10-K

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
              ----------------------------------------------------

                                    FORM 10-K

(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934 for the fiscal year ended December 28, 2002

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

                          Commission file number 1-8002

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

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

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

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

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

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

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

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

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

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ X ]  No [   ]

As of June 28, 2002, the aggregate market value of the voting stock held by
nonaffiliates of the Registrant was approximately $2,774,137,000. The stock
price used in this computation was the last sales price on that date.

As of January 24, 2003, the Registrant had 163,187,218 shares of Common Stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Sections of Thermo Electron Corporation's definitive Proxy Statement for the
Annual Meeting of Shareholders are incorporated by reference into Parts II and
III of this report.





                                                                                                                     


                           THERMO ELECTRON CORPORATION

                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 28, 2002

                                TABLE OF CONTENTS
                                                                                                                           Page
                                                                                                                           ----
                                     PART I

Item 1.      Business                                                                                                        3

Item 2.      Properties                                                                                                     12

Item 3.      Legal Proceedings                                                                                              12

Item 4.      Submission of Matters to a Vote of Security Holders                                                            12

                                     PART II

Item 5.      Market for the Registrant's Common Equity and Related Stockholder Matters                                      13

Item 6.      Selected Financial Data                                                                                        14

Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations                          15

             Forward-looking Statements                                                                                     28

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk                                                     32

Item 8.      Financial Statements and Supplementary Data                                                                    33

Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosures                          33

                                    PART III

Item 10.     Directors and Executive Officers of the Registrant                                                             34

Item 11.     Executive Compensation                                                                                         34

Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                 34

Item 13.     Certain Relationships and Related Transactions                                                                 34

Item 14.     Controls and Procedures                                                                                        34

                                     PART IV

Item 15.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K                                               35



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                                     PART I
Item 1.    Business

General Development of Business

       Thermo Electron Corporation (also referred to in this document as "Thermo
Electron," "we," the "company," or the "registrant") is a world leader in
high-tech instruments. The company helps life science, laboratory, and
industrial customers advance scientific knowledge, enable drug discovery,
improve manufacturing processes, and protect people and the environment with
instruments, scientific equipment, and sample-in/knowledge-out solutions. The
company's powerful technologies help researchers make discoveries that will
fight disease or prolong life. They automatically monitor and control online
production to ensure the quality and safety of raw materials as well as the
end-products themselves. And they are critical components embedded as enabling
technologies within scientific and industrial devices.

       In the late 1980s, Thermo Electron adopted a strategy of spinning out
certain businesses into separate public subsidiaries in which we kept a majority
ownership. By 1997, we had spun out 22 public entities serving many diverse
markets. To simplify our structure, we announced in January 2000 a major
reorganization that ultimately resulted in taking private all of our public
subsidiaries, selling noncore businesses, and spinning off our paper recycling
and medical products businesses. As part of the reorganization, we divested of
businesses with aggregate annual revenues of approximately $2 billion. This
reorganization was substantially completed in February 2002, when we took
private Spectra-Physics, Inc., our last publicly traded subsidiary.

       The businesses spun off and sold as part of our reorganization have been
accounted for as discontinued operations (see "Business Segments and Products").
The company's continuing operations solely include its instrument businesses.
Except where indicated, the information presented in this report pertains to our
continuing operations.

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

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

Forward-looking Statements

       Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934 (the Exchange Act), are made throughout this
Annual Report on Form 10-K. Any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," "seeks," "estimates," and similar expressions are intended to
identify forward-looking statements. While the company may elect to update
forward-looking statements in the future, it specifically disclaims any
obligation to do so, even if the company's estimates change, and readers should
not rely on those forward-looking statements as representing the company's views
as of any date subsequent to the date of the filing of this report.

       A number of important factors could cause the results of the company to
differ materially from those indicated by such forward-looking statements,
including those detailed under the heading "Forward-looking Statements" in Part
II, Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

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Business Segments and Products

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

       During 2002, the company transferred management responsibility for
several businesses between sectors as follows: (1) the spectroscopy businesses
were moved to the Life and Laboratory Sciences sector from the Measurement and
Control sector; (2) the temperature-control businesses were moved to the
Measurement and Control sector from the Optical Technologies sector; (3) the
electrochemistry products business was moved to the Measurement and Control
sector from the Life and Laboratory Sciences sector; and (4) the Thermo Projects
unit was moved from a separate sector (previously included as "Other") to the
Life and Laboratory Sciences sector. Prior-period sector information has been
restated to reflect these changes.

Life and Laboratory Sciences

       We address the pharmaceutical, biotechnology, academic, and other
research and industrial laboratory markets, as well as the clinical laboratory
and healthcare industries, through our Life and Laboratory Sciences sector.
During 2002, this sector was organized as five divisions: Bioscience
Technologies, Analytical Instruments, Spectroscopy, Informatics and Services,
and Clinical Diagnostics.

       Bioscience Technologies encompasses a broad range of instruments,
consumables, and robotic systems such as microplate-based handling and reading
equipment; polymerase chain reaction (PCR) thermal cyclers for deoxyribonucleic
acid (DNA) amplification; magnetic particle-based molecular separation
instruments; laboratory automation, software, and instruments; and single
nucleotide polymorphism (SNP) scoring systems. Consumables include reagents,
microtiter plates, liquid-handling pipettes, and pipette tips. Robotic systems
include individual microplate movers and other instrumentation combined with
sophisticated integration software to produce application-specific workstations.
These products are used primarily by pharmaceutical companies for drug discovery
and development, testing, and quality control, and by biotechnology companies
and universities for life science research to help fight disease and prolong
life. These products are typically used on the "front end" of multi-instrument
systems, to prepare and handle samples prior to the samples being loaded into
other, advanced instruments.

       This division also includes a range of scientific equipment used for the
preparation and preservation of chemical and biological samples, principally in
research settings for pharmaceutical, academic, and government customers.
Products include cell culture incubators, ultralow-temperature freezers,
high-speed centrifuges, centrifugal vacuum concentrators, biological safety
cabinets, cryopreservation storage tanks, and laboratory freeze-dryers.

       Analytical Instruments includes our offerings of ion trap, quadrupole,
and magnetic sector mass spectrometers (MS), liquid chromatographs (LC) and gas
chromatographs (GC), and hyphenated multi-instrument combinations of these
products. Our integrated solutions include state-of-the-art instrument systems,
advanced software, and consumables such as the vials, syringes, and columns
necessary for chromatography. Our systems are tailored to meet the rigorous
demands of lab professionals in applications such as drug discovery and life
science research, environmental analysis, and analytical quantitation.

       A significant and growing application for these instruments is
proteomics, the study of proteins. Most drugs - about 90 percent - interact with
proteins, so multi-instrument systems that can rapidly identify and quantify
proteins are of increasing value to pharmaceutical and biotechnology customers.
We continue to introduce new systems that offer a total solution for
high-throughput analysis. For example, our ProteomeXTM multidimensional LC/MS
system is a complete proteomics workstation that now enables routine
identification and quantitation of the thousands of proteins in a complex
sample. It offers sample preparation, analysis, and knowledge management in a
fully integrated system.

       Spectroscopy instruments use various optical techniques to determine the
elemental and molecular composition of a wide range of complex liquids and
solids. We manufacture atomic absorption (AA), inductively coupled plasma (ICP),
inductively coupled plasma-mass spectrometer (ICP-MS), Fourier transform
infrared (FT-IR), near-infrared (NIR), Optical Emission, Raman,
ultraviolet/visible (UV-Vis), fluorescence, X-ray diffractometry (XRD), and
X-ray

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fluorescence (XRF) instruments - as well microscopes, sampling accessories,
software, and spectral reference databases. Customers include pharmaceutical,
polymer, petrochemical, food, semiconductor, energy, steel, and basic material
producers, who typically use these instruments for quality assurance and quality
control applications primarily in a laboratory.

       Informatics and Services offers laboratory information management systems
(LIMS), chromatography data systems, analytical data archival, and instrument
integration solutions to customers in regulated and nonregulated industries such
as pharmaceuticals, biotechnology, petrochemicals, chemicals, and food and
beverage. We also provide desktop spectroscopy software for data processing,
data management, 3-D data viewing, spectral reference databases, and
chemometrics. These systems are critical to regulatory compliance because they
facilitate the monitoring and analysis of samples by storing and organizing the
massive amounts of analytical data gathered in laboratories, industrial
settings, and clinical-testing sites.

       We also provide a global services network of experienced consultants
focused on the successful implementation of our customers' projects.
Wide-ranging services include project planning, management of user workshops,
defining business requirements, milestone delivery, systems integration,
workflow modeling, and validation consultancy - in short, everything from
installation to complete integration and automation of the laboratory.

       Clinical Diagnostics provides equipment and supplies used by healthcare
laboratories in doctors' offices and hospitals to detect and diagnose disease.
Products in this group include sample-preparation instruments and materials to
highlight abnormal cells, blood gas and ion-selective electrolyte (ISE)
consumables, chemistry reagents, clinical-biochemistry instruments and
automation equipment, and rapid diagnostic tests for use in physicians' offices.
Our rapid diagnostic products have extremely high sensitivity and specificity to
test for infectious diseases, including Group A and B Streptococcus; Influenza A
and B; Chlamydia; Respiratory Syncytial Virus (RSV), the most common cause of
lower respiratory tract infections in children worldwide; and Clostridium
difficile Toxin A. We also supply a complete line of equipment and consumables
for anatomical pathology laboratories.

Measurement and Control

       We provide a range of real-time, online sensors, monitors, and control
systems to customers in key industrial markets - from chemical, pharmaceutical,
and food and beverage to minerals and mining, and steel - through our
Measurement and Control sector. These products enable customers to control and
optimize their manufacturing processes to increase quality, improve
productivity, and ensure worker safety, environmental protection, and regulatory
compliance. In addition, we offer a comprehensive range of fixed and portable
chemical, radiation, and explosives-detection instruments to help ensure the
safety of public places and people. During 2002, this sector was organized as
three divisions: Process Instruments, Environmental Instruments, and Temperature
Control.

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

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

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

       Environmental Instruments serves four major markets: air quality, water
analysis, radiation measurement and protection, and security. Air-quality
instruments are used for environmental air monitoring, gas detection, and
hazardous chemical detection. These include continuous gaseous and aerosol
instruments for monitoring ambient air and emissions, measuring such compounds
as common air pollutants, aerosols, organic halogens, and carbon. We also
provide a comprehensive line of gas detectors for controlling and detecting the
presence of combustible and toxic gases for worker and plant safety. These
products range from simple handheld, general-purpose portable equipment to more
sophisticated fixed systems.

       Used both in laboratory and process environments, our water-analysis
products include pH and ISE and other technologies for quality assurance and
regulatory compliance, primarily in the environmental, food and beverage,
chemical, pharmaceutical, and biomedical-research industries. These products
determine the quality of various substances, from food and pharmaceuticals to
water and wastewater, by measuring their pH, specific ion concentration,
dissolved oxygen, and conductivity.

       Radiation measurement and protection products monitor and detect
radiation in nuclear, environmental, industrial, medical, and security
applications. These products include portable and fixed radiation and
contamination monitors, as well as personal dosimetry products used for
protecting workers that are at risk of radiation exposure.

       Our security products include a comprehensive range of fixed and portable
instruments used for chemical, radiation, and explosives-detection. These
products are used in airports, embassies, cargo facilities, border crossings,
and other high-threat facilities. They are also used by emergency response teams
and are critical for the detection and prevention of terrorist acts, as well as
for the emergency and forensic response to such events.

       Temperature Control systems are necessary for laser, semiconductor,
analytical, medical, laboratory, industrial, and R&D applications, and we are a
leading manufacturer of precision temperature-control products for these
markets. Products include a complete line of heated/refrigerated circulating
baths, immersion coolers, and recirculating chillers. In addition, we supply
instruments that analyze materials for viscosity, surface tension, and thermal
properties. Customers include the food and pharmaceutical industries as well as
manufacturers of paints, inks, coatings, and adhesives, who depend on
high-precision viscometers to maintain the quality and consistency of their
products.

Optical Technologies

       We are a leader in lasers, photonics, and semiconductor equipment and
test systems. Products within the Optical Technologies sector are used in
multiple markets - particularly the scientific instrument, microelectronics,
industrial processes, and biomedical industries. During 2002, these products
were grouped into three divisions: Lasers, Photonics, and Semiconductor.

       Lasers encompasses Spectra-Physics, which is a global leader in the
design, development, manufacture, and distribution of high-power semiconductor
and solid-state lasers for industrial, scientific, electronics, and biomedical
markets. For example, nitrogen lasers used as an ionization source in mass
spectrometers enable scientists to study proteins, peptides, and other large
molecules in biomedical research. High-power semiconductor lasers are used in
such applications as direct-to-press printing, cosmetic and therapeutic medical
procedures, and they are key in the drive to make next-generation semiconductor
devices smaller, thinner, and faster. High-power solid-state lasers are used in
PC board manufacturing, rapid prototyping, bioinstrumentation, metrology, and
scientific research.

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       Photonics includes optical and optoelectronics components and systems
that make, move, and manipulate light. These products are used in a variety of
applications and industries, including scientific and medical instruments and
semiconductor manufacturing. For example, our diffraction gratings are used in
the line-narrowing packages of excimer lasers used for photolithography systems
in semiconductor manufacturing. Products also include Corion thin-film
interference filters, Hilger scintillation and electro-optic crystals, Oriel
optical components and instruments, and CIDTEC charged-injection device (CID)
solid-state video cameras. The Book of Photon Tools offers catalog customers a
full complement of laser and photonics products, as well as technical
information.

       Semiconductor products include compositional metrology tools, used to
analyze defects in ultrathin surface layers of a semiconductor chip and in R&D
for next-generation semiconductor devices. We also manufacture capital equipment
used to test and produce chips, including molecular beam epitaxy (MBE) systems
for the production of compound semiconductors. The largest application of these
systems is for microwave devices used in cellular telephones and other
high-speed wireless communications devices.

       For financial information about segments, including domestic and
international operations and export sales, see Note 3 to our Consolidated
Financial Statements beginning on page F-1 of this report.

Sector Changes for 2003

       During the first quarter of 2003, we fine-tuned the make-up of our three
sectors. We have moved the compositional-metrology business (formerly in Optical
Technologies) and our elemental-analyzer business (formerly in Measurement and
Control) into the Life and Laboratory Sciences sector. These two businesses are
part of the newly created Scientific Instruments division, which also comprises
the former Spectroscopy and Analytical Instruments divisions. The new division
better aligns our businesses with the way customers work. Specifically, the Life
and Laboratory Sciences sector is now organized to provide all our sample
preparation, handling, and storage offerings through the Bioscience Technologies
division, all our analytical solutions through the Scientific Instruments
division, and our information-management offerings through the Informatics and
Services division. We continue to provide a full range of products and services
to the distinct clinical marketplace through the Clinical Diagnostics division.

       In addition, we have moved our ultrahigh-vacuum systems and semiconductor
testing businesses, formerly part of the Optical Technologies sector, into the
Measurement and Control sector's Temperature Control division. This brings
together all of our technologies for maintaining and monitoring precise
operating conditions in process environments. Our Optical Technologies sector
now comprises all of our lasers and photonics offerings, which we united under
the Spectra-Physics brand name.

       We believe this sector alignment will help us achieve greater efficiency
in our operations, increase market awareness of our product offerings in the
marketplace, and capture cross-selling opportunities that exist between the
formerly separate organizations. In addition, we believe this structure will
enable us to better develop and provide integrated end-to-end solutions based on
our customers' needs. These changes will be reflected in our financial reports
beginning in the first quarter of 2003.

Discontinued Operations

       As a result of our January 2000 reorganization plan, a number of
businesses have been accounted for as discontinued operations. Businesses in
this category included Kadant Inc., a supplier of systems to the papermaking and
paper recycling industry, as well as fiber-based consumer products; and Viasys
Healthcare Inc., a manufacturer of a range of medical products for diagnosis and
monitoring. Kadant was spun off to shareholders in August 2001 and Viasys was
spun off in November 2001. These businesses, together with a number of operating
units that were sold, constituted the company's former Energy and Environment,
Biomedical and Emerging Technologies, and Recycling and Resource Recovery
segments. At March 7, 2003, one operating unit with revenues of $31 million in
2002 remained for sale in discontinued operations.

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New Products and Research and Development

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

       During 2002, 2001, and 2000, we spent $155.1 million, $171.6 million, and
$176.8 million, respectively, on research and development.

Raw Materials

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

Patents, Licenses, and Trademarks

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

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

Seasonal Influences

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

Working Capital Requirements

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

Dependency on a Single Customer

       There is no single customer the loss of which would have a material
adverse effect on our business. No customer accounted for more than 10% of our
total revenues in any of the past three years.

Backlog

       Our backlog of firm orders at year-end 2002 and 2001 was as follows:


                                                                                                                   

                                                                                                              2002         2001
                                                                                                            --------     --------
                                                                                                              (In thousands)

       Life and Laboratory Sciences                                                                         $207,643     $185,097
       Measurement and Control                                                                               103,665       93,588
       Optical Technologies                                                                                   71,634      155,159
       Intersegment                                                                                           (2,347)      (1,220)
                                                                                                            --------     --------

                                                                                                            $380,595     $432,624
                                                                                                            ========     ========


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       In the third quarter of 2002, following the company's acquisition of the
remaining minority interest in Spectra-Physics, the company conformed the Lasers
division's backlog policy to the prevailing practice at the company's other
businesses of including in backlog only product orders that are expected to ship
within six months. The Lasers division's historical practice had been to include
orders expected to ship within 12 months. This change resulted in a reduction of
backlog of $39.3 million. The remaining decrease in backlog in the Optical
Technologies sector was principally due to economic conditions facing customers
in the semiconductor and other industrial markets. We believe that virtually all
of our backlog at the end of 2002 will be filled during 2003.

Government Contracts

       Although the company transacts business with various government agencies,
no government contract is of such magnitude that a renegotiation of profits or
termination of the contract at the election of the government agency would have
a material adverse effect on the company's financial results.

Competition

General

       The company encounters aggressive and able competition in virtually all
of the markets we serve. Because of the diversity of our products and services,
we face many different types of competitors and competition. Our competitors
range from large organizations that produce a comprehensive array of products
and services for a variety of markets to small organizations producing a limited
number of products and services for specialized markets. In general, competitive
climates in the markets we serve are characterized by changing technology that
requires continuing research and development, as well as customer relationships.
Our success in these markets primarily depends on five factors:

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

Life and Laboratory Sciences

       Bioscience Technologies. In the markets served by this division, our
principal competitors include Kendro Laboratory Products (a subsidiary of SPX
Corporation); PerkinElmer, Inc.; and Beckman Coulter, Inc.

       Analytical Instruments. In the markets served by this division, our
principal competitors include Applied Biosystems Inc.; Agilent Technologies Inc.;
Waters Corporation; Shimadzu Corporation; PerkinElmer; and Bruker Daltonics Inc.

       Spectroscopy. In the markets served by this division, our principal
competitors include PerkinElmer; Varian Inc.; Agilent; Shimadzu; and Bruker.

       Informatics and Services. In the markets served by this division, our
principal competitors include PerkinElmer; Applied Biosystems; Beckman Coulter;
Agilent; and LabVantage Solutions.

       Clinical Diagnostics. In the markets served by this division, our principal
competitors include Leica Microsystems; Sakura Finetechnical Co., Ltd.; Becton,
Dickinson and Company; and Roche-Boeringher Manheim.

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Measurement and Control

       Process Instruments. In the markets served by this division, our principal
competitors include Mettler-Toledo International Inc.; Yokogawa Electric Corporation;
Fisher-Rosemount (a division of Emerson Electric Co., Inc.); Asea Brown Boveri
(Holding) Ltd.; and Endress & Hauser.

       Environmental Instruments. In the markets served by this division, our
principal competitors include Danaher Corporation; Mettler-Toledo; Canberra
Industries, Inc.; and Teledyne Advanced Pollution Instrumentation.

