Document:

Exhibit 10.35

                              THERMO TERRATECH INC.

                   DEFERRED COMPENSATION PLAN FOR DIRECTORS

                      As amended and restated as of 9/10/99

Section 1. Participation.  Any director of Thermo TerraTech Inc. (the "Company")
may elect to have such percentage as he or she may specify of the fees otherwise
payable to him or her  deferred and paid to him or her as provided in this Plan.
A director who is also an employee of the Company or any subsidiary or parent of
the Company,  shall not be eligible to participate  in this Plan.  Each election
shall be made by notice in writing delivered to the Secretary of the Company, in
such  form  as the  Secretary  shall  designate,  and  each  election  shall  be
applicable  only  with  respect  to fees  earned  subsequent  to the date of the
election for the period  designated in the form. The term  "participant" as used
herein  refers to any director who shall have made an election.  No  participant
may  defer  the  receipt  of any fees to be  earned  after the later to occur of
either (a) the date on which the  participant  shall  retire  from or  otherwise
cease to engage in his or her principal occupation or employment or (b) the date
on which he or she shall cease to be a director of the Company,  or such earlier
date as the Board of Directors of the Company,  with the participant's  consent,
may  designate  (the  "deferral  termination  date").  In  the  event  that  the
participant's deferral termination date is the date on which he or she ceases to
engage in his or her principal  occupation or employment,  the  participant or a
personal  representative shall advise the Company of that date by written notice
delivered to the Secretary of the Company.

Section 2.  Establishment of Deferred  Compensation  Accounts.  There shall be
established  for  each  participant  an  account  to  be  designated  as  that
participant's deferred compensation account.

Section  3.  Allocations  to  Deferred  Compensation  Accounts.  There  shall be
allocated to each participant's  deferred compensation account, as of the end of
each  quarter,  an amount equal to his or her fees for that  quarter  which that
participant shall have elected to have deferred pursuant to Section 1.

Section 4. Stock  Units and Stock Unit  Accounts.  All  amounts  allocated  to a
participant's  deferred compensation account pursuant to Section 3 and Section 5
shall be converted, at the end of each quarter, into stock units by dividing the
accumulated balance in the deferred  compensation  account as of the end of that
quarter by the average last sale price per share of the  Company's  common stock
as reported in The Wall Street  Journal,  for the five  business  days up to and
including the last business day of that quarter.  The number of stock units,  so
determined,  rounded to the nearest  one-hundredth of a share, shall be credited
to a separate stock unit account to be established for the participant,  and the

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aggregate  value  thereof as of the last  business day of that quarter  shall be
charged to the participant's  deferred compensation account. No amounts credited
to the  participant's  deferred  compensation  account  pursuant  to  Section  5
subsequent  to the close of the fiscal  year in which  occurs the  participant's
deferral  termination  date shall be converted into stock units. Any such amount
shall be  distributed  in cash as  provided  in Section  8. A maximum  number of
25,000 shares of the Company's  common stock may be  represented  by stock units
credited under this Plan,  subject to  proportionate  adjustment in the event of
any stock dividend,  stock split or other capital change affecting the Company's
common stock.

Section  5.  Cash  Dividend  Credits.  Additional  credits  shall  be  made to a
participant's  deferred compensation account, until all distributions shall have
been made from the  participant's  stock unit  account,  in amounts equal to the
cash  dividends  (or the fair market value of dividends  paid in property  other
than  dividends  payable in common stock of the Company)  which the  participant
would have received from time to time had he or she been the owner on the record
dates for the payment of such dividends of the number of shares of the Company's
common  stock  equal to the number of units in his or her stock unit  account on
those dates.

Section  6.  Stock  Dividend  Credits.  Additional  credits  shall  be made to a
participant's  stock unit account,  until all distributions shall have been made
from the  participant's  stock unit  account,  of a number of units equal to the
number  of  shares  of the  Company's  common  stock,  rounded  to  the  nearest
one-hundredth share, which the participant would have received from time to time
as stock  dividends  had he or she been the  owner on the  record  dates for the
payments of such stock dividends of the number of units of the Company's  common
stock equal to the number of units  credited to his or her stock unit account on
those dates.

Section 7. Adjustments in the Event of Certain  Transactions.  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 number
of  units  then  credited  to  a   partipant's   stock  unit  account  shall  be
appropriately  adjusted on the same basis. 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
terminate the Plan pursuant to Section 11.

Section  8.  Distribution  of  Stock  and  Cash  After  Participant's   Deferral
Termination  Date. When a participant's  deferral  termination date shall occur,
the Company shall become obligated to make the  distributions  prescribed in the
following paragraphs (a) and (b).

