Equity in (earnings) loss of unconsolidated subsidiaries
       (Note 15)                                                         (4,699)      47,315        7,274
     Cumulative effect of change in accounting principle, net
       of income taxes and minority interest (Notes 1 and 16)               994       12,918            -
     Change in deferred income taxes                                    (16,751)     (39,700)     (28,378)
     Loss (gain) on sale of businesses (Notes 2 and 15)                  10,943     (126,330)           -
     Gain on investments, net (Notes 9 and 15)                          (35,579)      (6,849)      (3,662)
     Extraordinary item, net of income taxes and minority
       interest (Note 10)                                                (1,061)        (532)      (1,469)
     Other noncash items, net                                            34,264       29,213       17,675
     Other unusual income                                                  (511)      (4,372)           -
     Changes in current accounts, excluding the effects
       of acquisitions and dispositions:
        Accounts receivable                                             (19,041)     (27,395)     (19,737)
        Inventories                                                       7,724      (77,356)      14,260
        Other current assets                                            (13,097)      (4,710)      (8,800)
        Accounts payable                                                (19,082)      17,742        2,012
        Other current liabilities                                        50,472       47,982       17,499
                                                                      ---------    ---------    ---------

          Net cash provided by continuing operations                    184,376       57,769      188,731
          Net cash provided by discontinued operations                    4,025      142,152      148,390
                                                                      ---------    ---------    ---------

          Net cash provided by operating activities                     188,401      199,921      337,121
                                                                      ---------    ---------    ---------

Investing Activities
 Purchases of available-for-sale investments                           (969,267)    (473,576)    (554,870)
 Proceeds from sale of available-for-sale investments                   536,966      113,220      281,451
 Proceeds from maturities of available-for-sale investments             250,345      403,134      794,288
 Proceeds from sale of other investments                                 43,255        6,367        3,775
 Purchases of property, plant, and equipment                            (84,799)     (74,039)     (61,238)
 Proceeds from sale of property, plant, and equipment                    11,638       21,828        9,604


<
                                       5
<PAGE>
>


Thermo Electron Corporation                                                      2001 Financial Statements

                              Consolidated Statement of Cash Flows (continued)

(In thousands)                                                             2001         2000         1999
- ---------------------------------------------------------------------------------------------------------

Investing Activities (continued)
 Acquisitions, net of cash acquired (Note 2)                          $ (14,130)   $ (15,808)   $(344,615)
 Acquisition of minority interests of subsidiaries (Note 17)           (69,528)    (307,166)     (43,176)
 Proceeds from sale of businesses, net of cash divested (Note 2)         46,767      253,583           61
 Advance (to) from affiliates                                           (16,088)     (96,434)       8,633
 Refund of acquisition purchase price                                         -            -        8,969
 Increase in other assets                                                (5,077)      (3,954)      (4,797)
 Other                                                                   (1,580)       7,826        2,181
                                                                      ---------    ---------    ---------

          Net cash provided by (used in) continuing operations         (271,498)    (165,019)     100,266
          Net cash provided by (used in) discontinued operations        447,654      394,596     (173,834)
                                                                      ---------    ---------    ---------

          Net cash provided by (used in) investing activities           176,156      229,577      (73,568)
                                                                      ---------    ---------    ---------

Financing Activities
 Purchases and redemption of Company and subsidiary common
   stock and subordinated convertible debentures (Note 10)             (511,393)     (43,787)    (190,412)
 Net proceeds from issuance of Company and subsidiary
   common stock (Notes 5 and 12)                                         69,873       58,466       14,896
 Repayment of long-term obligations                                     (43,129)    (161,191)     (40,283)
 Net proceeds from issuance of long-term obligations                        249       14,577       16,813
 Increase (decrease) in short-term notes payable                        (16,870)     (19,183)      25,373
 Other                                                                   (1,760)      (4,377)      (6,669)
                                                                      ---------    ---------    ---------

          Net cash used in continuing operations                       (503,030)    (155,495)    (180,282)
          Net cash provided by (used in) discontinued operations       (193,283)      17,914     (106,601)
                                                                      ---------    ---------    ---------

          Net cash used in financing activities                        (696,313)    (137,581)    (286,883)
                                                                      ---------    ---------    ---------

Exchange Rate Effect on Cash of Continuing Operations                    (3,760)      (2,883)     (12,242)
Exchange Rate Effect on Cash of Discontinued Operations                   4,464       (9,997)      (3,883)
                                                                      ---------    ---------    ---------

Increase (Decrease) in Cash and Cash Equivalents                       (331,052)     279,037      (39,455)
Cash and Cash Equivalents at Beginning of Year                          636,252      357,215      396,670
                                                                      ---------    ---------    ---------

                                                                        305,200      636,252      357,215
Cash and Cash Equivalents of Discontinued Operations at
 End of Year                                                             (7,643)    (130,728)    (119,371)
                                                                      ---------    ---------    ---------

Cash and Cash Equivalents at End of Year                              $ 297,557    $ 505,524    $ 237,844
                                                                      =========    =========    =========

See Note 14 for supplemental cash flow information.


The accompanying notes are an integral part of these consolidated financial statements.


<
                                       6
<PAGE>
>


Thermo Electron Corporation                                                      2001 Financial Statements

                Consolidated Statement of Comprehensive Loss and Shareholders' Investment


(In thousands)                                                              2001         2000         1999
- ----------------------------------------------------------------------------------------------------------

Comprehensive Loss
Net Loss                                                              $     (781)  $  (36,111)  $ (174,573)
                                                                      ----------   ----------   ----------

Other Comprehensive Items (Note 8):
 Currency translation adjustment                                         (24,606)     (44,975)     (50,979)
 Unrealized gains on available-for-sale investments, net of
   reclassification adjustment                                            20,320        4,558        4,651
 Unrealized gains on hedging instruments, net of
   reclassification adjustment                                             1,338            -            -
                                                                      ----------   ----------   ----------

                                                                          (2,948)     (40,417)     (46,328)
 Minority interest                                                           (81)       5,188        9,439
                                                                      ----------   ----------   ----------

                                                                          (3,029)     (35,229)     (36,889)
                                                                      ----------   ----------   ----------

                                                                      $   (3,810)  $  (71,340)  $ (211,462)
                                                                      ==========   ==========   ==========

Shareholders' Investment
Common Stock, $1 Par Value:
 Balance at beginning of year                                         $  195,877   $  167,433   $  166,971
 Acquisition of minority interests of subsidiaries (Note 17)                   -       22,553            -
 Issuance of stock under employees' and directors' stock plans             3,939        5,891          462
                                                                      ----------   ----------   ----------

 Balance at end of year                                                  199,816      195,877      167,433
                                                                      ----------   ----------   ----------

Capital in Excess of Par Value:
 Balance at beginning of year                                          1,681,452    1,052,837    1,033,799
 Acquisition of minority interests of subsidiaries (Note 17)                   -      541,434            -
 Activity under employees' and directors' stock plans                     56,542       84,840        4,093
 Tax benefit related to employees' and directors' stock plans              9,461       18,000        1,645
 Effect of subsidiaries' equity transactions                              11,112      (15,659)      13,300
                                                                      ----------   ----------   ----------

 Balance at end of year                                                1,758,567    1,681,452    1,052,837
                                                                      ----------   ----------   ----------

Retained Earnings:
 Balance at beginning of year                                          1,005,857    1,041,968    1,216,541
 Distribution of Kadant and Viasys Healthcare subsidiaries
   to shareholders (Note 17)                                            (495,395)           -            -
 Net loss                                                                   (781)     (36,111)    (174,573)
                                                                      ----------   ----------   ----------

 Balance at end of year                                               $  509,681   $1,005,857   $1,041,968
                                                                      ----------   ----------   ----------


<
                                       7
<PAGE>
>


Thermo Electron Corporation                                                      2001 Financial Statements

          Consolidated Statement of Comprehensive Loss and Shareholders' Investment (continued)

(In thousands)                                                              2001         2000         1999
- ----------------------------------------------------------------------------------------------------------

Treasury Stock:
 Balance at beginning of year                                         $ (246,228)  $ (189,646)  $ (151,643)
 Purchases of Company common stock                                      (196,544)     (22,826)     (44,758)
 Activity under employees' and directors' stock plans                    (12,305)     (26,590)       6,755
 Receipt of Company common stock as repayment of notes receivable         (2,398)      (6,155)           -
 Receipt of Company common stock in connection with sale of
   business                                                                    -       (1,011)           -
                                                                      ----------   ----------   ----------

 Balance at end of year                                                 (457,475)    (246,228)    (189,646)
                                                                      ----------   ----------   ----------

Deferred Compensation (Note 5):
 Balance at beginning of year                                             (6,640)      (3,149)           -
 Awards under employees' stock plans                                        (429)      (7,818)      (4,061)
 Amortization of deferred compensation                                     3,700        3,725          912
 Forfeitures under employees' stock plans                                    212          602            -
                                                                      ----------   ----------   ----------

 Balance at end of year                                                   (3,157)      (6,640)      (3,149)
                                                                      ----------   ----------   ----------

Accumulated Other Comprehensive Items (Note 8):
 Balance at beginning of year                                            (96,342)     (55,925)      (9,597)
 Other comprehensive items                                                (2,948)     (40,417)     (46,328)
                                                                      ----------   ----------   ----------

 Balance at end of year                                                  (99,290)     (96,342)     (55,925)
                                                                      ----------   ----------   ----------

                                                                      $1,908,142   $2,533,976   $2,013,518
                                                                      ==========   ==========   ==========


The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<
                                       8
<PAGE>
>


Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements

1.    Nature of Operations and Summary of Significant Accounting Policies
- --------------------------------------------------------------------------------

Nature of Operations
      Thermo Electron Corporation (the Company) is a global leader in the
development, manufacture, and sale of technology-based instrument systems,
components, and solutions used in virtually every industry to monitor, collect,
and analyze data to provide knowledge for the user. For example, the Company's
powerful analysis technologies help biotech researchers sift through data to
make the discoveries that will fight disease or prolong life; allow
telecommunications equipment manufacturers to fabricate components required to
increase the speed and quality of communications; and monitor and control
industrial processes on-line to ensure that critical quality standards are met
efficiently and safely.

Principles of Consolidation
      The accompanying financial statements include the accounts of the Company
and its majority- and wholly owned subsidiaries. All material intercompany
accounts and transactions have been eliminated. The Company accounts for
investments in businesses in which it owns between 20% and 50% using the equity
method.

Presentation
      During 2000 and 2001, the Company completed the principal aspects of a
major corporate reorganization. As part of this reorganization, the Company spun
off two businesses and sold a number of operating units. In addition, the
Company has taken private all of its majority-owned subsidiaries in its
continuing operations including Spectra-Physics, Inc. (formerly Spectra-Physics
Lasers, Inc.), which was effected in February 2002 (Note 19). The results of
operations of certain major lines of business that have been spun off or that
have been or will be sold have been classified as discontinued operations in the
accompanying financial statements (Note 17).

Fiscal Year
      The Company has adopted a fiscal year ending the Saturday nearest December
31. References to 2001, 2000, and 1999 are for the fiscal years ended December
29, 2001, December 30, 2000, and January 1, 2000, respectively.

Revenue Recognition
      Prior to 2000, the Company generally recognized revenues upon shipment of
its products. During the fourth quarter of 2000, effective as of January 2,
2000, the Company adopted Securities and Exchange Commission (SEC) Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." Under SAB No. 101, when the terms of sale include customer
acceptance provisions, and compliance with those provisions can not be
demonstrated until customer use, revenues are recognized upon acceptance.
Revenues for products that require installation for which the installation is
essential to functionality or is not deemed inconsequential or perfunctory are
recognized upon completion of installation. Revenues for products sold where
installation is not essential to functionality and is deemed inconsequential or
perfunctory are recognized upon shipment with estimated installation costs
accrued (Note 16).
      In restating quarterly results for 2000 to comply with SAB No. 101, the
Company included adjustments to record amounts billed to customers for shipping
and handling costs as revenues with the associated costs reported as cost of
revenues. Previously, amounts billed to customers for shipping and handling had
generally been reported as an offset to the related cost. Periods prior to 2000
were not restated for shipping and handling costs due to immateriality.
      The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to pay amounts due. The
Company provides a reserve for its estimate of warranty costs at the time
revenue is recognized. Deferred revenue in the accompanying balance sheet
consists primarily of unearned revenue on service contracts. Substantially all
of the deferred revenue in the accompanying 2001 balance sheet will be
recognized within one year.

<
                                       9
<PAGE>
>
Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


1.    Nature of Operations and Summary of Significant Accounting Policies
      (continued)
- --------------------------------------------------------------------------------

Stock-based Compensation Plans
      The Company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans (Note 5). Accordingly, no
accounting recognition is given to stock options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to shareholders' investment.

Income Taxes
      In accordance with Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," the Company recognizes deferred income taxes
based on the expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and liabilities,
calculated using enacted tax rates in effect for the year in which the
differences are expected to be reflected in the tax return.

Earnings (Loss) per Share
      Basic earnings (loss) per share has been computed by dividing net income
(loss) by the weighted average number of shares outstanding during the year.
Except where the result would be antidilutive to income from continuing
operations, diluted earnings (loss) per share has been computed assuming the
conversion of convertible obligations and the elimination of the related
interest expense, and the exercise of stock options, as well as their related
income tax effects (Note 7).

Cash and Cash Equivalents
      Cash equivalents consists principally of money market funds, commercial
paper, and other marketable securities purchased with an original maturity of
three months or less. These investments are carried at cost, which approximates
market value.

Available-for-sale Investments
      The Company's marketable debt and equity securities are considered
available-for-sale investments in the accompanying balance sheet and are carried
at market value, with the difference between cost and market value, net of
related tax effects, recorded in the "Accumulated other comprehensive items"
component of shareholders' investment (Note 9).

Inventories
      Inventories are stated at the lower of cost (on a first-in, first-out or
weighted average basis) or net realizable value and include materials, labor,
and manufacturing overhead. The components of inventories are as follows:

<TABLE>
<CAPTION>
<S>                                                                                     <C>          <C>

(In thousands)                                                                           2001         2000
- ----------------------------------------------------------------------------------------------------------

Raw Materials and Supplies                                                           $137,622     $169,885
Work in Progress                                                                       60,220       65,625
Finished Goods (includes $14,918 and $33,605 at customer locations)                   139,199      158,642
                                                                                     --------     --------

                                                                                     $337,041     $394,152
                                                                                     ========     ========

      The Company periodically reviews its quantities of inventories on hand and
compares these amounts to expected usage of each particular product or product
line. The Company records as a charge to cost of revenues any amounts required
to reduce the carrying value of inventories to net realizable value (Note 15).

<
                                       10
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


1.    Nature of Operations and Summary of Significant Accounting Policies
     (continued)
- --------------------------------------------------------------------------------

Property, Plant, and Equipment
      The costs of additions and improvements are capitalized, while maintenance
and repairs are charged to expense as incurred. The Company provides for
depreciation and amortization using the straight-line method over the estimated
useful lives of the property as follows: buildings and improvements, 2 to 40
years; machinery and equipment, 1 to 15 years; and leasehold improvements, the
shorter of the term of the lease or the life of the asset. Property, plant, and
equipment consists of the following:

(In thousands)                                                                           2001         2000
- ----------------------------------------------------------------------------------------------------------

Land                                                                                 $ 33,099     $ 40,292
Buildings and Improvements                                                            142,697      143,012
Machinery, Equipment, and Leasehold Improvements                                      306,590      301,251
                                                                                     --------     --------

                                                                                      482,386      484,555
Less:  Accumulated Depreciation and Amortization                                      211,674      198,677
                                                                                     --------     --------

                                                                                     $270,712     $285,878
                                                                                     ========     ========

Other Assets
      Other assets in the accompanying balance sheet includes intangible assets,
notes receivable, deferred debt expense, prepaid pension costs, an equity method
investment in FLIR Systems, Inc., and other assets. Intangible assets include
the costs of acquired trademarks, patents, product technology, and other
specifically identifiable intangible assets and are being amortized using the
straight-line method over their estimated useful lives, which range from 2 to 20
years. Intangible assets were $40.1 million and $46.8 million, net of
accumulated amortization of $43.0 million and $36.1 million, at year-end 2001
and 2000, respectively.

Goodwill
      Goodwill was amortized through December 29, 2001, using the straight-line
method over periods ranging from 5 to 40 years. Accumulated amortization was
$233.0 million and $192.8 million at year-end 2001 and 2000, respectively. The
Company assesses the future useful life of this and other noncurrent assets
whenever events or changes in circumstances indicate that the current useful
life has diminished. Such events or circumstances generally include the
occurrence of operating losses or a significant decline in earnings associated
with the acquired business or asset. The Company considers the future
undiscounted cash flows of the acquired companies in assessing the
recoverability of this asset. The Company assesses cash flows before interest
charges, and when impairment is indicated, writes the asset down to fair value.
If quoted market values are not available, the Company estimates fair value by
calculating the present value of future cash flows. If impairment has occurred,
any excess of carrying value over fair value is recorded as a loss (Note 15).
      In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 142, "Goodwill and Other Intangible Assets." The Company will adopt the
requirements of SFAS No. 142 effective December 30, 2001. SFAS No. 142 requires
companies to test all goodwill for impairment by June 29, 2002, and to cease
amortization of this asset in 2002. The provisions of SFAS No. 142 apply to all
goodwill regardless of when it was acquired. While the Company is in the process
of completing its testing of goodwill for impairment, it does not expect a
material charge for impairment based on its preliminary review. Amortization of
goodwill totaled $40.2 million, $37.9 million, and $34.4 million in 2001, 2000,
and 1999, respectively.



<
                                       11
<PAGE>
>
Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


1.    Nature of Operations and Summary of Significant Accounting Policies
      (continued)
- --------------------------------------------------------------------------------

Currency Translation
      All assets and liabilities of the Company's non-U.S. subsidiaries are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected in the
"Accumulated other comprehensive items" component of shareholders' investment.
Currency transaction gains and losses are included in the accompanying statement
of operations and are not material for the three years presented.

Forward Contracts
      Effective in the first quarter of 2001, the Company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as
amended, requires that all derivatives, including forward currency exchange
contracts, be recognized on the balance sheet at fair value. Derivatives that
are not hedges must be recorded at fair value through earnings. If a derivative
is a hedge, depending on the nature of the hedge, changes in the fair value of
the derivative are either offset against the change in fair value of the hedged
item through earnings or recognized in other comprehensive income until the
hedged item is recognized in earnings. The Company immediately records in
earnings the extent to which a hedge is not effective in achieving offsetting
changes in fair value or cash flows. Adoption of SFAS No. 133 in the first
quarter of 2001 resulted in the deferral of a gain of $1.0 million, net of tax
and minority interest, and a corresponding loss on periods prior to 2001, which
was classified as "Cumulative effect of the change in accounting principle" in
the accompanying 2001 statement of operations. This deferred gain related to
forward currency exchange contracts that were marked to market through earnings
prior to the adoption of SFAS No. 133. The entire deferred gain recorded upon
adoption was reclassified into earnings during 2001 as the underlying hedged
transactions occurred.
      Forward currency exchange contracts are used by the Company primarily to
hedge certain operational (cash-flow hedges) and balance sheet (fair-value
hedges) exposures resulting from changes in currency exchange rates. Such
exposures result from sales that are denominated in currencies other than the
functional currencies of the respective operations. These contracts principally
hedge transactions denominated in U.S. dollars, Euros, British pounds sterling,
Japanese yen, French francs, Swiss francs, German marks, Swedish krona, and
Netherland guilders. The Company enters into these currency exchange contracts
to hedge anticipated product sales and recorded accounts receivable made in the
normal course of business and, accordingly, the hedges are not speculative in
nature. As part of the Company's overall strategy to manage the level of
exposure to the risk of currency exchange fluctuations, certain operating units
enter into cash-flow hedges for a portion of their currency exposures
anticipated over the ensuing 12-month period, using exchange contracts that have
maturities of 12 months or less. The Company does not hold or engage in
transactions involving derivative instruments for purposes other than risk
management.
      The Company records its forward currency exchange contracts at fair value
in its balance sheet as other current assets or other accrued expenses and, for
cash-flow hedges, the related gains or losses on these contracts are deferred as
a component of other comprehensive items in the accompanying balance sheet.
These deferred gains and losses are recognized in income in the period in which
the underlying hedged transaction occurs. At December 29, 2001, the Company had
deferred gains, net of income taxes, relating to currency exchange contracts of
approximately $1.3 million, substantially all of which is expected to be
recognized as income over the next 12 months when the hedged transactions,
principally anticipated sales, transpire. Unrealized gains and losses resulting
from the impact of currency exchange rate movements on fair value hedges are
recognized in earnings in the period in which the exchange rates change and
offset the currency gains and losses on the underlying exposure being hedged.
The ineffective portion of the gain or loss on derivative instruments is
recorded in other income (expense), net, in the accompanying 2001 statement of
operations and is not material.
      See Note 15 for the effect in 1999 and 2000 of a majority-owned
subsidiary's early adoption of SFAS No. 133.
      Prior to adoption of SFAS No. 133, gains and losses arising from forward
currency exchange contracts were recognized as offsets to gains and losses
resulting from the transactions being hedged.


<
                                       12
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


1.    Nature of Operations and Summary of Significant Accounting Policies
      (continued)
- --------------------------------------------------------------------------------

Recent Accounting Pronouncements
      In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets."  Adoption of the standard is
required in the first quarter of 2002.  The Company does not expect adoption of
SFAS No. 144 to materially affect its financial statements.

Use of Estimates
      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. In addition, significant estimates were made in determining
the loss on disposition of the Company's discontinued operations (Note 17), in
estimating future cash flows to quantify impairment of assets, and in
determining the ultimate loss from abandoning leases at facilities being exited
(Note 15). Actual results could differ from those estimates.

2.    Acquisitions and Dispositions
- --------------------------------------------------------------------------------

Acquisitions
      In 2001 and 2000, the Company made several acquisitions for $14.1 million
and $15.8 million in cash, net of cash acquired, respectively.
      In February 1999, the Company acquired 17,494,684 shares (or approximately
99%) of Spectra-Physics AB, a Stockholm Stock Exchange-listed company, for
approximately 160 Swedish krona per share (approximately $20 per share) in
completion of the Company's cash tender offer to acquire all of the outstanding
shares of Spectra-Physics AB. In March 2000, the Company completed the
acquisition of the remaining Spectra-Physics AB shares outstanding pursuant to
the compulsory acquisition rules applicable to Swedish companies. As part of the
acquisition of Spectra-Physics AB, the Company acquired Spectra-Physics AB's
majority-owned public subsidiary, Spectra-Physics, Inc. The aggregate purchase
price was approximately $351.5 million, including related expenses. On the date
of acquisition, Spectra-Physics AB had $39.1 million of cash, which included
$30.5 million held by Spectra-Physics. Spectra-Physics AB manufactures a wide
range of laser-based instrumentation systems, primarily for the process-control,
industrial measurement, research, commercial, and government markets.
      In connection with the acquisition of Spectra-Physics AB, the Company
acquired 4,162,000 shares of FLIR common stock. FLIR designs, manufactures, and
markets thermal imaging and broadcast camera systems that detect infrared
radiation or heat emitted directly by all objects and materials. The Company
accounts for its investment in FLIR using the equity method with a one quarter
lag to ensure the availability of FLIR's operating results in time to enable the
Company to include its pro rata share of FLIR's results with its own. During
1999, FLIR consummated a pooling-of-interests transaction that decreased the
Company's pro rata share of FLIR's equity from 34.6% to 29.4%. During 2000, the
Company recorded a charge to reflect an impairment of its investment in FLIR
that was deemed to be other than temporary (Note 15). During 2001, the Company
sold 1,150,000 shares of FLIR bringing its ownership of FLIR to 18.2% as of
December 29, 2001 (Note 15). The investment in FLIR is included in other assets
in the accompanying balance sheet.

<
                                       13
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


2.    Acquisitions and Dispositions (continued)
- --------------------------------------------------------------------------------

      Summary unaudited financial information for FLIR as of and for the 12
months ended September 30, 2001 and 2000, is as follows:

(In thousands)                                                                        2001            2000
- ----------------------------------------------------------------------------------------------------------

Current Assets                                                                    $118,093        $114,494
Noncurrent Assets                                                                   43,903          51,439
                                                                                  --------        --------

Total Assets                                                                      $161,996        $165,933
                                                                                  ========        ========

Current Liabilities                                                               $103,804        $132,917
Noncurrent Liabilities                                                               8,948           4,251
Shareholders' Equity                                                                49,244          28,765
                                                                                  --------        --------

Total Liabilities and Shareholders' Equity                                        $161,996        $165,933
                                                                                  ========        ========


                                                                                  Twelve Months Ended
                                                                             -----------------------------
                                                                             September 30,   September 30,
(In thousands)                                                                        2001            2000
- ----------------------------------------------------------------------------------------------------------

Revenues                                                                          $206,573        $181,562
Cost of Revenues                                                                    95,587         114,211
                                                                                  --------        --------

Gross Profit                                                                      $110,986        $ 67,351
                                                                                  ========        ========

Net Earnings (Loss)                                                               $ 18,247        $(59,992)
                                                                                  ========        ========

      In 1999, in addition to the acquisition of Spectra-Physics AB, the Company
and its formerly majority-owned subsidiaries made several other acquisitions for
$32.2 million in cash, net of cash acquired.
      These acquisitions have been accounted for using the purchase method of
accounting, and the acquired companies' results have been included in the
accompanying financial statements from their respective dates of acquisition.
The aggregate cost of the acquisitions in 2001, 2000, and 1999 exceeded the
estimated fair value of the acquired net assets by $200.1 million, which was
amortized principally over 40 years through 2001. Allocation of the purchase
price for these acquisitions was based on estimates of the fair value of the net
assets acquired and, for acquisitions completed in 2001, is subject to
adjustment upon finalization of the purchase price allocation. The Company has
gathered no information that indicates the final purchase price allocations will
differ materially from the preliminary estimates. Pro forma data is not
presented since the acquisitions were not material to the Company's results of
operations individually or in the aggregate.
      In connection with its acquisitions, the Company has undertaken
restructuring activities at the acquired businesses. The Company's restructuring
activities, which were accounted for in accordance with Emerging Issues Task
Force Pronouncement (EITF) 95-3, have primarily included reductions in staffing
levels and the abandonment of excess facilities. In connection with these
restructuring activities, as part of the cost of the acquisitions, the Company
established reserves as detailed below, primarily for severance and excess
facilities. In accordance with EITF 95-3, the Company finalizes its
restructuring plans no later than one year from the respective dates of the
acquisitions. Accrued acquisition expenses are included in other accrued
expenses in the accompanying balance sheet.

</TABLE>
<
                                       14
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>
<TABLE>
<CAPTION>
<S>                                       <C>           <C>            <C>            <C>            <C>
Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


2.    Acquisitions and Dispositions (continued)
- --------------------------------------------------------------------------------

      A summary of the changes in accrued acquisition expenses for acquisitions
completed before and during 1999 is as follows:

                                                 1999 Acquisitions
                                      ---------------------------------------
                                                   Abandonment
                                                     of Excess                     Pre-1999
(In thousands)                        Severance     Facilities          Other  Acquisitions          Total
- ----------------------------------------------------------------------------------------------------------

Balance at January 2, 1999              $     -        $     -        $    -        $16,284        $16,284
 Reserves established                     9,464          1,355         3,364          3,069         17,252
 Payments                                (3,899)           (71)         (957)        (6,612)       (11,539)
 Decrease recorded as a
   reduction in goodwill                      -              -             -         (1,521)        (1,521)
 Currency translation                      (303)          (111)          (74)          (543)        (1,031)
                                        -------        -------        -------       -------        -------

Balance at January 1, 2000                5,262          1,173         2,333         10,677         19,445
 Reserves established                        90            111             -              -            201
 Payments                                (2,767)          (420)         (761)        (2,383)        (6,331)
 Decrease recorded as a
   reduction in goodwill                   (213)             -             -           (298)          (511)
 Reserves of businesses sold               (715)          (154)         (999)             -         (1,868)
 Currency translation                       189           (200)          (60)          (829)          (900)
                                        -------        -------        -------       -------        -------

Balance at December 30, 2000              1,846            510           513          7,167         10,036
 Payments                                  (467)          (291)         (358)          (747)        (1,863)
 Decrease recorded as a reduction
   in other intangible assets              (720)          (194)            -              -           (914)
 Currency translation                       (33)           (15)          (24)          (204)          (276)
                                        -------        -------        ------        -------        -------

Balance at December 29, 2001            $   626        $    10        $  131        $ 6,216        $ 6,983
                                        =======        =======        ======        =======        =======

      The principal acquisition expenses for pre-1999 acquisitions were for
severance for 601 employees across all functions and for abandoned facilities,
primarily related to the Company's acquisitions of the product-monitoring
businesses of Graseby Limited and Life Sciences International PLC. The abandoned
facilities include two operating facilities in North America with leases that
expired in 2001 and four operating facilities in England with leases expiring
through 2014.
      The principal acquisition expenses for 1999 acquisitions were for
severance for approximately 175 employees across all functions and for abandoned
facilities, primarily at Spectra-Physics AB. The abandoned facilities at
Spectra-Physics include operating facilities in Sweden, Germany, and France with
obligations that principally expired in 2001. The amounts captioned as "other"
primarily represent employee relocation, contract termination, and other exit
costs. The Company expects to pay amounts accrued for severance, abandoned
facilities, and other primarily through 2002. The Company finalized its
restructuring plans for Spectra-Physics AB and other 1999 acquisitions in 1999
and 2000. Upon finalization of restructuring plans or settlement of obligations
for less than the expected amount, any excess reserves have been reversed with a
corresponding decrease in goodwill or other intangible assets.
      The Company has not established material reserves for restructuring
businesses acquired in 2000 or 2001.

<
                                       15
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


2.    Acquisitions and Dispositions (continued)
- --------------------------------------------------------------------------------

Dispositions
      In 2001, the Company's continuing operations sold several noncore
businesses for net cash proceeds of $46.8 million and recorded $10.9 million of
pretax losses on sale, which is included in restructuring and other unusual
costs (income), net, in the accompanying statement of operations.
      On July 14, 2000, the Company completed the sale of its wholly owned
Spectra Precision businesses to Trimble Navigation Limited for $208.1 million in
net cash proceeds and $80.0 million in seller debt financing at an initial
interest rate of 10%. The note from the buyer called for repayment in two equal,
annual installments beginning in July 2001, but permitted extension of maturity
under certain conditions. The buyer elected to defer payment of the portion of
the note that was due in July 2001. Trimble has advised the Company that the
terms of its senior bank debt will preclude repayment of the note at its
maturity in July 2002. The Company is in negotiation with Trimble to amend the
terms of the note. As a result, the Company has classified the note as
noncurrent in the accompanying 2001 balance sheet. Spectra Precision, formerly
part of the Measurement and Control segment, was acquired as part of
Spectra-Physics AB and provides the construction, surveying, and heavy machine
industries with precision-positioning equipment.
      In 2000, the Company's continuing operations sold several other noncore
businesses for net cash proceeds of $45.5 million. The Company realized
aggregate pretax gains of $126.3 million in 2000 from the sale of businesses,
which are included in restructuring and other unusual costs (income), net, in
the accompanying statement of operations. The businesses that were sold in 2001
and 2000 were part of an effort to focus on potentially higher-growth
opportunities in the Life Sciences and Optical Technologies segments.

3.    Business Segment and Geographical Information
- --------------------------------------------------------------------------------

      The Company's businesses are managed in three segments:

      -  Life Sciences: serves the pharmaceutical and biotechnology industries
         with tools that enable drug discovery and life science research. The
         Company also serves the healthcare market with rapid point-of-care
         diagnostic tests and clinical laboratory automation products.
      -  Optical Technologies: provides photonic components and devices used in
         applications ranging from medical diagnostics and analytical
         instrumentation to scientific research, industrial manufacturing, and
         telecommunications equipment. In addition, the Company supplies
         semiconductor manufacturing and testing instruments and precision
         temperature-control systems.
      -  Measurement and Control: helps manufacturing customers increase quality
         and improve productivity with analytical tools and on-line process
         instruments. The Company's instruments also help protect workers and
         the environment.

</TABLE>
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                                       16
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>
<TABLE>
<CAPTION>
<S>                                                                        <C>          <C>         <C>
Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


3.    Business Segment and Geographical Information (continued)
- --------------------------------------------------------------------------------

      During 2001, the Company moved its Thermo KeyTek unit from the Measurement
and Control segment to the Optical Technologies segment and moved its Thermo
Projects unit (the principal operating business of which was acquired in early
2001) from the Life Sciences segment to a separate segment (included as "Other"
below) due to organizational changes. Prior periods have been restated to
conform to this presentation where applicable.