       Temperature Control. In the markets served by this division, our principal
competitors include Affinity, Inc.; Polyscience, Inc.; and Lytron Inc.

Optical Technologies

       Lasers. In the markets served by this division, our principal competitors
include Coherent, Inc.; Continuum (a division of Excel Technology, Inc.); and
JDS Uniphase Corporation.

       Photonics. In the markets served by this division, our principal
competitors include Jobin Yvon Inc.; New Focus, Inc.; and OCLI (a subsidiary of
JDS Uniphase).

       Semiconductor. In the markets served by this division, our principal
competitors include Oxford Instruments plc.; Veeco Instruments Inc.; EDAX Inc.;
and Kratos Analytical (a subsidiary of Shimadzu).

Environmental Protection Regulations

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

Number of Employees

       As of December 28, 2002, we had approximately 10,900 employees.

Financial Information About Geographic Areas

       Financial information about geographic areas is summarized in Note 3 to
our Consolidated Financial Statements beginning on page F-1 of this report.

Available Information

       The company files annual, quarterly, and current reports, proxy
statements, and other documents with the Securities and Exchange Commission
(SEC) under the Exchange Act. The public may read and copy any materials that we
file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC
maintains a Website that contains reports, proxy and information statements, and
other information regarding issuers, including the company, that file
electronically with the SEC. The public can obtain any documents that we file
with the SEC at www.sec.gov. We also make available free of charge on or through
our own Website at www.thermo.com our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable,
amendments to those reports filed or furnished pursuant to section 13(a) of the
Exchange Act as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the SEC.

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Executive Officers of the Registrant

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

Marijn E. Dekkers             45    President and Chief Executive Officer (2000)
Richard F. Syron              59    Executive Chairman and Chairman of the Board (1999)
Guy Broadbent                 39    Vice President; President, Optical Technologies (2001)
Marc N. Casper                34    Vice President; President, Life and Laboratory Sciences (2001)
Barry S. Howe                 47    Vice President; President, Measurement and Control (2001)
Theo Melas-Kyriazi            43    Vice President and Chief Financial Officer (1998)
Seth H. Hoogasian             48    Vice President, General Counsel, and Secretary (2001)
Peter E. Hornstra             43    Corporate Controller and Chief Accounting Officer (2001)

       Mr. Dekkers was appointed Chief Executive Officer in November 2002. He
was President and Chief Operating Officer from July 2000 to November 2002. From
June 1999 to June 2000, Mr. Dekkers served as president of Honeywell
International's (formerly Allied Signal) electronic materials division, and from
August 1997 to May 1999 he served as vice president and general manager of its
fluorine products division.

       Mr. Syron was appointed Executive Chairman in November 2002. He joined
the company in June 1999 as President and Chief Executive Officer and was
appointed Chairman of the Board in January 2000. From April 1994 to May 1999,
Mr. Syron was the Chairman and Chief Executive Officer of the American Stock
Exchange Inc.

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

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

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

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

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

       Mr. Hornstra was appointed Chief Accounting Officer in January 2001 and
Corporate Controller in 1996.

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Item 2.    Properties

       The location and general character of our principal properties by sector
as of December 28, 2002, are as follows:

Life and Laboratory Sciences

       We own approximately 1,540,000 square feet of office, engineering,
laboratory, and production space, principally in Wisconsin, Ohio, California,
Massachusetts, and New York within the U.S., and in Germany, Italy, and
Switzerland. We lease approximately 1,336,000 square feet of office,
engineering, laboratory, and production space, principally in Massachusetts,
Texas, Colorado, and New York within the U.S., and in Finland, England, Japan,
and France, under various leases that expire between 2003 and 2022.

Measurement and Control

       We own approximately 680,000 square feet of office, engineering,
laboratory, and production space, principally in Minnesota, New Hampshire, and
New Mexico within the U.S., and in Germany, and England. We lease approximately
1,169,000 square feet of office, engineering, laboratory, and production space,
principally in Massachusetts, Texas, Ohio, California, and Maryland within the
U.S., and in England, the Netherlands, and Australia, under various leases that
expire between 2003 and 2013.

Optical Technologies

       We own approximately 230,000 square feet of office, engineering,
laboratory, and production space, principally in Arizona, Wisconsin, and
California. We lease approximately 531,000 square feet of office, engineering,
laboratory, and production space, principally in California and Massachusetts
within the U.S., and in England, under various leases that expire between 2003
and 2019.

Corporate Headquarters

       We own approximately 81,000 square feet of office space in Massachusetts
and lease approximately 3,000 square feet of office space in Massachusetts under
a lease that expires in 2004.

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

Item 3.    Legal Proceedings

       We are a party to a number of claims and lawsuits relating to our
business. Information regarding litigation is contained in Note 11 to our
Consolidated Financial Statements beginning on page F-1 of this report, and is
incorporated herein by reference.

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

       No matters were submitted to a vote of security holders, whether through
the solicitation of proxies or otherwise, during our 2002 fourth fiscal quarter.



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                                     PART II

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

Market Price of Common Stock

       Our common stock is traded on the New York Stock Exchange under the
symbol TMO. The following table sets forth the high and low sale prices of the
company's common stock for 2002 and 2001, as reported in the consolidated
transaction reporting system.



                                                                                                               

                                                                                         2002                        2001
                                                                                 --------------------       ---------------------
                                                                                   High           Low         High            Low
                                                                                 ------        ------       ------         ------

       First Quarter                                                             $24.37        $19.30       $26.32         $17.12
       Second Quarter                                                             20.60         15.60        28.57          20.97
       Third Quarter                                                              17.80         14.50        22.02          17.38
       Fourth Quarter                                                             20.52         15.19        23.86          15.98

       In August and November 2001, the company spun off to shareholders its
Kadant and Viasys Healthcare subsidiaries. Prices in the above table for periods
prior to these spinoffs have not been adjusted to reflect the spinoffs.

Holders of Common Stock

       As of January 24, 2003, the company had 11,502 holders of record of its
common stock. This does not include holdings in street or nominee names.

Dividend Policy

       The company has never paid cash dividends and does not expect to pay cash
dividends in the foreseeable future because its policy has been to use earnings
to finance expansion and growth. Payment of dividends will rest within the
discretion of the company's Board of Directors and will depend upon, among other
factors, the company's earnings, capital requirements, and financial condition.

Securities Authorized for Issuance Under Equity Compensation Plans

       The information with respect to securities authorized for issuance under
equity compensation plans is listed under the caption "Equity Compensation Plan
Information" in our definitive proxy statement to be filed with the SEC, not
later than 120 days after the close of the fiscal year. This information is
incorporated in this report by reference.




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Item 6.    Selected Financial Data

                                                                 2002 (a)      2001 (b)      2000 (c)      1999 (d)      1998 (e)
                                                                 --------      --------      --------      --------      --------
                                                                              (In millions except per share amounts)

Statement of Operations Data
Revenues                                                         $2,086.4      $2,188.2      $2,280.5      $2,294.6      $1,880.9
Operating Income                                                    155.5          34.2         266.0         182.1         191.3
Income from Continuing Operations Before Extraordinary
 Item and Cumulative Effect of Change in Accounting
 Principle                                                          195.3          49.6          62.0          37.3          93.8
Income (Loss) Before Extraordinary Item and Cumulative
 Effect of Change in Accounting Principle                           310.7          (0.8)        (23.7)       (176.0)        181.5
Net Income (Loss)                                                   309.7          (0.8)        (36.1)       (174.6)        181.9
Earnings per Share from Continuing Operations Before
 Extraordinary Item and Cumulative Effect of Change in
 Accounting Principle:
    Basic                                                            1.16           .27           .37           .24           .58
    Diluted                                                          1.12           .27           .36           .22           .55
Earnings (Loss) per Share:
    Basic                                                            1.84             -          (.22)        (1.10)         1.12
    Diluted                                                          1.73             -          (.22)        (1.12)         1.08

Balance Sheet Data
Working Capital                                                  $  667.8      $  823.2      $1,737.0      $1,291.6      $2,130.1
Total Assets                                                      3,647.1       3,825.1       4,863.0       5,071.8       5,217.9
Long-term Obligations                                               451.3         727.5       1,528.5       1,566.0       1,786.4
Minority Interest                                                       -           6.9          24.7         348.4         378.9
Common Stock Subject to Redemption                                      -             -             -           7.7          40.5
Shareholders' Equity                                              2,033.3       1,908.1       2,534.0       2,013.5       2,256.1

       The company's fiscal year for 2002 and earlier ended on the Saturday
closest to December 31. For 2003 and thereafter, the company's fiscal year end
will be December 31. The consolidated financial statements for fiscal years 1998
through 2001 were audited by Arthur Andersen LLP, which has ceased operations. A
copy of the report previously issued by Arthur Andersen on the company's
financial statements as of December 29, 2001, and December 30, 2000, and for
each of the three years in the period ended December 29, 2001, is included
elsewhere in this document. Such report has not been reissued by Arthur
Andersen.

(a)   Reflects a $61.3 million pretax charge for restructuring and other costs;
      $111.4 million of pretax gains from the sale of shares of FLIR Systems,
      Inc.; a net of tax gain of $115.4 million related to the company's
      discontinued operations; the repurchase and redemption of $924.9 million
      of the company's debt and equity securities; and the reclassification of
      the company's $71.9 million principal amount 4 3/8% subordinated
      convertible debentures from long-term obligations to current liabilities
      as a result of the company's decision to redeem them in April 2003. Also
      reflects the adoption of SFAS No. 142, under which amortization of
      goodwill ceased.
(b)   Reflects a $161.6 million pretax charge for restructuring and other costs;
      $35.1 million of pretax gains from the sale of shares of FLIR Systems,
      Inc.; a net of tax charge of $50.4 million related to the company's
      discontinued operations; a $1.0 million net of tax charge reflecting the
      cumulative effect of a change in accounting principle for the adoption of
      SFAS No. 133; and the reclassification of $468.1 million of subordinated
      convertible debentures from long-term obligations to current liabilities
      as a result of the company's decision to redeem them in March 2002. Also
      reflects the spinoff of the company's Kadant and Viasys Healthcare
      subsidiaries, and the repurchase of $511.4 million of the company's debt
      and equity securities.

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(c)   Reflects $3.4 million of pretax restructuring and other income, net; a net
      of tax charge of $100 million related to the company's discontinued
      operations; the issuance of company common stock valued at $448.7 million
      to acquire the minority interest of certain subsidiaries; and a $12.9
      million net of tax charge reflecting the cumulative effect of a change in
      accounting principle for the adoption of SAB No. 101.
(d)   Reflects a $65.2 million pretax charge for restructuring and other costs,
      a net of tax charge of $50 million related to the company's discontinued
      operations, and the February 1999 acquisition of Spectra-Physics AB.
(e)   Reflects a $32.5 million pretax charge for restructuring and other costs.

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

       Reference is made throughout this Management's Discussion and Analysis of
Financial Condition and Results of Operations to footnotes included in Notes to
Consolidated Financial Statements, beginning on page F-11 of this report.

Overview

       The company develops and manufactures a broad range of products that are
sold worldwide. The company expands the product lines and services it offers by
developing and commercializing its own core technologies and by making strategic
acquisitions of complementary businesses. In January 2000, the company announced
a major reorganization plan under which it planned to sell or spin off many
noncore businesses. In 2001, the company modified the plan and sold its
power-generation business. As a result of these actions, the company's
continuing operations solely include its instrument businesses. The results of
the businesses that have been spun off, sold, or placed for sale have been
presented as discontinued operations in the accompanying financial statements.
The company's continuing operations fall into three principal business segments:
Life and Laboratory Sciences, Measurement and Control, and Optical Technologies.

       The company's discussion and analysis of its financial condition and
results of operations is based upon its financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenue and expenses, and related disclosure of contingent
liabilities. On an on-going basis, the company evaluates its estimates,
including those related to bad debts, inventories, intangible assets, warranty
obligations, income taxes, contingencies and litigation, restructuring, and
discontinued operations. The company bases its estimates on historical
experience, current market and economic conditions, and other assumptions that
management believes are reasonable. The results of these estimates form the
basis for judgments about the carrying value of assets and liabilities where the
values are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.

       The company believes the following represent its critical accounting
policies and estimates used in the preparation of its financial statements:

       (a) The company maintains allowances for doubtful accounts for estimated
           losses resulting from the inability of its customers to pay amounts
           due. If the financial condition of the company's customers were to
           deteriorate, reducing their ability to make payments, additional
           allowances would be required.

       (b) The company writes down its inventories for estimated obsolescence
           for differences between the cost and estimated net realizable value
           based on recent usage and expected demand. If ultimate usage or
           demand varies significantly from expected usage or demand, additional
           writedowns may be required.

       (c) The company assesses the realizability of its notes receivable based
           on judgments concerning the borrower's ability to make the required
           payments. If the financial condition of the borrower were to
           deteriorate, charges to reduce the carrying value of notes receivable
           may be necessary.

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       (d) The company periodically evaluates goodwill for impairment using
           market comparables for similar businesses and forecasts of discounted
           future cash flows. Should the fair value of the company's goodwill
           decline because of reduced operating performance, market declines, or
           other indicators of impairment, charges for impairment of goodwill
           may be necessary.

       (e) The company reviews other intangible assets for impairment when
           indication of potential impairment exists, such as a significant
           reduction in cash flows associated with the assets. Should future
           cash flows decline significantly from estimated amounts, charges for
           impairment of other intangible assets may be necessary.

       (f) In instances where the company sells equipment with an obligation to
           install it at a customer site, the company assesses the complexity of
           the installation to determine the timing of revenue recognition. If
           the nature of the company's products and the related installation
           obligations changed so that installation were to become more
           complicated and lengthy, the company may be required to defer
           additional revenues upon shipment of its products until completion of
           installation.

       (g) At the time the company recognizes revenue it provides for the
           estimated cost of product warranties based primarily on historical
           experience. Should product failure rates or the actual cost of
           correcting product failures vary from estimates, revisions to the
           estimated warranty liability would be necessary.

       (h) The company estimates the degree to which tax assets and loss
           carryforwards will result in a benefit based on expected
           profitability by tax jurisdiction, and provides a valuation allowance
           for tax assets and loss carryforwards that it believes will more
           likely than not go unused. Should the company's actual future taxable
           income by tax jurisdiction vary from estimates, additional allowances
           may be necessary.

       (i) The company estimates losses on contingencies and litigation and
           provides a reserve for these losses. Should the ultimate losses on
           contingencies and litigation vary from estimates, adjustments to
           those reserves may be required.

       (j) The company records restructuring charges for asset impairment based
           on estimated future cash flows associated with the equipment and for
           the cost of vacating facilities based on expected sub-rental income.
           Should actual cash flows associated with impaired equipment and
           sub-rental income from vacated facilities vary from estimated
           amounts, adjustments may be required.

       (k) The company estimates the expected proceeds from the sale of its
           discontinued businesses and, when necessary, records losses to reduce
           the carrying value of these businesses to estimated realizable value.
           Should the actual proceeds, which would include post-closing purchase
           price adjustments, vary from estimates, actual results could differ
           from expected amounts.

Results of Operations

       The discussion of operating income and operating income margin throughout
this Management's Discussion and Analysis of Financial Condition and Results of
Operations includes references to amounts determined in accordance with U.S.
generally accepted accounting principles (GAAP), as well as amounts that exclude
restructuring costs, gains and losses on the sale of businesses, and certain
other items that are discussed by segment below and in more detail in Note 15.
The company believes that this presentation, which is substantially consistent
with how it measures its operating performance, provides information that
investors may find useful as the items, while recurring in the years presented,
vary significantly from period to period.

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2002 Compared With 2001

Continuing Operations

       Sales in 2002 were $2.086 billion, a decrease of $101.9 million, or 5%,
from 2001. Excluding the effect of acquisitions, divestitures, and currency
translation, revenues decreased $101.3 million, or 5%. Currency translation had
a favorable effect on revenues as discussed below by segment, due to the
weakening of the U.S. dollar relative to currencies of countries in which the
company operates.

       Operating income was $155.5 million in 2002, compared with $34.2 million
in 2001. Segment operating income increased to $205.8 million in 2002 from $85.2
million in 2001. (Segment operating income is operating income excluding costs
incurred at the company's corporate office.) Operating and segment operating
income in 2002 were reduced by additional charges associated with a
restructuring plans initiated during the fourth quarter of 2001, other
restructuring actions initiated in 2002, and certain other costs, net (Note 15).
Operating and segment operating income in 2001 were reduced by charges
associated with restructuring plans initiated during 2001 and certain other
charges, net. The restructuring and other items in both periods are discussed by
segment below and in more detail in Note 15. Excluding the restructuring and
other costs, which totaled $58.7 million in 2002 and $147.3 million in 2001,
segment operating income was $264.5 million in 2002 and $232.4 million in 2001.
The 2001 period included $40.2 million of goodwill amortization. Amortization of
goodwill ceased following the adoption of Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," effective in
2002 (Note 1). Excluding goodwill amortization and restructuring and other
items, segment operating income totaled $272.7 million in 2001. Segment
operating income excluding goodwill amortization and restructuring and other
items decreased in 2002 due to lower revenues and the resulting reduced
profitability at a number of businesses, discussed below, offset in part by the
impact of cost-reduction and productivity initiatives.

       In response to a continued downturn in semiconductor and other industrial
markets served by the company, and in an effort to further integrate business
units and reduce the number of real estate locations, the company continued
restructuring initiatives in 2002 at a number of business units. The
restructuring and related actions primarily consisted of headcount reductions,
writedowns of production equipment and abandonment of leases for
telecommunications products, and consolidation of facilities to streamline
operations and reduce costs. These actions resulted in annual cost reductions
beginning in late 2002 and continuing in early 2003 of approximately $43
million, including $7 million in the Life and Laboratory Sciences segment, $13
million in the Measurement and Control segment, and $23 million in the Optical
Technologies segment. The company expects to incur an additional $6 million of
restructuring costs in 2003 for charges associated with these actions that
cannot be recorded until incurred, such as relocation and moving costs. The
company believes that restructuring actions undertaken in 2002 will be
substantially completed by mid-2003. The company expects to identify additional
sites to consolidate in 2003 and will record charges in connection with any such
actions.

Life and Laboratory Sciences

       Sales in the Life and Laboratory Sciences segment increased $25.9 million
to $1.140 billion in 2002. The favorable effects of currency translation
resulted in an increase in revenues of $21.9 million in 2002. Sales decreased
$0.5 million due to divestitures, net of acquisitions. Excluding the effect of
currency translation, divestitures, and acquisitions, revenues grew nominally,
increasing $4.5 million, or 0.4%. Increased demand for high-end technology mass
spectrometry equipment and histology and cytology products was offset in part by
weakened demand for spectroscopy instruments and sample-preparation products
that had mid-single digit percentage declines in sales, primarily due to lower
capital spending. The company believes that many pharmaceutical customers, for
example, are delaying purchases except for high-end equipment where recent
technological advances may provide a competitive advantage.

       Operating income margin increased to 15.6% in 2002 from 9.5% in 2001.
(Operating income margin is segment operating income divided by segment
revenues.) The segment's operating income margin increased primarily due to the
discontinuation of goodwill amortization as a result of the adoption of SFAS No.
142 in 2002 and higher restructuring and other costs in 2001, compared with
2002. Excluding restructuring and other costs, net, of $18.3

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million in 2002 and $45.6 million in 2001, and goodwill amortization of $23.6
million in 2001, operating income margin was 17.2% in 2002 and 15.7% in 2001.
The increase in operating income margin resulted primarily from cost reduction
and productivity measures undertaken in 2001 and 2002 and, to a lesser extent,
revenue growth of higher-margin products.

