Document:

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                                                                    Exhibit 10.3

                          TRANSITION SERVICES AGREEMENT

         THIS TRANSITION SERVICES AGREEMENT (this "Agreement") is made as of
__________, 2001, between Thermo Electron Corporation, a Delaware corporation
("Thermo Electron"), and Viasys Healthcare Inc., a Delaware corporation
("Viasys").

                                    RECITALS

         WHEREAS, Thermo Electron and Viasys have entered into a Plan and
Agreement of Distribution of even date herewith (the "Distribution Agreement")
that contemplates the distribution by Thermo Electron of all of the issued and
outstanding shares of Viasys Common Stock held by Thermo Electron to the
stockholders of Thermo Electron (the "Distribution");

         WHEREAS, each of Thermo Electron and Viasys wishes to provide for an
orderly and efficient separation of their businesses;

         WHEREAS, the successful operation of the business of Viasys following
the Distribution will require the performance of certain administrative services
that Thermo Electron has previously provided to Viasys and that Thermo Electron
is willing to continue to provide to Viasys; and

         WHEREAS, the Distribution Agreement contemplates the execution and
delivery of this Agreement, the purpose of which is to set forth certain matters
regarding the provision of administrative services by Thermo Electron to Viasys;

         NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:

         1.       DEFINITIONS. Capitalized terms not otherwise defined in this
Agreement shall have the meanings ascribed to them in the Distribution
Agreement.

         2.       SERVICES. During the term of this Agreement, as set forth in
Section 6 (the "Transition Period"), Thermo Electron shall provide, or cause its
Affiliates to provide, to Viasys, or its designated Affiliates, the services set
forth in this Section 2.

                  2.1.     ROUTINE SERVICES. Thermo Electron shall provide, or
cause one or more of the other members of the Thermo Electron Group to provide,
to Viasys or one or more of the other members of the Viasys Group designated by
Viasys the services identified in subparagraphs (a) through (k) below, in each
case to the extent that such services are routine and consistent with Thermo
Electron's past practices as set forth in the following two sentences
(collectively, "Routine Services") and as more fully described in previous
correspondence regarding the scope of services to be provided by Thermo Electron
to Viasys. Thermo Electron and/or one or more of the other members of the Thermo
Electron Group shall provide to the Viasys Group Routine Services in such
quantity and in the manner and at a level of service generally consistent with
that provided by one or more members of the Thermo Electron Group to the Viasys
Group during the two-year period prior to the Distribution (the "Base Period").
Notwithstanding the foregoing, with respect to Routine Services arising from
Viasys's reporting obligations under the Exchange Act and its other obligations
as a public company, Thermo Electron and/or one or

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more of the other members of the Thermo Electron Group shall provide to the
Viasys Group such services in such quantity and in the manner and at a level of
service generally consistent with that provided by one or more members of the
Thermo Electron Group to the publicly-held subsidiaries of Thermo Electron
during the Base Period. Thermo Electron shall determine, in good faith, what
services constitute Routine Services, and such determination shall not be
subject to challenge by any member of the Viasys Group unless made in bad faith.

                  (a)      ACCOUNTING AND SECURITIES COMPLIANCE RELATED
SERVICES. Until March 31, 2002, Thermo Electron shall assist, if and when
necessary, in the preparation of Viasys's routine Securities and Exchange
Commission filings, including without limitation Forms 10-K, 10-Q, 8-K and Proxy
Statements, assist in the preparation of Annual and Quarterly Reports to Viasys
stockholders, maintain internal audit support services and review compliance
with financial and accounting procedures.

                  (b)      TAX RELATED SERVICES. Until April 30, 2002, Thermo
Electron shall prepare Viasys's federal, state and local tax returns (including
income tax returns), conduct appropriate tax research and planning and assist
Viasys on federal, state or local tax audits.

                  (c)      INSURANCE AND RISK MANAGEMENT SERVICES. Until June
30, 2002, Thermo Electron shall arrange, at Viasys's expense, for liability,
property and casualty, and other normal business insurance coverage for the
Viasys Group. Thermo Electron shall also provide support for Viasys's product,
worker safety and environmental programs, although Viasys acknowledges that the
principal responsibility for compliance rests with Viasys.