(In thousands)                                                               2001        2000         1999
- ----------------------------------------------------------------------------------------------------------

Business Segment Information
Revenues:
   Life Sciences                                                       $  834,164  $  779,978   $  764,408
   Optical Technologies                                                   526,353     496,307      406,818
   Measurement and Control                                                831,345   1,021,040    1,148,083
   Other                                                                   12,130          41          228
   Intersegment (a)                                                       (15,782)    (16,844)     (24,917)
                                                                       ----------  ----------   ----------

                                                                      $ 2,188,210  $2,280,522  $ 2,294,620
                                                                      ===========  ==========  ===========

Income from Continuing Operations Before Provision for Income
 Taxes, Minority Interest, Extraordinary Item, and Cumulative
 Effect of Change in Accounting Principle:
   Life Sciences (b)                                                   $   82,245  $   93,207   $  118,712
   Optical Technologies (c)                                               (30,091)     36,307       25,110
   Measurement and Control (d)                                             32,892     191,611       76,922
   Other                                                                      122      (1,345)      (1,512)
                                                                       ----------  ----------   ----------

     Total Segment Income (e)                                              85,168     319,780      219,232
   Corporate/Other (f)                                                    (14,487)   (134,949)     (94,473)
                                                                       ----------  ----------   ----------

                                                                       $   70,681  $  184,831   $  124,759
                                                                       ==========  ==========   ==========

Total Assets:
   Life Sciences                                                       $1,155,286  $1,217,767   $1,150,532
   Optical Technologies                                                   649,511     624,128      514,584
   Measurement and Control                                              1,297,908   1,342,284    1,503,129
   Corporate/Other (g)                                                    722,365     775,505      444,500
   Net Assets of Discontinued Operations                                        -     903,293    1,459,012
                                                                       ----------  ----------   ----------

                                                                       $3,825,070  $4,862,977   $5,071,757
                                                                       ==========  ==========   ==========

Depreciation:
   Life Sciences                                                       $   16,504  $   16,091   $   15,669
   Optical Technologies                                                    17,712      15,055       12,558
   Measurement and Control                                                 15,039      20,579       21,892
   Corporate/Other                                                          2,173       1,189        1,231
                                                                       ----------  ----------   ----------

                                                                       $   51,428  $   52,914   $   51,350
                                                                       ==========  ==========   ==========


<
                                       17
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


3.    Business Segment and Geographical Information (continued)
- --------------------------------------------------------------------------------

(In thousands)                                                               2001        2000         1999
- ----------------------------------------------------------------------------------------------------------

Amortization:
   Life Sciences                                                       $   22,879  $   19,418   $   14,965
   Optical Technologies                                                     7,571       6,337        4,287
   Measurement and Control                                                 16,435      18,317       19,957
   Corporate/Other                                                            208         500          870
                                                                       ----------  ----------   ----------

                                                                       $   47,093  $   44,572   $   40,079
                                                                       ==========  ==========   ==========

Capital Expenditures:
   Life Sciences                                                       $   22,849  $   18,849   $   14,493
   Optical Technologies                                                    41,378      32,209       18,737
   Measurement and Control                                                 14,474      21,378       22,183
   Corporate/Other                                                          6,098       1,603        5,825
                                                                       ----------  ----------   ----------

                                                                       $   84,799  $   74,039   $   61,238
                                                                       ==========  ==========   ==========

Geographical Information
Revenues (h):
   United States                                                       $1,480,033  $1,574,737   $1,522,610
   England                                                                315,033     311,660      339,151
   Other                                                                  677,461     712,154      779,396
   Transfers among geographical areas (a)                                (284,317)   (318,029)    (346,537)
                                                                       ----------  ----------   ----------

                                                                       $2,188,210  $2,280,522   $2,294,620
                                                                       ==========  ==========   ==========

Long-lived Assets (i):
   United States                                                       $  199,111  $  222,169   $  206,409
   Sweden                                                                     354         262       66,339
   Other                                                                   92,457      88,846      122,723
                                                                       ----------  ----------   ----------

                                                                       $  291,922  $  311,277   $  395,471
                                                                       ==========  ==========   ==========

Export Sales Included in United States Revenues Above (j)              $  386,799  $  436,378   $  435,558
                                                                       ==========  ==========   ==========

(a) Intersegment sales and transfers among geographical areas are accounted for at prices that are
    representative of transactions with unaffiliated parties.
(b) Includes restructuring and other unusual costs, net, of $30.3 million and $16.3 million in 2001 and
    2000, respectively, and restructuring and other unusual income of $0.3 million in 1999.
(c) Includes restructuring and other unusual costs of $61.5 million, $6.5 million, and $11.2 million in
    2001, 2000, and 1999, respectively.
(d) Includes restructuring and other unusual costs, net, of $55.4 million and $30.1 million in 2001 and
    1999, respectively, and restructuring and other unusual income, net, of $91.9 million in 2000.
(e) Segment income is income before corporate general and administrative expenses, other income and
    expense, minority interest expense, income taxes, extraordinary item, and cumulative effect of change
    in accounting principle.

</TABLE>
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                                       18
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<TABLE>
<CAPTION>
<S>                                                                           <C>        <C>         <C>
Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


3.    Business Segment and Geographical Information (continued)
- --------------------------------------------------------------------------------

(f) Includes corporate general and administrative expenses and other income and expense. Includes
    restructuring and other unusual costs of $11.5 million, $20.5 million, and $5.7 million at the
    Company's corporate office in 2001, 2000, and 1999, respectively. Other income and expense includes
    $35.1 million of income in 2001 and $45.1 million and $13.4 million of charges in 2000 and 1999,
    respectively, primarily related to the Company's investment in FLIR; and other expense of $2.8 million
    and $3.6 million for impairment of investments in 2001 and 1999, respectively.
(g) Primarily cash and cash equivalents, short- and long-term investments, and property and equipment at
    the Company's corporate office.
(h) Revenues are attributed to countries based on selling location.
(i) Includes property, plant, and equipment, net, and other long-term tangible assets.
(j) In general, export revenues are denominated in U.S. dollars.

4.    Other Income (Expense), Net
- --------------------------------------------------------------------------------

      The components of other income (expense), net, in the accompanying
statement of operations are as follows:

(In thousands)                                                                 2001       2000        1999
- ----------------------------------------------------------------------------------------------------------

Interest Income                                                            $ 68,490   $ 40,151    $ 40,837
Interest Expense                                                            (71,769)   (83,142)    (91,861)
Equity in Earnings (Loss) of Unconsolidated Subsidiaries (Note 15)            4,699    (47,315)     (7,274)
Gain on Investments, Net (Notes 9 and 15)                                    35,579      6,849       3,662
Other Items, Net                                                               (520)     2,273      (2,709)
                                                                           --------   --------    --------

                                                                           $ 36,479   $(81,184)   $(57,345)
                                                                           ========   ========    ========

5.    Employee Benefit Plans
- --------------------------------------------------------------------------------

Stock-based Compensation Plans

Stock Option Plans
- ------------------
      The Company has stock-based compensation plans for its key employees,
directors, and others. These plans permit the grant of a variety of stock and
stock-based awards as determined by the human resources committee of the
Company's Board of Directors (the Board Committee) or by the Company's chief
executive officer in limited circumstances, including restricted stock, stock
options, stock bonus shares, or performance-based shares. Generally, options
granted prior to July 2000 under these plans are exercisable immediately, but
are subject to certain transfer restrictions and the right of the Company to
repurchase shares issued upon exercise of the options at the exercise price,
upon certain events, primarily cessation of employment. The restrictions and
repurchase rights may lapse over periods ranging from 0-10 years, depending on
the term of the option, which may range from 3-12 years. Options granted in or
after July 2000 under these plans generally vest ratably over three years,
assuming continued employment with certain exceptions. Upon a change in control
of the Company, all options, regardless of grant date, become immediately
exercisable and cease to be subject to transfer restrictions and the Company's
repurchase rights. Nonqualified options are generally granted at fair market
value, although options may be granted at a price at or above 85% of the fair
market value on the date of grant. Incentive stock options must be granted at
not less than the fair market value of the Company's stock on the date of grant.
Generally, stock options have been granted at fair market value. The Company
also has a directors' stock option plan that provides for the annual grant of
stock options of the Company to outside directors pursuant to a formula approved
by the Company's shareholders. Options awarded under this plan are immediately
exercisable and expire three to seven years after the date of grant.

</TABLE>
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<CAPTION>
<S>                                                 <C>      <C>      <C>         <C>      <C>       <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


5.    Employee Benefit Plans (continued)
- --------------------------------------------------------------------------------

      In August and November 2001, the Company distributed all of its shares of
two subsidiaries to the Company's shareholders (Note 17). The intrinsic value of
the options issued under the Company's employee stock plans prior to the
spinoffs was maintained following the spinoffs in accordance with the
methodology set forth in FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation." The data in the accompanying tables
has been adjusted to reflect the spinoffs. Options to purchase 908,000 shares of
Company common stock held by employees of the spun off businesses were cancelled
at the spin off dates. These employees received equivalent options in stock of
the respective spunoff business.
      In 2001, 2000, and 1999, the Company awarded 17,120, 372,800, and 193,000
shares, respectively, of restricted Company common stock with an aggregate value
of $0.4 million, $7.8 million, and $3.5 million, respectively, to certain key
employees. The shares generally vest over three years, assuming continued
employment, with some exceptions. Also in 1999, some of the Company's formerly
majority-owned subsidiaries awarded shares of restricted common stock of their
respective companies. The shares of subsidiary common stock had the same terms
as the Company's restricted common stock and had an aggregate value of $0.6
million. During 2000, the restricted common stock of the Company's formerly
majority-owned subsidiaries was converted into 100,715 shares of restricted
Company common stock with the same terms. The Company has recorded the fair
value of the restricted stock as deferred compensation in the accompanying
balance sheet and is amortizing the amount over the vesting periods.
      A summary of the Company's stock option activity is as follows:

                                                       2001                2000                 1999
                                                 ----------------    ----------------    -----------------
                                                         Weighted            Weighted             Weighted
                                                 Number   Average    Number   Average    Number    Average
                                                     of  Exercise        of  Exercise        of   Exercise
(Shares in thousands)                            Shares     Price    Shares     Price    Shares      Price
- ----------------------------------------------------------------------------------------------------------

Options Outstanding, Beginning of Year           24,579    $16.62    15,849    $16.86    11,528     $19.24
 Granted                                          3,086     22.00     2,595     18.49     3,961      14.47
 Assumed in mergers with subsidiaries (Note 17)       -         -    16,221     14.62     1,875       9.98
 Exercised                                       (4,258)    13.16    (5,915)    13.53      (444)     10.81
 Forfeited                                       (2,836)    19.27    (4,171)    15.25    (1,071)     24.07
 Canceled due to spinoffs                          (908)    17.53         -         -         -          -
                                                 ------              ------              ------

Options Outstanding, End of Year                 19,663    $17.78    24,579    $16.62    15,849     $16.86
                                                 ======    ======    ======    ======    ======     ======

Options Exercisable                              15,612    $16.83    23,120    $16.41    15,849     $16.86
                                                 ======    ======    ======    ======    ======     ======

Options Available for Grant                       8,234               3,826               5,531
                                                 ======              ======              ======


</TABLE>
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                                       20
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<TABLE>
<CAPTION>
<S>                                                         <C>                 <C>                 <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


5.    Employee Benefit Plans (continued)
- --------------------------------------------------------------------------------

      A summary of the status of the Company's stock options at December 29,
2001, is as follows:

                                                                      Options Outstanding
                                                   ------------------------------------------------------
Range of Exercise Prices                                   Number            Weighted            Weighted
                                                               of             Average             Average
                                                           Shares           Remaining            Exercise
                                                   (In thousands)    Contractual Life               Price
- ---------------------------------------------------------------------------------------------------------

$ 3.36 - $ 15.84                                            8,998           6.0 years              $11.79
 15.85 -   28.33                                            8,918           5.4 years               20.39
 28.34 -   40.82                                            1,649           7.1 years               32.54
 40.83 -  195.11                                               98           7.4 years               83.34
                                                           ------

$ 3.36 - $195.11                                           19,663           5.8 years              $17.78
                                                           ======

Employee Stock Purchase Plan
- ----------------------------
      Qualifying employees are eligible to participate in an employee stock
purchase plan sponsored by the Company. Under this program, shares of the
Company's common stock may be purchased at 85% of the lower of the fair market
value at the beginning or end of the purchase period, and the shares purchased
are subject to a one-year resale restriction. Shares are purchased through
payroll deductions of up to 10% of each participating employee's gross wages.
Prior to the 2000 plan year, participants of employee stock purchase programs
sponsored by the Company's formerly majority-owned public subsidiaries could
also elect to purchase shares of the common stock of the subsidiary at which
they are employed under the same general terms described above. During 2001,
2000, and 1999, the Company issued 184,000 shares, 693,000 shares, and 415,000
shares, respectively, of its common stock under this plan.


</TABLE>
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                                       21
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<CAPTION>
<S>                                                                          <C>          <C>        <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


5.    Employee Benefit Plans (continued)
- ----------------------------------------------------------------------------------------------------------

Pro Forma Stock-based Compensation Expense
      In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-based
Compensation," which sets forth a fair-value based method of recognizing
stock-based compensation expense. As permitted by SFAS No. 123, the Company has
elected to continue to apply APB No. 25 to account for its stock-based
compensation plans. Had compensation cost for awards granted after 1994 under
the Company's stock-based compensation plans been determined based on the fair
value at the grant dates consistent with the method set forth under SFAS No.
123, the effect on certain financial information of the Company would have been
as follows:

(In thousands except per share amounts)                                       2001        2000        1999
- ----------------------------------------------------------------------------------------------------------

Income from Continuing Operations Before Extraordinary Item and
 Cumulative Effect of Change in Accounting Principle:
   As reported                                                           $  49,592   $  62,047   $  37,283
   Pro forma                                                                30,159      45,965      25,281
Basic Earnings per Share from Continuing Operations Before
 Extraordinary Item and Cumulative Effect of Change in Accounting
 Principle:
   As reported                                                                 .27         .37         .24
   Pro forma                                                                   .17         .27         .16
Diluted Earnings per Share from Continuing Operations Before
 Extraordinary Item and Cumulative Effect of Change in Accounting
 Principle:
   As reported                                                                 .27         .36         .22
   Pro forma                                                                   .16         .26         .14

Net Loss:
   As reported                                                           $    (781)  $ (36,111)  $(174,573)
   Pro forma                                                               (20,214)    (52,131)   (201,186)
Basic Loss per Share:
   As reported                                                                   -        (.22)      (1.10)
   Pro forma                                                                  (.11)       (.31)      (1.27)
Diluted Loss per Share:
   As reported                                                                   -        (.22)      (1.12)
   Pro forma                                                                  (.11)       (.31)      (1.29)

      Pro forma compensation expense for options granted is reflected over the
vesting period; therefore, future pro forma compensation expense may be greater
as additional options are granted.
      The weighted average fair value per share of options granted was $9.85,
$6.58, and $4.82 in 2001, 2000, and 1999, respectively. The fair value of each
option grant was estimated on the grant date using the Black-Scholes
option-pricing model with the following weighted-average assumptions:

                                                                                2001       2000       1999
- ----------------------------------------------------------------------------------------------------------

Volatility                                                                       45%        35%        32%
Risk-free Interest Rate                                                         4.1%       4.9%       5.6%
Expected Life of Options                                                   5.0 years  3.9 years  3.9 years



<
                                       22
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


5.    Employee Benefit Plans (continued)
- --------------------------------------------------------------------------------

      The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option-pricing models require the input of
highly subjective assumptions, including expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

401(k) Savings Plan and Other Defined Contribution Plans
      The Company's 401(k) savings plan covers the majority of the Company's
eligible full-time U.S. employees. Contributions to the plan are made by both
the employee and the Company. Company contributions are based on the level of
employee contributions.
      Certain of the Company's subsidiaries offer retirement plans in lieu of
participation in the Company's principal 401(k) savings plan. Company
contributions to these plans are based on formulas determined by the Company.
      For these plans, the Company contributed and charged to expense $19.0
million, $18.0 million, and $15.2 million in 2001, 2000, and 1999, respectively.

Defined Benefit Pension Plans
      Two of the Company's German subsidiaries and one of its U.K. subsidiaries
have defined benefit pension plans covering substantially all full-time
employees at the respective subsidiaries. One of the German subsidiaries' plans
is unfunded, as permitted under the plan and applicable laws. Net periodic
benefit costs for the plans in aggregate included the following components:

(In thousands)                                                                  2001       2000       1999
- ----------------------------------------------------------------------------------------------------------

Service Cost                                                                 $ 2,615    $ 2,238    $ 2,639
Interest Cost on Benefit Obligation                                            3,941      3,834      3,899
Expected Return on Plan Assets                                                (4,951)    (5,793)    (5,264)
Recognized Net Actuarial Gain                                                    (19)      (180)       (34)
Amortization of Unrecognized Gain                                                  -         (2)       (23)
Amortization of Unrecognized Initial Obligation                                   35         36         41
                                                                             -------    -------    -------

                                                                             $ 1,621    $   133    $ 1,258
                                                                             =======    =======    =======
</TABLE>
<TABLE>
<CAPTION>
<S>                                                                                       <C>         <C>

      The activity under the Company's defined benefit plans is as follows:

(In thousands)                                                                            2001        2000
- ----------------------------------------------------------------------------------------------------------

Change in Benefit Obligation:
 Benefit obligation, beginning of year                                                 $73,772     $71,762
 Service cost                                                                            2,615       2,238
 Interest cost                                                                           3,941       3,834
 Benefits paid                                                                          (2,212)     (1,878)
 Actuarial (gain) loss                                                                  (8,358)      3,525
 Currency translation                                                                   (2,589)     (5,709)
                                                                                       -------     -------

 Benefit obligation, end of year                                                       $67,169     $73,772
                                                                                       -------     -------


<
                                       23
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


5.    Employee Benefit Plans (continued)
- --------------------------------------------------------------------------------

(In thousands)                                                                            2001        2000
- ----------------------------------------------------------------------------------------------------------

Change in Plan Assets:
 Fair value of plan assets, beginning of year                                          $76,579     $89,393
 Company contributions                                                                     580         518
 Benefits paid                                                                          (2,212)     (1,878)
 Actual loss on plan assets                                                            (10,064)     (4,505)
 Currency translation                                                                   (2,328)     (6,949)
                                                                                       -------     -------

 Fair value of plan assets, end of year                                                 62,555      76,579
                                                                                       -------     -------

Funded Status                                                                           (4,614)      2,807
Unrecognized Net Actuarial Loss                                                          7,126         252
Unrecognized Initial Obligation                                                             67         107
                                                                                       -------     -------

Prepaid Pension Costs                                                                  $ 2,579     $ 3,166
                                                                                       =======     =======

</TABLE>
<TABLE>
<CAPTION>
<S>                                                                           <C>         <C>        <C>

      The aggregate projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets were $18.5 million, $13.9 million,
and $5.6 million, respectively, at year-end 2001 and $18.0 million, $14.2
million, and $5.7 million, respectively, at year-end 2000.
      The weighted average rates used to determine the net periodic benefit
costs were as follows:

                                                                              2001        2000        1999
- ----------------------------------------------------------------------------------------------------------

Discount Rate                                                                 6.1%        5.6%        5.1%
Rate of Increase in Salary Levels                                             4.4%        4.4%        4.4%
Expected Long-term Rate of Return on Assets                                   7.0%        6.9%        6.9%

6.    Income Taxes
- --------------------------------------------------------------------------------

      The components of income from continuing operations before provision for
income taxes, minority interest, extraordinary item, and cumulative effect of
change in accounting principle are as follows:

(In thousands)                                                                  2001       2000       1999
- ----------------------------------------------------------------------------------------------------------

U.S.                                                                        $  5,745   $ 91,342   $ 39,761
Non-U.S.                                                                      64,936     93,489     84,998
                                                                            --------   --------   --------

                                                                            $ 70,681   $184,831   $124,759
                                                                            ========   ========   ========



<
                                       24
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


6.    Income Taxes (continued)
- --------------------------------------------------------------------------------

      The components of the provision for income taxes of continuing operations
are as follows:

(In thousands)                                                               2001        2000         1999
- ----------------------------------------------------------------------------------------------------------

Currently Payable:
 Federal                                                                $  11,117   $  55,819    $  25,102
 Non-U.S.                                                                  23,572      53,586       40,417
 State                                                                      3,318       8,311        6,364
                                                                        ---------   ---------    ---------

                                                                           38,007     117,716       71,883
                                                                        ---------   ---------    ---------

Net Deferred (Prepaid):
 Federal                                                                  (12,787)       (635)      (6,197)
 Non-U.S.                                                                   2,667      (4,535)         520
 State                                                                       (958)       (329)      (1,778)
                                                                        ---------   ---------    ---------

                                                                          (11,078)     (5,499)      (7,455)
                                                                        ---------   ---------    ---------

                                                                        $  26,929   $ 112,217    $  64,428
                                                                        =========   =========    =========

      The total provision for income taxes included in the accompanying
statement of operations is as follows:

(In thousands)                                                               2001        2000         1999
- ----------------------------------------------------------------------------------------------------------

Continuing Operations                                                   $  26,929   $ 112,217    $  64,428
Discontinued Operations                                                         -      10,427      (54,807)
Provision for Loss on Disposal of Discontinued Operations                 (22,741)   (104,000)     174,000
Extraordinary Item                                                            637         333          900
Cumulative Effect of Change in Accounting Principle                          (663)     (8,543)           -
                                                                        ---------   ---------    ---------

                                                                        $   4,162   $  10,434    $ 184,521
                                                                        =========   =========    =========

      The Company and its formerly majority-owned subsidiaries receive a tax
deduction upon the exercise of nonqualified stock options by employees for the
difference between the exercise price and the market price of the underlying
common stock on the date of exercise. The provision for income taxes that is
currently payable does not reflect $9.5 million, $18.0 million, and $2.7 million
of such benefits of the Company and its formerly majority-owned subsidiaries
that have been allocated to capital in excess of par value, directly or through
the effect of majority-owned subsidiaries' equity transactions, in 2001, 2000,
and 1999, respectively. In addition, the provision for income taxes that is
currently payable does not reflect $19.0 million and $3.5 million of tax
benefits used to reduce goodwill in 2000 and 1999, respectively.

<
                                       25
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


6.    Income Taxes (continued)
- --------------------------------------------------------------------------------

      The provision for income taxes in the accompanying statement of operations
differs from the provision calculated by applying the statutory federal income
tax rate of 35% to income from continuing operations before provision for income
taxes, minority interest, extraordinary item, and cumulative effect of change in
accounting principle due to the following:

(In thousands)                                                               2001         2000        1999
- ----------------------------------------------------------------------------------------------------------

Provision for Income Taxes at Statutory Rate                             $ 24,738     $ 64,691    $ 43,666
Increases (Decreases) Resulting From:
 Goodwill of businesses sold                                                    -       30,190           -
 Amortization and write off of goodwill                                    13,095       11,330      16,648
 Writedown and equity in loss of unconsolidated subsidiary                      -       12,062           -
 Foreign sales corporation                                                 (2,401)      (7,325)     (3,558)
 Federal tax credits                                                       (2,955)      (4,113)     (3,697)
 State income taxes, net of federal tax                                     1,535        5,188       2,979
 Non-U.S. tax rate and tax law differential                                (1,017)         301       6,771
 Nondeductible expenses                                                       926        1,347       2,246
 Losses not benefited in the year they occurred                            (4,687)       1,005       1,235
 Other, net                                                                (2,305)      (2,459)     (1,862)
                                                                         --------     --------    --------

                                                                         $ 26,929     $112,217    $ 64,428
                                                                         ========     ========    ========
</TABLE>
<TABLE>
<CAPTION>
<S>                                                                                    <C>           <C>

      Net deferred tax asset in the accompanying balance sheet consists of the
following:

(In thousands)                                                                           2001         2000
- ----------------------------------------------------------------------------------------------------------

Deferred Tax Asset (Liability):
 Net operating loss and credit carryforwards                                         $ 46,568     $ 94,874
 Reserves and accruals                                                                 52,234       55,460
 Inventory basis difference                                                            39,246       34,322
 Accrued compensation                                                                  10,952       12,097
 Depreciation and amortization                                                         11,299       (5,621)
 Available-for-sale investments                                                       (18,114)      (8,044)
 Other, net                                                                            (2,750)       1,102
                                                                                     --------     --------

                                                                                      139,435      184,190
 Less:  Valuation allowance                                                            45,370       54,874
                                                                                     --------     --------

                                                                                     $ 94,065     $129,316
                                                                                     ========     ========

      The valuation allowance primarily relates to the uncertainty surrounding
the realization of acquired tax loss and credit carryforwards. Any tax benefit
resulting from the use of acquired loss carryforwards is used to reduce
goodwill.
      At year-end 2001, the Company had federal, state, and non-U.S. net
operating loss carryforwards of $8 million, $327 million, and $116 million,
respectively. Use of the carryforwards is limited based on the future income of
certain subsidiaries. The federal and state net operating loss carryforwards
expire in the years 2002 through 2021. Of the non-U.S. net operating loss
carryforwards, $11 million expire in the years 2002 through 2015, and the
remainder do not expire.

</TABLE>
<
                                       26
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                                                        <C>          <C>          <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements

6.    Income Taxes (continued)
- --------------------------------------------------------------------------------

      A provision has not been made for U.S. or additional non-U.S. taxes on
$514 million of undistributed earnings of international subsidiaries that could
be subject to taxation if remitted to the U.S. because the Company plans to keep
these amounts permanently reinvested overseas.

7.    Earnings (Loss) per Share
- --------------------------------------------------------------------------------

(In thousands except per share amounts)                                     2001         2000         1999
- ----------------------------------------------------------------------------------------------------------

Basic
Income from Continuing Operations Before Extraordinary Item and
 Cumulative Effect of Change in Accounting Principle                   $  49,592    $  62,047    $  37,283
Income (Loss) from Discontinued Operations                                     -       14,228     (163,325)
Provision for Loss on Disposal of Discontinued Operations, Net           (50,440)    (100,000)     (50,000)
Extraordinary Item                                                         1,061          532        1,469
Cumulative Effect of Change in Accounting Principle                         (994)     (12,918)           -
                                                                       ---------    ---------    ---------

Net Loss                                                               $    (781)   $ (36,111)   $(174,573)
                                                                       ---------    ---------    ---------

Weighted Average Shares                                                  180,560      167,462      157,987
                                                                       ---------    ---------    ---------

Basic Earnings (Loss) per Share:
 Continuing operations before extraordinary item and cumulative
   effect of change in accounting principle                            $     .27    $     .37    $     .24
 Discontinued operations                                                    (.28)        (.51)       (1.35)
 Extraordinary item                                                          .01            -          .01
 Cumulative effect of change in accounting principle                        (.01)        (.08)           -
                                                                       ---------    ---------    ---------

                                                                       $       -    $    (.22)   $   (1.10)
                                                                       =========    =========    =========



<
                                       27
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


7.    Earnings (Loss) per Share (continued)
- --------------------------------------------------------------------------------

(In thousands except per share amounts)                                     2001         2000         1999
- ----------------------------------------------------------------------------------------------------------

Diluted
Income from Continuing Operations Before Extraordinary Item and
 Cumulative Effect of Change in Accounting Principle                   $  49,592    $  62,047    $  37,283
Income (Loss) from Discontinued Operations                                     -       14,228     (163,325)
Provision for Loss on Disposal of Discontinued Operations, Net           (50,440)    (100,000)     (50,000)
Extraordinary Item                                                         1,061          532        1,469
Cumulative Effect of Change in Accounting Principle                         (994)     (12,918)           -
                                                                       ---------    ---------    ---------

Net Loss                                                                    (781)     (36,111)    (174,573)

Effect of:
 Majority-owned subsidiaries' dilutive securities - continuing
   operations                                                                  -       (1,331)      (3,071)
 Majority-owned subsidiaries' dilutive securities - discontinued
   operations                                                                  -         (113)        (145)
                                                                       ---------    ---------    ---------

Loss Available to Common Shareholders, as Adjusted                     $    (781)   $ (37,555)   $(177,789)
                                                                       ---------    ---------    ---------

Weighted Average Shares                                                  180,560      167,462      157,987
Effect of:
 Stock options                                                             2,893        2,819          236
 Convertible obligations                                                     463          238            -
                                                                       ---------    ---------    ---------

Weighted Average Shares, as Adjusted                                     183,916      170,519      158,223
                                                                       ---------    ---------    ---------

Diluted Earnings (Loss) per Share:
 Continuing operations before extraordinary item and cumulative
   effect of change in accounting principle                            $     .27    $     .36    $     .22
 Discontinued operations                                                    (.27)        (.50)       (1.35)
 Extraordinary item                                                          .01            -          .01
 Cumulative effect of change in accounting principle                        (.01)        (.08)           -
                                                                       ---------    ---------    ---------

                                                                       $       -    $    (.22)   $   (1.12)
                                                                       =========    =========    =========

      Options to purchase 4,755,000, 4,726,000, and 12,200,000 shares of common
stock were not included in the computation of diluted earnings (loss) per share
for 2001, 2000, and 1999, respectively, because the options' exercise prices
were greater than the average market price for the common stock and their effect
would have been antidilutive.

</TABLE>
<
                                       28
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                    <C>              <C>          <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


7.    Earnings (Loss) per Share (continued)
- --------------------------------------------------------------------------------

      During 2000, convertible obligations of some of the Company's formerly
public subsidiaries became convertible into Company common stock (Note 17). The
computation of diluted earnings (loss) per share for 2001 and 2000 excludes the
effect of assuming the conversion of the following of the Company's subordinated
convertible debentures because the effect would be antidilutive:

                                                                Conversion
                                    Principal       Interest     Price per
                                       Amount           Rate         Share
                                  ----------------------------------------
                                  (In thousands)

                                     $398,498         4 1/4%       $ 32.09
                                      231,508             4%         35.77
                                      145,414         4 1/2%         34.42
                                       78,048         3 1/4%         41.84
                                       75,168         4 3/8%        111.83
                                       69,614         4 5/8%         34.22
                                       17,650         4 7/8%         32.50
                                       11,583         2 7/8%         28.16

      The computation of diluted earnings (loss) per share for 1999 excludes the
effect of assuming the conversion of the Company's 4 1/4% subordinated
convertible debentures, convertible at $32.09 per share, because the effect
would be antidilutive. In addition, the computation of diluted earnings (loss)
per share for 1999 excludes the effect of assuming the repurchase of 2,367,000
shares of Company common stock at a weighted average exercise price of $14.06
per share in connection with put options (Note 12) because the effect would be
antidilutive.

8.    Comprehensive Loss
- --------------------------------------------------------------------------------

      Comprehensive loss combines net loss and "other comprehensive items,"
which represents certain amounts that are reported as components of
shareholders' investment in the accompanying balance sheet, including currency
translation adjustments and unrealized net of tax gains and losses on
available-for-sale investments and hedging instruments.
      Accumulated other comprehensive items in the accompanying balance sheet
consists of the following:

</TABLE>
<TABLE>
<CAPTION>
<S>                                                                                    <C>          <C>


(In thousands)                                                                           2001         2000
- ----------------------------------------------------------------------------------------------------------

Cumulative Translation Adjustment                                                   $(132,709)   $(108,103)
Net Unrealized Gains on Available-for-sale Investments                                 32,081       11,761
Net Unrealized Gains on Hedging Instruments                                             1,338            -
                                                                                    ---------    ---------

                                                                                    $ (99,290)   $ (96,342)
                                                                                    =========    =========

</TABLE>
<
                                       29
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                                                        <C>          <C>          <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


8.    Comprehensive Loss (continued)
- --------------------------------------------------------------------------------

      The change in unrealized gains on available-for-sale investments, a
component of other comprehensive items in the accompanying statement of
comprehensive loss and shareholders' investment, includes the following:

(In thousands)                                                              2001         2000         1999
- ----------------------------------------------------------------------------------------------------------

Unrealized Holding Gains Arising During the Year (net of
 income tax provision of $12,136, $5,257, and $3,956)                    $21,077      $ 8,668      $ 6,848
Reclassification Adjustment for Gains Included in Net Loss
 (net of income tax provision of $505, $2,739, and $1,465)                  (757)      (4,110)      (2,197)
                                                                         -------      -------      -------

Net Unrealized Gains (net of income tax provision of $11,631,
 $2,518, and $2,491)                                                     $20,320      $ 4,558      $ 4,651
                                                                         =======      =======      =======
</TABLE>
<TABLE>
<CAPTION>
<S>                                                                                                  <C>

      The change in unrealized gains on hedging instruments, a component of
other comprehensive items in the accompanying statement of comprehensive loss
and shareholders' investment, includes the following:

(In thousands)                                                                                        2001
- ----------------------------------------------------------------------------------------------------------

Unrealized Holding Gains Arising During the Year (net of
 income tax provision of $2,861)                                                                   $ 4,330
Reclassification Adjustment for Gains Included in Net Loss
 (net of income tax provision of $1,995)                                                            (2,992)
                                                                                                   -------

Net Unrealized Gains (net of income tax provision of $866)                                         $ 1,338
                                                                                                   =======
</TABLE>
<TABLE>
<CAPTION>
<S>                                                       <C>           <C>           <C>           <C>

9.    Available-for-sale Investments
- --------------------------------------------------------------------------------

      The aggregate market value, cost basis, and gross unrealized gains and
losses of short- and long-term available-for-sale investments by major security
type are as follows:

                                                                                      Gross         Gross
                                                         Market          Cost    Unrealized    Unrealized
(In thousands)                                            Value         Basis         Gains        Losses
- ---------------------------------------------------------------------------------------------------------

2001
Corporate Bonds and Notes                              $682,520      $666,432      $ 16,372      $   (284)
Other                                                    71,161        37,054        34,231          (124)
                                                       --------      --------      --------      --------

                                                       $753,681      $703,486      $ 50,603      $   (408)
                                                       ========      ========      ========      ========

2000
Corporate Bonds and Notes                              $434,140      $431,553      $  2,749      $   (162)
U.S. Government-agency Securities                        42,475        42,318           222           (65)
Other                                                    61,824        46,324        17,633        (2,133)
                                                       --------      --------      --------      --------

                                                       $538,439      $520,195      $ 20,604      $ (2,360)
                                                       ========      ========      ========      ========

</TABLE>
<
                                       30
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                                                                    <C>           <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


9.    Available-for-sale Investments (continued)
- --------------------------------------------------------------------------------

      Short- and long-term available-for-sale investments in the accompanying
2001 balance sheet include equity securities of $54.6 million and debt
securities of $246.8 million with contractual maturities of one year or less and
$452.3 million with contractual maturities of more than one year through five
years. Actual maturities may differ from contractual maturities as a result of
the Company's intent to sell these securities prior to maturity and as a result
of put and call features of the securities that enable either the Company, the
issuer, or both to redeem these securities at an earlier date.
      The cost of available-for-sale investments that were sold was based on
specific identification in determining realized gains and losses recorded in the
accompanying statement of operations. The net gain on the sale of
available-for-sale investments resulted from gross realized gains of $5.0
million, $9.3 million, and $7.6 million and gross realized losses of $3.7
million, $2.5 million, and $3.9 million in 2001, 2000, and 1999, respectively.