       In 2002, the segment recorded restructuring and other charges, net, of
$18.3 million, including $11.4 million of cash costs, primarily for severance,
abandoned facilities, and employee retention at businesses being consolidated,
and charges to cost of revenues of $0.7 million for the sale of inventory
revalued at the date of acquisition and the discontinuation of a product line.
In addition, the segment realized a net loss of $4.8 million on the sale of
assets and small business units, principally its Dynex automated diagnostics
product line, and wrote down $1.4 million of fixed assets at abandoned
facilities (Note 15). Restructuring and other costs, net, in 2001 included cash
costs of $27.3 million, primarily for severance and abandoned facilities; $8.3
million of asset writedowns; $6.9 million of charges to cost of revenues,
principally for discontinued product lines; a charge of $3.4 million for the
writeoff of in-process research and development at an acquired business; $0.7
million of noncash severance costs; and $1.0 million of gains on the sale of a
small business unit and a product line (Note 15).

Measurement and Control

       Sales in the Measurement and Control segment decreased $61.9 million to
$614.4 million in 2002. Sales decreased $29.4 million due to divestitures, net
of acquisitions. The favorable effects of currency translation resulted in an
increase in revenues of $8.4 million in 2002. Excluding the effect of
divestitures, acquisitions, and currency translation, revenues decreased $40.9
million, or 7%. The decrease was due to a decline in revenues in each of the
segment's principal businesses, particularly the temperature control business,
where over half of the decrease occurred. The overall revenue decline was due to
economic conditions facing customers, particularly in the semiconductor, energy,
and steel industries. The decrease in revenues was offset in part by an increase
in sales of explosives-detection equipment in the fourth quarter of 2002
following a congressional mandate to begin screening all checked airline baggage
in the United States by the end of 2002. The company expects that a continued
downturn in markets served by the segment will unfavorably affect the segment's
revenue comparisons with corresponding prior-year periods in the near term. A
prolonged downturn could adversely affect the realizability of the segment's
assets, which may result in charges for impairment.

       The principal divestitures by the segment included the July 2002 sale of
Thermo BLH and Thermo Nobel, which manufacture and sell strain-gauges, and were
placed for sale in 2001 (Note 2); the August 2001 sale of its Pharos Marine
unit, which manufactures and sells marine-navigation equipment; the April 2001
sale of the CAC and Mid South businesses, which provide the oil and gas industry
with wellhead safety and control products; and the July 2001 sale of its
ThermoMicroscopes unit, a manufacturer of scanning probe microscopes. The
principal acquisition by the segment included the July 2002 purchase of the
radiation-monitoring products business of Saint-Gobain Corporation (Note 2).

       Operating income margin increased to 8.2% in 2002 from 2.5% in 2001,
primarily due to significant restructuring and other costs in 2001, and the
discontinuation of goodwill amortization as a result of the adoption of SFAS No.
142 in 2002. Operating income margin, excluding restructuring and other costs,
net, of $13.3 million in 2002 and $44.6 million in 2001, and goodwill
amortization of $12.1 million in 2001, decreased to 10.3% in 2002 from 10.9% in
2001. The decrease in operating income margin resulted primarily from the
decrease in revenues, offset in part by the effects of cost reduction and
productivity measures undertaken in 2001 and 2002.

       In 2002, the segment recorded restructuring and other charges, net, of
$13.3 million, including $20.1 million of cash costs, principally for severance,
abandoned facilities, and employee retention. In addition, the segment recorded
$8.7 million of net gains, primarily from the sale of businesses, principally
its Thermo BLH and Thermo Nobel subsidiaries. In 2002, the segment recorded
charges to cost of revenues of $1.4 million for the sale of inventory revalued
at the date of acquisition and $0.5 million of asset writedowns (Note 15).
Restructuring and other costs, net,

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in 2001 included $20.7 million of cash costs, primarily for severance, abandoned
facilities, and other exit costs; $12.0 million, net, for the loss on sale of
businesses or writedowns of businesses subsequently sold; $8.2 million of
charges to cost of revenues, principally for discontinued product lines; $3.6
million of asset writedowns; $1.0 million for impairment of a note receivable;
and $0.2 million of other costs. These charges were offset in part by a gain of
$1.1 million on the sale of a building (Note 15).

Optical Technologies

       Sales in the Optical Technologies segment decreased $66.7 million to
$342.2 million in 2002. The unfavorable effects of currency translation resulted
in a decrease in revenues of $1.6 million in 2002. Sales increased $0.6 million
due to the acquisition of a product line, net of divestitures. Excluding the
effect of currency translation, an acquisition, and divestitures, revenues
decreased $65.7 million, or 16%. The decrease was due to a severe slowdown in
the semiconductor and other industrial markets that has adversely affected all
of the segment's principal businesses. The semiconductor industry is highly
cyclical and is experiencing a downturn that began in 2001. The company expects
that the slowdowns in semiconductor and other industrial markets will continue
to result in unfavorable revenue comparisons with corresponding prior-year
periods in the near term. A prolonged downturn could adversely affect the
realizability of the segment's assets, which may result in charges for
impairment.

       In the third quarter of 2002, following the company's acquisition of the
remaining minority interest in Spectra-Physics, the company conformed the Lasers
division's backlog policy to the prevailing practice at the company's other
businesses of including in backlog only product orders that are expected to ship
within six months. The Lasers division's historical practice had been to include
orders expected to ship within 12 months. This change resulted in a reduction of
backlog of $39.3 million. Excluding the effect of this change, the segment's
backlog decreased 38% during 2002, and totaled $71.6 million as of December 28,
2002.

       Operating income margin was negative 6.5% in 2002, compared with
negative 9.1% in 2001. Excluding restructuring and other costs, net, of $27.1
million in 2002 and $57.1 million in 2001, and goodwill amortization of $4.5
million in 2001, operating income margin was 1.5% in 2002 and 5.9% in 2001. The
decrease in operating income margin was due to lower revenues at each of the
segment's principal businesses, particularly the lasers business
(Spectra-Physics), where the decline in revenues led to operating losses
although the business operated profitably in the fourth quarter of 2002,
excluding restructuring charges. The company initiated additional restructuring
actions in this business in 2002, following those announced in the fourth
quarter of 2001. These actions are discussed below and in Note 15.

       In 2002, the segment recorded restructuring and other charges, net, of
$27.1 million, including $10.7 million of cash costs, principally for severance
and abandoned-equipment leases associated with suspended telecom initiatives.
The cash costs also included $0.7 million for the settlement of litigation (Note
11). In addition, this segment wrote off assets totaling $8.8 million, primarily
for abandoned telecommunication and other manufacturing equipment. The segment
also recorded a charge of $0.8 million resulting from the exchange of options to
purchase shares of Spectra-Physics for options to purchase shares of Thermo
Electron following the acquisition of the minority interest in this business in
February 2002 (Note 17). In 2002, the segment also recorded $7.0 million of
charges to cost of revenues, principally for discontinued product lines. The
charges described above were offset in part by a net gain of $0.2 million from
the sale of a small business unit and land (Note 15). Restructuring and other
costs, net, in 2001 included $24.0 million of asset writedowns, principally
fixed assets associated with telecommunication initiatives; $22.1 million of
cash costs for severance, lease obligations for abandoned equipment and
facilities, litigation loss, and other exit costs; and $11.0 million of charges
to cost of revenues for inventory writedowns (Note 15).

Other Income, Net

       The company reported other income, net, of $132.5 million and $36.5
million in 2002 and 2001, respectively (Note 4). Other income, net, includes
interest income, interest expense, equity in earnings of unconsolidated
subsidiaries, gain on investments, net, and other items, net. Interest income
decreased to $47.9 million in 2002 from $68.5 million in 2001, primarily due to
lower invested cash balances following the repurchase and redemption of

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company securities, acquisitions, and, to a lesser extent, lower prevailing
interest rates. The company expects that the lower market interest rates
existing in 2003 will continue to adversely affect the yield it earns as
maturing investments originally invested at higher rates are reinvested at
current lower market rates. Following redemptions and repurchases of convertible
obligations in 2002 (Note 10) and repurchases of the company's common stock,
lower invested cash will also contribute to an expected reduction in interest
income. Interest expense decreased to $40.9 million in 2002 from $71.8 million
in 2001 as a result of the redemption, maturity, and repurchase of debentures,
as well as entering into interest-rate swap arrangements, offset in part by
interest on borrowings under securities-lending arrangements (Note 10).

       During 2002 and 2001, the company had gains on investments, net, of
$123.1 million and $35.6 million, respectively. The gains included $111.4
million and $35.1 million in 2002 and 2001, respectively, from the sale of
shares of FLIR Systems, Inc. The company obtained an equity interest in FLIR as
part of the acquisition of Spectra-Physics AB in 1999. Of the total gain from
the sale of FLIR shares, $39.5 million and $14.2 million in 2002 and 2001,
respectively, represent a recovery of amounts written down in prior years.
Following a reduction in the company's percentage ownership of FLIR to less than
20%, the company no longer reports its pro-rata share of FLIR's earnings but
instead accounts for its remaining investment as an available-for-sale security
(Note 4). Gains on investments in 2001 were reduced by a charge of $2.8 million
to write down two available-for-sale securities due to impairment that the
company deemed other than temporary. The company recorded income from equity in
earnings of unconsolidated subsidiaries of $2.5 million in 2002 and $4.7 million
in 2001, primarily related to the investment in FLIR through the first quarter
of 2002. In 2001, other income, net, included $0.5 million of other expense,
principally currency losses.

Provision for Income Taxes

       The company's effective tax rate was 32.3% and 38.1% in 2002 and 2001,
respectively. Excluding restructuring and other costs, net, and gains from the
sale of FLIR shares, the effective tax rate was 31.0% and 38.1% in 2002 and
2001, respectively. The effective tax rate decreased in 2002, primarily due to
the absence of nondeductible goodwill amortization following the adoption of
SFAS No. 142 and, to a lesser extent, a reorganization of the company's
subsidiaries in several European countries that resulted in a more tax-efficient
corporate structure. The effective tax rate exceeded the statutory federal
income tax rate in 2001 due to the impact of state income taxes and
nondeductible expenses, which included goodwill amortization. Excluding
restructuring and other costs, net, and goodwill amortization, the effective tax
rate was 33.1% in 2001.

Minority Interest Income

       Minority interest income of $0.3 million and $5.8 million in 2002 and
2001, respectively, represents minority shareholders' allocable share of losses
at Spectra-Physics through the date on which the company acquired the minority
interest in this subsidiary in February 2002 (Note 17).

Contingent Liabilities

       At year-end 2002, the company was contingently liable with respect to
certain lawsuits. An unfavorable outcome in one or more of the matters described
in Note 11 could materially affect the company's financial position as well as
its results of operations and cash flows for a particular quarterly or annual
period.

Income from Continuing Operations

       Income from continuing operations before extraordinary item and
cumulative effect of change in accounting principle was $195.3 million in 2002,
compared with $49.6 million in 2001. Results in both periods were affected by
restructuring, gains on the sale of FLIR shares, and other items, discussed
above. Excluding restructuring, gains on the sale of shares of FLIR, and other
items in both periods, income from continuing operations before extraordinary
item and cumulative effect of change in accounting principle increased to $164.4
million in 2002 from $122.4 million in 2001 due to the absence of goodwill
amortization in 2002, offset in part by the reasons discussed above.

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Extraordinary Item

       The company repurchased and redeemed debentures during 2002 and 2001,
resulting in an extraordinary charge of $1.0 million, net of a tax benefit of
$0.5 million, in 2002, and an extraordinary gain of $1.1 million, net of a tax
provision of $0.6 million, in 2001 (Note 10).

Cumulative Effect of Change in Accounting Principle

       The company adopted SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended, in the first quarter of 2001, and recorded
an after-tax charge of $1.0 million representing the cumulative effect of the
change in accounting principle.

Recent Accounting Pronouncements

       Several recent accounting pronouncements may affect the company's
financial statements in the future. These rule changes are summarized in Note 1.

Discontinued Operations

       During 2002, primarily as a result of new tax regulations concerning
deductible losses from divested businesses, the company revised its estimate of
the tax consequences of business disposals in discontinued operations and
recorded a tax benefit of $46.6 million. In addition, in 2002 the company sold
its Trophy Radiologie business for $51 million in cash and principally as a
result of this transaction recorded an after-tax gain of $17.4 million. Also,
the company sold the last remaining component of its former power-generation
business in 2002 and realized a gain from the disposition totaling $13.0
million, primarily for previously unrecognized tax benefits that were realized
upon the sale.

       In February 2001, the company sold its interest in Thermo Cardiosystems
Inc. to Thoratec Corporation in exchange for 19.3 million shares of Thoratec
common stock. Certain restrictions, which lapsed in August 2002, limited the
timing of the company's ability to sell these shares. The company recorded an
after-tax charge of $66.0 million in the first quarter of 2001 for a decline in
market value of Thoratec common stock as a loss on disposal of discontinued
operations. Following a sale of shares in February 2002 for net proceeds of $104
million and an after-tax gain of $38.4 million, the company owned less than 20%
of Thoratec's outstanding shares and began accounting for its investment as an
available-for-sale security in continuing operations in the first quarter of
2002, with unrealized gains or losses recorded as part of accumulated other
comprehensive items in the accompanying 2002 balance sheet (Note 17).

       In 2001, the company sold a substantial portion of its discontinued
power-generation business for net proceeds of $249 million and realized an
after-tax gain of $15.6 million on the disposition.

       The company is not currently aware of any known trends, events, or other
uncertainties involving discontinued operations that it expects will cause the
ultimate loss on disposal of discontinued operations to differ materially from
the amounts recorded to date. Any difference from the amounts recorded would be
reported as an adjustment to the ultimate loss on disposal of discontinued
operations.

2001 Compared With 2000

Continuing Operations

       Sales in 2001 were $2.188 billion, a decrease of $92.3 million from 2000.
Excluding the effect of acquisitions, divestitures, and currency translation,
revenues increased $113.5 million, or 5%. Currency translation had an
unfavorable effect on revenues as discussed below by segment, due to the
strengthening of the U.S. dollar relative to currencies of countries in which
the company operates.

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       Operating income was $34.2 million in 2001, compared with $266.0 million
in 2000. Segment operating income decreased to $85.2 million in 2001 from $319.8
million in 2000. Operating and segment operating income in 2001 were affected by
restructuring and other costs. Operating and segment operating income in 2000
were affected by gains from the sale of businesses, offset in part by
restructuring and other costs as well as a $1.7 million operating loss in the
third quarter at a business that was sold. The restructuring and other items in
both periods are discussed by segment below and in more detail in Note 15.
Excluding the restructuring and other items, which totaled $147.3 million of
expense in 2001 and $67.3 million of income in 2000, segment operating income
was $232.4 million in 2001 and $252.5 million in 2000. Segment operating income,
excluding restructuring and other items, decreased due to a reduction in segment
operating income of $10.9 million from businesses divested. The company also
recorded $2.3 million of incremental amortization expense in 2001, which
resulted primarily from the purchase of the minority interests of formerly
public subsidiaries in 2000, offset in part by lower amortization expense
following a number of divestitures. In addition, certain businesses discussed
below had lower profitability in 2001.

       The company undertook restructuring actions in 2001 to reduce costs in
businesses affected by a severe slowdown in the telecommunications and
semiconductor industries as well as other market sectors hurt by a slowing
economy, including the U.S. steel and cement industries. The restructuring
actions undertaken in 2001 were substantially completed by 2002. In addition to
the actions to reduce costs, the company recorded an impairment charge for
equipment used in telecommunication manufacturing at Spectra-Physics. The
company also recorded provisions for inventories related to the discontinuation
of certain mature or unprofitable product lines and inventories made redundant
by combining businesses and for excess telecommunication inventories at
Spectra-Physics. These actions resulted in annual cost reductions of
approximately $63 million with approximately 40% beginning in the fourth quarter
of 2001 and the balance by the third quarter of 2002, including $20 million in
the Life and Laboratory Sciences segment, $22 million in the Measurement and
Control segment, $18 million in the Optical Technologies segment, and $3 million
at the company's corporate office.

Life and Laboratory Sciences

       Sales in the Life and Laboratory Sciences segment increased $67.7 million
to $1.114 billion in 2001. Sales increased $17.9 million due to acquisitions.
The unfavorable effects of currency translation resulted in a decrease in
revenues of $28.1 million in 2001. Excluding the effect of acquisitions and
currency translation, revenues increased $77.9 million, or 7%. Approximately 40%
of the increase was due to higher sales of mass spectrometry products used in
proteomics and drug discovery research. Of the remaining increase, approximately
two thirds was from increased sales of biosciences equipment, including
sample-preparation equipment and microplate and liquid-handling products due to
strong demand from the drug discovery market and expanded distribution channels.
In addition, the segment reported higher revenues from clinical diagnostic
products, including rapid diagnostic tests, as well as increased sales of
spectroscopy instruments due to new product introductions.

       Operating income margin decreased to 9.5% in 2001 from 11.4% in 2000. The
segment's operating income margin in both periods was affected by restructuring
and other charges, discussed below. Excluding restructuring and other costs,
net, of $45.6 million in 2001 and $24.7 million in 2000, operating income margin
was 13.6% in 2001 and 13.8% in 2000. The decrease in operating income margin was
primarily due to an increase in goodwill amortization as a result of the
purchase of the minority interests of formerly public subsidiaries. Excluding
the additional amortization expense and the restructuring and other charges,
operating income margin was 13.8% in 2001. Lower profitability due to research
and development expenditures on proteomics initiatives was offset in part by the
effect of higher revenues, discussed above.

       Restructuring and other costs, net, in 2001 included cash costs of $27.3
million, primarily for severance and abandoned facilities; $8.3 million of asset
writedowns; $6.9 million of charges to cost of revenues, principally for
discontinued product lines; a charge of $3.4 million for the writeoff of
in-process research and development at an acquired business; $0.7 million of
noncash severance costs; and $1.0 million of gains on the sale of a small
business unit and a product line (Note 15). Restructuring costs in 2000
represent $13.7 million of charges to cost of revenues, principally for
discontinued product lines; $7.0 million of cash costs, primarily for severance
and abandoned facilities; and $4.0 million of asset writedowns (Note 15).

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Measurement and Control

       Sales in the Measurement and Control segment decreased $204.0 million to
$676.3 million in 2001. Sales decreased $176.7 million due to divestitures, net
of acquisitions. The unfavorable effects of currency translation resulted in a
decrease in revenues of $11.4 million in 2001. Excluding the effect of
divestitures, acquisitions, and currency translation, revenues decreased $15.9
million, or 2%. The decrease in revenues was primarily due to an 11% decrease in
sales of temperature-control products due to a severe market downturn in the
semiconductor industry, and $12.7 million of lower sales of process instruments.
The lower sales of process instruments primarily included weighing and
inspection equipment due to competitive pressures, and equipment sold to the
U.S. steel and cement industries due to a downturn in those markets. The
decrease in revenue was partially offset by an $8.8 million increase in sales of
environmental-monitoring equipment due in part to increased sales of chemical
and radiation monitors as well as demand from the construction industry and
upgrades of power plants. In April 2001, the segment sold businesses that
contributed $4.4 million of the segment's internal revenue growth in 2001. A
downturn in some markets served by the segment resulted in a decline in revenues
in the third and fourth quarters of 2001 compared with the same quarters of
2000.

       In 2001, the segment's principal divestitures included Pharos Marine,
ThermoMicroscopes, and the CAC and Mid South businesses. In 2000, the segment's
divestitures primarily included Spectra Precision, Nicolet Imaging Systems, and
Sierra Research and Technology, Inc. (Note 2).

       Operating income margin decreased to 2.5% in 2001 from 20.6% in 2000,
primarily due to restructuring and other charges, net, in 2001 and other income,
net, in 2000. Operating income margin, excluding restructuring and other costs,
net, of $44.6 million in 2001 and other income, net, of $98.1 million in 2000,
decreased to 9.1% in 2001 from 9.5% in 2000. The decrease in operating income
margin resulted primarily from lower profitability at the business units
discussed above that had declining revenues, offset in part by the higher
revenues from sales of environmental-monitoring equipment discussed above
together with cost reduction measures initiated in 2000 and 2001.