                  (d)      CORPORATE RECORD KEEPING SERVICES. Until December 31,
2001, Thermo Electron shall maintain the corporate records of the Viasys Group,
including without limitation, maintaining minutes of meetings of the Boards of
Directors and Stockholders, supervising the transfer agent and registration
functions, coordinating stock repurchase programs and tracking stock issuances
and reserved shares.

                  (e)      EMPLOYEE BENEFIT RELATED SERVICES. Until December 31,
2001, Thermo Electron shall assist with the administration of the employee
benefit plans of Viasys.

                  (f)      INTERNAL AUDIT SERVICES. Until December 31, 2001,
Thermo Electron shall assist Viasys in conducting audits of the Viasys business
units using the criteria utilized by the Internal Audit Department in the past.

                  (g)      EXECUTIVE COMPENSATION SERVICES. Until December 31,
2001, Thermo Electron shall assist Viasys with the administration of stock
option plans and restricted stock arrangements for Viasys employees.

                  (h)      LEGAL SERVICES. Until December 31, 2001, Thermo
Electron shall provide legal assistance to Viasys as requested in the areas of
litigation, intellectual property, corporate and securities law, contract
review, and export/import law compliance.

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                  (i)      REAL ESTATE SERVICES. Until December 31, 2001, Thermo
Electron shall provide lease finance services to Viasys.

                  (j)      TREASURY SERVICES. Until December 31, 2001, Thermo
Electron shall provide Viasys domestic cash management support services,
domestic trade finance support services, international cash management support
services and credit support services.

                  (k)      INFORMATION SYSTEMS. Until December 31, 2001, Thermo
Electron shall provide Viasys with general contract support for the purchase by
Viasys of computer hardware, software and general long distance and wireless
services.

                  2.2.     EXTRAORDINARY SERVICES. In addition to Routine
Services, Viasys may from time to time request that Thermo Electron, or one or
more of the other members of the Thermo Electron Group, provide other services
to members of the Viasys Group, including, but not limited to, acquisition and
offering support services (collectively, "Extraordinary Services"). Thermo
Electron shall determine, in good faith, what services constitute Extraordinary
Services, and such determination shall not be subject to challenge by any member
of the Viasys Group unless made in bad faith. Thermo Electron may, in its sole
discretion, reject any request for Extraordinary Services.

                  2.3.     OTHER THERMO ELECTRON ACTIVITIES. Viasys recognizes
that the Thermo Electron Group now renders and may continue to render management
and other services to other companies that may or may not have policies and
conduct activities similar to those of the Viasys Group. The Thermo Electron
Group shall be free to render such advice and other services, and Viasys hereby
consents thereto. The Thermo Electron Group shall not be required to devote full
time and attention to the performance of its duties under this Agreement, but
shall devote only so much of its time and attention as it deems reasonable or
necessary to perform the services required hereunder.

         3.       ACCESS TO VIASYS'S INFORMATION. Viasys shall, and shall cause
the other members of the Viasys Group to, make available on a timely basis to
the Thermo Electron Group and its Representatives all information and materials
reasonably requested by Thermo Electron after the Distribution Date to enable it
and/or other members of the Thermo Electron Group to provide the services
hereunder. The Viasys Group shall afford to the Thermo Electron Group and its
Representatives reasonable access, during normal business hours and at such
other times as are reasonably required, to the Viasys Group premises for the
purpose of providing the services hereunder if such services are to be provided
at a facility not owned or operated by the Thermo Electron Group. It is
anticipated, however, that the services to be provided hereunder shall be
performed at Thermo Electron's facilities and that Thermo Electron or any member
of the Thermo Electron Group shall not be obligated to be resident at Viasys's
facilities unless mutually agreed between the parties hereto.

         4.       FEES; EXPENSES; PAYMENT.

                  4.1.     ROUTINE SERVICES. For performing Routine Services,
Thermo Electron will charge Viasys a quarterly fixed fee for any fiscal quarter
(or portion thereof) in which services are performed equal to 0.6% of the
consolidated revenues of Viasys for the fiscal quarter ending December 30,

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2001, 0.4% of the consolidated revenues of Viasys for the fiscal quarter ending
March 30, 2002, and 0.2% of the consolidated revenues of Viasys for the fiscal
quarter ending June 29, 2002 (such amount to be prorated on a daily basis for
any partial fiscal quarter).

                  4.2.     EXTRAORDINARY SERVICES. For performing Extraordinary
Services, Thermo Electron will charge Viasys a fee equal to the fair market
value of such services, as determined by Thermo Electron in good faith and on a
basis consistent with the fees charged by Thermo Electron to the Viasys Group
and Thermo Electron's publicly-held subsidiaries for such services during the
Base Period.

