Exhibit 10.37

                              THERMO TERRATECH INC.

                           DIRECTORS STOCK OPTION PLAN

                As amended and restated effective as of 9/9/99

1.    Purpose

      The purpose of this  Directors  Stock  Option Plan (the  "Plan") of Thermo
TerraTech  Inc.  (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
75,000 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.

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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 1995,
shall be granted an option to purchase 1,000 shares of Common Stock at the close
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) three years after the grant date for options granted under
            Section 5(A), (b) two years after the Optionee  ceases to serve as a
            director of the Company, Thermo Electron or any subsidiary of Thermo
            Electron  (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 its terms by written notice
of intent to exercise the option,  specifying the number of shares of stock with
respect  to which the  option  is then  being  exercised.  The  notice  shall be
accompanied  by  payment  in the form of cash or shares  of Common  Stock of the
Company (the shares so tendered referred to herein as "Tendered  Shares") with a
then  current  market  value  equal to the  exercise  price of the  shares to be
purchased; provided, however, that such Tendered Shares shall have been acquired


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by the Optionee more than six months prior to the date of exercise  (unless such
requirement  is waived in writing by the  Company).  Against  such  payment  the
Company shall deliver or cause to be delivered to the Optionee a certificate for
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.

      B.    Tax Withholding

      The  Company  shall  have the right to deduct  from  payments  of any kind
otherwise  due to the  Optionee  any  federal,  state or local taxes of any kind
required by law to be withheld  with respect to any shares  issued upon exercise
of options under the Plan.  Subject to the prior approval of the Company,  which
may be withheld by the Company in its sole discretion, the Optionee may elect to
satisfy  such  obligations,  in whole or in part,  (i) by causing the Company to
withhold shares of Common Stock otherwise  issuable  pursuant to the exercise of
an option or (ii) by  delivering  to the Company  shares of Common Stock already
owned by the  Optionee.  The shares so delivered  or withheld  shall have a fair
market value equal to such withholding obligation.  The fair market value of the
shares used to satisfy such  withholding  obligation  shall be determined by the
Company  as of  the  date  that  the  amount  of  tax  to be  withheld  is to be
determined.  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.

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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 Options to avoid distortion in the operation of the Plan.

10.   Limitation of Rights in Option Stock

      The Optionees shall have no rights as stockholders in respect of shares as
to which their 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


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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
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


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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.

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


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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.

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.


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