       Restructuring and other costs, net, in 2001 included $20.7 million of
cash costs, primarily for severance, abandoned facilities, and other exit costs;
$12.0 million, net, for the loss on sale of businesses or writedowns of
businesses subsequently sold; $8.2 million of charges to cost of revenues,
principally for discontinued product lines; $3.6 million of asset writedowns;
$1.0 million for impairment of a note receivable; and $0.2 million of other
costs. These charges were offset in part by a gain of $1.1 million on the sale
of a building (Note 15). The businesses for which the segment recorded a loss on
or prior to sale were ThermoMicroscopes and Pharos Marine. In 2000,
restructuring and other income, net, totaled $98.1 million and included gains on
the sale of businesses, net, of $126.7 million, and the related operating loss
of $1.7 million of one of the divested businesses in the third quarter of 2000
prior to its sale; $18.7 million of asset writedowns to reduce the carrying
value of businesses held for sale to estimated disposal value and for fixed
assets unique to certain discontinued products; $6.1 million of cash costs,
primarily for severance and facility costs; charges to cost of revenues of $2.7
million, primarily for discontinued product lines; and a gain of $0.6 million
from the termination of a lease (Note 15).

Optical Technologies

       Sales in the Optical Technologies segment increased $45.0 million to
$408.9 million in 2001. Sales decreased $0.4 million due to a divestiture, net
of a small acquisition. The unfavorable effects of currency translation resulted
in a decrease in revenues of $7.0 million in 2001. Excluding the effect of a
divestiture, an acquisition, and currency translation, revenues increased $52.4
million, or 14%. The increase in revenues was due in part to $37.5 million of
increased demand for semiconductor-based lasers used in industrial, research and
development, and life sciences applications. The balance of the increase was due
to higher sales in the first half of 2001 of molecular beam epitaxy systems and
components to the semiconductor industry and, to a lesser extent, increased
sales of photonics products including gratings and other optical components used
in systems for lithography and telecommunication devices. Poor economic
conditions in the telecommunications markets resulted in a decline in segment
revenues in the third and fourth quarters of 2001 compared with the same
quarters of 2000.

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       Operating income margin decreased to negative 9.1% in 2001 from 5.1% in
2000. Excluding restructuring and other costs of $57.1 million in 2001 and $6.0
million in 2000, operating income margin was 4.8% in 2001 and 6.8% in 2000. The
decrease in operating income margin excluding restructuring and other costs was
primarily due to $2.8 million of operating losses at Spectra-Physics from its
telecom product introductions and associated startup costs, compared with
profitable operations in 2000. The decrease in operating income margin was also
due to $0.9 million of higher goodwill amortization in 2001 following the
purchase of the minority interests of formerly public subsidiaries in 2000.

       Restructuring and other costs, net, in 2001 included $24.0 million of
asset writedowns, principally fixed assets associated with telecommunication
initiatives; $22.1 million of cash costs for severance, lease obligations for
abandoned equipment and facilities, litigation loss, and other exit costs; and
$11.0 million of charges to cost of revenues for inventory writedowns (Note 15).
Restructuring and other costs in 2000 represent $2.9 million of charges to cost
of revenues principally for discontinued product lines, a $1.5 million writeoff
of in-process research and development at an acquired business, $1.1 million of
cash costs, and $0.5 million of asset writedowns, primarily goodwill on a
business held for sale (Note 15).

Other Income (Expense), Net

       The company reported other income, net, of $36.5 million in 2001 and
other expense, net, of $81.2 million in 2000 (Note 4). Interest income increased
to $68.5 million in 2001 from $40.2 million in 2000, primarily due to proceeds
from the sale of businesses, including discontinued operations, offset in part
by cash used in 2000 and 2001 for the purchase of the minority interests of
formerly public subsidiaries and in 2001 for repurchases of the company's debt
and equity securities. Interest expense decreased to $71.8 million in 2001 from
$83.1 million in 2000, as a result of the maturity and repurchase of debentures.

       The company recorded income from equity in earnings of unconsolidated
subsidiaries of $4.7 million in 2001 and incurred a net equity loss of $47.3
million in 2000, primarily related to its investment in FLIR, which undertook
significant restructuring actions in 2000. The company had gains on investments,
net, of $35.6 million in 2001 and $6.8 million in 2000. The gain in 2001
includes $35.1 million from the sale of shares of FLIR. Of the total gain from
the sale of FLIR, $14.2 million represents a recovery of previous writedowns of
FLIR. The gain in 2001 was reduced by a charge of $2.8 million to write down two
available-for-sale securities due to impairment that the company deemed other
than temporary. In 2001, other income, net, includes $0.5 million of other
expense, principally currency losses. In 2000, other expense, net, also includes
$2.3 million of net currency gains, primarily resulting from hedging activities
at Spectra-Physics, which elected early adoption of SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities."

Provision for Income Taxes

       The company's effective tax rate was 38.1% and 60.7% in 2001 and 2000,
respectively. Excluding the tax effect of restructuring and other costs or
income and gains from the sale of shares of FLIR, the effective tax rate was
38.1% and 39.4% in 2001 and 2000, respectively. The effective tax rate exceeded
the statutory federal income tax rate in both periods due to the impact of state
income taxes and nondeductible expenses, including amortization of goodwill.

Minority Interest Income (Expense)

       The company recorded minority interest income of $5.8 million in 2001 and
minority interest expense of $10.6 million in 2000, representing minority
shareholders' allocable share of subsidiary losses or earnings. Minority
interest expense decreased due to the purchase in 2000 of the minority interest
in all of the company's formerly public subsidiaries in continuing operations
except Spectra-Physics (Note 17). In 2001, Spectra-Physics incurred a loss and
minority interest income represents the minority shareholders' share of the
loss.

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Income from Continuing Operations

       Income from continuing operations before extraordinary item and
cumulative effect of change in accounting principle was $49.6 million in 2001,
compared with $62.0 million in 2000. Results in both periods were affected by
restructuring, gains on the sale of shares of FLIR, and other items, discussed
above. Excluding the restructuring, gains on the sale of shares of FLIR, and
other items in both periods, income from continuing operations before
extraordinary item and cumulative effect of change in accounting principle
increased to $122.4 million in 2001 from $100.0 million in 2000 due to the
reasons discussed above.

Extraordinary Item

       The company repurchased debentures during 2001 and 2000, resulting in
extraordinary gains of $1.1 million, net of taxes of $0.6 million, in 2001, and
$0.5 million, net of taxes of $0.3 million, in 2000 (Note 10).

Cumulative Effect of Change in Accounting Principle

       The company adopted SFAS No. 133, as amended, in the first quarter of
2001 and recorded a charge representing the cumulative effect of the change in
accounting principle of $1.0 million, net of an income tax benefit of $0.7
million (Note 1). In addition, in accordance with the requirements of SEC Staff
Accounting Bulletin (SAB) No. 101 "Revenue Recognition in Financial Statements,"
the company adopted the pronouncement as of January 2, 2000, and recorded a
charge in the first quarter of 2000 representing the cumulative effect of the
change in accounting principle of $12.9 million, net of an income tax benefit of
$8.5 million and minority interest of $0.5 million (Note 16).

Discontinued Operations

       The company recorded a provision of $66.0 million, net of taxes, in the
first quarter of 2001 for a decline in market value of Thoratec common stock as
a loss on disposal of discontinued operations. The Thoratec shares were obtained
in February 2001 upon the sale of the company's interest in Thermo
Cardiosystems.

       In June 2001, the company sold a substantial portion of its discontinued
power-generation business for net proceeds of $249 million and realized an
after-tax gain of $15.6 million on the disposition.

       The company recorded a provision of $100 million, net of taxes, in 2000
as a revision to the estimate of loss on disposal of discontinued operations
recorded in 1999. The increase in the loss resulted from lower after-tax
proceeds from the sale of noncore businesses than had been anticipated at the
time the businesses were discontinued. The company believes that deterioration
in the financial markets in the latter part of 2000, including tighter financing
terms and lower equity values, adversely affected the selling prices of the
discontinued businesses.

Liquidity and Capital Resources

       Consolidated working capital was $667.8 million at December 28, 2002,
compared with $823.2 million at December 29, 2001. Included in working capital
were cash, cash equivalents, and short-term available-for-sale investments of
$875.5 million at December 28, 2002, compared with $1.042 billion at December
29, 2001. In addition, the company had $9.4 million of long-term
available-for-sale investments at December 29, 2001.

2002

       Cash provided by operating activities was $102.9 million during 2002,
including $112.4 million provided by continuing operations. Payments for
restructuring actions of the company's continuing operations, principally
severance, lease costs, and other expenses of real estate consolidation, used
cash of $44.2 million, net of taxes, in 2002. Aside from cash used for
restructuring actions, a decrease in other current liabilities used cash of
$71.6 million, including $44.8 million of income tax payments and $10.8 million
of accrued interest, principally due to the debt redemption discussed in Note
10. The income tax payments include approximately $39.0 million related to gains
on investments. The use of cash of $9.5 million from discontinued operations was
principally due to the payment of liabilities, primarily for the settlement of
litigation, including a patent-infringement matter (Note 11), offset in part by
cash from tax benefits associated with discontinued operations.

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       In connection with restructuring actions undertaken by continuing
operations, the company had accrued $41.6 million for restructuring costs at
December 28, 2002. The company expects to pay $22.2 million of this amount for
severance, employee retention, and other costs primarily through 2003. The
balance of $19.4 million will be paid for lease obligations over the remaining
terms of the leases, with approximately 71% to be paid through 2003 and the
remainder through 2012. In addition, at December 28, 2002, the company had
accrued $8.8 million for acquisition expenses. Accrued acquisition expenses
included $1.8 million of severance and relocation obligations, which the company
expects to pay primarily through the third quarter of 2003. The balance
primarily represents abandoned-facility payments that will be paid over the
remaining terms of the leases through 2014.

       During 2002, the primary investing activities of the company's continuing
operations, excluding available-for-sale investment activities, included the
sale of other investments, acquisitions and divestitures, the collection of
notes receivable, the purchase of shares of a majority-owned subsidiary, and the
purchase of property, plant, and equipment. The company's continuing operations
received proceeds of $65.5 million from the sale of other investments,
principally shares of FLIR (Note 4), and proceeds of $23.6 million from the sale
of businesses, net of cash divested (Note 2). In addition, the company's
continuing operations expended $78.7 million for acquisitions (Note 2), $23.2
million to purchase the remaining minority-owned shares of its Spectra-Physics
subsidiary (Note 17), and $40.2 million for purchases of property, plant, and
equipment, net of dispositions. The company's continuing operations collected
$76.4 million from notes receivable, which included the repayment of Viasys
Healthcare's $33.4 million principal amount note in May 2002, the August 2002
repayment of a $25.0 million principal amount note receivable related to the
sale of a business in 2000, and partial repayment from Trimble Navigation
Limited in March 2002 (Note 2). During 2002, investing activities of the
company's discontinued operations provided $151.0 million of cash, primarily
representing proceeds of $104 million from the sale of Thoratec common stock
(Note 17) and the sale of Trophy Radiologie.

       The company's financing activities used $593.0 million of cash during
2002, including $592.7 million for continuing operations. During 2002, the
company's continuing operations expended $590.7 million to redeem certain
convertible debentures. The company increased short-term notes payable by $311.1
million to partially fund debt redemptions (Note 10). The company's continuing
operations received net proceeds of $25.3 million from the exercise of employee
stock options. During 2002, the company expended $334.2 million to repurchase
its debt and equity securities, of which $285.6 million was expended to
repurchase 15.4 million shares of the company's common stock. As of December 28,
2002, the company had approximately $62 million remaining under Board of
Directors authorizations to repurchase its own securities. In February 2003, the
company's Board of Directors authorized the repurchase of an additional $100
million tranche of its own debt and equity securities through February 26, 2004.
In December 2002, the company entered into arrangements under which the company
may borrow up to $250 million for working capital needs and possible
acquisitions (Note 10).

2001

       Cash provided by operating activities was $188.4 million in 2001,
including $184.4 million from continuing operations. Accounts receivable used
$19.0 million of cash, principally as a result of strong fourth quarter revenue
growth in 2001 over the fourth quarter of 2000 at the company's Life and
Laboratory Sciences segment. Accounts payable decreased $19.1 million primarily
due to a lower volume of purchasing activities resulting from slowdowns in
several businesses. Other current liabilities increased by $50.5 million,
including $39.7 million of restructuring reserves and $10.2 million of accrued
interest, due to the timing of payments.

       During 2001, the company's investing activities expended $73.2 million,
net of dispositions, for purchases of property, plant, and equipment; $69.5
million for the purchase of shares of a majority-owned subsidiary; and $14.1
million, net of cash acquired, for acquisitions. In addition, the company
recorded proceeds from the sale of businesses, net of cash divested, of $46.8
million, and $43.3 million for the sale of other investments, principally shares
of FLIR.

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       The company's financing activities used $696.3 million of cash during
2001, including $503.0 million for continuing operations. The company's
continuing operations expended $43.1 million for the repayment of long-term
obligations and received net proceeds of $69.9 million from the exercise of
employee stock options. In addition, the company expended $511.4 million to
repurchase its debt and equity securities in 2001. During 2001, the company's
discontinued operations used $193.3 million of cash, including cash at the
company's Kadant subsidiary, which was spun off in August 2001, and for the
repayment of debt.

2000

       Cash provided by operating activities was $199.9 million in 2000,
including $57.8 million from continuing operations. Cash of $77.4 million was
used to fund an increase in inventories in response to growth at certain of the
company's business units. Of the total increase in inventories, $14.5 million
resulted from the adoption of SAB No. 101. Accounts receivable used $27.4
million of cash due to increased revenues. The increase in receivables was
reduced by $21.6 million due to the adoption of SAB No. 101. Other current
liabilities increased by $48.0 million, including $15.5 million of restructuring
reserves and $29.1 million of accrued income taxes.

       During 2000, the company's investing activities expended $307.2 million
to acquire the minority interest of certain majority-owned subsidiaries; $74.0
million, net of dispositions, for purchases of property, plant, and equipment;
and $15.8 million, net of cash acquired, for acquisitions. In addition, the
company recorded proceeds from the sale of businesses, net of cash divested, of
$253.6 million. During 2000, investing activities of the company's discontinued
operations provided $394.6 million, primarily representing proceeds from the
sale of businesses.

       The company's financing activities used $137.6 million of cash during
2000, including $155.5 million for continuing operations. The company's
continuing operations expended $161.2 million for the repayment of long-term
obligations, $29.2 million to repurchase its debt and equity securities, and
$14.6 million to purchase debentures of certain of the company's majority-owned
subsidiaries.

Contractual Obligations and Other Commercial Commitments

       The table below summarizes, by period due or expiration of commitment,
the company's contractual obligations and other commercial commitments as of
December 28, 2002, which are principally for its continuing operations.



                                                                                                         

                                                               Payments Due by Period or Expiration of Commitment
                                                 -------------------------------------------------------------------------------
                                                 Less than                                                After
                                                    1 Year         1-3 Years        4-5 Years           5 Years            Total
                                                 ---------         ---------        ---------          --------         --------
                                                                                 (In thousands)
       Contractual Obligations and Other
        Commercial Commitments:
           Long-term obligations                  $117,144          $228,366         $ 78,471          $144,504         $568,485
           Operating leases                         40,312            89,356           20,017            83,072          232,757
                                                  --------          --------         --------          --------         --------

             Total contractual obligations         157,456           317,722           98,488           227,576          801,242
                                                  --------          --------         --------          --------         --------

       Other Commitments:
           Standby letters of credit                40,549             3,676              161               169           44,555
           Guarantees                               25,166             2,023                8                 4           27,201
                                                  --------          --------         --------          --------         --------

             Total other commitments                65,715             5,699              169               173           71,756
                                                  --------          --------         --------          --------         --------

                                                  $223,171          $323,421         $ 98,657          $227,749         $872,998
                                                  ========          ========         ========          ========         ========


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       The company does not use special purpose entities or other
off-balance-sheet financing techniques except for operating leases and other
commitments disclosed in the previous table.

       The company has no material commitments for purchases of property, plant,
and equipment and expects that for 2003, such expenditures will approximate $55
to $60 million.

       The company believes that its existing resources, including cash and
investments, future cash flow from operations, and available borrowings under
credit facilities, are sufficient to meet the working capital requirements of
its existing businesses for the foreseeable future, including at least the next
24 months.

Forward-looking Statements

       In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, we caution readers that the following important
factors, among others, in some cases have affected, and in the future could
affect, our actual results and could cause our actual results in 2003 and beyond
to differ materially from those expressed in any forward-looking statements made
by us.

       We must develop new products, adapt to rapid and significant
technological change, and respond to introductions of new products in order to
remain competitive. Our growth strategy includes significant investment in and
expenditures for product development, including in the area of proteomics. We
sell our products in several industries that are characterized by rapid and
significant technological changes, frequent new product and service
introductions, and enhancements and evolving industry standards. Without the
timely introduction of new products, services, and enhancements, our products
and services will likely become technologically obsolete over time, in which
case our revenue and operating results would suffer.

       Our customers use many of our products to develop, test, and manufacture
their own products. As a result, we must anticipate industry trends and develop
products in advance of the commercialization of our customers' products. If we
fail to adequately predict our customers' needs and future activities, we may
invest heavily in research and development of products and services that do not
lead to significant revenue.

       Many of our existing products and those under development are
technologically innovative and require significant planning, design,
development, and testing at the technological, product, and
manufacturing-process levels. These activities require us to make significant
investments.

       Products in our markets undergo rapid and significant technological
change because of quickly changing industry standards and the introduction of
new products and technologies that make existing products and technologies
uncompetitive or obsolete. Our competitors may adapt more quickly to new
technologies and changes in customers' requirements than we can. The products
that we are currently developing, or those we will develop in the future, may
not be technologically feasible or accepted by the marketplace, and our products
or technologies could become uncompetitive or obsolete.

       We sell our products and services to a number of companies that operate
in cyclical industries, which would adversely affect our results of operations
when those industries experience a downturn. The growth and profitability of
some of our businesses depend in part on sales to industries that are subject to
cyclical downturns and are experiencing slowing trends. For example, our Optical
Technologies segment depends in part on sales to the semiconductor industry and
our Measurement and Control segment depends in part on sales to the steel and
cement industries. A continued slowdown in these industries would adversely
affect sales by these segments, which in turn would adversely affect our
revenues and results of operations.

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                                       28

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       Our business is adversely impacted by the continuing general worldwide
economic slowdown and related uncertainties affecting markets in which we
operate. Continuing adverse economic conditions worldwide could adversely impact
our business in 2003 and beyond, resulting in:

       -  reduced demand for some of our products;

       -  increased rate of order cancellations or delays;

       -  increased risk of excess and obsolete inventories;

       -  increased pressure on the prices for our products and services; and

       -  greater difficulty in collecting accounts receivable.

       For example, continued softness in the laboratory equipment, industrial
manufacturing, and semiconductor markets could adversely affect our future
operating results.

       Changes in governmental regulations may reduce demand for our products or
increase our expenses. We compete in many markets in which we and our customers
must comply with federal, state, local, and international regulations, such as
environmental, health and safety, and food and drug regulations. We develop,
configure, and market our products to meet customer needs created by those
regulations. Any significant change in regulations could reduce demand for our
products. For example, many of our instruments are marketed to the
pharmaceutical industry for use in discovering and developing drugs. Changes in
the U.S. Food and Drug Administration's regulation of the drug discovery and
development process could have an adverse effect on the demand for these
products.

       Demand for most of our products depends on capital spending policies of
our customers and on government funding policies. Our customers include
manufacturers of semiconductors and products incorporating semiconductors,
pharmaceutical and chemical companies, laboratories, universities, healthcare
providers, government agencies, and public and private research institutions.
Many factors, including public policy spending priorities, available resources,
and product and economic cycles, have a significant effect on the capital
spending policies of these entities. These policies in turn can have a
significant effect on the demand for our products.