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      (a) The Company shall  distribute to the  participant the number of shares
of the common  stock of the Company  which shall equal the total number of units
accumulated  in his or her stock unit account as of the close of the fiscal year
in which the participant's  deferral  termination date occurs. Such distribution
of stock shall be made in ten annual  installments,  unless, at least six months
prior to his or her  deferral  termination  date,  the  participant  shall  have
elected,  by notice in writing filed with the Secretary of the Company,  to have
such  distribution  made in five annual  installments.  In either such case, the
installments  shall be of as nearly  equal  number  of  shares  as  practicable,
adjusted to reflect  any  changes  pursuant to Sections 6 and 7 in the number of
units  remaining  in the  participant's  stock  unit  account.  The  first  such
installment  shall be  distributed  within 60 days after the close of the fiscal
year in which the participant's  deferral termination date occurs. The remaining
installments  shall be  distributed  at annual  intervals  thereafter.  Anything
herein to the contrary  notwithstanding,  the Company shall have the option,  if
its Board of  Directors  shall by  resolution  so  determine,  in lieu of making
distribution  in ten or five annual  installments  as set forth above,  with the
participant's consent, to distribute stock or any remaining installments thereof
in a single  distribution  at any time following the close of the fiscal year in
which the participant's deferral termination date occurs.  Distribution of stock
made  hereunder  may be made from  shares of common  stock held in the  treasury
and/or from shares of authorized but previously unissued shares of common stock.

      (b) The Company shall  distribute to the participant sums in cash equal to
the balance credited to his or her deferred compensation account as of the close
of the fiscal  year in which his or her  deferral  termination  date occurs plus
such  additional  amounts  as  shall  be  credited  thereto  from  time  to time
thereafter  pursuant  to Section 5. The cash  distribution  shall be made on the
same dates as the annual distributions made pursuant to paragraph (a) above, and
each cash  distribution  shall  consist of the entire  balance  credited  to the
participant's   deferred   compensation  account  at  the  time  of  the  annual
distribution.

      If a participant's  deferral termination date shall occur by reason of his
or her death or if he or she shall  die  after his or her  deferral  termination
date but prior to receipt of all distributions of stock and cash provided for in
this Section 8, all stock and cash remaining  distributable  hereunder  shall be
distributed to such  beneficiary  as the  participant  shall have  designated in
writing  and filed  with the  Secretary  of the  Company  or, in the  absence of
designation,  to the participant's personal  representative.  Such distributions
shall be made in the same  manner and at the same  intervals  as they would have
been made to the participant had he or she continued to live.

Section 9.  Participant's  Rights  Unsecured.  The right of any  participant  to
receive  distributions  under Section 8 shall be an unsecured  claim against the
general  assets of the  Company.  The Company may but shall not be  obligated to
acquire shares of its outstanding common stock from time to time in anticipation
of its obligation to make such distributions,  but no participant shall have any
rights in or against any shares of stock so acquired  by the  Company.  All such
stock shall  constitute  general assets of the Company and may be disposed of by
the Company at such time and for such purposes as it may deem appropriate.

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10.   Change in Control

      10.1  Impact of Event

In the event of a "Change in Control" as defined in Section 10.2, the Plan shall
terminate and full distribution  shall be made from all  participants'  deferred
compensation  accounts  and stock  unit  accounts  effective  upon the Change of
Control.

      10.2  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

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      (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.

Section 11. Amendment and Termination of the Plan. The Board of Directors of the
Company  may  amend or  terminate  the  Plan at any time and from  time to time,
provided, however, that no amendment adversely affecting credits already made to
any  participant's  deferred  compensation  account or stock unit account may be
made without the consent of that  participant or, if that  participant has died,
that participant's beneficiary.  Upon termination of the Plan, the Company shall
be obligated to  distribute  to the  participant  either of the following as the
Board of Directors of the Company,  in its sole discretion,  may determine:  (i)
the number of shares of the common  stock of the  Company  which shall equal the
total number of units accumulated in the participant's  stock unit account as of
the effective date of termination of the Plan or (ii) a sum in cash equal to the
balance credited to the participant's  deferred  compensation  account as of the
effective date of termination of the Plan.

                                       5Exhibit 10.36

                              THERMO TERRATECH INC.

                              EQUITY INCENTIVE PLAN

               As amended and restated effective as of 9/10/99

1.    Purpose

      The purpose of this Equity  Incentive  Plan (the  "Plan") is to secure for
Thermo  TerraTech Inc. (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 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 two or more members of the Board,  each
of whom shall be deemed a  "disinterested  person"  within  the  meaning of Rule
16b-3  (or any  successor  rule) of the  Securities  Exchange  Act of 1934  (the
"Exchange Act").

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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
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  reserved and available for  distribution  under the Plan
shall be  1,750,000  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 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 200,000 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.

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      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 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 permissible forms of payment.

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      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  must
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.

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      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

      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

                                       5
<PAGE>

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.    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 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.

                                       6
<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 more subsidiaries) (such

                                       7
<PAGE>

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  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 (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.

                                       9
<PAGE>

      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.

      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
<PAGE>

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.

                                       11

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