10.   Long-term Obligations and Other Financing Arrangements
- --------------------------------------------------------------------------------

(In thousands except per share amounts)                                                  2001         2000
- ----------------------------------------------------------------------------------------------------------

4 1/2% Senior Convertible Debentures, Due 2003, Convertible at $34.42 per Share    $  145,414   $  172,500
7 5/8% Senior Notes, Due 2008                                                         128,725      150,000
4 1/4% Subordinated Convertible Debentures, Due 2003, Convertible at $32.09
 per Share (called for redemption in March 2002; Note 19)                             398,498      561,563
4% Subordinated Convertible Debentures, Due 2005, Convertible at $35.77 per
 Share                                                                                231,508      247,000
3 1/4% Subordinated Convertible Debentures, Due 2007, Convertible at $41.84 per
 Share                                                                                 78,048       78,048
4 3/8% Subordinated Convertible Debentures, Due 2004, Convertible at $111.83 per
 Share                                                                                 75,168       98,310
4 5/8% Subordinated Convertible Debentures, Due 2003, Convertible at $34.22
 per Share (called for redemption in March 2002; Note 19)                              69,614      110,191
Noninterest-bearing Subordinated Convertible Debentures, Due 2003, Convertible
 at $61.67 per Share                                                                   31,420       31,565
4 7/8% Subordinated Convertible Debentures, Due 2004, Convertible at $32.50 per
 Share                                                                                 17,650       35,029
2 7/8% Subordinated Convertible Debentures, Due 2003, Convertible at $28.16 per
 Share                                                                                 11,583       15,859
2 1/2% Subordinated Convertible Debentures, Due 2001, Convertible into Shares
 of Subsidiary Common Stock                                                                 -        4,787
Noninterest-bearing Subordinated Convertible Debentures, Due 2001, Convertible
 at $26.74 per Share                                                                        -        1,680
Other                                                                                  10,303       44,361
                                                                                   ----------   ----------

                                                                                    1,197,931    1,550,893
Less:  Current Maturities                                                             470,429       22,410
                                                                                   ----------   ----------

                                                                                   $  727,502   $1,528,483
                                                                                   ==========   ==========

      As a result of the spinoffs to shareholders discussed in Note 17, the
conversion price of each of the Company's convertible debentures was reduced in
2001 to approximately 85% of the conversion price at December 30, 2000, in
accordance with the terms of the convertible debentures.

<
                                       31
<PAGE>
>


Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements

10.   Long-term Obligations and Other Financing Arrangements (continued)
- --------------------------------------------------------------------------------

      Outstanding debentures issued by subsidiaries that were taken private in
transactions in which the consideration paid to stockholders of the subsidiary
was Thermo Electron common stock have become convertible into the Company's
common stock. Outstanding debentures issued by subsidiaries that have been taken
private in transactions in which the consideration paid to stockholders of the
subsidiary was cash became convertible into an amount based on the same cash
consideration payable in the merger transactions. Holders of such debentures had
the right to cause the debentures to be redeemed 90 days following the effective
date of the merger (Note 17). The interest cost of this debt has been included
as interest expense of continuing operations in the accompanying statement of
operations. No allocation of interest expense for debt of the Company's
continuing operations has been made to discontinued operations.

</TABLE>
<TABLE>
<CAPTION>
<S>                                                                                                 <C>

      The annual requirements for long-term obligations are as follows:

(In thousands)
- ----------------------------------------------------------------------------------------------------------

2002                                                                                            $  470,429
2003                                                                                               190,871
2004                                                                                                93,723
2005                                                                                               232,084
2006                                                                                                   346
2007 and thereafter                                                                                210,478
                                                                                                ----------

                                                                                                $1,197,931
                                                                                                ==========

      See Note 13 for fair value information pertaining to the Company's
      long-term obligations. Short-term obligations and current maturities of
      long-term obligations in the accompanying balance
sheet includes $58.5 million and $80.9 million in 2001 and 2000, respectively,
of short-term bank borrowings and borrowings under lines of credit of certain of
the Company's subsidiaries. The weighted average interest rate for these
borrowings was 3.1% and 4.7% at year-end 2001 and 2000, respectively. Unused
lines of credit were $189 million as of year-end 2001. The unused lines of
credit generally provide for short-term unsecured borrowings outside the United
States at various interest rates.
      Repurchases of subordinated convertible debentures for less than the par
value resulted in extraordinary gains of $1.1 million, $0.5 million, and $1.5
million in 2001, 2000, and 1999, respectively. The gains are net of taxes of
$0.6 million, $0.3 million, and $0.9 million in 2001, 2000, and 1999,
respectively.
      The Company has a cash-management arrangement in which some of its
subsidiaries participate, including some operating units of discontinued
operations. Amounts invested in this arrangement by the Company's discontinued
operations were classified as "Advance payable to affiliates" in the
accompanying 2000 balance sheet.
      Long-term net assets of discontinued operations in 2000 includes $153.0
million principal amount of 4 1/2% subordinated debentures due 2004 and
convertible into shares of Kadant Inc. common stock at $60.50 per share. The net
assets of discontinued operations at year-end 2000 also reflects $17.0 million
of redeemable stock obligations of Thermo Fibergen Inc., that were redeemed in
2001. The Company remains a guarantor of the Kadant debentures following the
spin off of Kadant and its Thermo Fibergen subsidiary in August 2001 (Note 17).
      Long-term net assets of discontinued operations at year-end 2000 also
includes $54.8 million principal amount of 4 3/4% subordinated convertible
debentures of Thermo Cardiosystems Inc., due 2004. In February 2001, the Company
sold Thermo Cardiosystems to Thoratec Corporation. Under the terms of the sale,
Thermo Cardiosystems' 4 3/4% subordinated convertible debentures were assumed by
Thoratec and became convertible into shares of Thoratec common stock. The
debentures remained outstanding through March 11, 2002, when they were redeemed
by Thoratec. Thermo Electron remained a guarantor of these obligations until
redemption occurred. Thoratec had posted a bank letter of credit naming the
fiscal agent of the debentures as beneficiary to secure the Company's position
as guarantor of the obligations.

<
                                       32
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


11.   Commitments and Contingencies
- --------------------------------------------------------------------------------

Operating Leases
      The Company leases portions of its office and operating facilities under
various operating lease arrangements. Income from continuing operations includes
expenses from operating leases of $43.9 million, $42.2 million, and $43.4
million in 2001, 2000, and 1999, respectively. Future minimum payments due under
noncancelable operating leases at December 29, 2001, are $36.3 million in 2002,
$32.5 million in 2003, $28.3 million in 2004, $21.6 million in 2005, $14.3
million in 2006, and $60.6 million in 2007 and thereafter. Total future minimum
lease payments are $193.6 million.

Letters of Credit
      Outstanding letters of credit, principally relating to performance bonds,
totaled $44.4 million at December 29, 2001.

Litigation and Related Contingencies

Continuing Operations
      The Company has been named a defendant, along with many other companies,
in a patent-infringement lawsuit brought by the Lemelson Medical, Education &
Research Foundation, L.P. The suit asserts that products manufactured, used, or
sold by the defendants infringe one or more patents related to methods of
machine vision or computer-image analysis. Also, Spectra-Physics and its Opto
Power subsidiary have been sued for patent infringement by Rockwell
International Corp. The suit claims that Spectra-Physics and Opto Power
infringed a patent for the manufacture of a film used in semiconductor
applications. Both the Lemelson and Rockwell actions seek damages, including
enhanced damages for alleged willful infringement and attorney's fees, and
Lemelson seeks injunctive relief.

Discontinued Operations
      The Company's Trex Medical Corporation subsidiary is a defendant in a
lawsuit brought by Fischer Imaging Corporation, which alleges that the prone
breast-biopsy systems of the Lorad division of Trex Medical infringe Fischer's
patents on a precision mammographic needle-biopsy system and a motorized
mammographic biopsy apparatus. Lorad's cumulative revenues from these products
totaled approximately $167 million through September 30, 2000. Trex Medical sold
this business in 2000 but retained this litigation as a term of the sale.
Subject to certain limitations, the Company is required to indemnify the buyer
with respect to claims by Fischer that post-closing sales of these products
infringe Fischer's patents.
      The Company's Thermo Coleman Corporation subsidiary has been named as a
defendant in a lawsuit initiated by two former employees. The suit alleges,
among other things, that Thermo Coleman violated the Federal False Claims Act in
connection with the performance of a government contract. The complaint seeks
the award of treble damages in an unspecified amount, plus other penalties. The
amount of billings under the contract activities in question were approximately
$7.6 million. Thermo Coleman sold its core business in 2000, but retained this
litigation as a term of the sale.
      The Company is a defendant in a lawsuit alleging breach of contract and
fraud in connection with the Company's sale in 2000 of its former Peek, Ltd.
subsidiary for $128 million. The suit alleges that the Company misrepresented
and concealed facts concerning Peek's earnings, assets, and liabilities, as a
result of which the plaintiffs seek damages.

      The Company intends to vigorously defend the matters in continuing and
discontinued operations described above. In the opinion of management, an
unfavorable outcome in one or more of the matters described above could
materially affect the Company's financial position as well as its results of
operations and cash flows for a particular quarter or annual period.

<
                                       33
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


11.   Commitments and Contingencies (continued)
- --------------------------------------------------------------------------------

      The Company's continuing and discontinued operations are a defendant in a
number of other pending legal proceedings incidental to present and former
operations. The Company does not expect the outcome of these proceedings, either
individually or in the aggregate, to have a material adverse effect on its
financial position, results of operations, or cash flows.

12.   Common and Preferred Stock
- --------------------------------------------------------------------------------

      At December 29, 2001, the Company had reserved 58,892,617 unissued shares
of its common stock for possible issuance under stock-based compensation plans
and for possible conversion of the Company's convertible debentures.
      The Company has 50,000 shares of authorized but unissued $100 par value
preferred stock.
      In 2000, the Company issued 22.6 million shares of its common stock valued
at $448.7 million to complete mergers with several of its formerly majority-
owned subsidiaries (Note 17).
      During 1998 and 1999, in a series of transactions with an institutional
counterparty, the Company sold put options and purchased call options. No cash
was exchanged as a result of these transactions. The Company had the right to
settle the put options by physical settlement of the options or by net share
settlement using shares of the Company's common stock. During 2000, the Company
purchased 1,183,500 shares of its common stock under the call options for $17.5
million. During 1999, the Company purchased 1,536,000 shares of its common stock
under the put options for $24.6 million. During 1999 and 2000, put options for
4,165,000 shares expired. No remaining obligation under the put options existed
at year-end 2000 or 2001.
      The Company has distributed rights under a shareholder rights plan adopted
by the Company's Board of Directors to holders of outstanding shares of the
Company's common stock. Each right entitles the holder to purchase one
ten-thousandth of a share (a Unit) of Series B Junior Participating Preferred
Stock, $100 par value, at a purchase price of $250 per Unit, subject to
adjustment. The rights will not be exercisable until the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an Acquiring Person) has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of common
stock (the Stock Acquisition Date), or (ii) 10 business days following the
commencement of a tender offer or exchange offer for 15% or more of the
outstanding shares of common stock.
      In the event that a person becomes the beneficial owner of 15% or more of
the outstanding shares of common stock, except pursuant to an offer for all
outstanding shares of common stock approved by at least a majority of the
members of the Board of Directors, each holder of a right (except for the
Acquiring Person) will thereafter have the right to receive, upon exercise, that
number of shares of common stock that equals the exercise price of the right
divided by one-half of the current market price of the common stock. In the
event that, at any time after any person has become an Acquiring Person, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or its common stock is
changed or exchanged (other than a merger that follows an offer approved by the
Board of Directors), or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a right (except for the Acquiring
Person) shall thereafter have the right to receive, upon exercise, the number of
shares of common stock of the acquiring company that equals the exercise price
of the right divided by one half of the current market price of such common
stock.
      At any time until 10 days following the Stock Acquisition Date, the
Company may redeem the rights in whole, but not in part, at a price of $.01 per
right (payable in cash or stock). The rights expire on January 29, 2006, unless
earlier redeemed or exchanged.

<
                                       34
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


13.   Fair Value of Financial Instruments
- --------------------------------------------------------------------------------

      The Company's financial instruments consist mainly of cash and cash
equivalents, available-for-sale investments, accounts receivable, short-term
obligations and current maturities of long-term obligations, advance payable to
affiliates, accounts payable, common stock subject to redemption, long-term
obligations, and forward currency exchange contracts. The carrying amounts of
cash and cash equivalents, accounts receivable, short-term obligations and
current maturities of long-term obligations (excluding convertible obligations),
advance payable to affiliates, and accounts payable approximate fair value due
to their short-term nature.
      Available-for-sale investments are carried at fair value in the
accompanying balance sheet. The fair values were determined based on quoted
market prices (Note 9).
      The carrying amount and fair value of the Company's long-term obligations,
common stock subject to redemption, and forward currency exchange contracts are
as follows:

</TABLE>
<TABLE>
<CAPTION>
<S>                                                             <C>        <C>        <C>          <C>

                                                                   2001                     2000
                                                         ------------------------  -----------------------
                                                            Carrying         Fair     Carrying        Fair
(In thousands)                                                Amount        Value      Amount       Value
- ----------------------------------------------------------------------------------------------------------

Current Maturities of Convertible Obligations             $  468,112   $  466,720  $    6,467   $    6,450
                                                          ==========   ==========  ==========   ==========

Common Stock Subject to Redemption                        $        -   $        -  $    7,692   $    7,692
                                                          ==========   ==========  ==========   ==========

Long-term Obligations:
 Convertible obligations                                  $  590,791   $  562,264  $1,350,065   $1,283,979
 Other                                                       136,711      140,006     178,418      180,268
                                                          ----------   ----------  ----------   ----------

                                                          $  727,502   $  702,270  $1,528,483   $1,464,247
                                                          ==========   ==========  ==========   ==========

Forward Currency Exchange Contracts Receivable            $    3,585   $    3,585  $    1,936   $    2,149

      The fair value of long-term obligations was determined based on quoted
market prices and on borrowing rates available to the Company at the respective
year ends. The fair value of common stock subject to redemption was determined
based upon quoted market prices.
      The notional amounts of forward currency exchange contracts outstanding
totaled $90.1 million and $122.1 million at year-end 2001 and 2000,
respectively. The fair value of such contracts is the estimated amount that the
Company would receive upon termination of the contracts, taking into account the
change in currency exchange rates.


</TABLE>
<
                                       35
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                                                     <C>          <C>            <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


14.   Supplemental Cash Flow Information
- --------------------------------------------------------------------------------

(In thousands)                                                           2001          2000           1999
- ----------------------------------------------------------------------------------------------------------

Cash Paid For
 Interest                                                           $  61,797     $  84,380      $  93,070
                                                                    =========     =========      =========

 Income taxes                                                       $  44,822     $  93,136      $  71,637
                                                                    =========     =========      =========

Noncash Activities
 Receipt of note in connection with sale of business (Note 2)       $       -     $  80,000      $       -
                                                                    =========     =========      =========

 Conversions of Company and subsidiary convertible
   obligations                                                      $       -     $       -      $   9,277
                                                                    =========     =========      =========

 Issuance of Company common stock in exchange for
   minority interests of subsidiaries (Note 17)                     $       -     $ 448,747      $       -
                                                                    =========     =========      =========

 Fair value of assets of acquired companies                         $  18,161     $  25,114      $ 604,114
 Cash paid for acquired companies                                     (14,834)      (17,311)      (385,260)
 Issuance of short- and long-term obligations for
   acquired company                                                         -             -        (14,852)
                                                                    ---------     ---------      ---------

     Liabilities assumed of acquired companies                      $   3,327     $   7,803      $ 204,002
                                                                    =========     =========      =========

15.   Restructuring and Other Unusual Costs (Income), Net
- --------------------------------------------------------------------------------

2001
      In response to a downturn in telecommunications, semiconductor, and other
markets served by the Company's businesses and in an effort to further integrate
business units, the Company initiated restructuring actions in the second
quarter of 2001 in a number of business units to reduce costs and shed
unproductive assets. Further actions were initiated in the fourth quarter of
2001. The restructuring and related actions primarily consist of headcount
reductions, writedowns of telecommunication equipment and excess
telecommunication inventories at Spectra-Physics, discontinuing a number of
mature or unprofitable product lines, and consolidation of facilities to
streamline operations and reduce costs. During 2001, the Company recorded $158.8
million of restructuring and unusual charges primarily associated with these
actions, including $26.1 million of charges to cost of revenues. In addition,
the Company recorded $2.8 million of other nonoperating charges during 2001.
These charges are detailed by segment below. The Company expects to incur an
additional $11 million of restructuring costs in 2002 for charges associated
with these actions that cannot be recorded until incurred. The Company expects
that the restructuring actions undertaken in 2001 will be substantially
completed by the third quarter of 2002.

</TABLE>
<
                                       36
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                  <C>             <C>             <C>            <C>             <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

      The Company recorded charges by segment for 2001 as follows:

                                                   Optical     Measurement
(In thousands)             Life Sciences  Technologies (a)     and Control       Corporate           Total
- ----------------------------------------------------------------------------------------------------------

Cost of Revenues                $  4,412          $ 11,753        $  9,930        $      -        $ 26,095
Restructuring and Other
  Unusual Costs, Net              25,906            49,779          45,499          11,518         132,702
Loss on Investments                    -               801           1,983               -           2,784
                                --------          --------        --------        --------        --------

                                $ 30,318          $ 62,333        $ 57,412        $ 11,518        $161,581
                                ========          ========        ========        ========        ========

(a) Excludes a gain of $35.1 million on the sale of 1,150,000 shares of FLIR, including $14.2 million
    representing a recovery of amounts previously written down in 1999 and 2000. The gain was recorded in
    other income (expense), net, in the accompanying 2001 statement of operations.

      The components of restructuring and other unusual costs by segment are as
follows:

Life Sciences
- -------------
      The Life Sciences segment recorded $30.3 million of restructuring and
unusual costs, net, in 2001. The segment recorded charges to cost of revenues of
$4.4 million, primarily for discontinued product lines, and $25.9 million of
other costs. The other restructuring and unusual costs consist of $15.1 million
of cash costs, including $11.1 million of severance for 342 employees across all
functions; $3.6 million of ongoing lease costs through 2012 for facilities
described below; and $0.4 million of other costs. A total of 128 employees were
terminated as of December 29, 2001. The charge also includes a $3.4 million
writeoff of in-process research and development costs at an acquired business,
$6.7 million of asset writedowns, and $0.7 million of noncash severance costs.
The writeoff of in-process research and development was determined through
established valuation techniques and was charged to expense upon acquisition
because technological feasibility had not been established and no future
alternative uses existed. The asset writedowns principally include $4.7 million
of goodwill for business units that were or will be closed and $2.0 million of
fixed assets at facilities being consolidated. The facility consolidations
include closure of 11 sales and service offices, including 10 in Europe and one
in the United States, and the closure of seven factories, including five in
Europe and two in the United States. The activities of these sales and service
offices and factories are being transferred to other facilities in those
regions.

Optical Technologies
- --------------------
      The Optical Technologies segment recorded $61.5 million of restructuring
and unusual costs, net, in 2001. The segment recorded charges to cost of
revenues of $11.8 million, primarily for excess telecommunication inventories at
Spectra-Physics and discontinued product lines, and $49.8 million of other
costs. The excess telecommunication inventories resulted from a severe slowdown
in this market and the writedown reduced the carrying value of these and other
inventories to estimated net realizable value. The other restructuring and
unusual costs consist of $25.2 million of cash costs, including $7.6 million of
severance for 614 employees, primarily in manufacturing positions; $7.0 million
for leases on abandoned equipment; $5.9 million of loss on litigation; $1.4
million of ongoing lease costs through 2005 for facilities described below; and
$3.3 million of other cash costs. A total of 599 employees were terminated as of
December 29, 2001. The other cash costs primarily represent cancellation fees
for fixed asset purchases and termination of distributor agreements. The segment
also recorded $24.6 million of asset writedowns. The asset writedowns include
$22.0 million of fixed assets, principally equipment used in telecommunication

<
                                       37
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

manufacturing for which estimated future cash flows are not sufficient to
recover the carrying value. The asset writedowns also include $2.2 million of
goodwill to reduce the carrying value of two small business units that are held
for sale to their estimated disposal value and $0.4 million of costs associated
with an abandoned financing at Spectra-Physics. The facility consolidations
include closure of six sales and service offices, including four in Europe and
two in the United States, the closure of three factories in the United States,
and the closure of two distribution facilities in Europe. The activities of
these sales and service offices, factories, and distribution facilities are
being transferred to other facilities in those regions.
      This segment also recorded $0.8 million of other nonoperating charges in
2001 to writedown an investment to its market value due to an impairment that
the Company deemed other than temporary.

Measurement and Control
- -----------------------
      The Measurement and Control segment recorded $55.4 million of
restructuring and unusual costs, net, in 2001. The segment recorded charges to
cost of revenues of $9.9 million, primarily for discontinued product lines, and
$45.5 million of other costs, net. The other restructuring and unusual costs
consist of $30.0 million of cash costs, including $19.4 million of severance for
629 employees across all functions; $8.9 million of ongoing lease costs through
2011 for facilities described below; and $1.7 million of other cash costs. A
total of 256 employees were terminated as of December 29, 2001. The charge also
includes $11.0 million, net, of loss on the sale of businesses and writedowns of
goodwill for businesses subsequently sold, $5.5 million of asset writedowns, and
$0.1 million of other costs, offset in part by $1.1 million of gain on the sale
of a building. The principal businesses that were sold that resulted in losses
included Pharos Marine, a marine navigation unit, in August 2001, and
ThermoMicroscopes, a manufacturer of scanning probe microscopes, in July 2001.
These units were noncore businesses. The asset writedowns include $4.5 million
of assets at facilities being closed, including $3.9 million of fixed assets and
$0.6 million of goodwill and other assets, and $1.0 million for impairment of a
note receivable that was a preacquisition asset of a business acquired in 1999.
The facility consolidations include closure of 15 sales and service offices, all
of which are located in Europe, and the closure of 16 factories, including 10 in
the United States, five in Europe, and one in Canada. The activities of these
sales and service offices and facilities are being transferred to other
facilities in those regions.
      This segment also recorded $2.0 million of other nonoperating charges in
2001 to writedown to its market value an available-for-sale investment that was
a preacquisition asset of a business acquired in 1999, due to an impairment that
the Company deemed other than temporary.

Corporate
- ---------
      The Company recorded $11.5 million of restructuring and unusual costs at
its corporate office in 2001. This amount includes $11.3 million of cash costs,
including $5.9 million of investment banking, consulting, and legal fees
associated with the Company's reorganization plan; $3.5 million of
employee-retention costs that was accrued ratably through 2001, the period
through which the employees had to work to qualify for a payment; and $1.9
million for severance for 21 employees. A total of 18 employees were terminated
as of December 29, 2001. The charge also includes $0.2 million of noncash
severance costs.

2000
      As a result of a review of existing businesses following the appointment
of a new president and chief operating officer in July 2000, the Company
commenced a restructuring of a number of business units to reduce costs and shed
unproductive assets. The restructuring primarily consisted of headcount
reductions, discontinuing a number of mature or unprofitable product lines, and
consolidation of facilities to streamline operations and reduce costs. During
2000, the Company recorded $81.4 million of restructuring and unusual charges
primarily associated with these actions, including $19.3 million of charges to
cost of revenues. These charges are detailed by segment below. In addition, the
Company recorded other unusual income, net, of $130.0 million and nonoperating
charges of $45.1 million during 2000, as detailed by segment below.


<
                                       38
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

      The Company recorded charges (income) by segment for 2000 as follows:

                                                   Optical     Measurement
(In thousands)               Life Sciences    Technologies  and Control (a)      Corporate           Total
- ----------------------------------------------------------------------------------------------------------

Cost of Revenues                  $  8,369        $  2,916        $  8,000        $      -        $ 19,285
Restructuring and Other
  Unusual Costs (Income), Net        7,939           3,600         (99,890)         20,496         (67,855)
Equity in Loss of
  Unconsolidated
  Subsidiaries                           -          47,421               -               -          47,421
Other Income, Net                        -          (2,281)              -               -          (2,281)
                                  --------        --------        --------        --------        --------

                                  $ 16,308        $ 51,656        $(91,890)       $ 20,496        $ (3,430)
                                  ========        ========        ========        ========        ========

(a) Excludes an operating loss of $1.7 million at the Spectra Precision businesses in the third quarter of
    2000 prior to their sale (Note 2).

      The components of restructuring and other unusual costs (income) by
segment are as follows:

Life Sciences
- -------------
      The Life Sciences segment recorded $16.3 million of restructuring and
unusual costs in 2000. The segment recorded charges to cost of revenues of $8.4
million, primarily for discontinued product lines, and $7.9 million of other
costs. The other restructuring and unusual costs consisted of $6.5 million of
cash costs, including $4.0 million of severance for 78 employees across all
functions; $1.1 million for ongoing lease costs through 2003 for facilities
described below; $0.8 million of provisions for two lawsuits; and $0.6 million
for other exit costs. The segment also recorded $1.4 million of asset writedowns
in connection with the closure of a small business and the consolidation and
abandonment of facilities. The asset writedowns included $0.7 million of
goodwill and $0.7 million of fixed assets. The facility consolidations included
closure of sales offices in Spain, Belgium, and Japan and the transfer of their
activities to other offices, consolidation of two German units into one
facility, and relocation of a unit to other facilities within Colorado.

Optical Technologies
- --------------------
      The Optical Technologies segment recorded $6.5 million of restructuring
and unusual costs in 2000. The segment recorded charges to cost of revenues of
$2.9 million, primarily for discontinued product lines, and $3.6 million of
other costs. The other restructuring and unusual costs consisted of a charge of
$1.5 million for in-process research and development in connection with an
acquisition; $0.9 million of asset writedowns; and $1.2 million of cash costs,
including $0.3 million of severance for 22 employees across all functions, $0.4
million for ongoing lease costs, and $0.5 million of other exit costs. The asset
writedowns primarily consisted of charges to reduce the carrying value of a
small business unit that was held for sale to estimated disposal value and
included $0.7 million of goodwill and $0.2 million of fixed assets. The lease
costs related to the closure of a facility in California with lease payments
that ceased in 2000.

<
                                       39
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

      The Optical Technologies segment also recorded a charge of $23.7 million
in 2000 to write down the carrying value of its equity method investment in FLIR
(Note 2) based on a decline in the market value of FLIR shares that the Company
deemed other than temporary. The segment also recorded other noncash charges of
$23.7 million in 2000, representing the Company's pro rata share of FLIR's
losses. Both of these charges were recorded to equity in earnings (loss) of
unconsolidated subsidiaries, a component of other income (expense), net, in the
accompanying statement of operations.
      Prior to its acquisition by the Company, Spectra-Physics elected early
adoption of SFAS No. 133. Under SFAS No. 133, Spectra-Physics is permitted under
certain conditions to enter into currency exchange contracts to hedge probable
anticipated transactions without recording gains and losses on such contracts in
income. The Company did not adopt SFAS No. 133 until 2001 and through 2000
accounted for hedging transactions under SFAS No. 52. Under SFAS No. 52, such
contracts are deemed to be speculative hedges and must be marked to market with
the resulting gain or loss reported as a component of the Company's results of
operations. During 2000, the Company recorded income on currency exchange
contracts entered into by Spectra-Physics of $2.3 million, which is included in
other income (expense), net, in the accompanying statement of operations.

Measurement and Control
- -----------------------
      The Measurement and Control segment recorded $91.9 million of
restructuring and unusual income, net, in 2000. The segment recorded charges to
cost of revenues of $8.0 million, primarily for discontinued product lines, and
recorded $99.9 million of other unusual income, net. The segment had a net gain
of $126.3 million on the sale of several businesses, primarily Spectra Precision
(Note 2), Nicolet Imaging Systems (NIS), and Sierra Research and Technology Inc.
(SRT). NIS and SRT manufacture products that include imaging systems used in
assembling complex printed circuit boards and in airbag manufacturing. Spectra
Precision, NIS, and SRT had aggregate revenues and operating income of $125.7
million and $11.0 million, respectively, in 2000 through their respective
disposal dates. The segment also recorded charges of $20.6 million for asset
writedowns to reduce the carrying value of businesses held for sale to estimated
disposal value and for fixed assets unique to certain discontinued products and
$6.4 million of cash costs. The cash costs included $3.0 million of severance
for 128 employees across all functions, $2.4 million of lease costs through
2001, and $1.0 million of other exit costs, primarily employee retention and
relocation costs incurred in 2000. The lease costs included amounts for the
closure of sales offices in Norway, New Zealand, and Germany, and a
manufacturing operation in the U.K. The asset writedowns included $17.6 million
of goodwill, $2.8 million of fixed assets, and $0.2 million of other assets. The
businesses held for sale primarily included CAC Inc. and the Mid South
Companies, which provide the oil and gas industry with wellhead safety and
control products; the Test and Measurement business, which manufactures and
sells data acquisition systems, digital oscilloscopes, and recorders; and Pharos
Marine. The segment also had unusual income of $0.6 million in 2000, primarily
representing a gain on the termination of a lease.

Corporate
- ---------
      The Company recorded $20.5 million of restructuring and unusual costs,
net, at its corporate office in 2000. This amount included $16.1 million of
investment banking, consulting, and legal fees associated with the Company's
reorganization plan; $3.6 million of employee-retention costs that was accrued
ratably over the period through which the employees had to work to qualify for a
payment; $3.0 million of severance for 21 employees; and $1.6 million of noncash
costs. The Company also recorded unusual income of $3.8 million, representing a
gain from the sale of an office building adjacent to the Company's corporate
office.

<
                                       40
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

1999
      During 1999, the Company recorded restructuring and unusual costs of $46.8
million and other nonoperating charges of $18.4 million in connection with broad
scale restructuring actions affecting a number of business units. Restructuring
and other unusual costs, net, included $37.7 million of restructuring costs,
$0.3 million of other unusual income, net, and $9.4 million of charges to cost
of revenues. The Company also recorded $17.0 million of other nonoperating
charges and $1.4 million of income tax expense. These charges are detailed by
segment below.
      The Company recorded charges (income) by segment for 1999 as follows:

                                             Life       Optical   Measurement
(In thousands)                           Sciences  Technologies   and Control     Corporate         Total
- ----------------------------------------------------------------------------------------------------------

Cost of Revenues                          $     -       $ 4,072       $ 5,354       $     -       $ 9,426
Restructuring and Other Unusual
 Costs (Income), Net                         (326)        7,166        24,761         5,745        37,346
Equity in Loss of Unconsolidated
 Subsidiaries                                   -        11,066             -             -        11,066
Other Expense, Net                              -         2,316             -         3,609         5,925
Income Tax Expense                              -             -         1,409             -         1,409
                                          -------       -------       -------       -------       -------

                                          $  (326)      $24,620       $31,524       $ 9,354       $65,172
                                          =======       =======       =======       =======       =======

      The components of restructuring and unusual costs (income) by segment are
as follows:

Life Sciences
- -------------
      During 1999, the Life Sciences segment settled certain severance matters
for less than had been previously accrued and, as a result, reversed $0.3
million of previously established reserves.

Optical Technologies
- --------------------
      During 1999, the Optical Technologies segment recorded restructuring and
unusual costs of $11.2 million. The restructuring and unusual costs included
$6.0 million of goodwill impairment in connection with the planned sale of the
Company's power electronics and test-equipment business; $3.2 million of charges
to cost of revenues for the sale of inventories revalued at the date of
acquisition; $1.0 million of facility closing costs and severance associated
with a restructuring plan undertaken in 1998 and completed in 1999; $0.9 million
of inventory provisions that resulted from exiting and reengineering certain
product lines; and $0.1 million of other costs. The Company sold the operating
units of the power electronics and test-equipment business in 2000 and 2001
except for its Thermo KeyTek unit, which it decided to retain. The other
components of the power electronics and test-equipment business were part of the
Measurement and Control segment.
      The Optical Technologies segment also recorded $13.4 million of
nonoperating charges in 1999. During the first calendar quarter of 1999, FLIR
recorded a loss in connection with a pooling-of-interests transaction and
certain restructuring actions. The Company recorded its pro rata share of this
loss, $5.1 million, in equity in earnings (loss) of unconsolidated subsidiaries,
a component of other income (expense), net, in the accompanying statement of
operations. In addition, as a result of the pooling consummated by FLIR and
related issuance of FLIR shares in March 1999, the Company's pro rata share of
FLIR's equity decreased to 29.4% from 34.6% prior to the transaction. This
decrease totaled $6.0 million and was recorded as a loss in equity in earnings
(loss) of unconsolidated subsidiaries in the accompanying statement of
operations, pursuant to SAB No. 51, "Accounting for Sales of Stock by a
Subsidiary." In addition, during 1999, the Optical Technologies segment recorded
a loss of $2.3 million on currency exchange contracts accounted for under SFAS
No. 133 by Spectra-Physics.

<
                                       41
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

Measurement and Control
- -----------------------
      During 1999, the Measurement and Control segment recorded restructuring
and unusual costs of $30.1 million and other nonoperating charges of $1.4
million. The Company recorded restructuring costs of $24.8 million and a tax
asset writeoff of $1.4 million, related to a decision to sell its power
electronics and test-equipment business. The planned sale of the power
electronics and test-equipment businesses followed a period of declining sales
and profitability in these units. These businesses are dependent on the cyclical
nature of the semiconductor industry and have lower growth prospects than other
businesses held by the Company. As a result, the Company decided to sell these
units. Restructuring costs included $22.6 million to write off related goodwill
to reduce the carrying value of the business to the estimated proceeds from its
sale. In addition, restructuring costs included a charge of $1.6 million
recorded to write off the Company's remaining net investment in a subsidiary of
the power electronics and test-equipment business, which the Company transferred
to a buyer in consideration for a release from certain contractual obligations,
primarily ongoing lease obligations. The tax writeoff represented a deferred tax
asset that was not realized as a result of exiting this business. Revenues and
operating losses, excluding restructuring and related costs, of the power
electronics and test-equipment business were $16.0 million and $1.4 million,
respectively, for 1999. The Company also recorded other unusual costs of $0.6
million, net, in 1999 at the power electronics and test-equipment business. As
of December 29, 2001, all of the principal operating units of this business had
been sold.
      The Measurement and Control segment's unusual charges also included a
charge to cost of revenues of $3.5 million relating to the sale of inventories
at some Spectra-Physics AB units that were revalued at the date of their
acquisition, and $1.9 million for inventories deemed excessive based on low
demand at the segment's quality assurance and security products business.

Corporate
- ---------
      During 1999, the Company recorded $5.7 million of restructuring and
unusual costs and $3.6 million of other nonoperating charges. Restructuring
costs consisted of $4.9 million for severance costs for seven senior-level
employees and $0.8 million of legal and advisory costs related to the Company's
reorganization. The Company also recorded $3.6 million of other nonoperating
charges to write down available-for-sale investments due to impairment that the
Company deemed other than temporary based upon market prices. These charges are
included in gain on investments, net, a component of other income (expense),
net, in the accompanying statement of operations.