       Our inability to protect our intellectual property could have a material
adverse effect on our business. In addition, third parties may claim that we
infringe their intellectual property, and we could suffer significant litigation
or licensing expense as a result. We place considerable emphasis on obtaining
patent and trade secret protection for significant new technologies, products,
and processes because of the length of time and expense associated with bringing
new products through the development process and into the marketplace. Our
success depends in part on our ability to develop patentable products and obtain
and enforce patent protection for our products both in the United States and in
other countries. We own numerous U.S. and foreign patents, and we intend to file
additional applications, as appropriate, for patents covering our products.
Patents may not be issued for any pending or future patent applications owned by
or licensed to us, and the claims allowed under any issued patents may not be
sufficiently broad to protect our technology. Any issued patents owned by or
licensed to us may be challenged, invalidated, or circumvented, and the rights
under these patents may not provide us with competitive advantages. In addition,
competitors may design around our technology or develop competing technologies.
Intellectual property rights may also be unavailable or limited in some foreign
countries, which could make it easier for competitors to capture increased
market position. We could incur substantial costs to defend ourselves in suits
brought against us or in suits in which we may assert our patent rights against
others. An unfavorable outcome of any such litigation could materially adversely
affect our business and results of operations.

       We also rely on trade secrets and proprietary know-how which we seek to
protect our products, in part, by confidentiality agreements with our
collaborators, employees, and consultants. These agreements may be breached and
we may not have adequate remedies for any breach. In addition, our trade secrets
may otherwise become known or be independently developed by our competitors.

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                                       29

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       Third parties may assert claims against us to the effect that we are
infringing on their intellectual property rights. We could incur substantial
costs and diversion of management resources in defending these claims, which
could have a material adverse effect on our business, financial condition, and
results of operations. In addition, parties making these claims could secure a
judgment awarding substantial damages, as well as injunctive or other equitable
relief, which could effectively block our ability to make, use, sell,
distribute, or market our products and services in the United States or abroad.
In the event that a claim relating to intellectual property is asserted against
us, or third parties not affiliated with us hold pending or issued patents that
relate to our products or technology, we may seek licenses to such intellectual
property or challenge those patents. However, we may be unable to obtain these
licenses on commercially reasonable terms, if at all, and our challenge of the
patents may be unsuccessful. Our failure to obtain the necessary licenses or
other rights could prevent the sale, manufacture, or distribution of our
products and, therefore, could have a material adverse effect on our business,
financial condition, and results of operations.

       We have retained contingent liabilities from businesses that we have
sold. From 1997 through 2002, we divested over 60 businesses with aggregate
annual revenues in excess of $2 billion. As part of these transactions, we
retained responsibility for some of the contingent liabilities related to these
businesses, such as lawsuits, product liability claims, and potential claims by
buyers that representations and warranties we made about the businesses were
inaccurate. The resolution of these contingencies has not had a material adverse
effect on our results of operations or financial condition; however, we can not
be certain that this favorable pattern will continue.

       We face a number of challenges in integrating and consolidating our
businesses. We have historically operated our businesses largely as autonomous,
unaffiliated operations. For the past few years, we have been consolidating our
operations and managing them in a more coordinated manner. The following factors
may make it difficult to successfully complete the integration and consolidation
of our operations:

       -  Our success in integrating our businesses depends on our ability to
          coordinate or consolidate geographically separate organizations and
          integrate personnel with different business backgrounds and corporate
          cultures.

       -  Our ability to combine our businesses requires coordination of
          previously autonomous administrative, sales and marketing,
          distribution, and accounting and finance functions, and expansion and
          integration of information and management systems.

       -  The integration and consolidation process could be disruptive to our
          businesses.

       Moreover, we may not be able to realize all of the cost savings and other
benefits that we expect to result from the integration and consolidation
process.

       Our results could be impacted if we are unable to realize potential
future savings from new sourcing initiatives. As part of our corporate
consolidation over the past two years, we have undertaken significant real
estate consolidations and cost-savings initiatives relating to sourcing
materials and services purchased by us throughout our businesses. While we
anticipate continued significant savings from additional sourcing initiatives
and further real estate consolidations, future savings opportunities may be
fewer and smaller in size, and may be more difficult to achieve.

       Implementation of our new branding strategy may be difficult and could
adversely affect our business. We historically operated our business largely as
autonomous, unaffiliated companies and as a result each of our businesses
independently created and developed its own brand names. We are implementing a
new marketing and branding strategy which involves the transition from multiple,
unrelated brands to two brands, Thermo Electron and Spectra-Physics. Several of
our existing brands such as Finnigan, Nicolet, and Oriel command strong market
recognition and customer loyalty. We believe the transition to the two new
brands will enhance and strengthen our collective brand image and brand
awareness across the entire company. Our success in transitioning our brands
depends on many factors, including effective communication of the transition to
our customers, acceptance and recognition by customers

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                                       30

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of these new brands, and successful execution of the branding campaign by our
marketing and sales teams. If we are not successful in implementing this
strategy and transitioning our brands, we may experience erosion in our product
recognition, brand image and customer loyalty, and a decrease in demand for our
products.

       It may be difficult for us to implement our strategies for improving
internal growth. Some of the markets in which we compete have been flat or
declining over the past several years. To address this issue, we are pursuing a
number of strategies to improve our internal growth, including:

       -  finding new markets for our products, including in the area of
          proteomics;

       -  developing new applications for our technologies;

       -  combining sales and marketing operations in appropriate markets to
          compete more effectively;

       -  actively funding research and development;

       -  commencing key customer initiatives;

       -  strengthening our presence in selected geographic markets; and

       -  developing commercial tools and infrastructure to increase and
          support cross-selling opportunities of products and services to take
          advantage of our breadth in product offerings.

       We may not be able to successfully implement these strategies, and these
strategies may not result in the growth of our business.

       We have significant international operations, which entail the risk that
exchange rate fluctuations may negatively affect demand for our products and our
profitability. International revenues account for a substantial portion of our
revenues, and we intend to continue expanding our presence in international
markets. In 2002, our international revenues from continuing operations,
including export revenues from the United States, accounted for approximately
52% of our total revenues. International revenues are subject to the risk that
fluctuations in exchange rates may adversely affect product demand and the
profitability in U.S. dollars of products and services provided by us in
international markets, where payment for our products and services is made in
the local currency. For example, while in fiscal 2002, currency translation had
a favorable effect on revenues of our continuing operations of $28.7 million, in
fiscal 2001, the unfavorable effects of currency translation decreased revenues
of our continuing operations by $46.5 million.

       We have acquired several companies and businesses; as a result we have
recorded significant goodwill on our balance sheet, which we must continually
evaluate for potential impairment. We have acquired significant intangible
assets, including approximately $1.4 billion of goodwill that we have recorded
on our balance sheet as of December 28, 2002. We assess the realizability of the
goodwill we have on our books annually as well as whenever events or changes in
circumstances indicate that the goodwill may be impaired. These events or
circumstances generally include operating losses or a significant decline in
earnings associated with the acquired business or asset. Our ability to realize
the value of the goodwill will depend on the future cash flows of these
businesses. These cash flows in turn depend in part on how well we have
integrated these businesses.

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                                       31

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Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

       The company is exposed to market risk from changes in interest rates,
currency exchange rates, and equity prices, which could affect its future
results of operations and financial condition. The company manages its exposure
to these risks through its regular operating and financing activities.
Additionally, the company uses short-term forward contracts to manage certain
exposures to currencies. The company enters into forward currency-exchange
contracts to hedge firm purchase and sale commitments denominated in currencies
other than its subsidiaries' local currencies. The company does not engage in
extensive currency hedging activities; however, the purpose of the company's
currency hedging activities is to protect the company's local currency cash
flows related to these commitments from fluctuations in currency exchange rates.
The company's forward currency-exchange contracts principally hedge transactions
denominated in U.S. dollars, Euros, British pounds sterling, Japanese yen, and
Swiss francs. Income and losses arising from forward contracts are recognized as
offsets to losses and income resulting from the underlying exposure being
hedged. The company does not enter into speculative currency agreements.

Interest Rates

       Certain of the company's short- and long-term available-for-sale
investments and long-term obligations are sensitive to changes in interest
rates. Interest rate changes would result in a change in the fair value of these
financial instruments due to the difference between the market interest rate and
the rate at the date of purchase or issuance of the financial instrument. A 10%
decrease in year-end 2002 and 2001 market interest rates would result in a
negative impact to the company of $2 million and $9 million, respectively, on
the net fair value of its interest-sensitive financial instruments.

       In addition, interest rate changes would result in a change in the
company's interest expense due to variable-rate debt instruments. A 100-basis
point increase in 90-day LIBOR at December 28, 2002, would increase the
company's annual pre-tax interest expense by $4 million.

Currency Exchange Rates

       The company generally views its investment in international subsidiaries
with a functional currency other than the company's reporting currency as
long-term. The company's investment in international subsidiaries is sensitive
to fluctuations in currency exchange rates. The functional currencies of the
company's international subsidiaries are principally denominated in Euros,
British pounds sterling, and Japanese yen. The effect of a change in currency
exchange rates on the company's net investment in international subsidiaries is
reflected in the "accumulated other comprehensive items" component of
shareholders' equity. A 10% depreciation in year-end 2002 and 2001 functional
currencies, relative to the U.S. dollar, would result in a reduction of
shareholders' equity of $76 million and $72 million, respectively.

       The fair value of forward currency-exchange contracts is sensitive to
changes in currency exchange rates. The fair value of forward currency-exchange
contracts is the estimated amount that the company would pay or receive upon
termination of the contract, taking into account the change in currency exchange
rates. A 10% depreciation in year-end 2002 and 2001 currency exchange rates
related to the company's contracts would result in an increase in the unrealized
loss on forward currency-exchange contracts of $3.3 million and $5.1 million,
respectively. The unrealized gains or losses on forward currency-exchange
contracts resulting from changes in currency exchange rates are expected to
approximately offset losses or gains on the exposures being hedged.

       Certain of the company's cash and cash equivalents are denominated in
currencies other than the functional currency of the depositor and are sensitive
to changes in currency exchange rates. A 10% depreciation in the related
year-end 2002 and 2001 currency exchange rates would result in a negative impact
of $1.2 million and $1.7 million, respectively, on the company's net income.


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Equity Prices

       The company's available-for-sale investment portfolio includes equity
securities that are sensitive to fluctuations in price. In addition, the
company's convertible obligations are sensitive to fluctuations in the price of
the company's common stock. Changes in equity prices would result in changes in
the fair value of the company's available-for-sale investments and convertible
obligations due to the difference between the current market price and the
market price at the date of purchase or issuance of the financial instrument. A
10% decrease in year-end 2002 market equity prices would result in a negative
impact to the company of $9 million on the net fair value of its price-sensitive
equity financial instruments, principally its available-for-sale investments. A
10% increase in the year-end 2001 market equity prices would result in a
negative impact to the company of $7 million on the net fair value of its
price-sensitive equity financial instruments, principally its convertible
obligations.

Item 8.    Financial Statements and Supplementary Data

       This data is submitted as a separate section to this report. See Item 15
"Exhibits, Financial Statement Schedules, and Reports on Form 8-K."

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

       In June 2002, we changed our independent accountants as reported in our
Current Report on Form 8-K dated June 21, 2002.

       Our consolidated financial statements for each of the two fiscal years
ended December 29, 2001, and December 30, 2000, were audited by Arthur Andersen
LLP, independent accountants. On August 31, 2002, Arthur Andersen ceased
practicing before the SEC. Therefore, Arthur Andersen did not participate in the
preparation of this Form 10-K, did not reissue its audit report with respect to
the financial statements included in this Form 10-K, and did not consent to the
inclusion of its audit report in this Form 10-K. As a result, holders of our
securities may have no effective remedy against Arthur Andersen in connection
with a material misstatement or omission in the financial statements to which
its audit report relates. In addition, even if such holders were able to assert
such a claim, because it has ceased operations, Arthur Andersen may fail or
otherwise have insufficient assets to satisfy claims made by holders of our
securities that might arise under federal securities laws or otherwise with
respect to Arthur Andersen's audit report.

<
                                       33

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                                    PART III

Item 10.   Directors and Executive Officers of the Registrant

       The information with respect to Directors is listed under the caption
"Election of Directors" in our definitive proxy statement to be filed with the
SEC, not later than 120 days after the close of the fiscal year. This
information is incorporated in this report by reference. Information relating to
our executive officers is included in Item 1 of this report.

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

Item 11.   Executive Compensation

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

Item 12.   Security Ownership of Certain Beneficial Owners and Management and
           Related Stockholder Matters

       The information with respect to security ownership of certain beneficial
owners and management is listed under the caption "Stock Ownership" in our
definitive proxy statement to be filed with the SEC, not later than 120 days
after the close of the fiscal year. The information with respect to securities
authorized for issuance under equity compensation plans is listed under the
caption "Equity Compensation Plan Information" in our definitive proxy statement
to be filed with the SEC, not later than 120 days after the close of the fiscal
year. This information is incorporated in this report by reference.

Item 13.   Certain Relationships and Related Transactions

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

Item 14.   Controls and Procedures

       The company's management, including its Chief Executive Officer and Chief
Financial Officer, has conducted an evaluation of the effectiveness of
disclosure controls and procedures within 90 days of the filing of this report
pursuant to Exchange Act Rule 13a-14. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the disclosure
controls and procedures are effective in ensuring that information required to
be disclosed in the reports that the company files or submits under the Exchange
Act is recorded, processed, summarized, and reported within the time periods
specified in SEC rules and forms. There have been no significant changes in
internal controls, or in factors that could significantly affect internal
controls, subsequent to the date the company's management, including its Chief
Executive Officer and Chief Financial Officer, completed its evaluation.

<
                                       34

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                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following documents are filed as part of this report:

       (1) Consolidated Financial Statements (see Index on page F-1 of this report):

                Reports of Independent Accountants
                Consolidated Statement of Operations
                Consolidated Balance Sheet
                Consolidated Statement of Cash Flows
                Consolidated Statement of Comprehensive Income and Shareholders' Equity
                Notes to Consolidated Financial Statements

       (2) Consolidated Financial Statement Schedule (see Index on page F-1 of this report):

                Schedule II: Valuation and Qualifying Accounts
                Reports of Independent Accountants

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

(b) Reports on Form 8-K

       On December 12, 2002, the company filed a Current Report on Form 8-K with
       respect to the election of Marijn Dekkers, the Registrant's president and
       chief operating officer, to the position of president and chief executive
       officer, and the election of Richard F. Syron, the Registrant's chairman
       and chief executive officer, to the position of full-time executive
       chairman.

(c)    Exhibits

       See the Exhibit Index on page 39.


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                                       35

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                                   SIGNATURES

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

Date:  March 7, 2003                   THERMO ELECTRON CORPORATION

                                       By: /s/ Marijn E. Dekkers
                                           -------------------------------------
                                           Marijn E. Dekkers
                                           President and Chief Executive Officer

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of March 7, 2003.


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

By:   /s/ Marijn E. Dekkers            President, Chief Executive Officer, and Director
      ------------------------------   (Principal Executive Officer)
      Marijn E. Dekkers


By:   /s/ Richard F. Syron             Chairman of the Board
      ------------------------------
      Richard F. Syron


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


By:   /s/ Peter E. Hornstra            Corporate Controller and Chief Accounting Officer
      ------------------------------   (Principal Accounting Officer)
      Peter E. Hornstra


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


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


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


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


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


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


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


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                                       36

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                           THERMO ELECTRON CORPORATION

                                 CERTIFICATIONS

I, Marijn E. Dekkers, certify that:

1.   I have reviewed this annual report on Form 10-K of Thermo Electron
     Corporation;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         annual report (the "Evaluation Date"); and

     c)  presented in this annual report our conclusions about the effectiveness
         of the disclosure controls and procedures based on our evaluation as of
         the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)  all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:  March 7, 2003


                                           /s/ Marijn E. Dekkers
                                           -------------------------------------
                                           Marijn E. Dekkers
                                           President and Chief Executive Officer

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                           THERMO ELECTRON CORPORATION

I, Theo Melas-Kyriazi, certify that:

1.   I have reviewed this annual report on Form 10-K of Thermo Electron
     Corporation;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         annual report (the "Evaluation Date"); and

     c)  presented in this annual report our conclusions about the effectiveness
         of the disclosure controls and procedures based on our evaluation as of
         the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)  all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:  March 7, 2003


                                                        /s/ Theo Melas-Kyriazi
                                                        ------------------------
                                                        Theo Melas-Kyriazi
                                                        Chief Financial Officer

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

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

  3.2             By-laws of the Registrant, as amended and effective as of
                  February 27, 2003.

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

  4.1             Rights Agreement dated as of October 29, 2001, between the
                  Registrant and American Stock Transfer & Trust Company, which
                  includes as Exhibit A the Form of Certificate of Designations,
                  as Exhibit B the Form of Rights Certificate, and as Exhibit C
                  the Summary of Rights to Purchase Preferred Stock (filed as
                  Exhibit 4.2 to the Registrant's Annual Report on Form 10-K for
                  the fiscal year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

  4.2             Amendment No. 1 to Rights Agreement dated as of February 7,
                  2002, between the Registrant and American Stock Transfer &
                  Trust Company (filed as Exhibit 4.3 to the Registrant's Annual
                  Report on Form 10-K for the fiscal year ended December 29,
                  2001 [File No. 1-8002] and incorporated in this document by
                  reference).

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

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

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

 10.4             Thermo Electron Corporation Directors Stock Option Plan, as
                  amended and restated as of February 7, 2002 (filed as Exhibit
                  10.7 to the Registrant's Annual Report on Form 10-K for the
                  fiscal year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

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

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


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                                       39

>


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

 10.7             Thermo Electron Corporation Equity Incentive Plan, as amended
                  and restated as of February 7, 2002 (filed as Exhibit 10.10 to
                  the Registrant's Annual Report on Form 10-K for the fiscal
                  year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

 10.8             Thermo Electron Corporation 2001 Equity Incentive Plan, as
                  amended and restated as of February 7, 2002 (filed as Exhibit
                  10.11 to the Registrant's Annual Report on Form 10-K for the
                  fiscal year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

 10.9             Thermo Electron Corporation Employees' Equity Incentive Plan,
                  as amended and restated as of February 7, 2002 (filed as
                  Exhibit 10.12 to the Registrant's Annual Report on Form 10-K
                  for the fiscal year ended December 29, 2001 [File No. 1-8002]
                  and incorporated in this document by reference).

 10.10            Thermo Electron Corporation Deferred Compensation Plan,
                  effective November 1, 2001 (filed as Exhibit 10.13 to the
                  Registrant's Annual Report on Form 10-K for the fiscal year
                  ended December 29, 2001 [File No. 1-8002] and incorporated in
                  this document by reference).

 10.11            Thermo Electron Corporation 2000 Employees Equity Incentive
                  Plan.

                  Each of the plans listed in Exhibits 10.12 to 10.53 originally
                  provided for the grant of options to acquire the shares of the
                  Registrant's formerly majority-owned subsidiaries. In
                  connection with the reorganization of the Registrant commenced
                  in 1999, all of the Registrant's formerly majority-owned
                  subsidiaries were taken private and as a result, these plans
                  were frozen and all of the options originally granted under
                  the plans ultimately became options to purchase shares of
                  Common Stock of the Registrant.

 10.12            Amended and Restated Thermo Electron Corporation - Thermo
                  Information Solutions Inc. Nonqualified Stock Option Plan
                  (Thermo Information Solutions merged with Thermo Coleman
                  Corporation on September 17, 1999, and Thermo Coleman merged
                  with Thermo Electron on October 15, 1999.)