                  4.3.     THIRD PARTY EXPENSES. In addition to the fees for
Routine Services and Extraordinary Services provided above, Viasys shall pay the
costs of all services provided by outside providers to or for the benefit of the
Viasys Group, as well as all out-of-pocket costs incurred in connection with the
provision of such services. If any member of the Viasys Group is billed by the
provider directly, Viasys shall pay the bill directly. If any member of the
Thermo Electron Group is billed for such services, Thermo Electron may pay the
bill and charge Viasys the amount of the bill or forward the bill to Viasys for
payment by Viasys.

                  4.4.     MANNER OF PAYMENT. The charges for services pursuant
to this Section 4 will be determined and payable no less frequently than on a
quarterly basis. The charges will be due when billed and shall be paid no later
than 30 days from the date of billing. Overdue amounts will bear interest at ten
percent (10%) per annum, compounded monthly. No member of the Viasys Group shall
have any right of set off with respect to amounts to be paid pursuant to this
Agreement nor may it withhold payment during the pendency of any dispute with
respect to amounts to be paid to any member of the Thermo Electron Group
pursuant to this Agreement.

         5.       TAXES. Any taxes assessed on the provision of the services
hereunder shall be paid by Viasys to the extent such taxes are customarily borne
or passed through to the recipient of such services.

         6.       TERM OF AGREEMENT. The term of this Agreement shall commence
on the Distribution Date and shall continue until June 30, 2002.

         7.       CONFIDENTIALITY. Subject to any contrary requirement of law
and the right of each party to enforce its rights hereunder in any legal action,
each party shall keep strictly confidential, and shall use its reasonable
efforts to cause the other members of its respective Group and the
Representatives to keep strictly confidential, any Information of or concerning
the other party or the other party's Group which it may acquire pursuant to, or
in the course of performing its obligations under, this Agreement; provided,
however, that such obligation to maintain confidentiality shall not apply to
Information that: (i) at the time of disclosure was in the public domain, not as
a result of improper acts by the receiving party; (ii) is received by the
receiving party from a third party who did not receive such Information from the
disclosing party under an obligation of confidentiality; or (iii) is compelled
to be disclosed by judicial or administrative process or, in the opinion of such
party's counsel, by other requirements of law. Notwithstanding the foregoing,
each of Thermo Electron and Viasys shall be deemed to have satisfied its
obligations under this Section 7 with respect to any Information if it exercises
the same care with regard to such Information as it takes to preserve the
confidentiality of its own similar Information.

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         8.       INDEMNIFICATION. Viasys hereby agrees to indemnify, defend and
hold harmless each of the Thermo Electron Indemnitees from and against any and
all Indemnifiable Losses resulting from or in connection with third party claims
arising from the Thermo Electron Group's performance of the services hereunder,
unless such third party claims are due to Thermo Electron's gross negligence or
willful misconduct in performing the services hereunder. In defending against
the claim, Viasys shall have the right to employ counsel of its choosing and
shall at all times have the power to direct the defense against the claim.
Thermo Electron shall provide such assistance and cooperation, at Viasys's cost,
as Viasys may reasonably request in connection with the defense of any claim
with respect to which indemnity may be sought against Viasys pursuant to this
Section 8. In connection with any written requests by Viasys that Thermo
Electron take action on behalf of Viasys (including, without limitation,
transfer monies on behalf of Viasys), Viasys hereby agrees to indemnify, defend
and hold harmless each of the Thermo Electron Indemnitees from and against any
and all Indemnifiable Losses resulting from or in connection with action taken
in accordance with Viasys's written instructions.

         9.       MISCELLANEOUS.

                  9.1.     GOVERNING LAW. This Agreement shall be governed by
the laws of the State of Delaware.

                  9.2.     CONSTRUCTION. Each provision of this Agreement shall
be interpreted in a manner to be effective and valid to the fullest extent
permissible under applicable law. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions of
this Agreement that shall remain in full force and effect.

                  9.3.     COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement.

                  9.4.     AMENDMENTS; WAIVERS. This Agreement may be amended or
modified only in writing executed on behalf of Thermo Electron and Viasys. No
waiver shall operate to waive any further or future act and no failure to object
or forbearance shall operate as a waiver.