</TABLE>
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                                       42
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<TABLE>
<CAPTION>
<S>                                                                                                  <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

      The following table summarizes the severance actions of the Company in
1999, 2000, and 2001.

                                                                                                 Number of
                                                                                                 Employees
- ----------------------------------------------------------------------------------------------------------

1999 Restructuring Plans
Terminations Announced in 1999                                                                          38
Terminations Occurring in 1999                                                                         (38)
                                                                                                    ------

Remaining Terminations at January 1, 2000                                                                -
                                                                                                    ======

2000 Restructuring Plans
Terminations Announced in 2000                                                                         249
Terminations Occurring in 2000                                                                        (168)
Adjustment to Plan                                                                                      (1)
                                                                                                    ------

Remaining Terminations at December 30, 2000                                                             80

Additional Terminations Announced in 2001                                                               16
Terminations Occurring in 2001                                                                         (91)
Adjustment to Plan                                                                                      (1)
                                                                                                    ------

Remaining Terminations at December 29, 2001                                                              4
                                                                                                    ======

2001 Restructuring Plans
Terminations Announced in 2001                                                                       1,606
Terminations Occurring in 2001                                                                      (1,001)
                                                                                                    ------

Remaining Terminations at December 29, 2001                                                            605
                                                                                                    ======

</TABLE>
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                                       43
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<TABLE>
<CAPTION>
<S>                                                      <C>           <C>             <C>           <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

      The following table summarizes the cash components of the Company's
restructuring plans. The noncash components and other amounts reported as
restructuring and unusual costs (income), net, in the accompanying statement of
operations have been summarized in the notes to the tables.

                                                                 Abandonment
                                                                   of Excess
(In thousands)                                      Severance     Facilities          Other          Total
- ----------------------------------------------------------------------------------------------------------

Pre-1999 Restructuring Plans
 Balance at January 2, 1999                          $  9,281       $  1,263       $    776       $ 11,320
 Costs incurred in 1999 (b)                             1,486          1,280            652          3,418
 1999 usage                                            (7,205)        (2,046)          (838)       (10,089)
 Reserves reversed (c)                                 (2,101)          (217)             -         (2,318)
 Currency translation                                    (568)           (55)           (26)          (649)
                                                     --------       --------       --------       --------

 Balance at January 1, 2000                               893            225            564          1,682
 Costs incurred in 2000                                     -            144              -            144
 2000 usage                                              (774)          (284)             -         (1,058)
 Reserves reversed                                          -            (84)             -            (84)
 Currency translation                                     (22)            (1)           (44)           (67)
                                                     --------       --------       --------       --------

 Balance at December 30, 2000                              97              -            520            617
 2001 usage                                               (90)             -              -            (90)
 Currency translation                                      (7)             -            (14)           (21)
                                                     --------       --------       --------       --------

 Balance at December 29, 2001                        $      -       $      -       $    506       $    506
                                                     ========       ========       ========       ========

1999 Restructuring Plans
 Costs incurred in 1999 (d)                          $  3,938       $      -       $    893       $  4,831
 1999 usage                                              (195)             -           (893)        (1,088)
                                                     --------       --------       --------       --------

 Balance at January 1, 2000                             3,743              -              -          3,743
 2000 usage                                            (2,851)             -              -         (2,851)
 Reserves reversed                                         (6)             -              -             (6)
                                                     --------       --------       --------       --------

 Balance at December 30, 2000                             886              -              -            886
 2001 usage                                              (315)             -              -           (315)
                                                     --------       --------       --------       --------

 Balance at December 29, 2001                        $    571       $      -       $      -       $    571
                                                     ========       ========       ========       ========

</TABLE>
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                                       44
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<TABLE>
<CAPTION>
<S>                                       <C>            <C>           <C>           <C>            <C>


Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements

15.   Restructuring and Other Unusual Costs (Income), Net (continued)
- --------------------------------------------------------------------------------

                                                                 Abandonment
                                                     Employee      of Excess
(In thousands)                       Severance  Retention (a)     Facilities         Other          Total
- ----------------------------------------------------------------------------------------------------------

2000 Restructuring Plans
 Costs incurred in 2000 (e)          $  10,469      $   4,116      $   3,818      $ 17,533      $  35,936
 2000 usage                             (6,488)          (830)        (1,031)       (7,958)       (16,307)
 Reserves reversed                        (205)             -              -             -           (205)
 Currency translation                       48             (3)            33            19             97
                                     ---------      ---------      ---------      --------      ---------

 Balance at December 30, 2000            3,824          3,283          2,820         9,594         19,521
 Costs incurred in 2001                    328          3,472             21         5,963          9,784
 2001 usage                             (2,415)          (468)          (909)      (14,277)       (18,069)
 Reserves reversed                        (105)             -            (21)            -           (126)
 Currency translation                      (44)             -            (45)          (80)          (169)
                                     ---------      ---------      ---------      --------      ---------

 Balance at December 29, 2001        $   1,588      $   6,287      $   1,866      $  1,200      $  10,941
                                     =========      =========      =========      ========      =========

2001 Restructuring Plans
 Costs incurred in 2001 (f)          $  40,076      $     297      $  21,058      $  5,099      $  66,530
 2001 usage                            (13,585)          (155)        (1,180)       (2,353)       (17,273)
 Reserves reversed                        (385)             -           (182)          (90)          (657)
 Currency translation                      (14)             1             69            11             67
                                     ---------      ---------      ---------      --------      ---------

 Balance at December 29, 2001        $  26,092      $     143      $  19,765      $  2,667      $  48,667
                                     =========      =========      =========      ========      =========

(a) Employee retention costs were accrued ratably over the period through which the employees had to work
    to qualify for a payment. The awards were based on specified percentages of employees' salaries and
    were generally awarded to help ensure continued employment at least through completion of the
    Company's reorganization plan in January 2002.
(b) Excludes a noncash charge of $0.1 million in the Measurement and Control segment.
(c) Reflects reversals of previously recorded restructuring costs of $0.3 million and $2.0 million
    in the Life Sciences and Measurement and Control segments, respectively, due to attrition and sale
    of businesses.
(d) Excludes noncash charges, net, of $6.0 million, $24.2 million, and $0.9 million in the Optical
    Technologies and Measurement and Control segments and at the Company's corporate office,
    respectively. Also excludes unusual costs of $0.3 million in the Measurement and Control segment.
(e) Excludes noncash charges, net, of $1.4 million and $2.4 million in the Life Sciences and Optical
    Technologies segments, respectively, and noncash income, net, of $106.3 million and $2.2 million in
    the Measurement and Control segment and at the Company's corporate office, respectively. Also,
    excludes $0.8 million of cash costs in the Life Sciences segment related to two lawsuits.
(f) Excludes noncash charges, net, of $10.8 million, $24.6 million, $15.5 million, and $0.2 million in
    the Life Sciences, Optical Technologies, and Measurement and Control segments, and at the Company's
    corporate office, respectively, and loss on litigation of $5.9 million in the Optical Technologies
    sector.

      The Company's continuing operations expect to pay accrued restructuring
costs as follows: severance, primarily in 2002; employee retention obligations,
primarily in 2002; abandoned-facility payments, over lease terms expiring
through 2012; and other costs, which primarily represent
cancellation/termination fees, in 2002.

<
                                       45
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


16.   Adoption of SAB No. 101
- --------------------------------------------------------------------------------

      In December 1999, the SEC issued SAB No. 101, "Revenue Recognition in
Financial Statements," which established criteria for recording revenue when the
terms of the sale include customer acceptance provisions or an obligation of the
seller to install the product. In instances where these terms exist and the
Company is unable to demonstrate that the customer's acceptance criteria has
been met prior to customer use or when the installation is essential to
functionality or is not deemed inconsequential or perfunctory, SAB No. 101
requires that revenue recognition occur at completion of installation and/or
upon customer acceptance. In accordance with the requirements of SAB No. 101,
the Company adopted the pronouncement as of January 2, 2000, and recorded the
cumulative effect of the change in accounting principle on periods prior to 2000
in the restated results for the first quarter of 2000. The cumulative effect on
net income totaled $12.9 million, net of an income tax benefit of $8.5 million
and minority interest of $0.5 million. Revenues of $41.3 million in 2000 (as
restated for the adoption of SAB No. 101) related to shipments that occurred in
1999 but for which installation and/or acceptance did not occur until 2000.
These revenues were recorded in 1999 prior to the adoption of SAB No. 101 and
thus were a component in the determination of the cumulative effect of the
change in accounting principle for periods prior to 2000. The Company has not
provided pro forma data for 1999 as the amounts are not readily determinable
based on the nature of the revenue adjustments required by SAB No. 101.

17.   Reorganization and Discontinued Operations
- --------------------------------------------------------------------------------

Reorganization
      During 2000 and 2001, the Company completed the principal aspects of a
major corporate reorganization. The reorganization split the Company into three
independent public entities and resulted in the divestiture of a number of
businesses. The Company spun off as a dividend to Company shareholders Kadant
Inc. and Viasys Healthcare Inc. in August and November 2001, respectively. The
Company's continuing operations solely include its instrument businesses.
      During 1999 and 2000, the Company acquired the minority interest in
certain of its privately held subsidiaries and all of its formerly publicly held
subsidiaries other than Spectra-Physics, Thermo Cardiosystems, Kadant, and
Thermo Fibergen. In connection with these acquisitions, the Company expended
$368.6 million and $43.2 million of cash in 2000 and 1999, respectively, and
issued 22.6 million shares of its common stock valued at $448.7 million in 2000.
In addition, the stock options of the subsidiaries were converted into stock
options that are exercisable into 13.9 million shares of Company common stock.
The stock options had a fair value of $115.3 million. As a result of the
completion of the cash tender offers and other repurchases, exchange offers, and
stock option conversions, the Company recorded an increase in goodwill of
approximately $380 million in 2000. In 2001, the Company increased its ownership
in Spectra-Physics to 93.6% through a cash tender offer. In connection with this
offer, the Company expended $63.6 million in 2001 and recorded an increase in
goodwill of $42.1 million (Note 19).
      As a result of the completion of the exchange offers for its formerly
majority-owned subsidiaries, Thermo Instrument Systems Inc., Thermedics Inc.,
Thermo Ecotek Corporation, ThermoLase Corporation, ThermoTrex Corporation, and
Thermo TerraTech Inc., $790.2 million principal amount of convertible
obligations of these subsidiaries became obligations convertible into Company
common stock.

<
                                       46
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


17.   Reorganization and Discontinued Operations (continued)
- --------------------------------------------------------------------------------

      Details of the transactions summarized above are as follows:

Continuing Operations

   2001
      The Company completed a cash tender offer of $17.50 per share for
Spectra-Physics, which brought its ownership to 93.6% (Note 19).

   2000
      Thermo Instrument completed a merger with Thermo Vision Corporation
pursuant to which Thermo Instrument acquired, for $7.00 per share in cash, all
of the outstanding shares of common stock of Thermo Vision not already owned by
Thermo Instrument or the Company. The common stock of Thermo Vision ceased to be
publicly traded.
      Thermo Instrument completed cash tender offers of $28.00 per share for
Thermo BioAnalysis Corporation, $9.00 per share for Metrika Systems Corporation,
and $9.00 per share for ONIX Systems Inc. in order to bring its and the
Company's collective ownership of these businesses to at least 90%.
Subsequently, Thermo Instrument completed the acquisition of the outstanding
minority interest in each of these companies through short-form mergers at the
same prices as the tender offers and their common stock ceased to be publicly
traded. Because Thermo Instrument owned more than 90% of the outstanding shares
of Thermo Optek Corporation and ThermoQuest Corporation common stock, each of
these companies were repurchased through short-form mergers at $15.00 and $17.00
per share, respectively, and their common stock ceased to be publicly traded.
      Thermedics completed cash tender offers of $8.00 and $15.50 per share for
Thermedics Detection Inc. and Thermo Sentron Inc., respectively, in order to
bring its and the Company's collective ownership of these businesses to at least
90%. Subsequently, Thermedics completed the acquisition of the outstanding
minority interest in each of these companies through short-form mergers at the
same prices as the tender offers and their common stock ceased to be publicly
traded.
      The Company completed an exchange offer for Thermo Instrument in which
shares of Company common stock were offered to Thermo Instrument shareholders in
exchange for their shares in order to bring the Company's ownership in Thermo
Instrument to at least 90%. The exchange ratio for Thermo Instrument was 0.85
shares of Company common stock for each share of Thermo Instrument common stock.
Subsequently, Thermo Instrument was spun into the Company through a short-form
merger at the same exchange ratio that was offered in the exchange offer and its
common stock ceased to be publicly traded. As a result of the completion of the
merger with Thermo Instrument, the Company issued 12.6 million shares of its
common stock valued at $265.9 million.

   1999
      Thermedics completed a merger with Thermo Voltek Corp. pursuant to which
Thermedics acquired, for $7.00 per share in cash, all of the outstanding shares
of common stock of Thermo Voltek not already owned by Thermedics or the Company.
The common stock of Thermo Voltek ceased to be publicly traded.
      Thermo Instrument completed a merger with ThermoSpectra Corporation
pursuant to which Thermo Instrument acquired, for $16.00 per share in cash, all
of the outstanding shares of common stock of ThermoSpectra not already owned by
Thermo Instrument or the Company. The common stock of ThermoSpectra ceased to be
publicly traded.

Discontinued Operations

   2000
      The Company completed a merger with Thermedics pursuant to which the
Company acquired all of Thermedics' outstanding shares of common stock not
already owned by the Company in exchange for Company common stock at a ratio of
0.45 shares for each share of Thermedics common stock. The common stock of
Thermedics ceased to be publicly traded.

<
                                       47
<PAGE>
>


Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


17.   Reorganization and Discontinued Operations (continued)
- --------------------------------------------------------------------------------

      The Company completed a merger with Thermo TerraTech pursuant to which the
Company acquired all of Thermo TerraTech's outstanding shares of common stock
not already owned by the Company in exchange for Company common stock at a ratio
of 0.3945 shares for each share of Thermo TerraTech common stock. The common
stock of Thermo TerraTech ceased to be publicly traded.
      The Company completed a merger with ThermoLase pursuant to which the
Company acquired all of ThermoLase's outstanding shares of common stock not
already owned by ThermoTrex or the Company in exchange for Company common stock
at a ratio of 0.132 shares for each share of ThermoLase common stock. The common
stock of ThermoLase ceased to be publicly traded. In addition, under the
agreement, units of ThermoLase were modified so that each unit consisted of a
fractional share of Company common stock. The units were redeemed in April 2001
for cash of $7.5 million.
      The Company completed a merger with ThermoTrex pursuant to which the
Company acquired all of ThermoTrex's outstanding shares of common stock not
already owned by the Company in exchange for Company common stock at a ratio of
0.5503 shares for each share of ThermoTrex common stock. The common stock of
ThermoTrex ceased to be publicly traded.
      The Company completed a cash tender offer of $2.15 per share for Trex
Medical to bring its ownership of this business to at least 90%. Subsequently,
the Company completed the acquisition of the outstanding minority interest in
Trex Medical through a short-form merger at the same price as the tender offer
and the common stock of Trex Medical ceased to be publicly traded.
      The Company completed mergers with ThermoRetec Corporation and The Randers
Killam Group Inc. pursuant to which the Company acquired, for $7.00 and $4.50
per share in cash, respectively, all of the outstanding shares of common stock
of ThermoRetec and Randers Killam not already owned by Thermo TerraTech or the
Company. The common stock of each of ThermoRetec and Randers Killam ceased to be
publicly traded.
      Because the Company owned more than 90% of the outstanding shares of
Thermo Ecotek, the Company repurchased Thermo Ecotek through a short-form
merger. Thermo Ecotek shareholders received 0.431 shares of Company common stock
for each share of Thermo Ecotek common stock. The common stock of Thermo Ecotek
ceased to be publicly traded.
      As a result of the completion of the mergers with Thermedics, Thermo
TerraTech, ThermoLase, ThermoTrex, and Thermo Ecotek, the Company issued 10.0
million shares of its common stock valued at $182.8 million.

   1999
      The Company completed a merger with Thermo Power Corporation pursuant to
which the Company acquired, for $12.00 per share in cash, all of the outstanding
shares of common stock of Thermo Power not already owned by the Company. The
common stock of Thermo Power ceased to be publicly traded.

Discontinued Operations
      In January 2000, the Company also announced its intention to sell several
of its businesses. These businesses, together with the businesses spun off,
constituted the Company's former Biomedical and Emerging Technologies and
Resource Recovery segments as well as the Company's environmental businesses,
and Thermo Power. In addition, in June and July 2001, the Company sold its power
generation business. In accordance with the provisions of APB No. 30 concerning
reporting the effects of disposal of a segment of a business, the Company
classified the results of these businesses, as well as the results of the
businesses spun off as dividends (collectively, "the discontinued businesses"),
as discontinued operations in the accompanying statement of operations. In
addition, the net assets of the discontinued businesses were classified as net
assets of discontinued operations in the accompanying 2000 balance sheet. In
2001, net liabilities of discontinued operations principally represent remaining
obligations of the discontinued businesses including severance, lease,
litigation, and tax obligations, net of the carrying value of 14.6 million
shares of Thoratec common stock, and the net assets of three remaining operating
units held for sale. Current net assets of discontinued

</TABLE>
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<S>                                                                                     <C>         <C>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


17.   Reorganization and Discontinued Operations (continued)
- --------------------------------------------------------------------------------

operations in 2000 primarily consisted of cash, inventories, and accounts
receivable, net of certain liabilities, primarily accrued expenses and accounts
payable. Long-term net assets of discontinued operations primarily consisted of
shares of common stock of Thoratec (see below), machinery and equipment, and
goodwill as well as subordinated convertible debentures of Thermo Cardiosystems
and Kadant (Note 10).
      Summary operating results for 1999 of the businesses discontinued in
January 2000 and for 1999 and 2000 for the power generation business, were as
follows:

(In thousands)                                                                            2000        1999
- ----------------------------------------------------------------------------------------------------------

Revenues                                                                            $  120,256  $2,009,130
Costs and Expenses                                                                      93,779   2,280,192
                                                                                    ----------  ----------

Income (Loss) from Discontinued Operations Before Income
 Taxes, Minority Interest, and Extraordinary Item                                       26,477    (271,062)
Income Tax (Provision) Benefit                                                         (10,427)     54,807
Minority Interest (Expense) Income                                                      (1,822)     52,282
                                                                                    ----------  ----------

Income (Loss) from Discontinued Operations Before
 Extraordinary Item                                                                     14,228    (163,973)
Extraordinary Item, Net of Income Taxes and Minority Interest                                -         648
                                                                                    ----------  ----------

Income (Loss) from Discontinued Operations                                          $   14,228  $ (163,325)
                                                                                    ==========  ==========

      During 2001, the Company's discontinued operations had revenues and
operating income of $658.3 million and $50.4 million, respectively. During 2000,
the Company's discontinued operations (excluding the power generation business)
had revenues and an operating loss of $1.49 billion and $40.2 million,
respectively. The Company received proceeds from the sale of discontinued
businesses of $347.8 million and $390.1 million in 2001 and 2000, respectively.
In 1999, the Company recorded a charge of $50 million, including a provision for
income taxes of $174 million, for the estimated loss on disposal of the
discontinued businesses. The charge was determined using management's best
estimate of the selling prices of the businesses and their estimated results
through the dates of sale. In 2000, the Company recorded an additional charge of
$100 million, net of an income tax benefit of $104 million, for changes in the
actual and estimated proceeds of businesses discontinued in 2000. Of the
businesses announced for sale, all but three with aggregate revenues of
approximately $100 million have been sold as of December 29, 2001.

Spinoffs
      On July 9, 2001, the Company's Board of Directors approved the spinoff of
the Company's 91%-owned Kadant subsidiary as a dividend to the Company's
shareholders. On August 8, 2001, the Company distributed all of its shares of
Kadant to Thermo Electron shareholders of record as of July 30, 2001.
Immediately after the distribution, the Company no longer owned shares of
Kadant. The Company received a ruling from the Internal Revenue Service (IRS)
that the dividend of Kadant shares qualifies in large part as a tax-free
distribution for U.S. federal income tax purposes. Approximately 8% of the
shares distributed to each shareholder are taxable because the Company purchased
them during the past five years. Cash distributed in lieu of fractional shares
is also taxable. The stock dividend resulted in a reduction of net assets of
discontinued operations and retained earnings of $197 million.

<
                                       49
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


17.   Reorganization and Discontinued Operations (continued)
- --------------------------------------------------------------------------------

      In connection with the spinoff, the Company and Kadant entered into a plan
and agreement of distribution. The agreement provides for, among other things,
the Company to continue to guarantee Kadant's $153.0 million principal amount
subordinated convertible debentures due 2004. The agreement requires Kadant to
maintain certain financial ratios during the time that the Company guarantees
these obligations.
      On October 11, 2001, the Company's Board of Directors approved the spinoff
of the Company's wholly owned Viasys Healthcare Inc. subsidiary as a dividend to
the Company's shareholders. On November 15, 2001, the Company distributed all of
its shares of Viasys Healthcare to Thermo Electron shareholders of record as of
November 7, 2001. Immediately after the planned distribution, the Company no
longer owned shares of Viasys Healthcare. The Company received a ruling from the
IRS that the dividend of Viasys Healthcare shares qualifies as a tax-free
distribution for U.S. federal income tax purposes, except that the cash received
in lieu of fractional shares is taxable. The stock dividend resulted in a
reduction of net assets of discontinued operations and retained earnings of $298
million.
      The ruling from the IRS requires that the spinoffs raise additional equity
capital in public offerings within one year of their spinoffs.

Thermo Cardiosystems
      In February 2001, the Company sold Thermo Cardiosystems to Thoratec in
exchange for 19.3 million shares of Thoratec common stock. Certain restrictions
limit the Company's ability to sell these shares, although the restrictions
fully lapse in August 2002. Subsequent to receipt of the Thoratec common stock,
the market value of the shares declined significantly at the same time as a
downturn in major equity markets. The Company recorded an after-tax charge of
$66.0 million in the first quarter of 2001 for the decline in market value of
Thoratec common stock as a loss on disposal of discontinued operations. Further
changes in the market value of Thoratec common stock may materially affect the
ultimate proceeds from the disposal of discontinued operations. Excluding
potential changes in the market value of Thoratec common stock, the Company is
not currently aware of any known trends, events, or other uncertainties
involving discontinued operations that it expects will cause the ultimate loss
on disposal of discontinued operations to differ materially from the amounts
recorded to date. Any difference from the amounts recorded would be reported as
an adjustment to the ultimate loss on disposal of discontinued operations. In
2001, the Company completed the sale of 4.7 million shares of Thoratec for
proceeds of $75.5 million. In February 2002, the Company completed the sale of
6.9 million shares of Thoratec for proceeds of approximately $105 million.

Power Generation Business
      In June and July 2001, the Company sold the chief components of the power
generation business for proceeds of $249 million, net of cash divested. The
Company realized a gain on disposition of $15.6 million, net of tax.

</TABLE>
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<CAPTION>
<S>                                                              <C>        <C>         <C>          <C>


Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


18.   Unaudited Quarterly Information
- --------------------------------------------------------------------------------

2001 (In thousands except per share amounts)                First (a)  Second (b)   Third (c)   Fourth (d)
- ----------------------------------------------------------------------------------------------------------

Revenues                                                     $573,089    $542,472    $512,941     $559,708
Gross Profit                                                  255,254     238,062     228,486      236,820
Income from Continuing Operations Before Extraordinary
 Item and Cumulative Effect of Change in Accounting
 Principle                                                     21,819       9,423      25,677       (7,327)
Income (Loss) Before Extraordinary Item and Cumulative
 Effect of Change in Accounting Principle                     (44,181)     24,983      25,677       (7,327)
Net Income (Loss) (e)                                         (45,175)     24,983      26,279       (6,868)
Earnings (Loss) per Share from Continuing Operations
 Before Extraordinary Item and Cumulative Effect of
 Change in Accounting Principle:
   Basic                                                          .12         .05         .14         (.04)
   Diluted                                                        .12         .05         .14         (.04)
Earnings (Loss) per Share (e):
   Basic                                                         (.25)        .14         .15         (.04)
   Diluted                                                       (.24)        .14         .14         (.04)


2000 (In thousands except per share amounts)                First (f)  Second (g)   Third (h)   Fourth (i)
- ----------------------------------------------------------------------------------------------------------

Revenues                                                     $576,604    $579,950    $546,949     $577,019
Gross Profit                                                  268,595     266,249     226,348      260,644
Income from Continuing Operations Before Extraordinary
 Item and Cumulative Effect of Change in Accounting
 Principle                                                     14,479      21,698       7,281       18,589
Income (Loss) Before Extraordinary Item and Cumulative
 Effect of Change in Accounting Principle                      15,940      24,255      12,279      (76,199)
Net Income (Loss) (j)                                           3,554      24,255      12,279      (76,199)
Earnings per Share from Continuing Operations Before
 Extraordinary Item and Cumulative Effect of Change in
 Accounting Principle:
   Basic                                                          .09         .14         .04          .10
   Diluted                                                        .09         .13         .04          .10
Earnings (Loss) per Share (j):
   Basic                                                          .02         .16         .07         (.42)
   Diluted                                                        .02         .15         .07         (.41)

      Amounts reflect aggregate restructuring and unusual items, net, and nonoperating items, net, as follows:

(a) Costs of $12.9 million, a net of tax charge of $66.0 million related to the Company's discontinued
    operations, and a $1.0 million charge for the cumulative effect of change in accounting principle for
    the adoption of SFAS No. 133.
(b) Costs of $37.0 million and a net of tax gain of $15.6 million related to the Company's discontinued
    operations.
(c) Costs of $9.6 million and gains of $8.6 million from the sale of shares of FLIR.
(d) Costs of $102.2 million and gains of $26.5 million from the sale of shares of FLIR.
(e) Extraordinary item, net of taxes, of $0.6 million and $0.5 million in the third and fourth quarters,
    respectively.
(f) Costs of $4.3 million and a $12.9 million charge for the cumulative effect of change in accounting
    principle for the adoption of SAB No. 101.
(g) Income of $1.5 million.
(h) Income of $31.9 million.  In July 2000, the Company sold its Spectra-Precision businesses.
(i) Costs of $25.7 million and a net of tax charge of $100 million related to the Company's discontinued
    operations.
(j) Extraordinary item, net of taxes, of $0.5 million in the first quarter.

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Thermo Electron Corporation                            2001 Financial Statements

                   Notes to Consolidated Financial Statements


19.   Subsequent Events
- --------------------------------------------------------------------------------

Purchase of Minority Interest in Spectra-Physics
      Following the completion of a cash tender offer in December 2001 for all
of the shares of Spectra-Physics it did not previously own, the Company
completed a short-form merger with Spectra-Physics in February 2002. Following
the merger, Spectra-Physics was no longer publicly traded and became a wholly
owned subsidiary of the Company.

Redemption of Subordinated Convertible Debentures
      In February 2002, the Company announced that on March 21, 2002, it will
redeem all of its outstanding 4 1/4% and 4 5/8% subordinated convertible
debentures due 2003. As of December 29, 2001, the principal amount outstanding
for the 4 1/4% and 4 5/8% debentures was $398.5 million and $69.6 million,
respectively. The redemption price is 100% of the principal amount of the
debentures, plus accrued interest. Accordingly, the obligations have been
presented as current liabilities in the accompanying 2001 balance sheet.

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Thermo Electron Corporation                            2001 Financial Statements

                    Report of Independent Public Accountants


To the Shareholders and Board of Directors of Thermo Electron Corporation:

      We have audited the accompanying consolidated balance sheets of Thermo
Electron Corporation (a Delaware corporation) and subsidiaries as of December
29, 2001, and December 30, 2000, and the related consolidated statements of
operations, cash flows, and comprehensive loss and shareholders' investment for
each of the three years in the period ended December 29, 2001. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
      We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
Electron Corporation and subsidiaries as of December 29, 2001, and December 30,
2000, and the results of their operations and their cash flows for each of the
three years in the period ended December 29, 2001, in conformity with accounting
principles generally accepted in the United States.
      As explained in Note 1 to the consolidated financial statements, effective
December 31, 2000, the Company changed its method of accounting for derivative
instruments and hedging activities through the adoption of Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended. As explained in Notes 1 and 16 to the
consolidated financial statements, effective January 2, 2000, the Company
changed its method of accounting for revenue recognition on certain product
shipments through the adoption of Staff Accounting Bulletin No. 101 "Revenue
Recognition in Financial Statements."



                                                             Arthur Andersen LLP



Boston, Massachusetts
February 7, 2002 (except
with respect to the
matters discussed in
Note 19, as to which the
date is February 25, 2002)

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Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


      Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks,"
"estimates," and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the results
of the Company to differ materially from those indicated by such forward-looking
statements, including those detailed immediately after this Management's
Discussion and Analysis of Financial Condition and Results of Operations under
the heading "Forward-looking Statements."

Overview
- --------------------------------------------------------------------------------

      The Company develops and manufactures a broad range of products that are
sold worldwide. The Company expands the product lines and services it offers by
developing and commercializing its own core technologies and by making strategic
acquisitions of complementary businesses. In January 2000, the Company announced
a major reorganization plan under which it planned to sell or spin off many
noncore businesses. As a result of these actions, the Company's continuing
operations solely include its instrument businesses. The results of the
businesses that have been spun off or have been or will be sold have been
presented as discontinued operations in the accompanying financial statements.
The Company's continuing operations fall into three principal business segments:
Life Sciences, Optical Technologies, and Measurement and Control.
      The Company's discussion and analysis of its financial condition and
results of operations is based upon its financial statements, which have been
prepared in accordance with generally accepted accounting principles. The
preparation of these financial statements requires the Company to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenue
and expenses, and related disclosure of contingent liabilities. On an on-going
basis, the Company evaluates its estimates, including those related to bad
debts, inventories, intangible assets, warranty obligations, income taxes,
contingencies and litigation, restructuring, and discontinued operations. The
Company bases its estimates on historical experience, current market and
economic conditions, and other assumptions that management believes are
reasonable. The results of these estimates form the basis for judgments about
the carrying value of assets and liabilities where the values are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.
      The Company believes the following represent its critical accounting
policies and estimates used in the preparation of its financial statements. a)
The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to pay amounts due. If the
financial condition of the Company's customers were to deteriorate, reducing
their ability to make payments, additional allowances would be required. b) The
Company writes down its inventories for estimated obsolescence for differences
between the cost and estimated net realizable value based on recent usage and
expected demand. If ultimate usage varies significantly from expected usage,
additional writedowns may be required. c) The Company periodically reviews
intangible assets including goodwill for impairment based on estimated future
cash flows associated with the assets. Should future cash flows decline
significantly from estimated amounts, charges for impairment of intangible
assets may be necessary. d) At the time the Company recognizes revenue it
provides for the estimated cost of product warranties based primarily on
historical experience. Should product failure rates or the actual cost of
correcting product failures vary from estimates, revisions to the estimated
warranty liability would be necessary. e) The Company estimates the degree to
which tax assets and loss carryforwards will result in a benefit based on
expected profitability by tax jurisdiction and provides a valuation allowance
for tax assets and loss carryforwards that it believes will more likely than not
go unused. Should the Company's actual future taxable income by tax jurisdiction
vary from estimates, additional allowances may be necessary. f) The Company
estimates losses on contingencies and litigation and provides a reserve for
these losses. Should the ultimate losses on contingencies and litigation vary
from estimates, additional charges may be required. g) The Company recorded
restructuring charges for asset impairment in 2001 based on estimated future
cash flows

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Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


Overview (continued)
- --------------------------------------------------------------------------------

associated with the equipment and for the cost of vacating facilities based on
expected sub-rental income. Should actual cash flows associated with impaired
equipment and sub-rental income from vacated facilities vary from estimated
amounts, additional charges may be required. h) The Company estimates the
expected proceeds from the sale of its discontinued businesses and recorded
losses in 1999-2001 to reduce the carrying value of these businesses to
estimated realizable value. Should the actual proceeds vary from estimates,
actual results could differ from expected amounts.

Results of Operations
- --------------------------------------------------------------------------------

2001 Compared With 2000

Continuing Operations
      Sales in 2001 were $2.188 billion, a decrease of $92.3 million from 2000.
Excluding the effect of acquisitions, divestitures, and currency translation,
revenues increased $113.5 million, or 5%. Currency translation had an
unfavorable effect on revenues as discussed below by segment, due to the
strengthening of the U.S. dollar relative to other currencies of countries in
which the Company operates.
      Operating income was $34.2 million in 2001, compared with $266.0 million
in 2000. Segment income decreased to $85.2 million in 2001 from $319.8 million
in 2000. (Segment income is defined as operating income excluding corporate
general and administrative expenses and corporate restructuring and other
unusual items, net.) Operating and segment income in 2001 were affected by
restructuring and other unusual costs. Operating and segment income in 2000 were
affected by gains from the sale of businesses, offset in part by restructuring
and other unusual costs as well as a $1.7 million operating loss in the third
quarter at a business that was sold. The unusual items in both periods are
discussed below and in more detail in Note 15. Excluding these unusual items,
which totaled $147.3 million of expense in 2001 and $67.3 million of income in
2000, segment income was $232.4 million in 2001 and $252.5 million in 2000.
Segment income excluding unusual items decreased due to a reduction in segment
income of $10.9 million from businesses divested. The Company also recorded $2.3
million of incremental amortization expense in 2001, which resulted primarily
from the purchase of the minority interests of formerly public subsidiaries in
2000, offset in part by lower amortization expense following a number of
divestitures. In addition, certain businesses discussed below had lower
profitability in 2001.
      The Company undertook restructuring actions in 2001 to reduce costs in
businesses affected by a severe slowdown in the telecommunications and
semiconductor industries as well as other market sectors hurt by a slowing
economy, including the U.S. steel and cement industries. The Company expects to
substantially complete the restructuring actions by the third quarter of 2002.
In addition to the actions to reduce costs, the Company recorded an impairment
charge for equipment used in telecommunication manufacturing at Spectra-Physics.
The Company also recorded provisions for inventories related to the
discontinuance of certain mature or unprofitable product lines and inventories
made redundant by combining businesses and for excess telecommunication
inventories at Spectra-Physics. The Company expects that the restructuring
actions will result in annual cost reductions of approximately $63 million with
approximately 40% beginning in the fourth quarter of 2001 and the balance by the
third quarter of 2002, including $12 million in the Life Sciences segment, $24
million in the Optical Technologies segment, $24 million in the Measurement and
Control segment, and $3 million at the Company's corporate office. The Company
expects to incur an additional $11 million of restructuring costs in 2002 for
charges that cannot be recorded until incurred. The Company will incur other
restructuring costs in 2002 as it integrates its formerly public subsidiary,
Spectra-Physics, with other businesses in its Optical Technologies sector. These
plans are being formed as of March 15, 2002, but are expected to include
severance and abandonment of certain redundant manufacturing processes and
related fixed assets and leased equipment with associated charges of at least $7
million, principally in the first quarter of 2002. The Company may incur other
restructuring costs in 2002 or thereafter as the Company continues its efforts
to consolidate the number of its operating locations. The particular actions,
costs, and timing of such undertakings have not been determined.