 10.13            Amended and Restated Thermo Information Solutions Inc. Equity
                  Incentive Plan (Thermo Information Solutions merged with
                  Thermo Coleman Corporation on September 17, 1999, and Thermo
                  Coleman merged with Thermo Electron on October 15, 1999.)

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

 10.15            Amended and Restated Thermo Coleman Corporation Equity
                  Incentive Plan (Thermo Coleman merged with Thermo Electron on
                  October 15, 1999.)

 10.16            Nonqualified Stock Option Plan of Thermo Power Corporation, as
                  amended (filed as Exhibit 10(i) to the Quarterly Report on
                  Form 10-Q of Thermo Power for the quarter ended April 3, 1993
                  [File No. 1-10573] and incorporated herein by reference).
                  (Thermo Power merged with Thermo Electron on October 28,
                  1999.)

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


<
                                       40

>


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

 10.18            Amended and Restated Trex Communications Corporation Equity
                  Incentive Plan (Trex Communications merged with ThermoTrex on
                  November 8, 1999, and ThermoTrex merged with Thermo Electron
                  on August 14, 2000.)

 10.19            Amended and Restated Thermo Instrument Systems Inc. -
                  ThermoSpectra Corporation Nonqualified Stock Option Plan
                  (filed as Exhibit 10.7 to the Quarterly Report on Form 10-Q of
                  Thermo Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated herein by reference). (ThermoSpectra
                  merged with Thermo Instrument on December 9, 1999, and Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

 10.20            Equity Incentive Plan of ThermoSpectra Corporation (filed as
                  Exhibit 10.18 to ThermoSpectra's Registration Statement on
                  Form S-1 [Reg. No. 33-93778] and incorporated herein by
                  reference). (ThermoSpectra merged with Thermo Instrument on
                  December 9, 1999, and Thermo Instrument merged with Thermo
                  Electron on June 30, 2000.)

 10.21            Amended and Restated Thermo Instrument Systems - Thermo Vision
                  Corporation Nonqualified Stock Option Plan (filed as Exhibit
                  10.12 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated in this document by reference).
                  (Thermo Vision merged with Thermo Instrument on January 6,
                  2000, and Thermo Instrument merged with Thermo Electron on
                  June 30, 2000.)

 10.22            Equity Incentive Plan of Thermo Vision Corporation (filed as
                  Exhibit 10.9 to the Annual Report on Form 10-K of Thermo
                  Vision for the fiscal year ended January 3, 1998 [File No.
                  1-13391] and incorporated herein by reference). (Thermo Vision
                  merged with Thermo Instrument on January 6, 2000, and Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

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

 10.24            Equity Incentive Plan of Thermo Sentron Inc. (filed as Exhibit
                  10.7 to Thermo Sentron's Registration Statement on Form S-1
                  [Reg. No. 333-806] and incorporated herein by reference).
                  (Thermo Sentron merged with Thermedics Inc. on April 4, 2000,
                  and Thermedics merged with Thermo Electron on June 30, 2000.)

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

 10.26            Equity Incentive Plan of Thermedics Detection Inc. (filed as
                  Exhibit 10.7 to Thermedics Detection's Registration Statement
                  on Form S-1 [File No. 333-19199] and incorporated in this
                  document by reference). (Thermedics Detection merged with
                  Thermedics on April 12, 2000, and Thermedics merged with
                  Thermo Electron on June 30, 2000.)


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                                       41

>

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

 10.27            Amended and Restated Equity Incentive Plan of Thermedics Inc.
                  (filed as Exhibit 10.7 to the  Quarterly Report on Form 10-Q
                  of Thermedics for the quarter ended July 3, 1999 [File No.
                  1-9567] and incorporated herein by reference). (Thermedics
                  merged with Thermo Electron on June 30, 2000.)

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

 10.29            Amended and Restated Thermo Instrument Systems Inc. - ONIX
                  Systems Inc. Nonqualified Stock Option Plan (filed as Exhibit
                  10.13 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated herein by reference). (ONIX merged
                  with Thermo Instrument on April 12, 2000, and Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

 10.30            Amended and Restated Equity Incentive Plan of ONIX Systems
                  Inc. (filed as Exhibit 10.11 to the Annual Report on Form 10-K
                  of ONIX for the fiscal year ended January 1, 2000 [File No.
                  1-13975] and incorporated herein by reference). (ONIX merged
                  with Thermo Instrument on April 12, 2000, and Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

 10.31            Amended and Restated Equity Incentive Plan of Thermo
                  BioAnalysis Corporation (filed as Exhibit 10.3 to the
                  Quarterly Report on Form 10-Q of Thermo BioAnalysis for the
                  quarter ended July 3, 1999 [File No. 1-12179] and incorporated
                  herein by reference). (Thermo BioAnalysis merged with Thermo
                  Instrument on April 19, 2000, and Thermo Instrument merged
                  with Thermo Electron on June 30, 2000.)

 10.32            Amended and Restated Thermo Instrument Systems Inc. - Metrika
                  Systems Corporation Nonqualified Stock Option Plan (filed as
                  Exhibit 10.11 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated herein by reference). (Metrika merged
                  with Thermo Instrument on May 3, 2000, and Thermo Instrument
                  merged with Thermo Electron on June 30, 2000.)

 10.33            Amended and Restated Equity Incentive Plan of Metrika Systems
                  Corporation (filed as Exhibit 10.3 to the Quarterly Report on
                  Form 10-Q of Metrika for the quarter ended July 3, 1999 [File
                  No. 1-13085] and incorporated herein by reference). (Metrika
                  merged with Thermo Instrument on May 3, 2000, and Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

 10.34            Amended and Restated Thermo Instrument Systems Inc. -
                  ThermoQuest Corporation Nonqualified Stock Option Plan (filed
                  as Exhibit 10.8 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated herein by reference). (ThermoQuest
                  merged with Thermo Instrument on May 11, 2000, and Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

 10.35            Amended and Restated Equity Incentive Plan of ThermoQuest
                  Corporation (filed as Exhibit 10.2 to the Quarterly Report on
                  Form 10-Q of ThermoQuest for the quarter ended July 3, 1999
                  [File No. 1-14262] and incorporated herein by reference).
                  (ThermoQuest merged with Thermo Instrument on May 11, 2000,
                  and Thermo Instrument merged with Thermo Electron on June 30,
                  2000.)


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                                       42

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

 10.36            Amended and Restated Equity Incentive Plan of Thermo Optek
                  Corporation (filed as Exhibit 10.2 to the Quarterly Report on
                  Form 10-Q of Thermo Optek for the quarter ended July 3, 1999
                  [File No. 1-11757] and incorporated herein by reference).
                  (Thermo Optek merged with Thermo Instrument on May 11, 2000,
                  and Thermo Instrument merged with Thermo Electron on June 30,
                  2000.)

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

 10.38            Equity Incentive Plan of The Randers Killam Group Inc. (filed
                  as Exhibit 10.7 to the Quarterly Report on Form 10-Q of
                  Randers Killam for the quarter ended January 3, 1998 [File No.
                  0-18095] and incorporated herein by reference). (Randers
                  Killam merged with Thermo TerraTech on May 15, 2000, and
                  Thermo TerraTech merged with Thermo Electron on September 22,
                  2000.)

 10.39            Amended and Restated Equity Incentive Plan of Thermo
                  Instrument Systems Inc. (filed as Exhibit 10.6 to the
                  Quarterly Report on Form 10-Q of Thermo Instrument for the
                  quarter ended July 3, 1999 [File No. 1-9786] and incorporated
                  herein by reference). (Thermo Instrument merged with Thermo
                  Electron on June 30, 2000.)

 10.40            Amended and Restated Thermo Instrument Systems Inc. - Thermo
                  BioAnalysis Corporation Nonqualified Stock Option Plan (filed
                  as Exhibit 10.9 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated herein by reference). (Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

 10.41            Amended and Restated Thermo Instrument Systems Inc. - Thermo
                  Optek Corporation Nonqualified Stock Option Plan (filed as
                  Exhibit 10.10 to the Quarterly Report on Form 10-Q of Thermo
                  Instrument for the quarter ended July 3, 1999 [File No.
                  1-9786] and incorporated herein by reference). (Thermo
                  Instrument merged with Thermo Electron on June 30, 2000.)

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

 10.43            Amended and Restated Nonqualified Stock Option Plan of Thermo
                  Ecotek Corporation (filed as Exhibit 10.6 to the Quarterly
                  Report on Form 10-Q of Thermo Ecotek for the quarter ended
                  July 3, 1999 [File No. 1-13572] and incorporated herein by
                  reference). (Thermo Ecotek merged with Thermo Electron on
                  August 10, 2000.)

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


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                                       43

>


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

 10.45            Amended and Restated Nonqualified Stock Option Plan of
                  ThermoTrex Corporation (filed as Exhibit 10.2 to the Quarterly
                  Report on Form 10-Q of ThermoTrex for the quarter ended July
                  3, 1999 [File No. 1-10791] and incorporated herein by
                  reference). (ThermoTrex merged with Thermo Electron on August
                  14, 2000.)

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

 10.47            Amended and Restated Nonqualified Stock Option Plan of
                  ThermoLase Corporation (filed as Exhibit 10.5 to the Quarterly
                  Report on Form 10-Q of ThermoLase for the quarter ended July
                  3, 1999 [File No. 1-13104] and incorporated herein by
                  reference). (ThermoLase merged with Thermo Electron on August
                  14, 2000.)

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

 10.49            Amended and Restated Nonqualified Stock Option Plan of Thermo
                  TerraTech Inc. (filed as Exhibit 10.34 to the Annual Report on
                  Form 10-K of Thermo TerraTech for the year ended April 1, 2000
                  [File No. 1-09549] and incorporated herein by reference).
                  (Thermo TerraTech merged with Thermo Electron on September 22,
                  2000.)

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

 10.51            Amended and Restated Equity Incentive Plan of Trex Medical
                  Corporation (filed as Exhibit 10.2 to the Quarterly Report on
                  Form 10-Q of Trex Medical for the quarter ended July 3, 1999
                  [File No. 1-11827] and incorporated herein by reference).
                  (Trex Medical merged with Thermo Electron on November 29,
                  2000.)

 10.52            1997 Spectra-Physics Lasers, Inc. Stock Option Plan (filed as
                  Exhibit 10.6 of Amendment No. 1 to Spectra-Physics'
                  Registration Statement on Form S-1 [File No. 333-38329] and
                  incorporated in this document by reference). (Spectra-Physics
                  merged with Thermo Electron on February 25, 2002.)

 10.53            2000 Spectra-Physics Lasers, Inc. Stock Option Plan (filed as
                  Exhibit 10.1 to Spectra-Physics' Quarterly Report on Form 10-Q
                  for the quarter ended September 30, 2000 [File No. 000-23461]
                  and incorporated in this document by reference).
                  (Spectra-Physics merged with Thermo Electron on February 25,
                  2002.)

 10.54            Description of Amendments to Certain Stock Option Plans made
                  in February 2002 (filed as Exhibit 10.31 to the Registrant's
                  Annual Report on Form 10-K for the fiscal year ended December
                  29, 2001 [File No. 1-8002] and incorporated in this document
                  by reference).



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

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

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

 10.57            Amended and Restated Employment Agreement between the
                  Registrant and Mr. Marijn Dekkers (filed as Exhibit 99.1 to
                  the Registrant's Current Report on Form 8-K dated December 12,
                  2002 [File No. 1-8002] and incorporated in this document by
                  reference).

 10.58            Amended and Restated Employment Agreement between the
                  Registrant and Mr. Richard F. Syron (filed as Exhibit 99.2 to
                  the Registrant's Current Report on Form 8-K dated December 12,
                  2002 [File No. 1-8002] and incorporated in this document by
                  reference).

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

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

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

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

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

 10.64            Amendment to the Plan and Agreement of Distribution dated
                  December 27, 2001, between the Registrant and Kadant Inc.
                  (filed as Exhibit 10.48 to the Registrant's Annual Report on
                  Form 10-K for the fiscal year ended December 29, 2001 [File
                  No. 1-8002] and incorporated in this document by reference).

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


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                                       45

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

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

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

 10.68            Employment Agreement dated as of November 29, 2001, between
                  the Registrant and Mr. Marc N. Casper (filed as Exhibit 10.54
                  to the Registrant's Annual Report on Form 10-K for the fiscal
                  year ended December 29, 2001 [File No. 1-8002] and
                  incorporated in this document by reference).

 10.69            Letter Agreement dated as of November 27, 2001, among SPX
                  Corporation, Kendro Laboratory Products, L.P., the Registrant,
                  and Mr. Marc N. Casper (filed as Exhibit 10.55 to the
                  Registrant's Annual Report on Form 10-K for the fiscal year
                  ended December 29, 2001 [File No. 1-8002] and incorporated in
                  this document by reference).

 10.70            Master Securities Loan Agreement between Thermo Electron
                  Corporation and JPMorgan Chase Bank (filed as Exhibit 10.1 to
                  the Registrant's Quarterly Report on Form 10-Q for the quarter
                  ended June 29, 2002 [File No. 1-8002] and incorporated in this
                  document by reference).

 10.71            Master Securities Loan Agreement between Thermo Electron
                  Corporation and ABN AMRO Inc. (filed as Exhibit 10.2 to the
                  Registrant's Quarterly Report on Form 10-Q for the quarter
                  ended June 29, 2002 [File No. 1-8002] and incorporated in this
                  document by reference).

 10.72            364-Day Credit Agreement among the Registrant, the Several
                  Lenders thereto, Barclays Bank Plc, as Lead Arranger, Book
                  Runner and Administrative Agent, ABN AMRO Bank N.V., as Lead
                  Arranger and Syndication Agent, and Fleet National Bank and
                  JPMorgan Chase Bank, as co-documentation agents, dated as of
                  December 20, 2002.

 10.73            Three-Year Credit Agreement among the Registrant, the Several
                  Lenders thereto, Barclays Bank Plc, as Lead Arranger, Book
                  Runner and Administrative Agent, ABN AMRO Bank N.V., as Lead
                  Arranger and Syndication Agent, and Fleet National Bank and
                  JPMorgan Chase Bank, as co-documentation agents, dated as of
                  December 20, 2002.

 10.74            Executive Registry Program at the Massachusetts General
                  Hospital.

 16.1             Letter from Arthur Andersen LLP to the Securities and Exchange
                  Commission, dated June 25, 2002 (filed as Exhibit 16 to the
                  Registrant's Current Report on Form 8-K dated June 21, 2002
                  [File No. 1-8002] and incorporated in this document by
                  reference).

 21               Subsidiaries of the Registrant.

 23.1             Consent of PricewaterhouseCoopers LLP.

 23.2             Limitation of Remedies Against Arthur Andersen LLP (Reference
                  is made to Item 9 of this Report.)

 99.1             Certification of Marijn E. Dekkers, President and Chief
                  Executive Officer of the Registrant pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

 99.2             Certification of Theo Melas-Kyriazi, Chief Financial Officer
                  of the Registrant pursuant to 18 U.S.C. Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.


<
                                       46

>


                           THERMO ELECTRON CORPORATION

                           ANNUAL REPORT ON FORM 10-K
             INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE


       The following Consolidated Financial Statements of the Registrant and its subsidiaries are required to be
included in Item 8:


                                                                                                                      
                                                                                                                         Page
                                                                                                                         ----

Report of Independent Accountants on financial statements at December 28, 2002, and for the year then ended              F-2

Report of Independent Accountants on financial statements at December 29, 2001, and for the two years then ended         F-3

Consolidated Statement of Operations for the years ended December 28, 2002, December 29, 2001, and December 30, 2000     F-4

Consolidated Balance Sheet as of December 28, 2002, and December 29, 2001                                                F-5

Consolidated Statement of Cash Flows for the years ended December 28, 2002, December 29, 2001, and December 30, 2000     F-7

Consolidated Statement of Comprehensive Income and Shareholders' Equity for the years ended December 28, 2002,
       December 29, 2001, and December 30, 2000                                                                          F-9

Notes to Consolidated Financial Statements                                                                               F-11


       The following Consolidated Financial Statement Schedule of the Registrant and its subsidiaries is filed as
part of this Report as required to be included in Item 15(a):
                                                                                                                         Page
                                                                                                                         ----

Schedule II - Valuation and Qualifying Accounts                                                                          F-61

Report of Independent Accountants at December 28, 2002, and for the year then ended                                      F-62

Report of Independent Accountants at December 29, 2001, and for the two years then ended                                 F-63











<
                                      F-1

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                           THERMO ELECTRON CORPORATION

                        REPORT OF INDEPENDENT ACCOUNTANTS

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

       In our opinion, the accompanying consolidated balance sheet as of
December 28, 2002 and the related consolidated statement of operations,
statement of cash flows, and statement of comprehensive income and shareholders'
equity for the year then ended present fairly, in all material respects, the
financial position of Thermo Electron Corporation and its subsidiaries as of
December 28, 2002, and the results of their operations and their cash flows for
the year then ended in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the
responsibility of the company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. The consolidated financial
statements of the company as of December 29, 2001, and for each of the two years
in the period ended December 29, 2001, prior to the revisions discussed in Notes
1 and 3, were audited by other independent accountants who have ceased
operations. Those independent accountants expressed an unqualified opinion on
those financial statements in their report dated February 7, 2002, except with
respect to the matters discussed in Note 19*, as to which the date is February
25, 2002.

       As disclosed in Note 1 to the consolidated financial statements, the
company changed the manner in which it accounts for goodwill and other
intangible assets upon adoption of Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" on December 30, 2001.

       As discussed above, the consolidated financial statements of Thermo
Electron Corporation as of December 29, 2001, and for each of the two years in
the period ended December 29, 2001, were audited by other independent
accountants who have ceased operations. As described in Note 1, these financial
statements have been restated to include the transitional disclosures required
by Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," which was adopted by the company on December 30, 2001. As
described in Note 3, these financial statements have also been restated to
reflect the change in the composition of the company's reportable segments. We
audited the transitional disclosures for 2001 and 2000 described in Note 1. We
also audited the adjustments described in Note 3 that were applied to restate
the 2001 and 2000 consolidated financial statements. In our opinion, all such
adjustments and transitional disclosures are appropriate and have been properly
applied. However, we were not engaged to audit, review, or apply any procedures
to the 2001 or 2000 consolidated financial statements of the company other than
with respect to such adjustments and transitional disclosures and, accordingly,
we do not express an opinion or any other form of assurance on the 2001 and 2000
consolidated financial statements taken as a whole.


PricewaterhouseCoopers LLP


Boston, Massachusetts
February 4, 2003 (except as to the
information in Note 19, for which
the date is February 28, 2003)


*The discussion of the subsequent events discussed in Note 19 in 2001, is now
 included in Note 10 and Note 17.


<
                                      F-2

>


                           THERMO ELECTRON CORPORATION

                        REPORT OF INDEPENDENT ACCOUNTANTS

THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP AND HAS NOT BEEN REISSSUED BY ARTHUR ANDERSEN LLP.

AS DISCUSSED IN NOTE 1, THERMO ELECTRON CORPORATION HAS RESTATED ITS FINANCIAL
STATEMENTS FOR THE YEARS ENDED DECEMBER 29, 2001, AND DECEMBER 30, 2000, TO
INCLUDE THE TRANSITIONAL DISCLOSURES REQUIRED BY STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS," AND AS
DISCUSSED IN NOTE 3, THERMO ELECTRON HAS RESTATED ITS BUSINESS SEGMENT
INFORMATION TO REFLECT A TRANSFER OF MANAGEMENT RESPONSIBILITY FOR SEVERAL
BUSINESSES BETWEEN SEGMENTS. THE REVISIONS TO THE 2001 AND 2000 FINANCIAL
STATEMENTS RELATED TO THESE TRANSITIONAL DISCLOSURES AND THE CHANGE IN BUSINESS
SEGMENT INFORMATION WERE REPORTED ON BY PRICEWATERHOUSECOOPERS LLP, AS STATED IN
THEIR REPORT APPEARING HEREIN.