                  9.5.     NOTICES. All notices, requests, demands and other
communications under this Agreement shall be given in accordance with Section
11.6 of the Distribution Agreement.

                  9.6      SUCCESSORS AND ASSIGNS. This Agreement and any of the
rights and obligations of each party hereunder shall not be assigned, in whole
or in part, without the prior written consent of the other party, except that
Thermo Electron may delegate its obligations under this Agreement to Affiliates
of Thermo Electron consistent with Thermo Electron's past practice or in
connection with its merger or consolidation or the sale of substantially all of
its assets, provided that in such event Thermo Electron shall remain fully
liable for the fulfillment of all its obligations hereunder. This Agreement
shall be binding upon the parties and their respective successors and assigns to
the extent such assignments are in accordance with this Section 9.6.

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                  9.7.     INTERPRETATION. The Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. Whenever any words are used herein in the
masculine gender, they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply.

                  9.8.     NO THIRD-PARTY BENEFICIARIES. Except for the
provisions of Section 8 relating to Thermo Electron Indemnitees, which are also
for the benefit of such Thermo Electron Indemnitees other than Thermo Electron
and the other members of the Thermo Electron Group, this Agreement is solely for
the benefit of the parties hereto and the members of their respective Groups and
is not intended to confer upon any other Persons any rights or remedies
hereunder.

                  9.9.     COMPLETE AGREEMENT. This Agreement, the Distribution
Agreement and any schedules thereto and the Ancillary Agreements and other
documents referred to herein or therein shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with respect to
such subject matter. All matters arising out of the Distribution relating to
taxes shall be governed by the Tax Matters Agreement. In the event of any
inconsistency between the Tax Matters Agreement and this Agreement with respect
to such matters, the Tax Matters Agreement shall govern.

                  9.10.    CONSEQUENTIAL AND OTHER DAMAGES. Except as
specifically set forth in this Agreement, Thermo Electron makes no
representations, warranties or guaranties, express or implied, with respect to
the services to be provided by the Thermo Electron Group under this Agreement.
Notwithstanding anything to the contrary contained herein, no member of the
Thermo Electron Group shall be liable, whether in contract, in tort (including
negligence and strict liability), or otherwise, for any special, indirect,
incidental or consequential damages whatsoever, that in any way arise out of,
relate to, or are a consequence of, its performance or nonperformance hereunder,
or the provision of or failure to provide any service hereunder, including but
not limited to loss of profits, business interruptions and claims of customers
except insofar as such damage is the result of gross negligence or willful
misconduct of a member of the Thermo Electron Group.

                  9.11.    FORCE MAJEURE. Neither party shall be considered in
default in performance of its obligations under this Agreement to the extent
that its performance of such obligations is prevented or delayed by any cause
beyond its reasonable control, including but not limited to strikes, labor
disputes, civil disturbances, rebellion, invasion, epidemic, hostilities, war,
embargo, natural disaster, acts of God, fire, sabotage, loss and destruction of
property, changes in laws, regulations or orders, other events or situations
that the party was unable to prevent or overcome despite the exercise of due
diligence.

                  9.12.    INDEPENDENT CONTRACTOR. At all times during the term
hereof, all members of the Thermo Electron Group shall be independent
contractors in providing services hereunder with the sole right to supervise,
manage, operate, control, and direct the performance of such services and the
sole obligation to employ, compensate, and manage its employees and business
affairs. Nothing contained in this Agreement shall be deemed or construed to
create a partnership or joint venture, to create the relationships of
employee/employer or principal/agent, or otherwise

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create any liability whatsoever of either party hereto with respect to the
indebtedness, liabilities, obligations or actions of the other party, any
members of such other party's Group, the Representatives of such other party's
Group, or any other person or entity.

                  9.13.    COMPLIANCE WITH LAW. Nothing in this Agreement shall
require either party to take any action or omit to take any action in violation
of applicable law.

                  9.14.    VIASYS OFFICERS AND DIRECTORS. Nothing contained
herein shall be construed to relieve the directors or officers of Viasys from
the performance of their respective duties or to limit the exercise of their
powers in accordance with Viasys's Certificate of Incorporation or By-laws, each
as amended to date, or in accordance with any applicable statute or regulation.

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         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                  THERMO ELECTRON CORPORATION

                                  By: __________________________________________

                                      Name:_____________________________________

                                      Title:____________________________________

                                  VIASYS HEALTHCARE INC.