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Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


2001 Compared With 2000 (continued)
      During 2001, the Company moved its Thermo KeyTek unit from the Measurement
and Control segment to the Optical Technologies segment and moved its Thermo
Projects unit (the principal operating business of which was acquired in early
2001) from the Life Sciences segment to a separate segment (included as "Other"
in Note 3) due to organizational changes. Prior periods have been restated to
conform to this presentation where applicable.

Life Sciences
- -------------
      Sales in the Life Sciences segment increased $54.2 million to $834.2
million in 2001. Sales increased $5.7 million due to acquisitions. The
unfavorable effects of currency translation resulted in a decrease in revenues
of $20.0 million in 2001. Excluding the effect of acquisitions and currency
translation, revenues increased $68.5 million, or 9%. Nearly half of the
increase was due to higher sales of mass spectrometry products in 2001 including
ion trap and triple quadrupole instruments used in proteomics and drug discovery
research. Of the remaining increase, approximately two thirds was from increased
sales of biosciences equipment including sample-preparation equipment and
microplate and liquid-handling products due to strong demand from the drug
discovery market and expanded distribution channels. In addition, the segment
had higher revenues from clinical diagnostic products, including rapid
diagnostic tests.
      Segment income margin decreased to 9.9% in 2001 from 11.9% in 2000. The
segment's margin in both periods was affected by restructuring and unusual
charges, discussed below. Excluding restructuring and unusual costs, net, of
$30.3 million in 2001 and $16.0 million in 2000, segment income margin was 13.5%
in 2001 and 14.0% in 2000. The decrease in segment income margin was primarily
due to an increase in goodwill amortization as a result of the purchase of the
minority interests of formerly public subsidiaries. Excluding the additional
amortization expense and the restructuring and unusual charges, segment income
margin was 13.9% in 2001. Lower profitability due to research and development
expenditures on proteomics initiatives was offset in part by the effect of
higher revenues, discussed above. In 2001, the segment recorded charges of $30.3
million, including cash costs of $15.1 million, primarily for severance and
abandoned facilities; $6.7 million of asset writedowns; $4.4 million of charges
to cost of revenues principally for discontinued product lines; and $0.7 million
of noncash severance costs (Note 15). The segment also recorded a charge of $3.4
million for the writeoff of in-process research and development at an acquired
business. Restructuring costs in 2000 represent $8.4 million of charges to cost
of revenues principally for discontinued product lines; $6.5 million of cash
costs, primarily for severance and abandoned facilities; and $1.4 million of
asset writedowns.

Optical Technologies
- --------------------
      Sales in the Optical Technologies segment increased $30.0 million to
$526.4 million in 2001. Sales increased $2.3 million from acquisitions, net of a
small divestiture. The unfavorable effects of currency translation resulted in a
decrease in revenues of $8.5 million in 2001. Excluding the effect of
acquisitions, a divestiture, and currency translation, revenues increased $36.3
million, or 7%. The increase in revenues was due in part to $32.7 million of
increased demand for semiconductor-based lasers used in industrial, research and
development, and life sciences applications. The balance of the increase was due
to higher sales in the first half of 2001 of molecular beam epitaxy systems and
components to the semiconductor industry and, to a lesser extent, increased
sales of photonics products including gratings and other optical components used
in systems for lithography and telecommunication devices. These increases were
offset in part by a 11% decrease in sales of temperature-control products due to
a severe market downturn in the semiconductor industry. This downturn, together
with poor economic conditions in the telecommunications markets, resulted in a
decline in segment revenues in the third and fourth quarters of 2001 of 8% and
11%, respectively, (excluding currency effects), compared with the same quarters
of 2000. These market conditions are continuing in 2002 and unfavorable revenue
and profitability comparisons with corresponding periods in the prior year will
result for at least the near-term. The segment's backlog trended down throughout
2001 and was $171.6 million at December 29, 2001, a decrease of 33% from the end
of 2000, excluding a divestiture.

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Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


2001 Compared With 2000 (continued)
      Segment income margin decreased to negative 5.7% in 2001 from 7.3% in
2000. Excluding restructuring and unusual costs of $61.5 million in 2001 and
$6.5 million in 2000, segment income margin was 6.0% in 2001 and 8.6% in 2000.
The decrease in segment income margin excluding unusual costs was primarily due
to $2.8 million of operating losses at Spectra-Physics from its telecom product
introductions and associated start-up costs, compared with profitable operations
in 2000. The decrease in segment income margin was also due to a smaller
contribution toward fixed costs as a result of lower revenues from
temperature-control products together with $0.9 million of higher goodwill
amortization in 2001 following the purchase of the minority interests of
formerly public subsidiaries. In 2001, the segment recorded restructuring and
unusual charges of $61.5 million, including $25.2 million of cash costs for
severance, lease obligations for abandoned equipment and facilities, litigation
loss, and other cash costs; $24.6 million of asset writedowns, principally fixed
assets associated with telecommunication initiatives; and $11.8 million of
charges to cost of revenues for inventories (Note 15). Restructuring and unusual
costs in 2000 represent $2.9 million of charges to cost of revenues principally
for discontinued product lines, a $1.5 million writeoff of in-process research
and development at an acquired business, $1.2 million of cash costs, a $0.7
million writedown of goodwill on a business held for sale, and $0.2 million of
asset writedowns.

Measurement and Control
- -----------------------
      Sales in the Measurement and Control segment decreased $189.7 million to
$831.3 million in 2001. Sales decreased $179.4 million due to divestitures, net
of an acquisition. The unfavorable effects of currency translation resulted in a
decrease in revenues of $17.9 million in 2001. Excluding the effect of
divestitures, an acquisition, and currency translation, revenues increased $7.6
million, or 1%. Revenues from the sale of environmental-monitoring equipment
increased $11.1 million due in part to increased sales of chemical and radiation
monitors as well as demand from the construction industry and upgrades of power
plants. In addition, revenues from the sale of spectroscopy instruments
increased due to new product introductions. These increases were offset in part
by $12.7 million of lower sales of process instruments. The lower sales of
process instruments primarily included weighing and inspection equipment due to
competitive pressures and equipment sold to the U.S. steel and cement industries
due to a downturn in those markets. In April 2001, the segment sold businesses
that contributed $4.4 million of the segment's internal revenue growth in 2001.
A downturn in some markets served by the segment resulted in a decline in
revenues in the third and fourth quarters of 2001 of 4% and 3%, respectively,
(excluding currency effects), compared with the same quarters of 2000. These
market conditions are continuing in 2002 and will unfavorably affect the
segment's revenue comparisons with corresponding periods in the prior year for
at least the near-term. The segment's backlog trended down in 2001 and was
$133.5 million at December 29, 2001, a decrease of 21% from the end of 2000,
excluding divestitures.
      In August 2001, the segment sold its Pharos Marine unit, which
manufactures and sells marine-navigation equipment and systems. In July 2001,
the segment sold its ThermoMicroscopes unit, a manufacturer of scanning probe
microscopes. In April 2001, the segment sold its CAC and Mid South businesses,
which provide the oil and gas industries with wellhead safety and control
products. The businesses were sold for net proceeds of approximately $46 million
and were cyclical and/or noncore units. The businesses had aggregate revenues
and segment income before restructuring and unusual costs of $31.3 million and
$3.4 million, respectively, in 2001 through the dates of sale. In 2000, the
segment's divestitures primarily included Spectra Precision, Nicolet Imaging
Systems, and Sierra Research and Technology, Inc. (Note 2).
      Segment income margin decreased to 4.0% in 2001 from 18.8% in 2000,
primarily due to restructuring and unusual charges, net, in 2001 and unusual
income, net, in 2000. Segment income margin, excluding restructuring and unusual
costs, net, of $55.4 million in 2001 and unusual income, net, of $90.1 million
in 2000, increased to 10.6% in 2001 from 10.0% in 2000. The increase in segment
income margin resulted primarily from higher revenues discussed above together
with cost reduction measures initiated in 2000 and 2001. These improvements were
offset in part by lower profitability at the business units discussed above that
had declining revenues. In 2001, the segment recorded

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Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


2001 Compared With 2000 (continued)
restructuring and unusual charges, net, of $55.4 million, including cash costs
of $30.0 million for severance, abandoned facilities, and other exit costs;
$11.0 million, net, for the loss on the sale of businesses and writedowns of
businesses subsequently sold; $9.9 million of charges to cost of revenues
principally for discontinued product lines; $5.5 million of asset writedowns;
and $0.1 million of other costs. These charges were offset in part by a gain of
$1.1 million on the sale of a building (Note 15). The businesses for which the
segment recorded a loss on or prior to sale were ThermoMicroscopes and Pharos
Marine. In 2000, restructuring and unusual income, net, totaled $90.2 million
and included gains on the sale of businesses, net, of $126.3 million, and the
related operating loss of $1.7 million of one of the divested businesses in the
third quarter of 2000 prior to its sale; $20.6 million of asset writedowns to
reduce the carrying value of businesses held for sale to estimated disposal
value and for fixed assets unique to certain discontinued products; charges to
cost of revenues of $8.0 million, primarily for discontinued product lines; $6.4
million of cash costs for severance and facility costs; and a gain of $0.6
million from the termination of a lease (Note 15).

Other Income (Expense), Net
- ---------------------------
      The Company reported other income, net, of $36.5 million in 2001 and other
expense, net, of $81.2 million in 2000 (Note 4). Other income (expense), net,
includes interest income, interest expense, equity in earnings (loss) of
unconsolidated subsidiaries, gain on investments, net, and other items, net.
Interest income increased to $68.5 million in 2001 from $40.2 million in 2000,
primarily due to proceeds from the sale of businesses, including discontinued
operations, offset in part by cash used in 2000 and 2001 for the purchase of the
minority interests of formerly public subsidiaries and in 2001 for repurchases
of the Company's debt and equity securities. Interest expense decreased to $71.8
million in 2001 from $83.1 million in 2000, as a result of the maturity and
repurchase of debentures.
      The Company recorded income from equity in earnings of unconsolidated
subsidiaries of $4.7 million in 2001 and incurred a net equity loss of $47.3
million in 2000, primarily related to its investment in FLIR Systems, Inc.,
which undertook significant restructuring actions in 2000. The Company reports
its pro rata share of FLIR's results on a one-quarter lag. In December 2001, the
Company's ownership of FLIR fell below 20%, following a sale of shares discussed
below. In the first quarter of 2002, the Company will record its pro rata share
of FLIR's fourth quarter 2001 earnings. Thereafter, the Company will account for
its investment in FLIR as an available-for-sale security and will no longer
record its share of FLIR's earnings. The Company had gains on investments, net,
of $35.6 million and $6.8 million in 2000. The gain in 2001 includes $35.1
million from the sale of 1,150,000 shares of FLIR. Of the total gain from the
sale of FLIR, $14.2 million represents a recovery of previous writedowns of
FLIR. The gain in 2001 was reduced by a charge of $2.8 million to writedown two
available-for-sale investments due to impairment that the Company deemed other
than temporary. In 2001, other income, net, includes $0.5 million of other
expense, principally currency losses. In 2000, other expense, net, also includes
$2.3 million of net currency gains, primarily resulting from hedging activities
at Spectra-Physics, which elected early adoption of Statement of Financial
Accounting Standards (SFAS) No. 133 "Accounting for Derivative Instruments and
Hedging Activities."

Provision for Income Taxes
- --------------------------
      The Company's effective tax rate was 38% and 61% in 2001 and 2000,
respectively. Excluding the tax effect of restructuring and unusual costs or
income, the effective tax rate was 38% and 39% in 2001 and 2000, respectively.
The effective tax rate exceeded the statutory federal income tax rate in both
periods due to the impact of state income taxes and nondeductible expenses,
including amortization of goodwill.

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Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


2001 Compared With 2000 (continued)

Minority Interest Income (Expense)
- ----------------------------------
      The Company recorded minority interest income of $5.8 million in 2001 and
minority interest expense of $10.6 million in 2000, representing minority
shareholders' allocable share of subsidiary losses or earnings. Minority
interest expense decreased due to the purchase in 2000 of the minority interest
in all of the Company's formerly public subsidiaries in continuing operations
except Spectra-Physics (Note 17). In 2001, Spectra-Physics incurred a loss and
minority interest income represents the minority shareholders' share of the
loss. Following the purchase of the minority interest in Spectra-Physics in
February 2002 (Note 19), the Company has no material minority interests in its
subsidiaries.

Contingent Liabilities
- ----------------------
      At year-end 2001, the Company was contingently liable with respect to
certain lawsuits. An unfavorable outcome in one or more of the matters described
in Note 11 could materially affect the Company's financial position as well as
its results of operations and cash flows for a particular quarter or annual
period.

Income from Continuing Operations
- ---------------------------------
      Income from continuing operations before extraordinary item and cumulative
effect of change in accounting principle was $49.6 million in 2001, compared
with $62.0 million in 2000. Results were affected by restructuring and other
unusual items, discussed above. Excluding restructuring and other unusual items
in both periods as well as gains from the sale of shares of FLIR, income from
continuing operations before extraordinary item and cumulative effect of change
in accounting principle increased to $122.4 million in 2001 from $100.0 million
in 2000 due to the items discussed above.

Cumulative Effect of Change in Accounting Principle
- ---------------------------------------------------
      The Company adopted SFAS No. 133, as amended, in the first quarter of 2001
and recorded a charge representing the cumulative effect of the change in
accounting principle of $1.0 million, net of an income tax benefit of $0.7
million (Note 1). In addition, in accordance with the requirements of Securities
and Exchange Commission Staff Accounting Bulletin (SAB) No. 101 "Revenue
Recognition in Financial Statements," the Company adopted the pronouncement as
of January 2, 2000, and recorded a charge in the first quarter of 2000
representing the cumulative effect of the change in accounting principle of
$12.9 million, net of an income tax benefit of $8.5 million and minority
interest of $0.5 million (Note 16).

Discontinued Operations
      In February 2001, the Company sold Thermo Cardiosystems Inc. to Thoratec
Corporation in exchange for 19.3 million shares of Thoratec common stock.
Certain restrictions limit the Company's ability to sell these shares, although
the restrictions fully lapse in August 2002. Subsequent to the receipt of the
Thoratec common stock, the market value of the shares declined significantly.
The Company recorded a net of tax provision of $66.0 million in the first
quarter of 2001 for the decline in market value of Thoratec common stock as a
loss on disposal of discontinued operations. Further changes in the market value
of Thoratec common stock may materially affect the ultimate proceeds from the
disposal of discontinued operations. Excluding potential changes in the market
value of Thoratec common stock, the Company is not currently aware of any known
trends, events, or other uncertainties involving discontinued operations that it
expects will cause the ultimate loss on disposal of discontinued operations to
differ materially from the amounts recorded to date. Any difference from the
amounts recorded would be reported as an adjustment to the ultimate loss on
disposal of discontinued operations. In 2001, the Company sold 4.7 million
shares of Thoratec for proceeds of $75.5 million. In February 2002, the Company
sold an additional 6.9 million shares for proceeds of approximately $105
million.

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Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


2001 Compared With 2000 (continued)
      The Company sold the chief components of its discontinued power generation
business in June and July 2001 for proceeds of $249 million, net of cash
divested, and realized a net of tax gain of $15.6 million on the disposition.
The power generation business had income of $14.2 million in 2000, net of taxes
and minority interest.
      The Company recorded a net of tax provision of $100 million in 2000 as a
revision to the estimate of loss on disposal of discontinued operations recorded
in 1999. The increase in the loss resulted from lower after-tax proceeds from
the sale of noncore businesses than had been anticipated at the time the
businesses were discontinued. The Company believes that deterioration in the
financial markets in the latter part of 2000, including tighter financing terms
and lower equity values, adversely affected the selling prices of the
discontinued businesses.

2000 Compared With 1999

Continuing Operations
      Sales in 2000 were $2.281 billion, a decrease of $14.1 million from 1999.
Excluding the effect of acquisitions, divestitures, and currency translation,
revenues increased $146.6 million, or 7%. Operating income was $266.0 million in
2000, compared with $182.1 million in 1999. Segment income increased to $319.8
million in 2000 from $219.2 million in 1999. The 2000 period included
significant gains on the sale of businesses, inventory provisions, and
restructuring and unusual costs as well as a $1.7 million operating loss in the
third quarter at a business that was sold. The 1999 period included significant
restructuring and unusual costs. These items are discussed below. Excluding
unusual income, net, of $67.3 million in 2000 and unusual costs of $41.0 million
in 1999, segment income decreased to $252.5 million in 2000 from $260.2 million
in 1999. Segment income excluding unusual items decreased in part due to a
reduction in segment income of $8.6 million from businesses divested. In
addition, $4.9 million of incremental amortization expense resulted primarily
from the purchase of the minority interests of formerly public subsidiaries,
offset in part by lower amortization expense following certain divestitures.
These decreases in segment income were offset in part by higher profitability at
certain units.
      The restructuring actions undertaken in 2000 were substantially completed
by the end of the second quarter of 2001. These actions resulted in annualized
savings of approximately $5 million in the Life Sciences segment, $2 million in
the Optical Technologies segment, $4 million in the Measurement and Control
segment, and $2 million in the corporate office, generally beginning in the
fourth quarter of 2000.

Life Sciences
- -------------
      Sales in the Life Sciences segment increased $15.6 million to $780.0
million in 2000. The unfavorable effects of currency translation resulted in a
decrease in revenues of $29.6 million in 2000. Revenues increased $13.7 million
due to acquisitions, offset in part by a decrease of $2.0 million due to the
adoption of SAB No. 101. Excluding the effect of currency translation,
acquisitions, and the adoption of SAB No. 101, revenues increased $33.5 million,
or 4%. Over half of the increase resulted from increased demand for mass
spectrometers, due in part to strong sales in Japan and growth in the drug
discovery market. Approximately a third of the increase in revenues was from
increased sales of clinical diagnostic products due to higher demand for
clinical chemistry analyzers and reagents and rapid diagnostic tests. In
addition, a 10% increase in sales of controlled-environment laboratory equipment
was largely offset by lower revenues from laboratory information management
systems due to completion of year-2000 compliance projects in 1999.
      Segment income margin decreased to 11.9% in 2000 from 15.5% in 1999. The
segment's margin decreased primarily due to restructuring and related actions in
2000. Excluding restructuring and unusual costs, segment income margin decreased
to 14.0% in 2000 from 15.5% in 1999 due to lower sales of laboratory information
management systems, which have a higher profit margin than the segment's other
products. In addition, segment income margin was negatively affected by the
purchase of the minority interests of formerly public subsidiaries, which
resulted in an increase of $4.5 million in goodwill amortization expense, as
well as $1.8 million of research and development

<
                                       60
<PAGE>
>


Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


2000 Compared With 1999 (continued)
spending on proteomics initiatives. The restructuring and unusual costs totaled
$16.3 million and included $8.4 million of charges to cost of revenues,
primarily for discontinued product lines; $6.5 million of cash costs, primarily
for severance and facilities closures; and $1.4 million of asset writedowns in
connection with the closure of a small business and the consolidation and
abandonment of facilities. The segment recorded unusual income of $0.3 million
in 1999 for the reversal of previously recorded restructuring costs (Note 15).

Optical Technologies
- --------------------
      Sales in the Optical Technologies segment increased $89.5 million to
$496.3 million in 2000. Sales increased $19.4 million due to acquisitions,
primarily the inclusion of a full year of revenues from the acquisition of a
majority interest in Spectra-Physics on February 22, 1999. The unfavorable
effects of currency translation resulted in a decrease in revenues of $13.3
million in 2000. The adoption of SAB No. 101 reduced revenues by $13.1 million.
Excluding the effect of acquisitions, currency translation, and the adoption of
SAB No. 101, revenues increased $96.5 million, or 25%. Sales of
semiconductor-based lasers increased $41.9 million due to higher demand from
computer and microelectronic manufacturers. Sales of temperature-control systems
increased $27.3 million in 2000 as a result of strong demand from the
semiconductor industry. Approximately 18% of the increase in revenues was from
higher sale of photonics products as a result of strong demand for gratings and
other optical components used in systems for lithography and telecommunication
devices. In addition, higher sales of molecular beam epitaxy systems resulted
from increased demand from semiconductor manufacturers.
      Segment income margin was 7.3% in 2000 and 6.2% in 1999. Excluding
restructuring and unusual costs, segment income margin was 8.6% in 2000 and 8.9%
in 1999. Segment income margin was unfavorably affected by the growth in
revenues at Spectra-Physics, which has lower operating margins due to heavy
investments in telecommunications products. In addition, the segment had $2.1
million of higher goodwill amortization expense, primarily resulting from the
purchase of the minority interests in formerly public subsidiaries. These
factors were offset in part by higher profitability resulting from increased
sales of photonics products and temperature-control systems. The restructuring
and unusual costs in 2000 totaled $6.5 million and included charges to cost of
revenues of $2.9 million, primarily for discontinued product lines; a $1.5
million charge for in-process research and development in connection with an
acquisition; $1.2 million of cash costs for severance and facility exit costs;
and $0.9 million of asset writedowns, primarily to reduce the carrying value of
a small business unit held for sale to estimated disposal value. The
restructuring and unusual costs in 1999 totaled $11.2 million and included $6.0
million of goodwill impairment in connection with the planned sale of the
Company's power electronics and test-equipment business; $3.2 million of charges
to cost of revenues for the sale of inventories revalued at the date of
acquisition; $1.0 million of facility closing costs and severance associated
with a restructuring plan undertaken in 1998 and completed in 1999; $0.9 million
of inventory provisions; and $0.1 million of other costs (Note 15). The Company
sold the operating units of the power electronics and test-equipment business in
2000 and 2001, except for its Thermo KeyTek unit, which it decided to retain.
The other components of the power electronics and test-equipment business were
part of the Measurement and Control segment.

Measurement and Control
- -----------------------
      Sales in the Measurement and Control segment decreased $127.0 million to
$1.021 billion in 2000. Sales decreased $101.7 million due to divestitures, net
of acquisitions. The unfavorable effects of currency translation resulted in a
decrease in revenues of $37.1 million in 2000. Revenues increased $2.9 million
due to the adoption of SAB No. 101. Excluding the effect of divestitures,
acquisitions, currency translation, and the adoption of SAB No. 101, revenues
increased $8.9 million, or 1%. Revenues from the sale of process instruments
increased $8.1 million, primarily due to strong demand from the natural gas
industry, which benefited from higher gas prices. In addition, sales of
environmental-monitoring equipment increased $7.2 million. Revenues from the
sale of spectroscopy instruments increased $4.6 million due to higher demand.
These increases were offset in part by lower sales of

<
                                       61
<PAGE>
>


Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


2000 Compared With 1999 (continued)
weighing and inspection equipment resulting from reduced demand from the global
packaged food industry. This industry was in a period of consolidation and the
Company believes that a decrease in customers' capital spending resulted from
uncertainty in the marketplace.
      Segment income margin increased to 18.8% in 2000 from 6.7% in 1999,
primarily due to gains on the sale of businesses. Segment income margin,
excluding restructuring and unusual items, increased to 10.0% in 2000 from 9.3%
in 1999. Higher profitability from increased sales of process instruments and
environmental-monitoring equipment was offset in part by lower margins from
spectroscopy instruments due to price competition at certain of the segment's
elemental analysis businesses. Restructuring and unusual income, net, in 2000
totaled $90.2 million and included gains on the sale of businesses, net, of
$126.3 million, and the related operating loss of $1.7 million of one of the
divested businesses in the third quarter of 2000 prior to its sale; $20.6
million of asset writedowns to reduce the carrying value of businesses held for
sale to estimated disposal value and for fixed assets unique to certain
discontinued products; charges to cost of revenues of $8.0 million, primarily
for discontinued product lines; $6.4 million of cash costs for severance and
facility costs; and a gain of $0.6 million from the termination of a lease. The
1999 restructuring and unusual costs totaled $30.1 million, including $24.8
million of restructuring charges, primarily to reduce the carrying value of the
power electronics and test-equipment business to estimated disposal value; $3.5
million of charges for the sale of inventories revalued at the date of
acquisition; and $1.9 million of inventory provisions (Note 15).

Other Expense, Net
- ------------------
      The Company reported other expense, net, of $81.2 million and $57.3
million in 2000 and 1999, respectively (Note 4). Interest income increased to
$40.2 million in 2000 from $40.8 million in 1999 due to investment of cash
proceeds from the divestiture of noncore businesses, offset in part by lower
cash balances from the purchase of the minority interests in certain formerly
public subsidiaries. Interest expense decreased to $83.1 million in 2000 from
$91.9 million in 1999 as a result of the maturity and repurchase of Company and
subsidiary debentures in 1999 and 2000.
      The Company incurred a loss of $47.3 million in 2000 from its equity in
the results of unconsolidated subsidiaries, primarily $47.4 million at FLIR,
including a writedown of the carrying value of the investment in FLIR to market
value. In 1999, the Company's equity in the results of unconsolidated subsidiary
totaled a loss of $7.3 million, including $11.1 million of unusual charges
related to FLIR (Notes 2 and 15). During 2000, gain on investments, net, was
$6.8 million, compared with $3.7 million in 1999. The 1999 gain on investments,
net, includes $3.6 million of charges for impairment that was deemed other than
temporary. In 2000, other expense, net, also includes $2.3 million of net
currency gains, primarily resulting from hedging activities at Spectra-Physics,
which elected early adoption of SFAS No. 133. In 1999, the Company had $2.3
million of losses from Spectra-Physics' hedging activities (Note 15).

Provision for Income Taxes
- --------------------------
      The Company's effective tax rate was 61% and 52% in 2000 and 1999,
respectively. The effective tax rate in 2000 includes the effect of the sale of
Spectra Precision, which had a lower tax basis than book basis, resulting in a
significant tax gain on the sale. Excluding unusual items, the effective tax
rate was 39% and 40% in 2000 and 1999, respectively. The effective tax rate in
each period exceeds the statutory federal income tax rate primarily due to state
income taxes and nondeductible expenses, including amortization of goodwill.

Minority Interest Expense
- -------------------------
      The Company recorded minority interest expense of $10.6 million and $23.0
million in 2000 and 1999, respectively. Minority interest expense decreased due
to the purchase of the minority interests in a number of formerly public
subsidiaries.

<
                                       62
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


2000 Compared With 1999 (continued)

Income from Continuing Operations
- ---------------------------------
      Income from continuing operations before extraordinary item and cumulative
effect of change in accounting principle was $62.0 million in 2000, compared
with $37.3 million in 1999. Results were affected by restructuring costs and
unusual items, net, in both periods as well as the significant tax provision in
2000 on a gain on the sale of a business as discussed above. Excluding these
items, income from continuing operations before extraordinary item and
cumulative effect of change in accounting principle was $104.4 million in 2000
and $79.8 million in 1999.

Cumulative Effect of Change in Accounting Principle
- ---------------------------------------------------
      In accordance with the requirements of SAB No. 101, the Company adopted
the pronouncement as of January 2, 2000, and recorded a charge in the first
quarter of 2000 representing the cumulative effect of the change in accounting
principle of $12.9 million, net of an income tax benefit of $8.5 million and
minority interest of $0.5 million (Note 16).

Discontinued Operations
      The Company recorded a net of tax provision of $100 million in 2000 as a
revision to the estimate of $50 million recorded in 1999 for loss on disposal of
discontinued operations. The increase in the loss resulted from lower after-tax
proceeds from the sale of noncore businesses than had been anticipated at the
time the businesses were discontinued. The Company believes that deterioration
in the financial markets in the latter part of 2000, including tighter financing
terms and lower equity values, adversely affected the selling prices of the
discontinued businesses.
      In February 2001, the Company entered into a definitive agreement to sell
its power generation business and subsequently sold the chief components of this
business in June and July 2001. The power generation business had income of
$14.2 million in 2000, net of taxes and minority interest. The Company's
discontinued operations had an aggregate loss of $163.3 million in 1999, net of
taxes and minority interest, primarily as a result of asset impairment charges.

Liquidity and Capital Resources
- --------------------------------------------------------------------------------

      Consolidated working capital was $823.2 million at December 29, 2001,
compared with $1.74 billion at December 30, 2000. Included in working capital
were cash, cash equivalents, and short-term available-for-sale investments of
$1.04 billion at December 29, 2001, compared with $1.03 billion at December 30,
2000. In addition, the Company had $9.4 million of long-term available-for-sale
investments at December 29, 2001, compared with $17.1 million at December 30,
2000. Half of the decrease in working capital resulted from the Company's
decision to redeem certain convertible debentures prior to their 2003 maturity
(Note 19). The balance of the decrease resulted primarily from repurchases of
the Company's debt and equity securities in 2001.
      Cash provided by operating activities was $188.4 million during 2001,
including $184.4 million from continuing operations. Accounts receivable used
$19.0 million of cash, of which $12.6 million occurred at the Company's Thermo
Finnigan business due to strong fourth quarter revenue growth in 2001 over the
fourth quarter of 2000. Accounts payable decreased by $19.1 million primarily
due to lower volume of purchasing activities resulting from slowdowns in several
businesses. Other current liabilities increased by $50.5 million, including an
increase of $39.7 million of restructuring reserves and an increase of $10.2
million of accrued interest, due to the timing of payments. In connection with
certain restructuring actions undertaken by the Company's continuing operations,
the Company had accrued $60.7 million for restructuring and unusual costs at
December 29, 2001. The Company expects to pay $39.1 million of this amount for
severance, employee retention, and other costs primarily through 2002. The
remaining balance of $21.6 million will be paid through the expiration of lease
obligations in 2012 (Note 15). In addition, at December 29, 2001, the Company
had accrued $7.1 million for acquisition expenses. This balance principally
represents abandoned-facility payments that will be paid over the remaining
terms of the leases through 2014 (Note 2).

<
                                       63
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


Liquidity and Capital Resources (continued)
- --------------------------------------------------------------------------------

      During 2001, the primary investing activities of the Company's continuing
operations, excluding available-for-sale investment activities, included the
purchase of property, plant, and equipment, the purchase of shares of a
majority-owned subsidiary, the sale of businesses and other investments, and
acquisitions. The Company's continuing operations expended $73.2 million, net of
dispositions, for purchases of property, plant, and equipment, $69.5 million for
the purchase of shares of its majority-owned Spectra-Physics subsidiary, and
$14.1 million, net of cash acquired, for acquisitions. In addition, in 2001, the
Company's continuing operations sold businesses for aggregate proceeds, net of
cash divested, of $46.8 million and recorded proceeds of $43.3 million from the
sale of other investments, principally shares of FLIR. During 2001, investing
activities of the Company's discontinued operations provided $447.7 million of
cash, primarily representing proceeds, net of cash divested, of $347.8 million
from the sale of businesses and proceeds of $75.5 million from the sale of
Thoratec common stock.
      The Company's financing activities used $696.3 million of cash during
2001, including $503.0 million for continuing operations. During 2001, the
Company's continuing operations expended $43.1 million for the repayment of
long-term obligations and received net proceeds of $69.9 million from the
exercise of employee stock options. During 2001, the Company expended $511.4
million to repurchase its securities. In November 2001, the Company's Board of
Directors authorized the repurchase of an additional $100 million tranche of its
own securities through November 6, 2002. Such purchases may be made in the open
market, or in negotiated transactions. As of December 29, 2001, the Company had
$96 million remaining under Board of Directors authorizations to repurchase its
own securities. In March 2002, the Company's Board of Directors authorized the
repurchase of an additional $100 million tranche of its own securities through
March 6, 2003. During 2001, the financing activities of the Company's
discontinued operations used $193.3 million of cash, including cash at the
Company's Kadant subsidiary, which was spun off in August 2001 (Note 17), and
the repayment of debt.
      The table below summarizes the Company's contractual obligations and other
commercial commitments as of December 29, 2001, by period due or expiration of
commitment.

</TABLE>
<TABLE>
<CAPTION>
<S>                                        <C>           <C>            <C>          <C>           <C>

                                                Payments Due by Period or Expiration of Commitment
                                      ----------------------------------------------------------------------
                                       Less than
                                          1 year      1-3 Years     4-5 Years   After 5 Years          Total
                                      ----------------------------------------------------------------------

Contractual Obligations and Other
 Commercial Commitments:
   Long-term obligations              $  470,429     $  516,678    $      346      $  210,478     $1,197,931
   Operating leases                       36,265         60,873        35,906          59,044        192,088
                                      ----------     ----------    ----------      ----------     ----------

     Total contractual obligations       506,694        577,551        36,252         269,522      1,390,019
                                      ----------     ----------    ----------      ----------     ----------

Other Commitments:
   Standby letters of credit              40,099          4,174            98               -         44,371
   Guarantees                                  -        207,838             -               -        207,838
                                      ----------     ----------    ----------      ----------     ----------

     Total other commitments              40,099        212,012            98               -        252,209
                                      ----------     ----------    ----------      ----------     ----------

                                      $  546,793     $  789,563    $   36,350      $  269,522     $1,642,228
                                      ==========     ==========    ==========      ==========     ==========

      The Company does not use special purpose entities or other
off-balance-sheet financing techniques except for operating leases and other
commitments disclosed in the table above.