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

       We have audited the accompanying consolidated balance sheets of Thermo
Electron Corporation (a Delaware corporation) and subsidiaries as of December
29, 2001, and December 30, 2000,* and the related consolidated statements of
operations, cash flows, and comprehensive loss and shareholders' investment for
each of the three years in the period ended December 29, 2001.* These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
       We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
       In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Thermo
Electron Corporation and subsidiaries as of December 29, 2001, and December 30,
2000, and the results of their operations and their cash flows for each of the
three years in the period ended December 29, 2001,* in conformity with
accounting principles generally accepted in the United States.
       As explained in Note 1 to the consolidated financial statements,
effective December 31, 2000, the company changed its method of accounting for
derivative instruments and hedging activities through the adoption of Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended. As explained in Notes 1 and 16
to the consolidated financial statements, effective January 2, 2000, the company
changed its method of accounting for revenue recognition on certain product
shipments through the adoption of Staff Accounting Bulletin No. 101 "Revenue
Recognition in Financial Statements."


                                                     Arthur Andersen LLP

Boston, Massachusetts
February 7, 2002 (except with respect
to the matters discussed in Note 19*, as
to which the date is February 25, 2002)

*The company's consolidated balance sheet as of December 30, 2000, and the
 consolidated statements of operations, cash flows, and comprehensive loss and
 shareholders' investment for the year ended January 1, 2000, are not included
 in this Form 10-K. Additionally, the discussion of the subsequent events
 discussed in Note 19 in 2001, is now included in Note 10 and Note 17.


<
                                      F-3

>


                           THERMO ELECTRON CORPORATION

                      CONSOLIDATED STATEMENT OF OPERATIONS
                     (In thousands except per share amounts)


                                                                                                                

                                                                                            2002            2001             2000
                                                                                         ----------      ----------      ----------

Revenues (Notes 3 and 16)                                                                $2,086,355      $2,188,210      $2,280,522
                                                                                         ----------      ----------      ----------

Costs and Operating Expenses:
 Cost of revenues (Note 15)                                                               1,158,979       1,229,588       1,258,686
 Selling, general, and administrative expenses                                              564,656         620,104         646,920
 Research and development expenses                                                          155,121         171,614         176,756
 Restructuring and other costs (income), net (Note 15)                                       52,146         132,702         (67,855)
                                                                                         ----------      ----------      ----------

                                                                                          1,930,902       2,154,008       2,014,507
                                                                                         ----------      ----------      ----------

Operating Income                                                                            155,453          34,202         266,015
Other Income (Expense), Net (Notes 4 and 15)                                                132,533          36,479         (81,184)
                                                                                         ----------      ----------      ----------

Income from Continuing Operations Before Provision for Income Taxes, Minority
 Interest, Extraordinary Item, and Cumulative Effect of Change in Accounting
 Principle                                                                                  287,986          70,681         184,831
Provision for Income Taxes (Note 6)                                                         (92,987)        (26,929)       (112,217)
Minority Interest Income (Expense)                                                              331           5,840         (10,567)
                                                                                         ----------      ----------      ----------

Income from Continuing Operations Before Extraordinary Item and Cumulative Effect of
 Change in Accounting Principle                                                             195,330          49,592          62,047
Income from Discontinued Operations (net of income tax provision and minority interest
 of $12,249; Note 17)                                                                             -               -          14,228
Gain (Loss) on Disposal of Discontinued Operations, Net (includes tax benefit of
 $21,008, $22,741, and $104,000; Note 17)                                                   115,370         (50,440)       (100,000)
                                                                                         ----------      ----------      ----------

Income (Loss) Before Extraordinary Item and Cumulative Effect of Change in Accounting
 Principle                                                                                  310,700            (848)        (23,725)
Extraordinary Item (net of income tax benefit of $522 and income tax provision of $637
 and $333; Note 10)                                                                            (970)          1,061             532
                                                                                         ----------      ----------      ----------

Income (Loss) Before Cumulative Effect of Change in Accounting Principle                    309,730             213         (23,193)
Cumulative Effect of Change in Accounting Principle (net of income tax benefit and
 minority interest of $663 and $8,986; Notes 1 and 16)                                            -            (994)        (12,918)
                                                                                         ----------      ----------      ----------

Net Income (Loss)                                                                        $  309,730      $     (781)     $  (36,111)
                                                                                         ==========      ==========      ==========

Earnings per Share from Continuing Operations Before Extraordinary
 Item and Cumulative Effect of Change in Accounting Principle (Note 7)
    Basic                                                                                $     1.16      $      .27      $      .37
                                                                                         ==========      ==========      ==========
    Diluted                                                                              $     1.12      $      .27      $      .36
                                                                                         ==========      ==========      ==========

Earnings (Loss) per Share (Note 7)
    Basic                                                                                $     1.84      $        -      $     (.22)
                                                                                         ==========      ==========      ==========
    Diluted                                                                              $     1.73      $        -      $     (.22)
                                                                                         ==========      ==========      ==========

Weighted Average Shares (Note 7)
    Basic                                                                                   168,572         180,560         167,462
                                                                                         ==========      ==========      ==========
    Diluted                                                                                 186,611         183,916         170,519
                                                                                         ==========      ==========      ==========

                       The accompanying notes are an integral part of these consolidated financial statements.


<
                                      F-4

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                           THERMO ELECTRON CORPORATION

                           CONSOLIDATED BALANCE SHEET
                                 (In thousands)


                                                                                                                 

                                                                                                          2002            2001
                                                                                                       ----------      ----------

Assets
Current Assets:
 Cash and cash equivalents                                                                             $  339,038      $  297,557
 Short-term available-for-sale investments, at quoted market value (Notes 4, 9, and 15)                   536,430         744,321
 Accounts receivable, less allowances of $25,576 and $26,525                                              429,740         410,960
 Inventories (Note 15)                                                                                    332,804         337,041
 Deferred tax asset (Note 6)                                                                               79,057          82,766
 Other current assets                                                                                      54,490          92,565
                                                                                                       ----------      ----------

                                                                                                        1,771,559       1,965,210
                                                                                                       ----------      ----------

Property, Plant, and Equipment, at Cost, Net (Note 15)                                                    272,908         270,712
                                                                                                       ----------      ----------

Long-term Available-for-sale Investments, at Quoted Market Value (Notes 9 and 15)                               -           9,360
                                                                                                       ----------      ----------

Other Assets (Notes 2 and 15)                                                                             186,390         231,395
                                                                                                       ----------      ----------

Goodwill (Notes 2 and 15)                                                                               1,416,205       1,348,393
                                                                                                       ----------      ----------

                                                                                                       $3,647,062      $3,825,070
                                                                                                       ==========      ==========



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                                      F-5

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                           THERMO ELECTRON CORPORATION

                    CONSOLIDATED BALANCE SHEET - (Continued)
                       (In thousands except share amounts)

                                                                                                          2002            2001
                                                                                                       ----------      ----------

Liabilities and Shareholders' Equity
Current Liabilities:
 Short-term obligations and current maturities of long-term obligations
    (Notes 10 and 19)                                                                                  $  484,480      $  528,988
 Accounts payable                                                                                         111,994         111,950
 Accrued payroll and employee benefits                                                                     97,856          92,262
 Accrued income taxes                                                                                      44,519          30,797
 Deferred revenue                                                                                          51,259          48,166
 Accrued restructuring costs (Note 15)                                                                     41,579          60,685
 Other accrued expenses (Note 2)                                                                          178,227         203,775
 Net liabilities of discontinued operations (Note 17)                                                      93,806          65,416
                                                                                                       ----------      ----------

                                                                                                        1,103,720       1,142,039
                                                                                                       ----------      ----------

Deferred Income Taxes (Note 6)                                                                             10,144           7,907
                                                                                                       ----------      ----------

Other Deferred Items (Note 5)                                                                              48,534          32,579
                                                                                                       ----------      ----------

Long-term Obligations (Notes 10 and 19):
 Senior convertible obligations                                                                                 -         145,414
 Senior notes                                                                                             141,032         128,725
 Subordinated convertible obligations                                                                     304,549         445,377
 Other                                                                                                      5,760           7,986
                                                                                                       ----------      ----------

                                                                                                          451,341         727,502
                                                                                                       ----------      ----------

Minority Interest (Note 17)                                                                                     -           6,901
                                                                                                       ----------      ----------

Commitments and Contingencies (Note 11)

Shareholders' Equity (Notes 5 and 12):
 Preferred stock, $100 par value, 50,000 shares authorized; none issued
 Common stock, $1 par value, 350,000,000 shares authorized; 169,952,419 and
    199,816,264 shares issued                                                                             169,952         199,816
 Capital in excess of par value                                                                         1,212,145       1,758,567
 Retained earnings                                                                                        819,411         509,681
 Treasury stock at cost, 7,098,501 and 23,458,555 shares                                                 (129,675)       (457,475)
 Deferred compensation                                                                                     (4,852)         (3,157)
 Accumulated other comprehensive items (Note 8)                                                           (33,658)        (99,290)
                                                                                                       ----------      ----------

                                                                                                        2,033,323       1,908,142
                                                                                                       ----------      ----------

                                                                                                       $3,647,062      $3,825,070
                                                                                                       ==========      ==========


                     The accompanying notes are an integral part of these consolidated financial statements.


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                                      F-6

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                           THERMO ELECTRON CORPORATION

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)


                                                                                                              

                                                                                          2002            2001            2000
                                                                                       ---------       ---------       ---------

Operating Activities
 Net income (loss)                                                                     $ 309,730       $    (781)      $ (36,111)
 Adjustments to reconcile net income (loss) to income from continuing
    operations:
      Income from discontinued operations (Note 17)                                            -               -         (14,228)
      (Gain) loss on disposal of discontinued operations, net (Note 17)                 (115,370)         50,440         100,000
                                                                                       ---------       ---------       ---------

 Income from continuing operations                                                       194,360          49,659          49,661

 Adjustments to reconcile income from continuing operations to net cash provided
    by operating activities:
      Depreciation and amortization                                                       56,376          98,521          97,486
      Noncash restructuring and other costs, net (Note 15)                                11,750          41,144          22,865
      Provision for losses on accounts receivable                                          4,114           6,316           9,264
      Minority interest (income) expense                                                    (331)         (5,840)         10,567
      Equity in (earnings) loss of unconsolidated subsidiaries (Note 15)                  (2,533)         (4,699)         47,315
      Cumulative effect of change in accounting principle, net of income
        taxes and minority interest (Notes 1 and 16)                                           -             994          12,918
      Change in deferred income taxes                                                     23,770         (16,751)        (39,700)
      (Gain) loss on sale of businesses (Notes 2 and 15)                                  (2,484)         10,943        (126,330)
      Gain on investments, net (Notes 4, 9, and 15)                                     (123,134)        (35,579)         (6,849)
      Extraordinary item, net of income taxes (Note 10)                                      970          (1,061)           (532)
      Other noncash items, net                                                            15,547          34,264          29,213
      Other income                                                                        (1,381)           (511)         (4,372)
      Changes in current accounts, excluding the effects of
        acquisitions and dispositions:
          Accounts receivable                                                              4,535         (19,041)        (27,395)
          Inventories                                                                     21,470           7,724         (77,356)
          Other current assets                                                             9,888         (13,097)         (4,710)
          Accounts payable                                                                (8,000)        (19,082)         17,742
          Other current liabilities                                                      (92,563)         50,472          47,982
                                                                                       ---------       ---------       ---------

            Net cash provided by continuing operations                                   112,354         184,376          57,769
            Net cash provided by (used in) discontinued operations                        (9,462)          4,025         142,152
                                                                                       ---------       ---------       ---------

            Net cash provided by operating activities                                    102,892         188,401         199,921
                                                                                       ---------       ---------       ---------

Investing Activities
 Purchases of available-for-sale investments                                                 (83)       (680,337)       (473,576)
 Proceeds from sale of available-for-sale investments (Note 4)                           122,094         248,036         113,220
 Proceeds from maturities of available-for-sale investments                              217,011         250,345         403,134
 Proceeds from sale of other investments (Note 4)                                         65,540          43,255           6,367
 Purchases of property, plant, and equipment                                             (51,212)        (84,799)        (74,039)
 Proceeds from sale of property, plant, and equipment                                     11,016          11,638          21,828


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                                      F-7

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                           THERMO ELECTRON CORPORATION

               CONSOLIDATED STATEMENT OF CASH FLOWS - (Continued)
                                 (In thousands)

                                                                                          2002            2001            2000
                                                                                       ---------       ---------       ---------

Investing Activities (continued)
 Acquisition of minority interests of subsidiaries (Note 17)                           $ (23,212)      $ (69,528)      $(307,166)
 Acquisitions, net of cash acquired (Note 2)                                             (78,683)        (14,130)        (15,808)
 Collection of notes receivable                                                           76,392               -               -
 Proceeds from sale of businesses, net of cash divested (Note 2)                          23,559          46,767         253,583
 Advance to affiliates                                                                         -         (16,088)        (96,434)
 Increase in other assets                                                                 (8,688)         (5,077)         (3,954)
 Other                                                                                     3,754          (1,580)          7,826
                                                                                       ---------       ---------       ---------

            Net cash provided by (used in) continuing operations                         357,488        (271,498)       (165,019)
            Net cash provided by discontinued operations                                 150,991         447,654         394,596
                                                                                       ---------       ---------       ---------

            Net cash provided by investing activities                                    508,479         176,156         229,577
                                                                                       ---------       ---------       ---------

Financing Activities
 Redemption and repayment of long-term obligations (Note 10)                            (598,050)        (43,129)       (161,191)
 Purchases of company and subsidiary common stock and subordinated
    convertible debentures (Note 10)                                                    (334,152)       (511,393)        (43,787)
 Net proceeds from issuance of company and subsidiary common stock
    (Notes 5 and 12)                                                                      25,335          69,873          58,466
 Increase (decrease) in short-term notes payable                                         311,134         (16,870)        (19,183)
 Proceeds from issuance of long-term obligations                                              31             249          14,577
 Other                                                                                     2,970          (1,760)         (4,377)
                                                                                       ---------       ---------       ---------

            Net cash used in continuing operations                                      (592,732)       (503,030)       (155,495)
            Net cash provided by (used in) discontinued operations                          (234)       (193,283)         17,914
                                                                                       ---------       ---------       ---------

            Net cash used in financing activities                                       (592,966)       (696,313)       (137,581)
                                                                                       ---------       ---------       ---------

Exchange Rate Effect on Cash of Continuing Operations                                     14,986          (3,760)         (2,883)
Exchange Rate Effect on Cash of Discontinued Operations                                      476           4,464          (9,997)
                                                                                       ---------       ---------       ---------

Increase (Decrease) in Cash and Cash Equivalents                                          33,867        (331,052)        279,037
Cash and Cash Equivalents at Beginning of Year                                           305,200         636,252         357,215
                                                                                       ---------       ---------       ---------

                                                                                         339,067         305,200         636,252
Cash and Cash Equivalents of Discontinued Operations at End of Year                          (29)         (7,643)       (130,728)
                                                                                       ---------       ---------       ---------

Cash and Cash Equivalents at End of Year                                               $ 339,038       $ 297,557       $ 505,524
                                                                                       =========       =========       =========

See Note 14 for supplemental cash flow information.





                     The accompanying notes are an integral part of these consolidated financial statements.


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                                      F-8

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                           THERMO ELECTRON CORPORATION

                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                            AND SHAREHOLDERS' EQUITY
                                 (In thousands)

                                                                                           2002           2001            2000
                                                                                        ----------     ----------      ----------

Comprehensive Income
Net Income (Loss)                                                                       $  309,730     $     (781)     $  (36,111)
                                                                                        ----------     ----------      ----------

Other Comprehensive Items (Note 8):
 Currency translation adjustment                                                            91,261        (24,606)        (44,975)
 Unrealized gains (losses) on available-for-sale investments, net of
    reclassification adjustment                                                            (65,894)        20,320           4,558
 Unrealized gains (losses) on hedging instruments, net of reclassification
    adjustment                                                                              (2,828)         1,338               -
 Minimum pension liability adjustment                                                      (18,949)             -               -
                                                                                        ----------     ----------      ----------

                                                                                             3,590         (2,948)        (40,417)
 Minority interest                                                                               -            (81)          5,188
                                                                                        ----------     ----------      ----------

                                                                                             3,590         (3,029)        (35,229)
                                                                                        ----------     ----------      ----------

                                                                                        $  313,320     $   (3,810)     $  (71,340)
                                                                                        ==========     ==========      ==========

Shareholders' Equity
Common Stock, $1 Par Value:
 Balance at beginning of year                                                           $  199,816     $  195,877      $  167,433
 Acquisition of minority interests of subsidiaries (Note 17)                                     -              -          22,553
 Issuance of stock under employees' and directors' stock plans                               2,136          3,939           5,891
 Restoration of stock to authorized but unissued status (Note 12)                          (32,000)             -               -
                                                                                        ----------     ----------      ----------

 Balance at end of year                                                                    169,952        199,816         195,877
                                                                                        ----------     ----------      ----------

Capital in Excess of Par Value:
 Balance at beginning of year                                                            1,758,567      1,681,452       1,052,837
 Acquisition of minority interests of subsidiaries (Note 17)                                     -              -         541,434
 Activity under employees' and directors' stock plans                                       31,669         56,542          84,840
 Tax benefit related to employees' and directors' stock plans                                6,696          9,461          18,000
 Effect of subsidiaries' equity transactions                                                   613         11,112         (15,659)
 Restoration of stock to authorized but unissued status (Note 12)                         (585,400)             -               -
                                                                                        ----------     ----------      ----------

 Balance at end of year                                                                  1,212,145      1,758,567       1,681,452
                                                                                        ----------     ----------      ----------

Retained Earnings:
 Balance at beginning of year                                                              509,681      1,005,857       1,041,968
 Distribution of Kadant and Viasys Healthcare subsidiaries to
    shareholders (Note 17)                                                                       -       (495,395)              -
 Net income (loss)                                                                         309,730           (781)        (36,111)
                                                                                        ----------     ----------      ----------

 Balance at end of year                                                                 $  819,411     $  509,681      $1,005,857
                                                                                        ----------     ----------      ----------


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                                      F-9

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                           THERMO ELECTRON CORPORATION

                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                     AND SHAREHOLDERS' EQUITY - (Continued)
                                 (In thousands)

                                                                                           2002           2001            2000
                                                                                        ----------     ----------      ----------

Treasury Stock:
 Balance at beginning of year                                                           $ (457,475)    $ (246,228)     $ (189,646)
 Purchases of company common stock                                                        (285,632)      (196,544)        (22,826)
 Activity under employees' and directors' stock plans                                       (3,968)       (12,305)        (26,590)
 Receipt of company common stock as repayment of notes receivable                                -         (2,398)         (6,155)
 Receipt of company common stock in connection with sale of business                             -              -          (1,011)
 Restoration of stock to authorized but unissued status (Note 12)                          617,400              -               -
                                                                                        ----------     ----------      ----------

 Balance at end of year                                                                   (129,675)      (457,475)       (246,228)
                                                                                        ----------     ----------      ----------

Deferred Compensation (Note 5):
 Balance at beginning of year                                                               (3,157)        (6,640)         (3,149)
 Awards under employees' stock plans                                                        (4,207)          (429)         (7,818)
 Amortization of deferred compensation                                                       2,272          3,700           3,725
 Forfeitures under employees' stock plans                                                      240            212             602
                                                                                        ----------     ----------      ----------

 Balance at end of year                                                                     (4,852)        (3,157)         (6,640)
                                                                                        ----------     ----------      ----------

Accumulated Other Comprehensive Items (Note 8):
 Balance at beginning of year                                                              (99,290)       (96,342)        (55,925)
 Other comprehensive items                                                                 (45,034)        (2,948)        (40,417)
 Reclassification of equity interests to available-for-sale investments
    (Notes 4 and 17)                                                                       110,666              -               -
                                                                                        ----------     ----------      ----------

 Balance at end of year                                                                    (33,658)       (99,290)        (96,342)
                                                                                        ----------     ----------      ----------

                                                                                        $2,033,323     $1,908,142      $2,533,976
                                                                                        ==========     ==========      ==========



                     The accompanying notes are an integral part of these consolidated financial statements.