                                  By: __________________________________________
                                      Randy H. Thurman
                                      President and Chief Executive Officer

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                                                                    EXHIBIT 10.6

                             VIASYS HEALTHCARE INC.

                              EQUITY INCENTIVE PLAN

1.       PURPOSE

         The purpose of this Equity Incentive Plan (the "Plan") is to secure for
Viasys Healthcare Inc. (the "Company") and its Stockholders the benefits arising
from capital stock ownership by employees, officers 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 reference 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,
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.

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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 $.01 per share ("Common
Stock"), reserved and available for distribution under the Plan shall be
7,200,000 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, officers 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 1,800,000 shares of
Common Stock, subject to adjustment as provided under Section 10.6.

         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

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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 the par value per share of Common
Stock.

         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 writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (1) any additional
documents required by the Board and (2) payment in full in accordance with
Section 6.1.4 for the number of shares for which the option is exercised.

         6.1.4 PAYMENT OF EXERCISE PRICE. Stock purchased on exercise of an
option shall be paid for as follows: (1) in cash or by check (subject to such
guidelines as the Company may establish for this purpose), bank draft or money
order payable to the order of the Company or (2) if so permitted by the
instrument evidencing the option (or in the case of a non-statutory option, by
the Board at or after grant of the option), (i) through the delivery of shares
of Common Stock that have been outstanding for at least six months (unless the
Board expressly approves a shorter period) and that have a fair market value
(determined in accordance with procedures prescribed by the Board) equal to the
exercise price, (ii) by delivery of a promissory note of the option holder to
the Company, payable on such terms as are specified by the Board, (iii) by
delivery of an unconditional and irrevocable undertaking by a broker to deliver
promptly to the Company sufficient funds to pay the exercise price, or (iv) by
any combination of the foregoing permissible forms of payment.

         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.

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         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 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 with respect to
such shares including the right to receive dividends and to vote such shares.
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.

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         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

         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 a condition or
conditions (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>   6

8.       LOANS AND SUPPLEMENTAL GRANTS

         The Company may make a loan to a Participant, either on or after the
grant to the Participant of any Award, in connection with the purchase of Common
Stock under the Award or with the payment of any obligation incurred or
recognized as a result of the Award. The Board will have full authority to
decide whether the loan is to be secured or unsecured or with or without
recourse against the borrower, the terms on which the loan is to be repaid and
the conditions, if any, under which it may be forgiven.

         In connection with any Award, the Board may at the time such Award is
made or at a later date, provide for and make a cash payment to the participant
not to exceed an amount equal to (a) the amount of any federal, state and local
income tax or ordinary income for which the Participant will be liable with
respect to the Award, plus (b) an additional amount on a grossed-up basis
necessary to make him or her whole after tax, discharging all the participant's
income tax liabilities arising from all payments under the Plan.

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 conditions
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) that occurs after the
distribution by Thermo Electron Corporation, a Delaware corporation ("Thermo"),
to its stockholders of all or substantially all of the shares of the Company's
common stock, par value $0.01 per share, held beneficially by Thermo in a
tax-free spin-off under Section 355 of the Internal Revenue Code of 1986, as
amended:

                                       6
<PAGE>   7

         (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 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 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 Voting Securities"); PROVIDED, HOWEVER, that for purposes of this
subsection (a), the following acquisitions of shares of Common Stock 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 definition; 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 as of
the date of the original adoption of this Plan by the Board 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 Common Stock and Outstanding 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 Common Stock and Outstanding 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

                                       7
<PAGE>   8

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

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 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

                                       8
<PAGE>   9

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 sold, assigned, transferred,
pledged or otherwise encumbered 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, 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 to avoid distortion in the operation of the Plan.

         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

                                       9

<PAGE>   10

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.

         10.11 GOVERNING LAW

         The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.

11.      TERMINATION AND AMENDMENT

         The Plan shall terminate upon the earlier of (i) the close of business
on the day next preceding the tenth anniversary of the date of its adoption by
the Board (or approval by the Corporation's Stockholders if earlier), or (ii)
the date on which all shares available for issuance under the Plan shall have
been issued pursuant to the exercise or cancellation of options granted under
the Plan. If the date of termination is determined under (i) above, then the
options

                                       10
<PAGE>   11

outstanding on such date shall continue to have full force and effect in
accordance with the provisions of the option agreements evidencing such options.
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.

                                       11

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