<
                                       64
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


Liquidity and Capital Resources (continued)
- --------------------------------------------------------------------------------

      The Company has no material commitments for purchases of property, plant,
and equipment and expects that for 2002, such expenditures will approximate $60
- - 70 million.
      The Company believes that its existing resources are sufficient to meet
the working capital requirements of its existing businesses for the foreseeable
future, including at least the next 24 months.

Market Risk
- --------------------------------------------------------------------------------

      The Company is exposed to market risk from changes in interest rates,
currency exchange rates, and equity prices, which could affect its future
results of operations and financial condition. The Company manages its exposure
to these risks through its regular operating and financing activities.
Additionally, the Company uses short-term forward contracts to manage certain
exposures to currencies. The Company enters into forward currency exchange
contracts to hedge firm purchase and sale commitments denominated in currencies
other than its subsidiaries' local currencies. The Company does not engage in
extensive currency hedging activities; however, the purpose of the Company's
currency hedging activities is to protect the Company's local currency cash
flows related to these commitments from fluctuations in currency exchange rates.
The Company's forward currency exchange contracts principally hedge transactions
denominated in U.S. dollars, Euros, British pounds sterling, Japanese yen,
French francs, Swiss francs, German marks, Swedish krona, and Netherlands
guilders. Income and losses arising from forward contracts are recognized as
offsets to income and losses resulting from the transactions being hedged. The
Company does not enter into speculative currency agreements.

Interest Rates
      Certain of the Company's short- and long-term available-for-sale
investments and long-term obligations are sensitive to changes in interest
rates. Interest rate changes would result in a change in the fair value of these
financial instruments due to the difference between the market interest rate and
the rate at the date of purchase or issuance of the financial instrument. A 10%
decrease in year-end 2001 and 2000 market interest rates would result in a
negative impact to the Company of $9 million and $16 million, respectively, on
the net fair value of its interest-sensitive financial instruments.

Currency Exchange Rates
      The Company generally views its investment in international subsidiaries
with a functional currency other than the Company's reporting currency as
long-term. The Company's investment in international subsidiaries is sensitive
to fluctuations in currency exchange rates. The functional currencies of the
Company's international subsidiaries are principally denominated in British
pounds sterling, Euros, Netherlands guilders, Swedish krona, French francs, and
German marks. The effect of a change in currency exchange rates on the Company's
net investment in international subsidiaries is reflected in the "Accumulated
other comprehensive items" component of shareholders' investment. A 10%
depreciation in year-end 2001 and 2000 functional currencies, relative to the
U.S. dollar, would result in a reduction of shareholders' investment of $72
million and $62 million, respectively.
      The fair value of forward currency exchange contracts is sensitive to
changes in currency exchange rates. The fair value of forward currency exchange
contracts is the estimated amount that the Company would pay or receive upon
termination of the contract, taking into account the change in currency exchange
rates. A 10% depreciation in year-end 2001 and 2000 currency exchange rates
related to the Company's contracts would result in an increase in the unrealized
loss on forward currency exchange contracts of $5.1 million and $7.0 million,
respectively. Since the Company uses forward currency exchange contracts as
hedges of firm purchase and sale commitments, the unrealized gain or loss on
forward currency exchange contracts resulting from changes in currency exchange
rates would be offset by a corresponding change in the fair value of the hedged
item.

<
                                       65
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations



Market Risk (continued)
- --------------------------------------------------------------------------------

      Certain of the Company's cash and cash equivalents are denominated in
currencies other than the functional currency of the depositor and are sensitive
to changes in currency exchange rates. A 10% depreciation in the related
year-end 2001 and 2000 currency exchange rates would result in a negative impact
of $0.6 million and $0.3 million, respectively, on the Company's net income.

Equity Prices
      The Company's available-for-sale investment portfolio includes equity
securities that are sensitive to fluctuations in price. In addition, the
Company's convertible obligations are sensitive to fluctuations in the price of
Company common stock into which the obligations are convertible. Changes in
equity prices would result in changes in the fair value of the Company's
available-for-sale investments and convertible obligations due to the difference
between the current market price and the market price at the date of purchase or
issuance of the financial instrument. A 10% increase in the year-end 2001 and
2000 market equity prices would result in a negative impact to the Company of $7
million and $26 million, respectively, on the net fair value of its
price-sensitive equity financial instruments, principally its convertible
obligations.




<
                                       66
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                           Forward-looking Statements

      In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, Thermo Electron wishes to caution readers that
the following important factors, among others, in some cases have affected, and
in the future could affect, Thermo Electron's actual results and could cause its
actual results in 2002 and beyond to differ materially from those expressed in
any forward-looking statements made by, or on behalf of, Thermo Electron.

      Thermo Electron faces a number of challenges in integrating its instrument
businesses. Thermo Electron has historically operated its instrument businesses
largely as autonomous, unaffiliated operations. As part of its reorganization,
Thermo Electron has begun to manage these operations in a more coordinated
manner. The following factors may make it difficult to successfully integrate
and consolidate Thermo Electron's instrument operations:

      - Thermo Electron's success in integrating these businesses will depend on
its ability to coordinate geographically separate organizations and integrate
personnel with different business backgrounds and corporate cultures.

      - Thermo Electron's ability to combine these businesses will require
coordination of previously autonomous administrative, sales and marketing,
distribution, and accounting and finance functions, and expansion and
integration of information and management systems.

      - The integration process could become disruptive to Thermo Electron's
instrument businesses.

      Moreover, Thermo Electron may not be able to realize all of the cost
savings and other benefits that it expects to result from the integration
process, even if the process is completed.

      It may be difficult for Thermo Electron to expand because some of the
markets for its products are not growing. Some of the markets in which Thermo
Electron competes have been flat or declining over the past several years. To
address this issue, Thermo Electron is pursuing a number of strategies to
improve its internal growth, including:

      -  finding new markets for its products, including, most significantly, in
the areas of proteomics and photonics;

      -  developing new applications for its technologies;

      -  combining sales and marketing operations in appropriate markets to
         compete more effectively;

      -  actively funding research and development; and

      -  strengthening its presence in selected geographic markets.

      Thermo Electron may not be able to successfully implement these
strategies, and these strategies may not result in growth of Thermo Electron's
business.

      As a result of the spin-off of Kadant, Thermo Electron remains as the
guarantor of indebtedness issued by Kadant even though Thermo Electron no longer
controls Kadant's business or operations. Thermo Electron has guaranteed the
payment of principal and interest on $153 million principal amount of debentures
issued by Kadant. These debentures mature in July 2004. Thermo Electron remains
liable as a guarantor for this obligation following the spinoff, although it no
longer controls the business or operations of Kadant.

<
                                       67
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                           Forward-looking Statements


      Thermo Electron has significant international operations, which entail the
risk that exchange rate fluctuations may negatively affect demand for its
products and its profitability. International revenues account for a substantial
portion of Thermo Electron's revenues, and Thermo Electron intends to continue
expanding its presence in international markets. In 2001, Thermo Electron's
international revenues from continuing operations, including export revenues
from the United States, accounted for approximately 50% of its total revenues.
International revenues are subject to the risk that changes in exchange rates
may adversely affect product demand and the profitability in U.S. dollars of
products and services provided by Thermo Electron in international markets,
where payment for Thermo Electron's products and services is made in the local
currency. For example, in fiscal 2001, the unfavorable effects of currency
translation decreased revenues of Thermo Electron's continuing operations by
$46.5 million.

      Thermo Electron has acquired several companies and businesses; as a result
it has recorded significant goodwill on its balance sheet, which it must
continually evaluate for potential impairment. Thermo Electron has acquired
significant intangible assets, including approximately $1.3 billion of goodwill
that it has recorded on its balance sheet as of December 29, 2001. Thermo
Electron assesses the future useful life of the goodwill it has on its books
whenever events or changes in circumstances indicate that the current useful
life has diminished. These events or circumstances generally include operating
losses or a significant decline in earnings associated with the acquired
business or asset. Thermo Electron's ability to realize the value of the
goodwill that it has recorded as a result of its acquisition of the minority
interests in its formerly publicly-traded subsidiaries will depend on the future
cash flows of these businesses. These cash flows in turn depend in part on how
well Thermo Electron has integrated these businesses.

      Thermo Electron must develop new products, adapt to rapid and significant
technological change, and respond to introductions of new products in order to
remain competitive. Thermo Electron's growth strategy includes significant
investment in and expenditures for product development, including most
significantly in the areas of proteomics and photonics. Thermo Electron intends
to increase spending in the area of research and development. Thermo Electron
sells its products in several industries that are characterized by rapid and
significant technological changes, frequent new product and service
introductions, and enhancements and evolving industry standards. Without the
timely introduction of new products, services, and enhancements, Thermo
Electron's products and services will likely become technologically obsolete
over time, in which case its revenue and operating results would suffer.
      Thermo Electron's customers use many of its products to develop, test, and
manufacture their own products. As a result, Thermo Electron must anticipate
industry trends and develop products in advance of the commercialization of its
customers' products. If it fails to adequately predict its customers' needs and
future activities, Thermo Electron may invest heavily in research and
development of products and services that do not lead to significant revenue.
      Many of its products and products under development are technologically
innovative and require significant planning, design, development, and testing at
the technological, product, and manufacturing-process levels. These activities
require Thermo Electron to make significant investments.
      Products in Thermo Electron's markets undergo rapid and significant
technological change because of quickly changing industry standards and the
introduction of new products and technologies that make existing products and
technologies uncompetitive or obsolete. Thermo Electron's competitors may adapt
more quickly to new technologies and changes in customers' requirements than
Thermo Electron can. The products Thermo Electron is currently developing, or
those it will develop in the future, may not be technologically feasible or
accepted by the marketplace, and its products or technologies could become
uncompetitive or obsolete.

      Thermo Electron sells its products and services to a number of companies
that operate in cyclical industries, which could adversely affect its results of
operations when those industries experience a downturn. The growth and
profitability of Thermo Electron's Optical Technologies segment depends in part
on sales to the semiconductor and telecommunications industries, which are
subject to cyclical downturns. These industries are experiencing slowing trends.
A prolonged slowdown in these industries would adversely affect sales by the
Optical Technologies segment, which in turn could adversely affect Thermo
Electron's revenues and results of operations.

<
                                       68
<PAGE>
>

Thermo Electron Corporation                            2001 Financial Statements

                           Forward-looking Statements


      Changes in governmental regulations may reduce demand for Thermo
Electron's products or increase its expenses. Thermo Electron competes in many
markets in which it and its customers must comply with federal, state, local,
and international regulations, such as environmental, health and safety, and
food and drug regulations. Thermo Electron develops, configures, and markets its
products to meet customer needs created by those regulations. Any significant
change in regulations could reduce demand for Thermo Electron's products. For
example, many of Thermo Electron's instruments are marketed to the
pharmaceutical industry for use in discovering and developing drugs. Changes in
the U.S. Food and Drug Administration's regulation of the drug discovery and
development process could have an adverse effect on the demand for these
products.

      Demand for some of Thermo Electron's products depends on capital spending
policies of its customers and on government funding policies. Thermo Electron's
customers include manufacturers of semiconductors and products incorporating
semiconductors, pharmaceutical and chemical companies, laboratories,
universities, healthcare providers, government agencies, and public and private
research institutions. Many factors, including public policy spending
priorities, available resources, and economic cycles, have a significant effect
on the capital spending policies of these entities. These policies in turn can
have a significant effect on the demand for our products. For example, sales of
weighing and inspection equipment have decreased as a result of lower demand
from the global packaged food industry, which is undergoing a period of
consolidation.



<
                                       69
<PAGE>
>


Thermo Electron Corporation                                                      2001 Financial Statements

                                      Selected Financial Information

(In millions except per share amounts)              2001 (a)    2000 (b)   1999 (c)    1998 (d)       1997
- ----------------------------------------------------------------------------------------------------------

Statement of Operations Data
Revenues                                            $2,188.2    $2,280.5   $2,294.6    $1,880.9   $1,811.5
Gross Profit                                           958.6     1,021.8    1,048.8       872.8      859.2
Operating Income                                        34.2       266.0      182.1       191.3      235.5
Income from Continuing Operations Before
 Extraordinary Item and Cumulative Effect of
 Change in Accounting Principle                         49.6        62.0       37.3        93.8      142.4
Income (Loss) Before Extraordinary Item and
 Cumulative Effect of Change in Accounting
 Principle                                              (0.8)      (23.7)    (176.0)      181.5      239.3
Net Income (Loss)                                       (0.8)      (36.1)    (174.6)      181.9      239.3
Earnings per Share from Continuing Operations
 Before Extraordinary Item and Cumulative
 Effect of Change in Accounting Principle:
   Basic                                                 .27         .37        .24         .58        .93
   Diluted                                               .27         .36        .22         .55        .87
Earnings (Loss) per Share:
   Basic                                                   -        (.22)     (1.10)       1.12       1.57
   Diluted                                                 -        (.22)     (1.12)       1.08       1.45

Balance Sheet Data
Working Capital                                     $  823.2    $1,737.0   $1,291.6    $2,130.1   $1,983.8
Total Assets                                         3,825.1     4,863.0    5,071.8     5,217.9    4,731.6
Long-term Obligations                                  727.5     1,528.5    1,566.0     1,786.4    1,463.9
Minority Interest                                        6.9        24.7      348.4       378.9      442.1
Common Stock Subject to Redemption                         -           -        7.7        40.5       40.5
Shareholders' Investment                             1,908.1     2,534.0    2,013.5     2,256.1    2,004.0

(a) Reflects a $161.6 million pretax charge for restructuring and related costs, $35.1 million of gains
    from the sale of shares of FLIR Systems, Inc., a net of tax charge of $50.4 million related to the
    Company's discontinued operations, a $1.0 million charge reflecting the cumulative effect of change
    in accounting principle for the adoption of SFAS No. 133, and the reclassification of $468.1 million
    of subordinated convertible debentures from long-term obligations to current liabilities as a result
    of the Company's decision to redeem them in March 2002. Also reflects the spinoff of the Company's
    Kadant and Viasys Healthcare subsidiaries and the repurchase of $511.4 million of the Company's debt
    and equity securities.
(b) Reflects $3.4 million of pretax restructuring and related income, net, a net of tax charge of $100
    million related to the Company's discontinued operations, the issuance of Company common stock valued
    at $448.7 million to acquire the minority interest of certain subsidiaries, and a $12.9 million
    charge reflecting the cumulative effect of change in accounting principle for the adoption of
    SAB No. 101.
(c) Reflects a $65.2 million pretax charge for restructuring and related costs, a net of tax charge of
    $50 million related to the Company's discontinued operations, and the February 1999 acquisition of
    Spectra-Physics AB.
(d) Reflects a $32.5 million pretax charge for restructuring and related costs, the issuance of $150.0
    million principal amount of the Company's notes, and the Company's public offering of common stock for
    net proceeds of $290.1 million.




</TABLE>
<
                                       70
<PAGE>
>
<TABLE>
<CAPTION>
<S>                                                              <C>       <C>        <C>        <C>


Thermo Electron Corporation                            2001 Financial Statements

Common Stock Market Information
      The Company's common stock is traded on the New York Stock Exchange under
the symbol TMO. The following table sets forth the high and low sale prices of
the Company's common stock for 2001 and 2000, as reported in the consolidated
transaction reporting system.

                                                                      2001                  2000
                                                               -----------------     -----------------
Quarter                                                          High        Low       High        Low
- ------------------------------------------------------------------------------------------------------

First                                                          $26.32     $17.12     $26.25     $14.25
Second                                                          28.57      20.97      21.77      17.94
Third                                                           22.02      17.38      26.94      20.06
Fourth                                                          23.86      15.98      31.10      24.25

      In August and November 2001, the Company spun off to shareholders its
Kadant Inc. and Viasys Healthcare Inc. subsidiaries.  Prices in the above table
for periods prior to these spinoffs have not been adjusted to reflect the
spinoffs.  As of January 25, 2002, the Company had 13,248 holders of record of
its common stock.  This does not include holdings in street or nominee names.

Shareholder Services
      Shareholders of Thermo Electron Corporation who desire information about
the Company are invited to contact the Investor Relations Department, Thermo
Electron Corporation, 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts
02454-9046, (781) 622-1111, or by e-mail at: investorrelations@thermo.com. We
maintain a mailing list to enable shareholders whose stock is held in street
name, and other interested individuals, to receive Company information as
quickly as possible. All material is also available from the Company's Internet
site at www.thermo.com, under "Investors."

Stock Transfer Agent
      American Stock Transfer & Trust Company is the stock transfer agent and
maintains shareholder activity records. The agent will respond to questions on
issuance of stock certificates, change of ownership, lost stock certificates,
and change of address. For these and similar matters, please direct inquiries
to: American Stock Transfer & Trust Company, 59 Maiden Lane, Plaza Level, New
York, New York 10038, (877) 777-0800. You may also send an e-mail to
info@amstock.com, or visit the transfer agent's Internet site at
www.amstock.com.

Dividend Policy
      The Company has never paid cash dividends and does not expect to pay cash
dividends in the foreseeable future because its policy has been to use earnings
to finance expansion and growth. Payment of dividends will rest within the
discretion of the Company's Board of Directors and will depend upon, among other
factors, the Company's earnings, capital requirements, and financial condition.

Form 10-K Report
      A copy of the Annual Report on Form 10-K for the fiscal year ended
December 29, 2001, as filed with the Securities and Exchange Commission, may be
obtained at no charge by contacting the Investor Relations Department, Thermo
Electron Corporation, 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts
02454-9046, (781) 622-1111, or by e-mail at: investorrelations@thermo.com. The
Form 10-K is also available from the Company's Internet site at www.thermo.com,
under "Investors."

</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.55
<SEQUENCE>15
<FILENAME>tmok01ex10-55.txt
<TEXT>
                                                                   Exhibit 10.55

                                                               November 27, 2001



By Facsimile:  (203) 699-3216
SPX Corporation
90 Fieldstone Court
Cheshire, CT 06410-1212
Attn: Paul F. Hally, Group General Counsel

Kendro Laboratory Products, L.P.
C/o Paul F. Hally, Group General Counsel
SPX Corporation

By Facsimile:  (617) 566-0716
Mr. Marc N. Casper
144 Clark Road
Brookline, MA 02445

        Re:    Employment of Marc Casper as President of Thermo Electron's Life
               Sciences Sector

Gentlemen:

        As you know, Thermo Electron Corporation ("Thermo") has been discussing
with Marc Casper ("Mr. Casper") the possibility of hiring him as the President
of its Life Sciences Sector. Thermo and Mr. Casper acknowledge SPX's view that
Mr. Casper's existing obligations contained in his Employment Agreement with
Kendro Laboratory Products, L.P. ("Kendro") dated May 15, 2000, and his
Separation Agreement with SPX Corporation ("SPX"), dated July 23, 2001
(hereafter collectively referred to as the "Agreements"), would prohibit Mr.
Casper's employment by Thermo. Thermo has been provided copies of, and is aware
of the contents of, the Agreements. Thermo and Mr. Casper seek to: (1) modify
certain obligations of Mr. Casper under the Agreements, subject to compliance by
Mr. Casper and Thermo with the terms of this Letter Agreement; and (2) establish
certain limitations relating to Mr. Casper's employment by Thermo in order to
protect SPX and Kendro (hereafter collectively referred to as "SPX") from any
prejudice as a result of the employment of Mr. Casper as President of Thermo's
Life Sciences Sector.

<PAGE>

        In consideration of the mutual agreements specified herein, the
sufficiency of which is hereby acknowledged, Thermo, Mr. Casper, and SPX agree
as follows:

1. SPX acknowledges and agrees that the employment of Mr. Casper by Thermo will
not be deemed to be in violation of the Agreements, so long as Mr. Casper
complies with the terms and conditions set forth in the Agreements as modified
by the terms of this Letter Agreement, and Thermo complies with the terms and
conditions set forth in this Letter Agreement. In the event that Mr. Casper
and/or Thermo fail to comply with the terms of this Letter Agreement, SPX will,
at its election, be free to enforce the terms of this Letter Agreement and/or
the Agreements as originally written.

2. The non-competition and non-solicitation obligations contained in the
Agreements will be modified to extend the duration thereof until December 31,
2002, whether or not Mr. Casper accepts or continues employment by Thermo.

3. (a) For the duration of Mr. Casper's non-competition obligations under the
Agreements (as modified in paragraph 2 above), Mr. Casper and Thermo agree that
Mr. Casper will not be provided any material nonpublic information, participate
in any discussions or meetings, or provide any advice or management, relating to
any aspect of the operations of Thermo Forma Inc., Thermo IEC Inc. and/or any
other aspect of Thermo's current or future business operations which are
competitive with Kendro's current business (the "Competitive Businesses"),
including without limitation any aspects of the Competitive Businesses that
relate to research, design and development, production, and marketing of
products and related services, any strategic management of the Competitive



<
                                       2
<PAGE>
>



Businesses including consideration of changes to products, product line
expansions or enhancements, acquisitions or dispositions of businesses
competitive with the Competitive Businesses, and the establishment
or modification of any relationship between the Competitive Businesses and third
parties, and any financial or administrative aspects of the Competitive
Businesses, such as review of financial performance of the Competitive
Businesses, or employee compensation, real estate or tax matters affecting the
Competitive Businesses, PROVIDED HOWEVER, Mr. Casper's receipt, or communication
to shareholders, analysts, other members of the financial community, press or
media, of information regarding the consolidated financial performance of the
Life Sciences Sector as a whole will not be deemed a breach of this paragraph 3
of this Letter Agreement as long as Mr. Casper's communications clearly include
the disclaimers described in paragraph 3(b)(2) below.

               (b) During the period of the non-compete, SPX agrees that Mr.
Casper can hold the title of President of the Life Sciences Sector of Thermo,
provided that Thermo and Mr. Casper agree and acknowledge that: (1) Mr. Casper
will not serve as Thermo's spokesperson for the Competitive Businesses of the
Life Sciences Sector, and another representative of Thermo will serve as
Thermo's spokesperson for the Competitive Businesses; (2) all public
communications and announcements by Mr. Casper pertaining to his employment by
Thermo or to his commentary on the consolidated financial performance of the
Life Sciences Sector as a whole will clearly indicate that Mr. Casper is
restricted by the terms of a non-compete agreement with his former employer from
managing or discussing the Competitive Businesses; and (3) the Competitive
Businesses will report to the Division President, who reports to the President
of Thermo and who does not report to Mr. Casper.

<
                                       3
<PAGE>
>


               (c) During the period of the non-compete, Mr. Casper and Thermo
agree and acknowledge that it is their obligation to take affirmative steps to
ensure that the public does not perceive that Mr. Casper is managing the
Competitive Businesses, and that such affirmative actions are material to SPX's
agreement to Mr. Casper's employment by Thermo as President of the Life Sciences
Sector and to Thermo's and Mr. Casper's compliance with this Agreement. During
the period of the non-compete, Thermo and Mr. Casper agree to take affirmative
steps to dispel any public perception that Mr. Casper is managing the
Competitive Businesses. For example, at any presentation to Wall Street
analysts, Mr. Casper will refrain from providing any information regarding the
Competitive Businesses, will affirmatively indicate that the Competitive
Businesses do not report to him and will defer any questions about the
Competitive Businesses to another Thermo representative. During the period of
the non-compete, Thermo and Mr. Casper will take similar affirmative steps in
other public settings, such as trade shows, sales conventions and/or customer
presentations.

               (d) Nothing is this paragraph 3 is intended to preclude Mr.
Casper from receiving any information or engaging in any activity with respect
to any aspect of the Life Sciences Sector of Thermo which is not part of the
Competitive Businesses.

4. Except as modified by this letter, Mr. Casper will continue to be bound by
the terms of the Agreements in accordance with their terms, including without
limitation, and without modification, Mr. Casper's confidentiality and trade
secret obligations contained in the Agreements. Thermo acknowledges and agrees
to use reasonable best efforts to cause Mr. Casper to comply with the
confidentiality, nonsolicitation and trade secret obligations contained in the
Agreements during Mr. Casper's employment with Thermo.

<
                                       4
<PAGE>
>


5. In order to permit SPX to confirm that Mr. Casper and Thermo continue to
comply with the terms of this Letter Agreement, Mr. Casper and Thermo will
cooperate with SPX by providing access to any five officers or employees of
Thermo designated by name, title or function by SPX, and to records of Thermo
relating to the Competitive Businesses which are reasonably required to
determine Mr. Casper's and Thermo's compliance with this Letter Agreement, to a
third party auditor identified by SPX, upon request through December 31, 2004,
provided however, if after completing such an audit, SPX has reasonable cause to
believe that Mr. Casper and Thermo have not complied with the terms of this
Letter Agreement, SPX's auditors will be provided access to additional Thermo
officers, employees and records which are reasonably required to determine Mr.
Casper's and Thermo's compliance with this Letter Agreement. SPX may not request
an audit more often than once per any 6 month period through December 31, 2004,
unless SPX has reasonable cause to believe that Mr. Casper and Thermo have not
complied with the terms of this Letter Agreement, in which case SPX may
undertake one additional audit in any 6 month period. If SPX elects to have an
auditor confirm compliance by Mr. Casper and Thermo with their obligations under
this letter, SPX will use an office of Arthur Anderson (or of the then current
auditing firm for SPX ) other than the office that usually audits SPX. Thermo
will ensure that such accounting firm will have reasonable access to the persons
and records referred to above for purposes of confirming any factual information
reasonably required in order to confirm that Mr. Casper and Thermo have complied
with the terms of this letter. The third party auditor must be instructed by SPX
and agree in writing, a copy of which must be provided to Thermo at the time of
the audit, not to disclose to SPX any confidential or proprietary information of
Thermo, including any confidential or proprietary information relating to the
Competitive Businesses.

<
                                       5
<PAGE>
>


6. At the time Mr. Casper's employment with Thermo commences, and as appropriate
or reasonably requested by SPX from time to time thereafter, Thermo will advise
all senior management of Thermo and all managers in Thermo's Competitive
Businesses of the limitations imposed by paragraph 3 of this Letter Agreement on
Mr. Casper and Thermo, as well as the penalties imposed for violations thereof
by paragraph 7 of this Letter Agreement, in writing, as set forth in Exhibit A.

7. In order to ensure that SPX has adequate remedies available for any violation
of this Letter Agreement, without limiting any of the other remedies available
to SPX at law or in equity, in the event of a violation of this Letter Agreement
by Mr. Casper or Thermo, SPX will be entitled to injunctive relief, including
any temporary restraining order or emergency, preliminary or final injunction,
and damages. In the event of litigation regarding a violation of this Letter
Agreement, the prevailing party will be entitled to reimbursement of costs and
reasonable attorneys' fees incurred from the losing party. If SPX is successful
in any way in obtaining injunctive relief or damages, SPX will be a prevailing
party for purposes of recovering costs and fees. The foregoing entitlement of
the prevailing party to collect costs and reasonable attorneys' fees only
applies to litigation between the parties regarding the enforcement or breach of
this Letter Agreement, and not to litigation of any other claim or counterclaim
that a party may assert in such litigation between the parties.

8. SPX agrees that, notwithstanding anything to the contrary in the Agreements,
Mr. Casper will be permitted to acquire and hold securities of Thermo, including
shares of stock and stock options, so long as Mr. Casper owns not more than 2%
of the outstanding stock of any class of Thermo, provided however, Mr. Casper
may not acquire or hold securities, including stock and stock options, of any
enterprise Thermo establishes, acquires, or divests, in which sales in a

<
                                       6
<PAGE>
>


Competitive Business are 15% or more of the sales of the enterprise, for the
duration of Mr. Casper's non-competition obligations under the Agreements (as
modified in paragraph 2 above).

9. This Letter Agreement will be governed by the laws of the State of
Connecticut, and all disputes arising under this Letter Agreement must be filed
in a court of competent jurisdiction in the State of Connecticut. No dispute
arising under this Letter Agreement will be subject to mandatory arbitration.

10. Mr. Casper and Thermo will be jointly and severally liable for any breach of
this Letter Agreement arising from Mr. Casper's employment by Thermo.

11. Nothing in this Letter Agreement will be construed to limit the rights of
discovery of SPX in any litigation with Mr. Casper or Thermo.

12. This Letter Agreement is binding upon Thermo and SPX, and their successors,
and on Mr. Casper, and his heirs, executors and administrators. The obligations
of Mr. Casper under this Letter Agreement are not assignable. The obligations of
Thermo under this Letter Agreement are not assignable, except to an assignee of
substantially all of the stock or assets of the entire Life Sciences Sector,
including the Competitive Businesses, of Thermo.

13. This Letter Agreement may not be amended or modified in any manner except in
a writing signed by the parties.

<
                                       7
<PAGE>
>

        If the foregoing is acceptable to you please sign four counterparts of
this letter where indicated below and return one original to each of Thermo,
SPX, Kendro and Mr. Casper.  This letter will become effective once it has been
signed and delivered by each of Thermo, SPX, Kendro and Mr. Casper to each of
the other parties.

                                   AGREED:

                                   THERMO ELECTRON CORPORATION


                              By:  /s/ Seth H. Hoogasian
                                   ---------------------------------------------
                                   Name: Seth H. Hoogasian
                                   ---------------------------------------------
                                   Title: Vice President and General Counsel
                                   ---------------------------------------------
                                   Date: November 27, 2001
                                   ---------------------------------------------

                                   SPX CORPORATION


                              By:  /s/ Lewis M. Kling
                                   ---------------------------------------------
                                   Name: Lewis M. Kling
                                   ---------------------------------------------
                                   Title: Vice President
                                   ---------------------------------------------
                                   Date: November 27, 2001
                                   ---------------------------------------------

                                   KENDRO LABORATORY PRODUCTS, L.P.


                              By:  /s/ Dennis Pope
                                   ---------------------------------------------
                                   Name: Dennis Pope
                                   ---------------------------------------------
                                   Title: President
                                   ---------------------------------------------
                                   Date: December 11, 2001
                                   ---------------------------------------------


                                   /s/ Marc N. Casper
                                   ---------------------------------------------
                                   Marc N. Casper

                                   Date: 11/29/01
                                   ---------------------------------------------





<
                                       8
<PAGE>
>


                                                                       Exhibit A

                                                                Legal Department
                                                                      Memorandum

To:     Distribution

From:   Seth H. Hoogasian

Date:   11/27/01

Re:     Marc N. Casper

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


        Please be advised that Thermo Electron and Marc N. Casper, the new
President of our Life Sciences Sector, have certain obligations to Marc's former
employer, Kendro Laboratory Products, L.P. ("Kendro") and its parent company,
SPX Corporation, based on Marc's non-competition undertakings.

        Specifically, until December 31, 2002, Marc may not receive any material
non-public information, participate in any discussions or meetings, or provide
any advice or management relating to any aspect of the operations of Thermo
Forma Inc., Thermo IEC Inc., and/or any other aspect of Thermo Electron's
current or future business operations which are competitive with Kendro's
current business (the "Competitive Businesses").

        Activities in which Marc may not participate include, without
limitation, all aspects of Competitive Businesses that relate to research,
design and development, production, and marketing of products and related
services, and strategic management of Competitive Businesses, including
consideration of changes to products, product line expansions or enhancements,
acquisitions or dispositions of Competitive Businesses, and the establishment or
modification of any relationship between Competitive Businesses and third
parties, as well as any financial or administrative aspects of Competitive
Businesses, such as review of financial performance of Competitive Businesses,
employee compensation, real estate or tax matters affecting Competitive
Businesses. He may receive, or communicate to shareholders, analysts, other
members of the financial community, press or media, information regarding the
consolidated financial performance of the Life Sciences Sector as a whole, as
long as his communications clearly include disclaimers that he is restricted by
the terms of a non-compete agreement with his former employer from managing or
discussing the Competitive Businesses.

        Until December 31, 2002, Marc may not serve as Thermo's spokesperson for
the Competitive Businesses, and another representative of Thermo will serve as
spokesperson for the Competitive Businesses. Thermo Forma Inc. and Thermo IEC
Inc. will continue to report to Lewis Rosenblum, who will report to Marijn
Dekkers until December 31, 2002. Thermo Electron and Marc have an obligation to
take affirmative steps to ensure that the public does not perceive that Marc is
managing the Competitive Businesses.

<
                                       9
<PAGE>
>


        In the event that Marc or Thermo Electron violate the terms of the
restrictions described above, Kendro and SPX Corporation will be entitled to
injunctive relief (including any temporary restraining order or emergency,
preliminary or final injunction), damages, and reimbursement of costs and
reasonable attorneys' fees from Marc and Thermo Electron.

        Please let me know if you have any questions regarding what is
prohibited by this restriction.





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>16
<FILENAME>tmok01ex10-12.txt
<TEXT>
                                                                   Exhibit 10.12

                           THERMO ELECTRON CORPORATION

                         EMPLOYEES EQUITY INCENTIVE PLAN
                         -------------------------------


             As amended and restated effective as of February 7, 2002
             --------------------------------------------------------



1.      Purpose
        -------

        The purpose of this Employees Equity Incentive Plan (the "Plan") is to
secure for Thermo Electron Corporation (the "Company") and its Stockholders the
benefits arising from capital stock ownership by employees of, and consultants
to, the Company and its subsidiaries or other persons who are expected to make
significant contributions to the future growth and success of the Company and
its subsidiaries. The Plan is intended to accomplish these goals by enabling the
Company to offer such persons equity-based interests, equity-based incentives or
performance-based stock incentives in the Company, or any combination thereof
("Awards").

2.      Administration
        --------------

        The Plan will be administered by the Board of Directors of the Company
(the "Board"). The Board shall have full power to interpret and administer the
Plan, to prescribe, amend and rescind rules and regulations relating to the Plan
and Awards, and full authority to select the persons to whom Awards will be
granted ("Participants"), determine the type and amount of Awards to be granted
to Participants (including any combination of Awards), determine the terms and
conditions of Awards granted under the Plan (including terms and conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture, restrictions, dividends and interest, if any,
on deferred amounts), waive compliance by a participant with any obligation to
be performed by him or her under an Award, waive any term or condition of an
Award, cancel an existing Award in whole or in part with the consent of a
Participant, grant replacement Awards, accelerate the vesting or lapse of any
restrictions of any Award, correct any defect, supply any omission or reconcile
any inconsistency in the Plan or in any Award and adopt the form of instruments
evidencing Awards under the Plan and change such forms from time to time. Any
interpretation by the Board of the terms and provisions of the Plan or any Award
thereunder and the administration thereof, and all action taken by the Board,
shall be final, binding and conclusive on all parties and any person claiming
under or through any party. No Director shall be liable for any action or
determination made in good faith. The Board may, to the full extent permitted by
law, delegate any or all of its responsibilities under the Plan to a committee
(the "Committee") appointed by the Board and consisting of members of the Board.
All references in the Plan to the "Board" shall mean the Board or a Committee of
the Board to the extent that the Board's powers or authority under the Plan have
been delegated to such Committee.

<PAGE>


3.      Effective Date
        --------------

        The Plan shall be effective as of the date first approved by the Board
of Directors. Grants of Awards under the Plan made prior to such approval shall
be effective when made (unless otherwise specified by the Board at the time of
grant.

4.      Shares Subject to the Plan
        --------------------------

        Subject to adjustment as provided in Section 10.6, the total number of
shares of common stock of the Company, par value $1.00 per share ("Common
Stock"), reserved and available for distribution under the Plan shall be
3,000,000 shares. Such shares may consist, in whole or in part, of authorized
and unissued shares or treasury shares.

        If any Award of shares of Common Stock requiring exercise by the
Participant for delivery of such shares expires or terminates without having
been exercised in full, is forfeited or is otherwise terminated without a
payment being made to the Participant in the form of Common Stock, or if any
shares of Common Stock subject to restrictions are repurchased by the Company
pursuant to the terms of any Award or are otherwise reacquired by the Company to
satisfy obligations arising by virtue of any Award, such shares shall be
available for distribution in connection with future Awards under the Plan.

5.      Eligibility
        -----------

        Employees of, and consultants to, the Company and its subsidiaries, or
other persons who are expected to make significant contributions to the future
growth and success of the Company and its subsidiaries shall be eligible to
receive Awards under the Plan. Directors and executive officers of the Company
shall not be eligible to receive Awards under the Plan. The Board, or other
appropriate committee or person to the extent permitted pursuant to the last
sentence of Section 2, shall from time to time select from among such eligible
persons those who will receive Awards under the Plan.

6.      Types of Awards
        ---------------

        The Board may offer Awards under the Plan in any form of equity-based
interest, equity-based incentive or performance-based stock incentive in Common
Stock of the Company or any combination thereof. The type, terms and conditions
and restrictions of an Award shall be determined by the Board at the time such
Award is made to a Participant.

        An Award shall be made at the time specified by the Board and shall be
subject to such conditions or restrictions as may be imposed by the Board and
shall conform to the general rules applicable under the Plan as well as any
special rules then applicable under federal tax laws or regulations or the
federal securities laws relating to the type of Award granted.


                                       2
<PAGE>

        Without limiting the foregoing, Awards may take the following forms and
shall be subject to the following rules and conditions:

        6.1    Options
               -------

        An option is an Award that entitles the holder on exercise thereof to
purchase Common Stock at a specified exercise price. Options granted under the
Plan shall be options that are not intended to meet the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") applicable to
incentive stock options ("non-statutory options").


        6.1.1 Option Price. The price at which Common Stock may be purchased
upon exercise of an option shall be determined by the Board, provided however,
the exercise price shall not be less than 85% of the fair market value per share
of the Common Stock as of the date of the grant.


        6.1.2 Option Grants. The granting of an option shall take place at the
time specified by the Board. Options shall be evidenced by option agreements.
Such agreements shall conform to the requirements of the Plan, and may contain
such other provisions (including but not limited to vesting and forfeiture
provisions, acceleration, change of control, protection in the event of merger,
consolidations, dissolutions and liquidations) as the Board shall deem
advisable. Option agreements shall expressly state that the option grant is
intended to qualify as a non-statutory option.

        6.1.3 Option Period. An option will become exercisable at such time or
times (which may be immediately or in such installments as the Board shall
determine) and on such terms and conditions as the Board shall specify. The
option agreements shall specify the terms and conditions applicable in the event
of an option holder's termination of employment during the option's term.


        Any exercise of an option must be in accordance with the instructions
described in "The Guide for Employees of Thermo Electron Corporation Stock
Option Plans," as may be amended from time to time (the "Guide").

        6.1.4  Payment of Exercise  Price.  Stock  purchased on exercise of an
option shall be paid for in accordance with the instructions described in the
Guide.


        6.1.5 Buyout Provision. The Board may at any time offer to buy out for a
payment in cash, shares of Common Stock, deferred stock or restricted stock, an
option previously granted, based on such terms and conditions as the Board shall
establish and communicate to the option holder at the time that such offer is
made.

        6.2    Restricted and Unrestricted Stock
               ---------------------------------

        An Award of restricted stock entitles the recipient thereof to acquire
shares of Common Stock upon payment of the purchase price subject to
restrictions specified in the instrument evidencing the Award.

<
                                       3
<PAGE>
>


        6.2.1 Restricted Stock Awards. Awards of restricted stock shall be
evidenced by restricted stock agreements. Such agreements shall conform to the
requirements of the Plan, and may contain such other provisions (including
restriction and forfeiture provisions, change of control, protection in the
event of mergers, consolidations, dissolutions and liquidations) as the Board
shall deem advisable.

        6.2.2 Restrictions. Until the restrictions specified in a restricted
stock agreement shall lapse, restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of, and upon certain
conditions specified in the restricted stock agreement, must be resold to the
Company for the price, if any, specified in such agreement. The restrictions
shall lapse at such time or times, and on such conditions, as the Board may
specify. The Board may at any time accelerate the time at which the restrictions
on all or any part of the shares shall lapse.


        6.2.3 Rights as a Stockholder. A Participant who acquires shares of
restricted stock will have all of the rights of a stockholder of the Company
with respect to such shares except as otherwise limited pursuant to the
Participant's restricted stock agreement. Unless the Board otherwise determines,
certificates evidencing shares of restricted stock will remain in the possession
of the Company until such shares are free of all restrictions under the Plan.


        6.2.4 Purchase Price. The purchase price of shares of restricted stock
shall be determined by the Board, in its sole discretion, but such price may not
be less than the par value of such shares.

        6.2.5  Other  Awards  Settled  With  Restricted  Stock.  The Board may
provide that any or all the Common Stock delivered pursuant to an Award will be
restricted stock.

        6.2.6 Unrestricted Stock. The Board may, in its sole discretion, sell to
any Participant shares of Common Stock free of restrictions under the Plan for a
price determined by the Board, but which may not be less than the par value per
share of the Common Stock.

        6.3    Deferred Stock
               --------------

        6.3.1 Deferred Stock Award. A deferred stock Award entitles the
recipient to receive shares of deferred stock, which is Common Stock to be
delivered in the future. Delivery of the Common Stock will take place at such
time or times, and on such conditions, as the Board may specify. The Board may
at any time accelerate the time at which delivery of all or any part of the
Common Stock will take place.

        6.3.2 Other Awards Settled with Deferred Stock. The Board may, at the
time any Award described in this Section 6 is granted, provide that, at the time
Common Stock would otherwise be delivered pursuant to the Award, the Participant
will instead receive an instrument evidencing the right to future delivery of
deferred stock.

        6.4    Performance Awards
               ------------------


<
                                       4
<PAGE>
>


        6.4.1 Performance Awards. A performance Award entitles the recipient to
receive, without payment, an amount, in cash or Common Stock or a combination
thereof (such form to be determined by the Board), following the attainment of
performance goals. Performance goals may be related to personal performance,
corporate performance, departmental performance or any other category of
performance deemed by the Board to be important to the success of the Company.
The Board will determine the performance goals, the period or periods during
which performance is to be measured and all other terms and conditions
applicable to the Award.

        6.4.2 Other Awards Subject to Performance Conditions. The Board may, at
the time any Award described in this Section 6 is granted, impose the condition
(in addition to any conditions specified or authorized in this Section 6 of the
Plan) that performance goals be met prior to the Participant's realization of
any payment or benefit under the Award.

7.      Purchase Price and Payment
        --------------------------

        Except as otherwise provided in the Plan, the purchase price of Common
Stock to be acquired pursuant to an Award shall be the price determined by the
Board, provided that such price shall not be less than the par value of the
Common Stock. Except as otherwise provided in the Plan, the Board may determine
the method of payment of the exercise price or purchase price of an Award
granted under the Plan and the form of payment. The Board may determine that all
or any part of the purchase price of Common Stock pursuant to an Award has been
satisfied by past services rendered by the Participant. The Board may agree at
any time, upon request of the Participant, to defer the date on which any
payment under an Award will be made.


8.      Intentionally Omitted
        ---------------------


9.      Change in Control
        -----------------

        9.1    Impact of Event
               ---------------

        In the event of a "Change in Control" as defined in Section 9.2, the
following provisions shall apply, unless the agreement evidencing the Award
otherwise provides (by specific explicit reference to Section 9.2 below). If a
Change in Control occurs while any Awards are outstanding, then, effective upon
the Change in Control, (i) each outstanding stock option or other stock-based
Award awarded under the Plan that was not previously exercisable and vested
shall become immediately exercisable in full and will no longer be subject to a
right of repurchase by the Company, (ii) each outstanding restricted stock award
or other stock-based Award subject to restrictions and to the extent not fully
vested, shall be deemed to be fully vested, free of restrictions and no longer
subject to a right of repurchase by the Company, and (iii) deferral limitations
and conditions that relate solely to the passage of time, continued employment
or affiliation will be waived and removed as to deferred stock Awards and
performance Awards; performance of other conditions (other than conditions
relating solely to the passage of time, continued employment or affiliation)
will continue to apply unless otherwise provided in the agreement evidencing the
Award or in any other agreement between the Participant and the Company or
unless otherwise agreed by the Board.


<
                                       5
<PAGE>
>


        9.2    Definition of "Change in Control"
               --------------------------------

        "Change in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):

        (a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of Thermo Electron Corporation
("Thermo Electron") if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) 40% or
more of either (i) the then-outstanding shares of common stock of Thermo
Electron (the "Outstanding TMO Common Stock") or (ii) the combined voting power
of the then-outstanding securities of Thermo Electron entitled to vote generally
in the election of directors (the "Outstanding TMO Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition by
Thermo Electron, (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Thermo Electron or any corporation controlled
by Thermo Electron, or (iii) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i) and (ii) of subsection (c) of this
definition; or

        (b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of Thermo Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo Electron), where the term "Continuing Director" means at any date a
member of the Thermo Board (i) who was a member of the Thermo Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Thermo Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (ii) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Thermo Board; or

        (c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Thermo Electron or a sale
or other disposition of all or substantially all of the assets of Thermo
Electron in one or a series of transactions (a "Business Combination"), unless,
immediately following such Business Combination, each of the following two
conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding TMO Common Stock and
Outstanding TMO Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns Thermo Electron or substantially all of Thermo
Electron's assets either directly or through one or

<
                                       6
<PAGE>
>


more subsidiaries) (such resulting or acquiring corporation is referred to
herein as the "Acquiring Corporation") in substantially the same proportions as
their ownership, immediately prior to such Business Combination, of the
Outstanding TMO Common Stock and Outstanding TMO Voting Securities,
respectively; and (ii) no Person (excluding the Acquiring Corporation or any
employee benefit plan (or related trust) maintained or sponsored by Thermo
Electron or by the Acquiring Corporation) beneficially owns, directly or
indirectly, 40% or more of the then outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding
securities of such corporation entitled to vote generally in the election of
directors; or

        (d)    approval by the  stockholders of Thermo  Electron of a complete
liquidation or dissolution of Thermo Electron.

10.     General Provisions
        ------------------

        10.1   Documentation of Awards
               -----------------------

        Awards will be evidenced by written instruments, which may differ among
Participants, prescribed by the Board from time to time. Such instruments may be
in the form of agreements to be executed by both the Participant and the Company
or certificates, letters or similar instruments which need not be executed by
the participant but acceptance of which will evidence agreement to the terms
thereof. Such instruments shall conform to the requirements of the Plan and may
contain such other provisions (including provisions relating to events of
merger, consolidation, dissolution and liquidations, change of control and
restrictions affecting either the agreement or the Common Stock issued
thereunder), as the Board deems advisable.

        10.2   Rights as a Stockholder
               -----------------------

        Except as specifically provided by the Plan or the instrument evidencing
the Award, the receipt of an Award will not give a Participant rights as a
stockholder of the Company with respect to any shares covered by an Award until
the date of issue of a stock certificate to the participant for such shares.

        10.3   Conditions on Delivery of Stock
               -------------------------------

        The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove any restriction from shares previously
delivered under the Plan (a) until all conditions of the Award have been
satisfied or removed, (b) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, (c)
if the outstanding Common Stock is at the time listed on any stock exchange,
until the shares have been listed or authorized to be listed on such exchange
upon official notice of issuance, and (d) until all other legal matters in
connection with the issuance and delivery of such shares have been approved by
the Company's counsel. If the sale of Common Stock has not been registered under
the Securities Act of 1933, as amended, the Company may require, as a condition
to exercise of the Award, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such act and may require
that the certificates evidencing such Common Stock bear an appropriate legend
restricting transfer.

<
                                       7
<PAGE>
>


        If an Award is exercised by the participant's legal representative, the
Company will be under no obligation to deliver Common Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.

        10.4   Tax Withholding
               ---------------

        The Company will withhold from any cash payment made pursuant to an
Award an amount sufficient to satisfy all federal, state and local withholding
tax requirements (the "withholding requirements").

        In the case of an Award pursuant to which Common Stock may be delivered,
the Board will have the right to require that the participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the Board
with regard to such requirements, prior to the delivery of any Common Stock. If
and to the extent that such withholding is required, the Board may permit the
participant or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirement.

        10.5   Transferability of Awards
               -------------------------

        Except as may be authorized by the Board, in its sole discretion, no
Award (other than an Award in the form of an outright transfer of cash or Common
Stock not subject to any restrictions) may be transferred other than by will or
the laws of descent and distribution, and during a Participant's lifetime an
Award requiring exercise may be exercised only by him or her (or in the event of
incapacity, the person or persons properly appointed to act on his or her
behalf). The Board may, in its discretion, determine the extent to which Awards
granted to a Participant shall be transferable, and such provisions permitting
or acknowledging transfer shall be set forth in the written agreement evidencing
the Award executed and delivered by or on behalf of the Company and the
Participant.

        10.6   Adjustments in the Event of Certain Transactions
               ------------------------------------------------

        (a) In the event of a stock dividend, stock split or combination of
shares, or other distribution with respect to holders of Common Stock other than
normal cash dividends, the Board will make (i) appropriate adjustments to the
maximum number of shares that may be delivered under the Plan under Section 4
above, and (ii) appropriate adjustments to the number and kind of shares of
stock or securities subject to Awards then outstanding or subsequently granted,
any exercise prices relating to Awards and any other provisions of Awards
affected by such change.

        (b) In the event of any recapitalization, merger or consolidation
involving the Company, any transaction in which the Company becomes a subsidiary
of another entity, any sale or other disposition of all or a substantial portion
of the assets of the Company or any similar transaction, as determined by the
Board, the Board in its discretion may make appropriate adjustments to
outstanding Awards, including, without limitation: (i) accelerate the
exercisability of the Option,

<
                                       8
<PAGE>
>


or (ii) adjust the terms of the Option (whether or not in a manner that complies
with the requirements of Section 424(a) of the Internal Revenue Code of 1986, as
amended (the "Code")), or (iii) if there is a survivor or acquiror entity,
provide for the assumption of the Option by such survivor or acquiror or an
affiliate thereof or for the grant of one or more replacement options by such
survivor or acquiror or an affiliate thereof, in each case on such terms (which
may, but need not, comply with the requirements of Section 424(a) of the Code)
as the Board may determine, or (iv) terminate the Option (provided, that if the
Board terminates the Option, it shall, in connection therewith, either (A)
accelerate the exercisability of the Option prior to such termination, or (B)
provide for a payment to the holder of the Option of cash or other property or a
combination of cash or other property in an amount reasonably determined by the
Board to approximate the value of the Option assuming an exercise immediately
prior to the transaction, or (C) if there is a survivor or acquiror entity,
provide for the grant of one or more replacement options pursuant to clause
(iii) above), or (v) provide for none of, or any combination of, the foregoing.

        (c) No fraction of a share or fractional shares shall be purchasable or
deliverable pursuant to this Section 10.6.

        10.7   Employment Rights
               -----------------

        Neither the adoption of the Plan nor the grant of Awards will confer
upon any person any right to continued employment with the Company or any
subsidiary or interfere in any way with the right of the Company or subsidiary
to terminate any employment relationship at any time or to increase or decrease
the compensation of such person. Except as specifically provided by the Board in
any particular case, the loss of existing or potential profit in Awards granted
under the Plan will not constitute an element of damages in the event of
termination of an employment relationship even if the termination is in
violation of an obligation of the Company to the employee.

        Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Board at the time. For purposes of this Plan, transfer of
employment between the Company and its subsidiaries shall not be deemed
termination of employment.

        10.8   Other Employee Benefits
               -----------------------

        The value of an Award granted to a Participant who is an employee, and
the amount of any compensation deemed to be received by an employee as a result
of any exercise or purchase of Common Stock pursuant to an Award or sale of
shares received under the Plan, will not constitute "earnings" or "compensation"
with respect to which any other employee benefits of such employee are
determined, including without limitation benefits under any pension, stock
ownership, stock purchase, life insurance, medical, health, disability or salary
continuation plan.


<
                                       9
<PAGE>
>


        10.9   Legal Holidays
               --------------

        If any day on or before which action under the Plan must be taken falls
on a Saturday, Sunday or legal holiday, such action may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.

        10.10  Foreign Nationals
               -----------------

        Without amending the Plan, Awards may be granted to persons who are
foreign nationals or employed outside the United States or both, on such terms
and conditions different from those specified in the Plan, as may, in the
judgment of the Board, be necessary or desirable to further the purpose of the
Plan.

11.     Termination and Amendment
        -------------------------

        The Plan shall remain in full force and effect until terminated by the
Board. Subject to the last sentence of this Section 11, the Board may at any
time or times amend the Plan or any outstanding Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards. No amendment of the Plan or any agreement evidencing
Awards under the Plan may adversely affect the rights of any participant under
any Award previously granted without such participant's consent.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.34
<SEQUENCE>17
<FILENAME>tmok01ex10-34.txt
<TEXT>
                                                                   Exhibit 10.34

Thermo Electron
81 Wyman Street
Post Office Box 9046                                              (781) 622-1000
Waltham, MA 02454-9046                                       Fax: (781) 622-1207



Brian Holt
President and CEO
Thermo Ecotek Corporation


May 18, 2000



Dear Brian:

As we have discussed, Thermo Electron Corporation (the Company) has announced a
reorganization of the company in which certain of the company's assets will be
sold. We recognize that your past contributions have been integral to the
success of the Company and that your continued involvement will be necessary in
order to facilitate these sales and to assure a smooth transition for potential
buyers.

In order to provide an incentive for you to remain with the company through the
completion of these sales, we will pay you a Transaction Bonus.

Transaction Bonus
- -----------------

You will be paid the amounts indicated below for the sale or disposition of the
following businesses. If the actual sale price of any business exceeds its
target price, .5% of the difference between the actual sale price and the target
price will be added to your transaction bonus for that business. If the actual
sale price on any business is below its target price, you will be paid a portion
of the Transaction Bonus. The portion will equal the sale price divided by the
target price times the listed Transaction Bonus rounded up to the nearest
hundred. (EXAMPLE: If FES sold for $40,000,000 your bonus would be $44,500
($40,000,000 divided by $45,000,000 times $50,000 equals $44,444. Rounded up to
the next hundred equals $44,500)

These Transaction Bonuses will be paid to you in a lump sum payment on or before
ninety (90) days following the closing date of each sale unless you and I
mutually agree to an alternate payment date.

<TABLE>
<CAPTION>
<S>                                       <C>                     <C>

                                                          Transaction Bonus
Businesses to be sold               Target Price           At Target Price
- ---------------------               ------------          -----------------

FES                                 $ 45,000,000              $ 50,000
NuTemp Inc.                         $ 16,000,000              $ 18,000
Tecogen                             $  6,000,000              $  7,000
Optronics                           $  6,000,000              $  7,000
Peek                                $ 85,000,000              $ 93,000
Retec Consulting                    $ 45,000,000              $ 49,000
Nutech                              $ 17,000,000              $ 19,000
TPST Soil                           $ 15,000,000              $ 16,000
Fluids                              $ 13,000,000              $ 14,000
Killam                              $ 45,000,000              $ 49,000
Lancaster Labs                      $ 60,000,000              $ 66,000
Eurotech                            $  5,000,000              $  6,000
Normandeau                          $  5,000,000              $  6,000
Green Sunrise                       $  5,000,000              $  6,000
Metal Treaters                      $ 12,000,000              $ 13,000
Trilogy                             $ 30,000,000              $ 31,000
                                    ------------              --------

Total                               $410,000,000              $450,000

</TABLE>

Terms of Agreement
- ------------------

1. The Company agrees to continue to employ you on the same terms and with the
same benefits you currently enjoy as an employee-at-will. In return, you agree
to remain in such employ and to continue to devote your full time and best
efforts to the Company as an employee-at-will until the closing date of the sale
of these businesses.

<PAGE>

2. You understand that the Company retains the right to terminate your services
without cause (as defined below) and you retain the right to terminate your
services from the Company at any time. If your employment is terminated by the
company without cause prior to the closing of these business sales, you will be
paid your full and unreduced Transaction Bonus payments at the time of the
sales. If you terminate your employment prior to the final closing date, or the
Company terminates your employment for "cause" (as defined below), you will
forfeit any and all payments that you would be entitled to for unsold businesses
covered under this agreement.

3. For the purposes of this agreement, "cause" shall be determined by the
Company in the exercise of good faith and reasonable judgment and will include
any breach of this agreement by you or any act by you of gross personal
misconduct, insubordination, misappropriation of funds, fraud, dishonesty, gross
neglect of or failure to perform the duties reasonably required of you pursuant
to this agreement or any conduct which is in willful violation of any applicable
law or regulation pertaining to the business.

4. For purposes of this agreement we agree that the businesses will be
considered to be sold when any person or entity, other than a person or entity
affiliated with the Company, purchases at least fifty percent (50%) of the
assets or shares of the individual businesses, whether through a purchase of the
business or a purchase of the company of which the business is a part.

5. You understand that all payments made under this agreement are subject to
appropriate federal, state, city or other tax withholding requirements.

6. You acknowledge that this Transaction Bonus Agreement supersedes any prior
agreements or understandings oral or written between you and the Company
pertaining to any Transaction Bonus incentive payments being offered to
employees of businesses being sold in connection with the reorganization and
that this agreement constitutes the entire agreement between us with regard to
Transaction Bonuses.

On behalf of Thermo Electron, I thank you for your continued assistance and
support. If you have any questions regarding any of the terms of this Agreement,
please do not hesitate to contact me.

Once you have read and understood the terms of this Agreement, please indicate
your agreement by signing below on the line above your typewritten name, make a
copy for your records and return the original document to me.

                                            Very truly yours,


                                            /s/ Anne Pol
                                            -----------------------
                                            Sr. Vice President
                                            Thermo Electron


Accepted and agreed:

/s/ Brian D. Holt                          01/06/2000
- -----------------------------              ------------
Brian Holt                           Date: June 1, 2000

<
                                       2
<PAGE>
>





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>18
<FILENAME>tmok01ex23.txt
<TEXT>
                                                                      Exhibit 23

                   Consent of Independent Public Accountants

      As independent public accountants, we hereby consent to the incorporation
by reference of our reports dated February 7, 2002 (except with respect to the
matters discussed in Note 19, as to which the date is February 25, 2002),
included in or incorporated by reference into Thermo Electron Corporation's
Annual Report on Form 10-K for the year ended December 29, 2001, into the
Company's previously filed Registration Statement No. 33-00182 on Form S-8,
Registration Statement No. 33-8993 on Form S-8, Registration Statement No.
33-8973 on Form S-8, Registration Statement No. 33-16460 on Form S-8,
Registration Statement No. 33-16466 on Form S-8, Registration Statement No.
33-25052 on Form S-8, Registration Statement No. 33-37865 on Form S-8,
Registration Statement No. 33-37867 on Form S-8, Registration Statement No.
33-36223 on Form S-8, Registration Statement No. 33-52826 on Form S-8,
Registration Statement No. 33-52804 on Form S-8, Registration Statement
No. 33-52806 on Form S-8, Registration Statement No. 33-52800 on Form S-8,
Registration Statement No. 33-37868 on Form S-8, Registration Statement No.
33-51187 on Form S-8, Registration Statement No. 33-51189 on Form S-8,
Registration Statement No. 33-54347 on Form S-8, Registration Statement No.
33-54453 on Form S-8, Registration Statement No. 33-65237 on Form S-8,
Registration Statement No. 33-61561 on Form S-8, Registration Statement No.
33-58487 on Form S-8, Registration Statement No. 333-01277 on Form S-3,
Registration Statement No. 333-01893 on Form S-3, Registration Statement No.
333-19535 on Form S-8, Registration Statement No. 333-19633-01 on Form S-4,
Registration Statement No. 333-34909-01 on Form S-3, Registration Statement No.
333-14265 on Form S-8, Registration Statement No. 333-62957 on Form S-3,
Registration Statement No. 333-90761 on Form S-8, Registration Statement No.
333-90823 on Form S-8, Registration Statement No. 333-94627 on Form S-8,
Registration Statement No. 333-32035-01 on Form S-3, Registration Statement No.
333-48432 on Form S-8, Registration Statement No. 333-46408 on Form S-8,
Registration Statement No. 333-43702 on Form S-8, Registration Statement No.
333-43698 on Form S-8, Registration Statement No. 333-40578 on Form S-8,
Registration Statement No. 333-40576 on Form S-8, Registration Statement No.
333-33070 on Form S-8, Registration Statement No. 333-33062 on Form S-8,
Registration Statement No. 333-33068 on Form S-8, Registration Statement No.
333-33064 on Form S-8, Registration Statement No. 333-33058 on Form S-8,
Registration Statement No. 333-33066 on Form S-8, Registration Statement No.
333-33060 on Form S-8, Registration Statement No. 333-33074 on Form S-8,
Registration Statement No. 333-33072 on Form S-8, Registration Statement No.
333-60024 on Form S-3, Registration Statement No. 333-62004 on Form S-8,
Registration Statement No. 333-76670 on Form S-8, and Registration Statement No.
333-83470 on Form S-8.



                                                    Arthur Andersen LLP



Boston, Massachusetts
March 14, 2002


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>19
<FILENAME>tmok01ex21.txt
<TEXT>
<TABLE>
<CAPTION>
<S>                                                                             <C>               <C>
                                                                                               Exhibit 21
                                   THERMO ELECTRON CORPORATION

                                  Subsidiaries of the Registrant

As of February 28, 2002, Thermo Electron Corporation owned the following companies:


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ---------------------------------------------------------------------------------------------------------

Thermo Coleman Corporation                                                   Delaware             100
    Thermo Information Solutions Inc.                                        Delaware             100
Peter Brotherhood Holdings Ltd.                                               England             100
    Aircogen Ltd.                                                             England              80
    Peter Brotherhood Limited                                                 England             100
        Peter Brotherhood Pension Fund Trustees Ltd.                          England             100
        Thermo Electron Realty Limited                                        England             100
    Thermo Holdings Limited                                                   England             100
Thermo Electron, S.A. de C.V.                                                 Mexico              100
Fi SA                                                                         France              100
Gulf Precision, Inc.                                                          Arizona             100
    Seeley Enterprises, Inc.                                                New Mexico            100
Thermo Hypersil-Keystone Inc.                                              Pennsylvania           100
Loftus Furnace Company                                                     Pennsylvania           100
Met-Therm, Inc.                                                                Ohio               100
NAPCO, Inc.                                                                 Connecticut           100
Nicolet Biomedical of California Inc.                                       California            100
North East Surgical Tool Corp.                                             Massachusetts          100
North Carbondale Minerals, Inc.                                             California            100
Thermo WI, Inc.                                                              Wisconsin            100
Perfection Heat Treating Company                                             Michigan             100
San Marcos Resource Recovery, Inc.                                          California            100
Staten Island Cogeneration Corporation                                       New York             100
TE Great Lakes Inc.                                                          Michigan             100
TEC Cogeneration Inc.                                                         Florida             100
South Florida Cogeneration Associates                                         Florida              50*
TEC Energy Corporation                                                      California            100
    North County Resource Recovery  Associates                              California            100*
    (50% of which is owned directly by
     San Marcos Resource Recovery, Inc.)
Thermo Electron Export Inc.                                                  Barbados             100
Thermo Foundation, Inc.                                                    Massachusetts          100
Thermo Leasing Corporation                                                   Delaware             100
    Thermo Capital Company LLC                                               Delaware              50
Walpak Company                                                               Illinois             100
Thermo Detection Inc.                                                        Delaware             100
    Thermo Orion Inc.                                                      Massachusetts          100
        Orion Research Limited                                                England             100
        Thermo Orion Puerto Rico Inc.                                        Delaware             100
        Russell pH Limited                                                   Scotland             100
    Thermo Keytek LLC                                                        Delaware             100
    ThermedeTec Corporation                                                  Delaware             100


<PAGE>




                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

        Thermedics Detection de Argentina S.A.                               Argentina             99
        (additionally 1% of the shares are owned
        directly by Thermo Detection Inc.)
        Thermedics Detection de Mexico, S.A. de C.V.                          Mexico               99
        (additionally 1% of the shares are owned
        directly by Thermo Detection Inc.)
        Thermedics Detection Limited                                          England             100
        Thermedics Detection Scandinavia AS                                   Norway              100
Allen Coding Systems Limited                                                  England             100
    Thermo Allen Coding Corporation                                          Delaware             100
Goring Kerr Limited                                                           England             100
    Best Checkweighers Limited                                                England             100
    Intertest (UK) Limited                                                    England             100
Goring Kerr Detection Limited                                                 England             100
    Goring Kerr (NZ) Limited                                                New Zealand           100
    Goring Kerr Canada Inc.                                                   Canada              100
Ramsey France S.A.R.L.                                                        France              100
Ramsey Ingenieros S.A.                                                         Spain              100
Ramsey Italia S.R.L.                                                           Italy              100
    Tecno Europa Elettromeccanica S.R.L.                                       Italy              100
Thermo Ramsey Inc.                                                         Massachusetts          100
Xuzhou Ramsey Technology Development Co., Limited                              China               50*
Thermo Sentron Australia Pty. Ltd.                                           Australia            100
Thermo Sentron Canada Inc.                                                    Canada              100
Thermo Sentron Limited                                                        England             100
    Hitech Electrocontrols Limited                                            England             100
        Hitech Licenses Ltd.                                                  England             100
        Hitech Metal Detectors Ltd.                                           England             100
    Westerland Engineering Ltd.                                               England             100
Thermo Sentron (South Africa) Pty. Ltd.                                    South Africa           100
Thermo Voltek Europe B.V.                                                   Netherlands           100
    Comtest Italia S.R.L.                                                      Italy              100
    Comtest Limited                                                           England             100
UVC Realty Corp.                                                             New York             100
Thermo Administrative Services Corporation                                   Delaware             100
Independent Power Services Corporation                                        Nevada              100
KFP Operating Company, Inc.                                                  Delaware             100
KFx Fuel Partners, L.P.                                                      Delaware             100
MBPL Agriwaste Corporation                                                  California            100
Thermo Electron of Maine, Inc.                                                 Maine              100
    Gorbell/Thermo Electron Power Company                                      Maine               80*
Star/RESC LLC                                                                  Texas               75
Ulna Incorporated                                                           California            100
Thermo Electron Foundation, Inc.                                           Massachusetts          100
Thermo Electron Metallurgical Services, Inc.                                   Texas              100
Analytical Instrument Development, Inc.                                    Pennsylvania           100
Eberline Instrument Company Limited                                           England             100
Thermo Eberline Corporation                                                 New Mexico            100


<
                                       2
<PAGE>
>


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

Epsilon Industrial Inc.                                                        Texas              100
Thermo Life Sciences Limited                                                  England             100
    Kenbury Limited                                                           England             100
    Denley Ltd.                                                               England             100
Thermo Gas Tech, Inc.                                                       California            100
    Gas Tech Partnership                                                    California             50*
    Thermo Gastech Ltd.                                                       Canada              100
Life Sciences International Limited                                           England             100
    Comdata Services Limited                                                  England             100
        Lipshaw Limited                                                       England             100
        Luckham Limited                                                       England             100
        Phicom Limited                                                        England             100
        Southions Investments Limited                                         England             100
        Sungei Puntar Rubber Estate Limited                                   England             100
        Westions Limited                                                      England             100
        Whale Scientific Limited                                              England             100
        Forma Scientific Ltd.                                                 England             100
    Ravensward Ltd.                                                           England             100
    E-C Apparatus Ltd.                                                        England             100
    Shandon (Germany) Ltd.                                                    England             100
    Savant Instruments Ltd.                                                   England             100
    Helmet Securities Limited                                                 England             100
        Life Sciences International Kft                                       Hungary             100
        Life Sciences International, Inc.                                  Pennsylvania           100
           LSI (US) Inc.                                                     Delaware             100
        LSI North America Service Inc.                                       Delaware             100
        Life Sciences International Holdings BV                             Netherlands           100
           Life Sciences International (Poland) SP z O.O                      Poland              100
    Britlowes Limited                                                         England             100
    Commendstar Limited                                                       England             100
    Consumer & Video Holdings Limited                                         England             100
        Video Communications Limited                                          England             100
    Greensecure Projects Limited                                              England             100
        Hybaid Limited                                                        England             100
           Equibio Limited                                                    England             100
               Cell One S.A.R.L.                                              France              100
    Labsystems Europe SA                                                       Spain              100
    Labsystems Ges mbH                                                        Austria             100
    Omnigene Limited                                                          England            58.50
    Shenbridge Limited                                                        England             100
    Southern Instruments Holdings Limited                                     England             100
        Finishlong Ltd.                                                       England             100
Gamma-Metrics Minerals Pty Ltd.                                              Australia            100
Thermo Gamma-Metrics Inc.                                                   California            100
    Thermo Electron India Private Limited                                      India              100
Thermo MF Physics Corporation                                                Delaware             100
Thermo Radiometrie Corporation                                               Delaware             100
    Spectra-Physics VisionTech, Inc.                                         Delaware             100


<
                                       3
<PAGE>
>


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

Radiometrie U.S.A., Inc.                                                    California            100
Radiometrie Limited                                                           England             100
National Nuclear Corporation                                                California            100
    Thermo Nucleonics LLC                                                    Delaware              51
    (additionally, 49% of the shares are owned directly
    by TBA Nucleonics Holding Corporation)
ONIX Systems Inc.                                                            Delaware             100
    Thermo Process Instruments GP, LLC                                       Delaware             100
    Thermo Process Instruments LP                                            Delaware             99.9
    (an additional 0.1% of Thermo Process Instruments LP
    is owned by Thermo Process Instruments GP, LLC)
    ONIX Holdings Limited                                                     England             100
        CAC UK Limited                                                        England             100
        ONIX Measurement Limited                                              England             100
        ONIX Process Analysis Limited                                         England             100
           Thermo ONIX B.V.                                                 Netherlands           100
VG Systems Japan K.K.                                                          Japan              100
Thermo Nicolet Corporation                                                   Wisconsin            100
    Thermo Electron German Holdings Inc.                                     Delaware             35.4
    (7.2% of shares are owned directly by Dynex
    Technologies Inc., 6.6% of shares are owned directly
    by Radiometrie Corporation, 19.3% of shares are owned
    directly by Thermo Electron Corporation, 29.3% of
    shares are owned directly by Finnigan MAT (Nevada)
    Inc., 2.2% of shares are owned directly by ThermedTec Corp.)
    Thermo Vacuum Generators Inc.                                            Delaware             100
    FI Instruments Inc.                                                      Delaware             100
    Thermo Haake Inc.                                                        Delaware             100
    Scintag, Inc.                                                           California            100
    Thermo Spectronic Inc.                                                   Delaware             100
        SLM International Inc.                                               Illinois             100
    Thermo Elemental Inc.                                                  Massachusetts          100
        Thermo ARL U.S. LLC                                                  Delaware             100
        A.R.L. Applied Research Laboratories S.A.                           Switzerland           100
           Fisons Instruments (Proprietary) Limited                        South Africa           100
           Thermo Optek Wissenschaftliche Gerate GesmbH                       Austria             100
        Baird Do Brazil Representacoes Ltda.                                  Brazil              100
        Beijing Baird Analytical Instrument Technology Co. Limited             China              100
    Thermo Cahn Corporation                                                  Wisconsin            100
        Mattson Instruments Limited                                           England             100
        Thermo Optek Limited                                                  England             100
           Thermo VG Systems Limited                                          England             100
           Norlab Instruments Ltd.                                            England             100
           Thermo Elemental Limited                                           England             100
           Unicam Limited                                                     England             100
               Unicam Export Limited                                          England             100
        Unicam Italia SpA                                                      Italy              100
        Unicam S.A.                                                           Belgium             100


<
                                       4
<PAGE>
>


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

    Thermo Instruments Nordic AB                                              Sweden              100
    Nicolet Japan K.K.                                                         Japan              100
    Thermo Spectra-Tech Inc.                                                 Wisconsin            100
    Optek Securities Corporation                                           Massachusetts          100
    Planweld Holding Limited                                                  England             100
        Thermo Electron Limited                                               England             100
    Thermo Nicolet Limited                                                    England             100
        Hilger Analytical Limited                                             England             100
    Thermo Instrument Systems Japan Holdings, Inc.                           Delaware             100
        Nippon Jarrell-Ash Company, Ltd.                                       Japan              100
    Thermo Instruments (Canada) Inc.                                          Canada              100
        Unicam Analytical Inc.                                                Canada              100
Thermo Optek Materials Analysis (S.E.A.) Pte Limited                         Singapore            100
Gould Instrument Systems, Inc.                                                 Ohio               100
    Gould & Nicolet S.A.                                                      France               95
        (additionally, 5% of the shares are owned directly by
        Thermo Electron Corporation)
Thermo Kevex X-Ray Inc.                                                      Delaware             100
Thermo NESLAB Inc.                                                         New Hampshire          100
Nicolet Instrument Technologies Inc.                                         Wisconsin            100
Thermo Noran Inc.                                                            Wisconsin            100
ThermoSpectra Limited                                                         England             100
    Nicolet Technologies Ltd.                                                 England             100
Spectrace Instruments Inc.                                                  California            100
Thermo Electron Sweden Forvaltning AB                                         Sweden              100
    Spectra-Physics AB                                                        Sweden               99
        Spectra-Physics Holdings USA, Inc.                                   Delaware             100
           Pharos Holdings, Inc.                                             Delaware             100
               Thermo BLH Inc.                                               Delaware             100
                  Pharos de Costa Rica S.A.                                 Costa Rica            100
               Automatic Power, Inc.                                         Delaware             100
           Pharos Tech, Inc.                                                 Delaware             100
           Spectra-Physics, Inc.                                             Delaware             100
               Laser Analytical Systems GmbH                                  Germany             100
                  Laser Analytical Systems, Inc.                            California            100
               Opto Power Corporation                                        Delaware             100
               Spectra-Physics Laser Data Systems, Inc.                      Delaware             100
               Spectra-Physics France S.A.                                    France              100
               Spectra-Physics GmbH                                           Germany             100
               Spectra-Physics K.K.                                            Japan              100
               Spectra-Physics Lasers B.V.                                  Netherlands           100
               Spectra-Physics Lasers Ltd.                                    England             100
           Spectra-Physics Foreign Sales Corp.                               Barbados             100
           Spectra-Physics Canada Ltd.                                        Canada              100
        Spectra-Physics Holdings Plc                                          England             100
           Automatic Power Ltd.                                               England             100
           Prizerest Ltd.                                                     England             100
        Spectra-Physics Holdings S.A.                                         France              100


<
                                       5
<PAGE>
>


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

        Saroph B.V.                                                         Netherlands           100
        Thermo Radiometrie Oy                                                 Finland             100
        Thermo Radiometrie KK                                                  Japan              100
        Spectra Precision (Asia) Pte. Ltd.                                   Singapore            100
        Saroph Sweden AB                                                      Sweden              100
           Thermo Nobel AB                                                    Sweden              100
               Nobel Electronique S.A.R.L.                                    France              100
               Thermo Nobel Oy                                                Finland             100
               Nobel Elektronikk A/S                                          Norway              100
               AB Givareteknik                                                Sweden              100
               Thermo Nobel  Ltd.                                             England             100
Thermo Finnigan LLC                                                          Delaware             100
    Finnigan Instruments, Inc.                                               New York             100
    Finnigan International Sales, Inc.                                      California            100
    Finnigan MAT China, Inc.                                                California            100
    Finnigan MAT (Delaware), Inc.                                            Delaware             100
    Finnigan MAT Instruments, Inc.                                            Nevada              100
    Finnigan MAT International Sales, Inc.                                  California            100
    Finnigan MAT (Nevada), Inc.                                               Nevada              100
        Finnigan MAT S.R.L.                                                    Italy              100
           Thermo Separation Products S.R.L.                                   Italy              100
        Thermo Masslab Limited                                                England             100
           H.D. Technologies Limited                                          England             100
        Thermo Instruments Australia Pty. Limited                            Australia            100
        Thermo Finnigan Ltd.                                                  England             100
           Hypersil Limited                                                   England             100
           ThermoQuest AB                                                     Sweden              100
    Finnigan Properties, Inc.                                                Delaware             100
        Thermo Electron Business Trust                                     Massachusetts          100
           TMOI Inc.                                                         Delaware             100
Thermo Forma Inc.                                                            Delaware             100
    Thermo IEC Inc.                                                          Delaware             100
        International Equipment Company Limited                               England             100
    Thermo Savant Inc.                                                       New York             100
Life Sciences International (Hong Kong) Limited                              Hong Kong            100
TMQ SEG (Hong Kong) Limited                                                  Hong Kong            100
ThermoQuest Italia S.p.A.                                                      Italy              100
ThermoQuest Spain S.A.                                                         Spain              100
ThermoQuest Wissenschaftliche Gerate GmbH                                     Austria             100
Thermo Separation Products AG                                               Switzerland           100
ThermoQuest K.K.                                                               Japan              100
Thru-Put Systems, Inc.                                                        Florida             100
Fisons Instruments NV                                                         Belgium             100
Fisons Instruments K.K.                                                        Japan              100
Thermo Haake Ltd.                                                             England             100
Thermo Haake (U.K.) Limited                                                   England             100
Thermo Instrumentos Cientificos S.A.                                           Spain              100
Thermo BioAnalysis Corporation                                               Delaware             100


<
                                       6
<PAGE>
>


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

    Thermo Holding European Operations Corp.                                 Delaware              85
    (an additional 15% is owned by Thermo Electron German Holdings Inc.)
        Thermo Luxembourg Holding S.a.r.l.                                  Luxembourg            100
           Grond & Watersaneringstechniek Nederland B.V.                    Netherlands           100
               Thermo Instruments B.V.                                      Netherlands           100
                  ThIS Automation B.V.                                      Netherlands           100
                  Thermo Instruments NV                                       Belgium             100
                  Thermo Analytical B.V.                                    Netherlands           100
                  This Lab Systems B.V.                                     Netherlands           100
                  Thermo Scientific B.V.                                    Netherlands           100
                  This Gas Analysis Systems B.V.                            Netherlands           100
                      Thermo Euroglas B.V.                                  Netherlands           100
                          Thermo Electron Deutschland Verwaltvngs GmbH        Germany             100
                          Thermo Luxembourg S.a.r.l.                        Luxembourg            100
                             Thermo Electron Deutschland GmbH & Co. KG        Germany             100
                                 Thermo BioSciences GmbH                      Germany             100
                                    Thermo Finnigan GmbH                      Germany              90
                                    (additionally, 10% of the shares
                                    are owned directly by Thermo
                                    Electron Corporation)
                                        Thermo Life Sciences GmbH             Germany             100
                                        Thermo Hypersil GmbH                  Germany             100
                                        Thermo Finnigan GmbH                  Germany             100
                                    Thermo Nicolet  GmbH                      Germany             100
                                    Thermo Haake GmbH                         Germany              90
                                    (additionally, 10% of the shares
                                    are owned directly by Thermo
                                    Nicolet Corporation)
                                    ESM Andersen Instruments GmbH             Germany             100
                                 ITC Grundstucksverwaltungs GmbH              Germany             100
                                    ITC Grundstucksverwaltungs GmbH & Co.     Germany              90
                                    (additionally 10% of the shares
                                    are owned by ITC Holdings Inc.)
                                 Thermo BLH GmbH                              Germany             100
                                 Thermo Shandon GmbH                          Germany             100
                                 Thermo Radiometrie GmbH                      Germany              90
                                 (additionally 10% of the shares are
                                 owned directly by Thermo Electron
                                 Corporation)
                                    ESM Eberline Instruments GmbH             Germany             100
                                 Thermo LabSystems Vertriebs GmbH             Germany             100
                                 Thermo Ramsey GmbH                           Germany             100
                                 Thermo Nobel GmbH                            Germany             100
                                 Thermo Detection GmbH                        Germany             100


<
                                       7
<PAGE>
>


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

                                 ThermoSpectra GmbH                           Germany             100
                                    Gould Nicolet Messtechnik GmbH            Germany             100
                                        Thermo NORAN GmbH                     Germany             100
                  ThermoSpectra  B.V.                                       Netherlands           100
                      Thermo Finance Company B.V.                           Netherlands           100
                      Thermo Neslab BV                                      Netherlands           100
                      Thermo Finnigan B.V.                                  Netherlands           100
                          Thermo Separation Products B.V. B.A.                Belgium             100
                      Fisons Instruments BV                                 Netherlands           100
                      Thermo LabSystems B.V.                                Netherlands           100
                      Life Sciences International (Benelux) B.V.            Netherlands           100
                      Thermo Ramsey B.V.                                    Netherlands           100
                      Thermo Moisture Systems B.V.                          Netherlands           100
                      Thermo MeasureTech B.V.                               Netherlands           100
                          Thermo Measuretech Canada Inc.                      Canada              100
                      Thermo Optek Holding B.V.                             Netherlands           100
                      Thermo Optek B.V.                                     Netherlands           100
                          Thermo Optek N.V.                                   Belgium              99
                          (additionally, 1% of the shares are owned
                          by Thermo Optek Holding B.V.)
                      Nicolet Technologies B.V.                             Netherlands           100
                      NORAN Instruments B.V.                                Netherlands           100
           Thermo TLH (U.K.) Limited                                          England             100
           Thermo TLH LP                                                     Delaware            99.99*
           (additionally 0.01% is owned by Thermo TLH (U.K.) Limited
    Thermo BioStar Inc.                                                      Delaware             100
    Data Medical Associates, Inc.                                              Texas              100
        DMA Latinoamericana S.A. de C.V.                                      Mexico               50
    Labsystems (SEA) Pte. Ltd.                                               Singapore            100
    Fastighets AB Skrubba                                                     Sweden              100
    Dynex Technologies spol. s.r.o.                                       Czech Republic          100
    Thermo DYNEX Inc.                                                        Virginia             100
    Labsystems, Inc.                                                         Delaware             100
    Thermo BioAnalysis Japan K.K.                                              Japan              100
    Thermo Labsystems OY                                                      Finland             100
        Thermo Labsystems (Shanghai) Co. Ltd.                                  China               90
        Thermo Labsystems India Pvt. Ltd.                                      India              100
        Thermo Clinical Labsystems Oy                                         Finland             100
        Labsystems (Hong Kong) Limited                                       Hong Kong             99
        JSC Thermo Labsystems                                                 Russia               95
    Labsystems Sweden AB                                                      Sweden              100
    Thermo Shandon Ltd.                                                       England             100
        Anglia Scientific Instruments Limited                                 England             100
        Shandon Southern Instruments Limited                                  England             100
    Thermo Shandon Inc.                                                    Pennsylvania           100
        E-C Apparatus Corporation                                             Florida             100
        Whale Scientific Corporation                                         Colorado             100
        ALKO Diagnostic Corporation                                        Massachusetts          100


<
                                       8
<PAGE>
>


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

    TBA Nucleonics Holding Corporation                                       Delaware             100
    Thermo BioAnalysis (Guernsey) Ltd.                                    Channel Islands         100
    Thermo BioAnalysis Limited                                                England             100
        Thermo Fast U.K. Limited                                              England             100
    Thermo Projects Limited                                                   England             100
        Dynex Technologies Limited                                            England             100
        Thermo LabSystems Limited                                             England             100
    Thermo Electron Holding France SA.                                        France              100
        Thermo Finnigan France                                                France              100
           Finnigan Automass S.A.                                             France              100
           Thermo Hypersil S.A.                                               France              100
        Konelab SA                                                            France              100
        Shandon France S.A.                                                   France              100
        Thermo Radiometrie                                                    France              100
        Thermo Instruments SAS                                                France              100
           Rutter Instrumentation S.A.R.L.                                    France              100
        Thermo Optek S.A.R.L.                                                 France              100
        Thermo LabSystems S.A.R.L.                                            France              100
        Thermo Rheo S.A.                                                      France              100
        Labsystems S.A.R.L.                                                   France              100
    Thermo LabSystems (Australia) Pty Limited                                Australia            100
    Thermo LabSystems Inc.                                                 Massachusetts          100
    BioAnalysis Labsystems, S.A.                                              Spain               100
    Thermo Trace Ltd.                                                        Australia            100
        Trace BioSciences Pty. Ltd.                                          Australia            100
        Thermo Trace BioSciences NZ Limited                                 New Zealand            99
        Trace America, Inc.                                                   Florida             100
        Herbos Dijaganosticka                                                 Croatia              50
        Shanghai Long March Chiron Trace Medical Science Co. Ltd.              China               22
Thermo Environmental Instruments Inc.                                       California            100
    Thermo Andersen Inc.                                                     Delaware             100
        Andersen Instruments Limited                                          England             100
Thermo Instruments do Brasil Ltda.                                            Brazil              100
(1% of which shares are owned directly
by Thermo Jarrell Ash Corporation)
Van Hengel Holding B.V.                                                     Netherlands           100
    Thermo Optek S.A.                                                          Spain              100
Thermo Automation Systems Inc.                                               Delaware             100
    Thermo CIDTEC Inc.                                                       New York             100
    Thermo Centro Vision Inc.                                                Delaware             100
    Hilger Crystals Limited                                                   England             100
    Thermo Laser Science Inc.                                                Delaware             100
    Thermo Oriel Corporation                                                 Delaware             100
Thermo Power Corporation                                                   Massachusetts          100
    ACI Holdings Inc.                                                        New York             100
    T-Lyte Corporation                                                       Delaware              98
Holcroft (Canada) Limited                                                     Canada              100


<
                                       9
<PAGE>
>


                                                                             STATE OR
                                                                          JURISDICTION OF      PERCENT OF
                                 NAME                                      INCORPORATION       OWNERSHIP
- ------------------------------------------------------------------------------------------------------------

TTT Metals of Minnesota Inc.                                                 Minnesota            100
    TTT Metals of California Inc.                                           California            100
TTT Metals of Wisconsin Inc.                                                 Wisconsin            100
TMA/Hanford, Inc.                                                           Washington            100
Clark-Trombley Consulting Engineers, Inc.                                    Michigan             100
Thermo REI Inc.                                                              Michigan             100
Randers Engineering of Massachusetts, Inc.                                   Michigan             100
RGPC Inc.                                                                    Michigan             100
Thermo RDC Inc.                                                              Michigan             100
Thermo VTC Inc.                                                              Michigan             100
Fellows, Read & Associates, Inc.                                            New Jersey            100
    George A. Schock & Associates, Inc.                                     New Jersey            100
    Jennison Engineering, Inc.                                                Vermont             100
Lancaster Laboratories LLC                                                   Delaware             100
    Skinner & Sherman, Inc.                                                Massachusetts          100
Thermo EuroTech (Delaware) Inc.                                              Delaware             100
Thermo EuroTech Ireland Ltd.                                                  Ireland             100
ThermoRetec Corporation                                                      Delaware             100
    ThermoRetec Construction Corporation                                     Virginia             100
    GeoWest Golden Inc.                                                      Colorado             100
        GeoWest TriTechnics of Ohio, LLC                                     Colorado             100
    RETEC Thermal, Inc.                                                      Delaware             100
        TRI Oak Ridge LLC                                                    Delaware              50
        (additionally, 50% of the shares are owned
        directly by Coleman Services Incorporated)
        TRUtech L.L.C.                                                       Delaware            47.5*
Thermo Securities Corporation                                                Delaware             100
    Thermo Amex Finance, L.P.                                                Delaware              99*
        Thermo Amex Convertible Growth Fund I., L.P.                         Delaware              99*
Thermo Technology Ventures Inc.                                                Idaho              100
    Plasma Quench Investment Limited Partnership                             Delaware              60*
ThermoLase LLC                                                               Delaware             100
    ThermoLase Japan L.L.C.                                                   Wyoming              50*
Trex Medical Corporation                                                     Delaware             100
    Trex Medical Systems Corporation                                         Delaware             100
        Trophy Dental Inc.                                                   Virginia             100
    Trex Medical France S.A.                                                  France              100
        Trophy Radiologie S.A.                                                France              100
           Trophy Benelux S.A.                                                Belgium             100
           Trophy Radiologie Italia S.R.L.                                     Italy              100
           Trophy Radiologie Japan KK                                          Japan              100
           Trophy Radiologie GmbH                                             Germany             100
           P.T. Trophy Rajawali Indonesia                                    Indonesia             51*
           Trophy Radiologia Espana SA                                         Spain              100
           Trophy Radiologie U.K. Ltd.                                        England             100
Thermo Corporation                                                           Delaware             100

 * Joint Venture/Partnership

</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.36
<SEQUENCE>20
<FILENAME>tmok01ex10-36.txt
<TEXT>
                                                                   Exhibit 10.36

                           THERMO ELECTRON CORPORATION

                          EXECUTIVE SEVERANCE AGREEMENT


THIS  AGREEMENT  by  and  between  THERMO  ELECTRON   CORPORATION,   a  Delaware
corporation (the "Company"),  and Seth H. Hoogasian (the "Executive") is made as
of January 27, 2000 (the "Effective Date").

     WHEREAS,  the Company recognizes that the uncertainty  regarding the future
employment   prospects  for  key  personnel  may  result  in  the  departure  or
distraction   of  key  personnel  to  the  detriment  of  the  Company  and  its
stockholders;

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that appropriate  steps should be taken to reinforce and encourage the continued
employment  and  dedication of the Company's key personnel  without  distraction
from such uncertainty and related events and circumstances; and

     NOW, THEREFORE,  as an inducement for and in consideration of the Executive
remaining in its employ, the Company agrees that the Executive shall receive the
severance  benefits  set forth in this  Agreement  in the event the  Executive's
employment  with the Company is  terminated  under the  circumstances  described
below.

         1.       Key Definitions.
                  ---------------

     As used herein,  the following  terms shall have the  following  respective
meanings:

               1.1 "Change in Control" means an event or occurrence set forth in
any one or more of  subsections  (a)  through (d) below  (including  an event or
occurrence  that  constitutes a Change in Control under one of such  subsections
but is specifically exempted from another such subsection):

                    (a)  the  acquisition  by an  individual,  entity  or  group
(within the meaning of Section  13(d)(3) or 14(d)(2) of the Securities  Exchange
Act of 1934,  as  amended  (the  "Exchange  Act")) (a  "Person")  of  beneficial
ownership of any capital stock of the Company if, after such  acquisition,  such
Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange  Act) 40% or more of either (i) the  then-outstanding  shares of common
stock of the  Company  (the  "Outstanding  Company  Common  Stock")  or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding  Company Voting
Securities");  provided,  however, that for purposes of this subsection (a), the
following  acquisitions  shall  not  constitute  a Change  in  Control:  (i) any
acquisition by the Company,  (ii) any  acquisition by any employee  benefit plan
(or related  trust)  sponsored or maintained  by the Company or any  corporation
controlled by the Company, or (iii) any acquisition by any corporation  pursuant
to a transaction  which  complies with clauses (i) and (ii) of subsection (c) of
this Section 1.1; or

<PAGE>


                    (b) such time as the Continuing Directors (as defined below)
do not  constitute  a majority  of the Board (or,  if  applicable,  the Board of
Directors of a successor corporation to the Company), where the term "Continuing
Director"  means at any date a member  of the  Board (i) who was a member of the
Board on the date of the  execution of this  Agreement or (ii) who was nominated
or elected  subsequent  to such date by at least a majority of the directors who
were  Continuing  Directors at the time of such  nomination or election or whose
election to the Board was  recommended or endorsed by at least a majority of the
directors  who  were  Continuing  Directors  at the time of such  nomination  or
election;  provided, however, that there shall be excluded from this clause (ii)
any  individual  whose initial  assumption of office  occurred as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened  solicitation of proxies or consents, by
or on behalf of a person other than the Board; or

                    (c)   the   consummation   of   a   merger,   consolidation,
reorganization,  recapitalization  or statutory  share  exchange  involving  the
Company or a sale or other disposition of all or substantially all of the assets
of the Company in one or a series of  transactions  (a "Business  Combination"),
unless,  immediately following such Business Combination,  each of the following
two conditions is satisfied: (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding  Company Common Stock
and Outstanding  Company Voting  Securities  immediately  prior to such Business
Combination  beneficially  own,  directly  or  indirectly,  more than 60% of the
then-outstanding  shares of common  stock and the  combined  voting power of the
then-outstanding  securities  entitled  to vote  generally  in the  election  of
directors,  respectively,  of the  resulting  or acquiring  corporation  in such
Business  Combination (which shall include,  without  limitation,  a corporation
which as a result of such transaction  owns the Company or substantially  all of
the Company's assets either directly or through one or more subsidiaries)  (such
resulting  or  acquiring  corporation  is referred  to herein as the  "Acquiring
Corporation")  in  substantially   the  same  proportions  as  their  ownership,
immediately  prior to such  Business  Combination,  of the  Outstanding  Company
Common Stock and Outstanding Company Voting Securities,  respectively;  and (ii)
no Person (excluding the Acquiring  Corporation or any employee benefit plan (or
related  trust)  maintained  or  sponsored  by the  Company or by the  Acquiring
Corporation) beneficially owns, directly or indirectly,  40% or more of the then
outstanding  shares  of common  stock of the  Acquiring  Corporation,  or of the
combined  voting power of the  then-outstanding  securities of such  corporation
entitled to vote generally in the election of directors; or

                    (d)  approval  by  the  stockholders  of  the  Company  of a
complete liquidation or dissolution of the Company.

               1.2 "Cause" means the Executive's  willful  engagement in illegal
conduct or gross misconduct  which is materially and  demonstrably  injurious to
the  Company.  For purposes of this Section 1.2, no act or failure to act by the
Executive  shall be  considered  "willful"  unless it is done,  or omitted to be

<PAGE>

done, in bad faith and without  reasonable belief that the Executive's action or
omission was in the best interests of the Company.

     2. Term of Agreement. This Agreement, and all rights and obligations of the
parties  hereunder,  shall take effect upon the Effective  Date and shall expire
upon the first to occur of (a) the  expiration of the Term (as defined below) or
(b) the  fulfillment by the Company of all of its  obligations  under Sections 4
and 5.2 if the Executive's  employment with the Company  terminates prior to the
expiration  of the Term.  "Term"  shall  mean the  period  commencing  as of the
Effective Date and continuing in effect through December 31, 2002.

     3.  Not an  Employment  Contract.  The  Executive  acknowledges  that  this
Agreement  does not constitute a contract of employment or impose on the Company
any  obligation to retain the  Executive as an employee and that this  Agreement
does not prevent the Executive from terminating employment at any time.

     4.        Benefits to Executive.
               ---------------------

               4.1 Compensation.

                    (a) Termination Without Cause. If the Executive's employment
with the Company is  terminated  by the Company  (other than for Cause) then the
Executive shall be entitled to the following benefits:

                         (i) the Company  shall pay to the  Executive  in a lump
sum in cash within 30 days after the date of  termination  the  aggregate of the
following amounts:

                         (1) the sum of (A) two  times  the  Executive's  annual
     base salary as in effect immediately prior to the date of termination,  and
     (B)  the  amount  of  any  cash  compensation  previously  deferred  by the
     Executive  (together with any accrued interest or earnings thereon) and any
     accrued vacation pay, in each case to the extent not previously paid; and

                         (ii) for two years  after the date of  termination,  or
such  longer  period as may be provided  by the terms of the  appropriate  plan,
program,  practice or policy,  the Company shall continue to provide benefits to
the  Executive  and the  Executive's  family at least equal to those which would
have  been  provided  to  them  if  the  Executive's  employment  had  not  been
terminated,  in accordance  with the  applicable  benefit plans in effect on the
date of termination  or, if more favorable to the Executive and the  Executive's
family,  in effect  generally at any time  thereafter with respect to other peer
executives of the Company and its affiliated companies;  provided, however, that
if the Executive  becomes  reemployed  with another  employer and is eligible to
receive a particular type of benefits  (e.g.,  health  insurance  benefits) from
such  employer  on  terms  at  least  as  favorable  to the  Executive  and  the

<PAGE>

Executive's  family as those  being  provided by the  Company,  then the Company
shall no  longer  be  required  to  provide  those  particular  benefits  to the
Executive and the Executive's family;

                         (iii) to the extent not  previously  paid or  provided,
the Company  shall timely pay or provide to the  Executive  any other amounts or
benefits  required to be paid or provided or which the  Executive is eligible to
receive  following the  Executive's  termination  of employment  under any plan,
program,  policy,  practice,  contract  or  agreement  of the  Company  and  its
affiliated  companies  (such other  amounts and  benefits  shall be  hereinafter
referred to as the "Other Benefits"); and

                         (iv) for purposes of determining  eligibility  (but not
the time of commencement  of benefits) of the Executive for retiree  benefits to
which the  Executive is entitled,  the  Executive  shall be  considered  to have
remained employed by the Company until two years after the date of termination.

                    (b)  Termination  for Cause.  If the Company  terminates the
Executive's  employment  with the Company for Cause,  then the Company shall (i)
pay the  Executive,  in a lump  sum in cash  within  30 days  after  the date of
termination,  the sum of (A) the  Executive's  base  salary  through the date of
termination and (B) the amount of any cash compensation  previously  deferred by
the Executive,  in each case to the extent not  previously  paid and (ii) timely
pay or provide to the Executive the Other Benefits.

               4.2  Mitigation.  The Executive shall not be required to mitigate
the amount of any payment or benefits  provided for in this Section 4 by seeking
other  employment  or  otherwise.   Further,   except  as  provided  in  Section
4.1(a)(ii), the amount of any payment or benefits provided for in this Section 4
shall not be reduced by any compensation  earned by the Executive as a result of
employment by another employer,  by retirement  benefits,  by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.

         5.       Disputes.
                  --------

               5.1  Settlement  of  Disputes;  Arbitration.  All  claims  by the
Executive for benefits under this Agreement  shall be directed to and determined
by the Board of Directors of the Company and shall be in writing.  Any denial by
the Board of  Directors of a claim for benefits  under this  Agreement  shall be
delivered to the  Executive in writing and shall set forth the specific  reasons
for the denial and the specific  provisions of this  Agreement  relied upon. The
Board of Directors shall afford a reasonable  opportunity to the Executive for a
review of the  decision  denying a claim.  Any  further  dispute or  controversy
arising under or in connection with this Agreement shall be settled  exclusively
by arbitration  in Boston,  Massachusetts,  in accordance  with the rules of the
American Arbitration  Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.

               5.2 Expenses.  The Company agrees to pay as incurred, to the full
extent permitted by law, all legal, accounting and other fees and expenses which

<PAGE>

the  Executive  may  reasonably  incur  as a  result  of any  claim  or  contest
(regardless  of the outcome  thereof) by the  Company,  the  Executive or others
regarding the validity or  enforceability  of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive  regarding the amount of any payment or benefits
pursuant to this  Agreement),  plus in each case interest on any delayed payment
at the  applicable  Federal rate  provided for in Section  7872(f)(2)(A)  of the
Internal Revenue Code.

         6.       Successors.
                  ----------

               6.1 Successor to Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially  all of the business or assets of the Company  expressly to
assume and agree to perform  this  Agreement to the same extent that the Company
would be required to perform it if no such  succession had taken place.  As used
in this  Agreement,  "Company"  shall mean the Company as defined  above and any
successor  to its business or assets as  aforesaid  which  assumes and agrees to
perform this Agreement, by operation of law or otherwise.

               6.2 Successor to  Executive.  This  Agreement  shall inure to the
benefit  of  and  be   enforceable   by  the   Executive's   personal  or  legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
devisees and legatees.  If the Executive should die while any amount would still
be payable to the Executive or the Executive's family hereunder if the Executive
had continued to live, all such amounts, unless otherwise provided herein, shall
be paid in  accordance  with  the  terms  of this  Agreement  to the  executors,
personal representatives or administrators of the Executive's estate.

     7.  Notice.  All  notices,  instructions  and  other  communications  given
hereunder  or in  connection  herewith  shall be in  writing.  Any such  notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable
nationwide  overnight courier service, in each case addressed to the Company, at
81 Wyman Street, Waltham,  Massachusetts and to the Executive at the Executive's
principal  residence as currently reflected on the Company's records (or to such
other address as either the Company or the  Executive may have  furnished to the
other in  writing in  accordance  herewith).  Any such  notice,  instruction  or
communication shall be deemed to have been delivered five business days after it
is sent by registered  or certified  mail,  return  receipt  requested,  postage
prepaid,  or one  business  day  after  it is sent  via a  reputable  nationwide
overnight  courier  service.  Either party may give any notice,  instruction  or
other  communication  hereunder  using  any  other  means,  but no such  notice,
instruction or other  communication  shall be deemed to have been duly delivered
unless and until it actually is received by the party for whom it is intended.



<PAGE>


         8.       Miscellaneous.
                  -------------

               8.1  Severability.  The  invalidity  or  unenforceability  of any
provision of this Agreement shall not affect the validity or  enforceability  of
any other  provision  of this  Agreement,  which shall  remain in full force and
effect.

               8.2 Injunctive  Relief.  The Company and the Executive agree that
any breach of this  Agreement  by the  Company is likely to cause the  Executive
substantial  and  irrevocable  damage  and  therefore,  in the event of any such
breach, in addition to such other remedies which may be available, the Executive
shall have the right to specific performance and injunctive relief.

               8.3 Governing Law. The validity, interpretation, construction and
performance  of this  Agreement  shall be governed by the  internal  laws of the
Commonwealth of Massachusetts, without regard to conflicts of law principles.

               8.4 Waivers. No waiver by the Executive at any time of any
breach of, or compliance  with,  any provision of this Agreement to be performed
by the Company  shall be deemed a waiver of that or any other  provision  at any
subsequent time.

               8.5 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.

               8.6 Tax Withholding. Any payments provided for hereunder shall be
paid net of any applicable  tax  withholding  required  under federal,  state or
local law.

               8.7  Entire  Agreement.  This  Agreement  sets  forth the  entire
agreement  of the  parties  hereto in respect of the  subject  matter  contained
herein and supersedes all prior agreements,  promises, covenants,  arrangements,
communications,  representations or warranties,  whether oral or written, by any
officer,  employee  or  representative  of any party  hereto in  respect  of the
subject matter contained  herein,  and any prior agreement of the parties hereto
in respect of the  subject  matter  contained  herein is hereby  terminated  and
cancelled,  except  as  provided  in  the  next  sentence.  Notwithstanding  the
foregoing  sentence,  if the Executive is party to an agreement with the Company
providing  for the  payment of benefits in the event  employment  is  terminated
after a Change in Control (a "Change  in  Control  Agreement"),  such  Change in
Control  Agreement  shall not be terminated  or cancelled by this  Agreement and
such  Change  in  Control  Agreement  shall  survive  and  remain  in  effect in
accordance  with its own terms.  In the event the  Executive  actually  receives
benefits under the Change in Control Agreement,  the Executive shall not also be
entitled to receive benefits under this Agreement.

               8.8 Amendments. This Agreement may be amended or modified only by
a written instrument executed by both the Company and the Executive.

<PAGE>

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first set forth above.


                                THERMO ELECTRON CORPORATION


                                By:     /s/ Anne Pol
                                        --------------------------------
                                        Anne Pol
                                       Senior Vice President, Human Resources

                                EXECUTIVE:


                                        /s/ Seth H. Hoogasian
                                        -----------------------------------
                                        Seth H. Hoogasian





</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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