<
                                      F-10

>


                           THERMO ELECTRON CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

       A world leader in high-tech instruments, Thermo Electron Corporation (the
company) helps life science, laboratory, and industrial customers advance
scientific knowledge, enable drug discovery, improve manufacturing processes,
and protect people and the environment with instruments, scientific equipment,
and sample-in/knowledge-out solutions. The company's powerful technologies help
researchers make discoveries that will fight disease or prolong life. They
automatically monitor and control online production to ensure the quality and
safety of raw materials as well as the end-products themselves. And they are
critical components embedded as enabling technologies within scientific and
industrial devices.

Principles of Consolidation

       The accompanying financial statements include the accounts of the company
and its majority- and wholly owned subsidiaries. All material intercompany
accounts and transactions have been eliminated. The company accounts for
investments in businesses in which it owns between 20% and 50% using the equity
method.

Presentation

       During 2000 and 2001, the company completed the principal aspects of a
major corporate reorganization. As part of this reorganization, the company spun
off two businesses and sold a number of operating units. In addition, the
company has taken private all of its majority-owned subsidiaries in its
continuing operations, including Spectra-Physics, Inc., effective February 2002.
The results of operations of certain major lines of business that have been spun
off, sold, or placed for sale have been classified as discontinued operations in
the accompanying financial statements (Note 17).

Fiscal Year

       The company has adopted a fiscal year ending the Saturday nearest
December 31. References to 2002, 2001, and 2000 are for the fiscal years ended
December 28, 2002, December 29, 2001, and December 30, 2000, respectively.

Revenue Recognition

       Prior to 2000, the company generally recognized revenues upon shipment of
its products. During the fourth quarter of 2000, effective as of January 2,
2000, the company adopted Securities and Exchange Commission (SEC) Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." Under SAB No. 101, when the terms of sale include customer
acceptance provisions, and compliance with those provisions cannot be
demonstrated until customer use, revenues are recognized upon acceptance.
Revenues for products that require installation for which the installation is
essential to functionality or is not deemed inconsequential or perfunctory are
recognized upon completion of installation. Revenues for products sold where
installation is not essential to functionality and is deemed inconsequential or
perfunctory are recognized upon shipment with estimated installation costs
accrued (Note 16).

       The company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to pay amounts due.
Deferred revenue in the accompanying balance sheet consists primarily of
unearned revenue on service contracts, which is recognized ratably over the
terms of the contracts. Substantially all of the deferred revenue in the
accompanying 2002 balance sheet will be recognized within one year.

Warranty Obligations

       The company provides for the estimated cost of product warranties,
primarily from historical information, at the time product revenue is
recognized. While the company engages in extensive product quality programs and
processes, including actively monitoring and evaluating the quality of its
component supplies, the company's warranty obligation is affected by product
failure rates, utilization levels, material usage, service delivery costs
incurred in correcting a

<
                                      F-11

>


                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

product failure, and supplier warranties on parts delivered to the company.
Should actual product failure rates, utilization levels, material usage, service
delivery costs, or supplier warranties on parts differ from the company's
estimates, revisions to the estimated warranty liability would be required. The
changes in the carrying amount of product warranties for the year ended December
28, 2002, are as follows (in thousands):



                                                                                                                    

       Balance at December 29, 2001                                                                                    $ 26,396
        Provision charged to income                                                                                      17,266
        Usage                                                                                                           (19,645)
        Other, net (a)                                                                                                    3,344
                                                                                                                       --------

       Balance at December 28, 2002                                                                                    $ 27,361
                                                                                                                       ========

       (a) Primarily represents the effects of currency translation.

Stock-based Compensation Plans and Pro Forma Stock-based Compensation Expense

       The company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans (Note 5). Accordingly, no
accounting recognition is given to stock options granted at fair market value
until they are exercised. Upon exercise, net proceeds, including tax benefits
realized, are credited to shareholders' equity.

       In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," which sets forth a fair-value-based method of
recognizing stock-based compensation expense. As permitted by SFAS No. 123, the
company has elected to continue to apply APB No. 25 to account for its
stock-based compensation plans. Had compensation cost for awards granted after
1994 under the company's stock-based compensation plans been determined based on
the fair value at the grant dates consistent with the method set forth under
SFAS No. 123, the effect on certain financial information of the company would
have been as follows:



                                                                                                                
                                                                                              2002          2001           2000
                                                                                            --------      --------       --------
                                                                                                    (In thousands except
                                                                                                     per share amounts)
       Income from Continuing Operations Before Extraordinary Item and Cumulative
        Effect of Change in Accounting Principle:
           As reported                                                                      $195,330      $ 49,592       $ 62,047
           Add: Stock-based employee compensation expense included in reported
             results, net of tax                                                               3,117         2,294          2,272
           Deduct: Total stock-based employee compensation expense determined under
             the fair-value-based method for all awards, net of tax                          (27,749)      (26,090)       (20,855)
                                                                                            --------      --------       --------

           Pro forma                                                                        $170,698      $ 25,796       $ 43,464
                                                                                            ========      ========       ========

       Basic Earnings per Share from Continuing Operations Before Extraordinary
        Item and Cumulative Effect of Change in Accounting Principle:
           As reported                                                                      $   1.16      $    .27       $    .37
           Pro forma                                                                        $   1.01      $    .14       $    .26
       Diluted Earnings per Share from Continuing Operations Before
        Extraordinary Item and Cumulative Effect of Change in Accounting
        Principle:
           As reported                                                                      $   1.12      $    .27       $    .36
           Pro forma                                                                        $    .99      $    .14       $    .25


<
                                      F-12

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 1.    Nature of Operations and Summary of Significant Accounting Policies (continued)

                                                                                              2002          2001            2000
                                                                                            --------      --------       --------
                                                                                                    (In thousands except
                                                                                                     per share amounts)
       Net Income (Loss):
           As reported                                                                      $309,730      $   (781)      $(36,111)
           Add: Stock-based employee compensation expense included in reported net
             income, net of tax                                                                3,117         2,294          2,272
           Deduct: Total stock-based employee compensation expense determined under
             the fair-value-based method for all awards, net of tax                          (27,749)      (26,090)       (20,855)
                                                                                            --------      --------       --------

           Pro forma                                                                        $285,098      $(24,577)      $(54,694)
                                                                                            ========      ========       ========

       Basic Earnings (Loss) per Share:
           As reported                                                                      $   1.84      $      -       $   (.22)
           Pro forma                                                                        $   1.69      $   (.14)      $   (.33)
       Diluted Earnings (Loss) per Share:
           As reported                                                                      $   1.73      $      -       $   (.22)
           Pro forma                                                                        $   1.60      $   (.13)      $   (.33)

       The weighted average fair value per share of options granted was $9.23,
$9.85, and $6.58 in 2002, 2001, and 2000, respectively. The fair value of each
option grant was estimated on the grant date using the Black-Scholes
option-pricing model assuming an expected dividend yield of zero and with the
following weighted-average assumptions:

                                                                                              2002          2001           2000
                                                                                           ---------     ---------      ---------

       Volatility                                                                                42%           45%            35%
       Risk-free Interest Rate                                                                  4.2%          4.1%           4.9%
       Expected Life of Options                                                            6.0 years     5.0 years      3.9 years

       The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options, which have no vesting restrictions
and are fully transferable. In addition, option-pricing models require the input
of highly subjective assumptions, including expected stock price volatility.
Because the company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

Income Taxes

       In accordance with SFAS No. 109, "Accounting for Income Taxes," the
company recognizes deferred income taxes based on the expected future tax
consequences of differences between the financial statement basis and the tax
basis of assets and liabilities, calculated using enacted tax rates in effect
for the year in which the differences are expected to be reflected in the tax
return.

Earnings (Loss) per Share

       Basic earnings (loss) per share has been computed by dividing net income
(loss) by the weighted average number of shares outstanding during the year.
Except where the result would be antidilutive to income from continuing
operations, diluted earnings (loss) per share has been computed assuming the
conversion of convertible obligations and the elimination of the related
interest expense, and the exercise of stock options, as well as their related
income tax effects (Note 7).


<
                                      F-13

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

Cash and Cash Equivalents

       Cash equivalents consists principally of money market funds, commercial
paper, and other marketable securities purchased with an original maturity of
three months or less. These investments are carried at cost, which approximates
market value.

Available-for-sale Investments

       The company's marketable debt and equity securities are considered
available-for-sale investments in the accompanying balance sheet and are carried
at market value, with the difference between cost and market value, net of
related tax effects, recorded in the "Accumulated other comprehensive items"
component of shareholders' equity (Notes 8 and 9). Decreases in market values of
individual securities below cost for a duration of six to nine months are deemed
indicative of other than temporary impairment and the company writes down the
carrying amount of the investments to market value through other income
(expense), net, in the accompanying statement of operations.

Inventories

       Inventories are stated at the lower of cost (on a first-in, first-out or
weighted average basis) or net realizable value and include materials, labor,
and manufacturing overhead. The components of inventories are as follows:



                                                                                                                   

                                                                                                            2002           2001
                                                                                                          --------       --------
                                                                                                            (In thousands)

       Raw Materials and Supplies                                                                         $134,039       $149,817
       Work in Progress                                                                                     50,894         56,417
       Finished Goods (includes $18,982 and $14,918 at customer locations)                                 147,871        130,807
                                                                                                          --------       --------

                                                                                                          $332,804       $337,041
                                                                                                          ========       ========

       The company periodically reviews its quantities of inventories on hand
and compares these amounts to expected use of each particular product or product
line. The company records as a charge to cost of revenues any amounts required
to reduce the carrying value of inventories to net realizable value (Note 15).

Property, Plant, and Equipment

       The costs of additions and improvements are capitalized, while
maintenance and repairs are charged to expense as incurred. The company provides
for depreciation and amortization using the straight-line method over the
estimated useful lives of the property as follows: buildings and improvements, 2
to 40 years; machinery and equipment, 1 to 15 years; and leasehold improvements,
the shorter of the term of the lease or the life of the asset. Property, plant,
and equipment consists of the following:

                                                                                                            2002           2001
                                                                                                          --------       --------
                                                                                                            (In thousands)

       Land                                                                                               $ 34,221       $ 33,099
       Buildings and Improvements                                                                          156,812        142,697
       Machinery, Equipment, and Leasehold Improvements                                                    362,316        306,590
                                                                                                          --------       --------

                                                                                                           553,349        482,386
       Less: Accumulated Depreciation and Amortization                                                     280,441        211,674
                                                                                                          --------       --------

                                                                                                          $272,908       $270,712
                                                                                                          ========       ========

       Depreciation and amortization expense of property, plant, and equipment
was $48.1 million, $51.4 million, and $52.9 million in 2002, 2001, and 2000,
respectively.

<
                                      F-14

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 1.    Nature of Operations and Summary of Significant Accounting Policies (continued)

Other Assets

       Other assets in the accompanying balance sheet includes intangible
assets, notes receivable, deferred debt expense, other assets, and, in 2001,
prepaid pension costs and an equity-method investment in FLIR Systems, Inc.
(Note 4). Intangible assets include the costs of acquired product technology,
patents, trademarks, and other specifically identifiable intangible assets, and
are being amortized using the straight-line method over their estimated useful
lives, which range from 2 to 20 years. The company has recorded no intangible
assets with indefinite lives. The company reviews other intangible assets for
impairment when indication of potential impairment exists, such as a significant
reduction in cash flows associated with the assets. Acquired intangible assets
are as follows:



                                                                                                                

                                                                                                   Accumulated
                                                                                     Gross        Amortization                Net
                                                                                  --------        ------------           --------
                                                                                                  (In thousands)

       December 28, 2002
        Product technology                                                        $ 58,250            $(17,877)          $ 40,373
        Patents                                                                     41,103             (20,409)            20,694
        Trademarks                                                                   4,489              (1,143)             3,346
        Other                                                                        4,663                (729)             3,934
                                                                                  --------            --------           --------

                                                                                  $108,505            $(40,158)          $ 68,347
                                                                                  ========            ========           ========

       December 29, 2001
        Product technology                                                        $ 25,227            $(13,333)          $ 11,894
        Patents                                                                     40,447             (16,685)            23,762
        Trademarks                                                                   2,421                (799)             1,622
        Other                                                                        4,477              (1,618)             2,859
                                                                                  --------            --------           --------

                                                                                  $ 72,572            $(32,435)          $ 40,137
                                                                                  ========            ========           ========

       The estimated future amortization expense of acquired intangible assets
is as follows (in thousands):


                                                                                                                      
       2003                                                                                                              $  9,573
       2004                                                                                                                 8,831
       2005                                                                                                                 7,036
       2006                                                                                                                 6,237
       2007                                                                                                                 5,853
       2008 and thereafter                                                                                                 30,817
                                                                                                                         --------

                                                                                                                         $ 68,347
                                                                                                                         ========

       Amortization of acquired intangible assets was $8.3 million, $6.9
million, and $6.7 million in 2002, 2001, and 2000, respectively.



<
                                      F-15

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

Goodwill

       Goodwill was amortized through December 29, 2001, using the straight-line
method over periods ranging from 5 to 40 years. Accumulated amortization was
$233.0 million at year-end 2001. In June 2001, the FASB issued SFAS No. 142,
"Goodwill and Other Intangible Assets." The company adopted SFAS No. 142
effective December 30, 2001. Under SFAS No. 142, amortization of goodwill ceased
and the company assesses the realizability of this asset annually and whenever
events or changes in circumstances indicate it may be impaired. Such events or
circumstances generally include the occurrence of operating losses or a
significant decline in earnings associated with one or more of the company's
reporting units. The company estimates the fair value of its reporting units by
using market comparables for similar businesses and forecasts of discounted
future cash flows. When impairment is indicated, any excess of carrying value
over fair value is recorded as a loss (Note 15).

       The company performed an initial test for impairment upon adoption of
SFAS No. 142 at December 29, 2001, and determined that goodwill was not
impaired. The company completed an annual test for impairment at December 28,
2002, and determined that goodwill was not impaired.

       Pro forma results for 2001 and 2000, as if SFAS No. 142 had been adopted
at the beginning of 2000, are as follows:



                                                                                                                  

                                                                                                        2001              2000
                                                                                                      --------          --------
                                                                                                         (In thousands except
                                                                                                          per share amounts)

       Income from Continuing Operations Before Extraordinary Item and Cumulative
        Effect of Change in Accounting Principle:
           As reported                                                                                $ 49,592          $ 62,047
           Pro forma                                                                                    86,390            95,495
       Basic Earnings per Share from Continuing Operations Before Extraordinary
        Item and Cumulative Effect of Change in Accounting Principle:
           As reported                                                                                     .27               .37
           Pro forma                                                                                       .48               .57
       Diluted Earnings per Share from Continuing Operations Before
        Extraordinary Item and Cumulative Effect of Change in Accounting
        Principle:
           As reported                                                                                     .27               .36
           Pro forma                                                                                       .47               .55

       Net Income (Loss):
           As reported                                                                                $   (781)         $(36,111)
           Pro forma                                                                                    36,017            (2,663)
       Basic Earnings (Loss) per Share:
           As reported                                                                                       -              (.22)
           Pro forma                                                                                       .20              (.02)
       Diluted Earnings (Loss) per Share:
           As reported                                                                                       -              (.22)
           Pro forma                                                                                       .20              (.02)



<
                                      F-16

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 1.    Nature of Operations and Summary of Significant Accounting Policies (continued)

       The changes in the carrying amount of goodwill for 2002 and 2001 by
segment are as follows:




                                                                                                          
                                                                    Life and
                                                                  Laboratory      Measurement           Optical
                                                                    Sciences      and Control      Technologies            Total
                                                                  ----------      -----------      ------------       ----------
                                                                                         (In thousands)

       Balance at December 30, 2000                               $  808,908       $  430,531        $  139,225       $1,378,664
        Acquisitions                                                  10,915              474                 -           11,389
        Amortization                                                 (23,629)         (12,117)           (4,478)         (40,224)
        Write off due to sale or planned sale of businesses           (8,515)         (22,455)           (2,214)         (33,184)
        Acquisition of minority interest of subsidiary                     -                -            45,829           45,829
        Other (a)                                                     (1,975)            (146)                -           (2,121)
        Currency translation                                          (8,283)          (2,999)             (678)         (11,960)
                                                                  ----------       ----------        ----------       ----------

       Balance at December 29, 2001                                  777,421          393,288           177,684        1,348,393
        Acquisitions                                                  22,666            2,361                 -           25,027
        Write off due to sale of businesses                             (463)          (3,332)             (517)          (4,312)
        Acquisition of minority interest of subsidiary                     -                -            15,807           15,807
        Other (a)                                                        351           (2,239)           (3,036)          (4,924)
        Currency translation                                          25,791            8,032             2,391           36,214
                                                                  ----------       ----------        ----------       ----------

       Balance at December 28, 2002                               $  825,766       $  398,110        $  192,329       $1,416,205
                                                                  ==========       ==========        ==========       ==========

       (a) Principally represents use of previously reserved acquired net operating losses and reversal of acquisition reserves
           that were not required.

Currency Translation

       All assets and liabilities of the company's non-U.S. subsidiaries are
translated at year-end exchange rates, and revenues and expenses are translated
at average exchange rates for the year in accordance with SFAS No. 52, "Foreign
Currency Translation." Resulting translation adjustments are reflected in the
"Accumulated other comprehensive items" component of shareholders' equity.
Currency transaction gains and losses are included in the accompanying statement
of operations and are not material for the three years presented.

Forward Contracts

       Effective in the first quarter of 2001, the company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as
amended, requires that all derivatives, including forward currency-exchange
contracts, be recognized on the balance sheet at fair value. Derivatives that
are not hedges must be recorded at fair value through earnings. If a derivative
is a hedge, depending on the nature of the hedge, changes in the fair value of
the derivative are either offset against the change in fair value of the hedged
item through earnings or recognized in other comprehensive income until the
hedged item is recognized in earnings. The company immediately records in
earnings the extent to which a hedge is not effective in achieving offsetting
changes in fair value or cash flows. Adoption of SFAS No. 133 in the first
quarter of 2001 resulted in the deferral of a gain of $1.0 million, net of tax
and minority interest, and a corresponding loss on periods prior to 2001, which
was classified as "Cumulative effect of the change in accounting principle" in
the accompanying 2001 statement of operations. This deferred gain

<
                                      F-17

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

related to forward currency-exchange contracts that were marked to market
through earnings prior to the adoption of SFAS No. 133. The entire deferred gain
recorded upon adoption was reclassified into earnings during 2001 as the
underlying hedged transactions occurred.

       The company uses forward currency-exchange contracts primarily to hedge
certain operational (cash-flow hedges) and balance sheet (fair-value hedges)
exposures resulting from changes in currency exchange rates. Such exposures
result from sales that are denominated in currencies other than the functional
currencies of the respective operations. These contracts principally hedge
transactions denominated in U.S. dollars, Euros, British pounds sterling,
Japanese yen, and Swiss francs. The company enters into these currency-exchange
contracts to hedge anticipated product sales and recorded accounts receivable
made in the normal course of business. Accordingly, the hedges are not
speculative in nature. As part of the company's overall strategy to manage the
level of exposure to the risk of currency-exchange fluctuations, some operating
units hedge a portion of their currency exposures anticipated over the ensuing
12-month period, using exchange contracts that have maturities of 12 months or
less. The company does not hold or engage in transactions involving derivative
instruments for purposes other than risk management.

       The company records its forward currency-exchange contracts at fair value
in its balance sheet as other current assets or other accrued expenses and, for
cash-flow hedges, the related gains or losses on these contracts are deferred as
a component of accumulated other comprehensive items in the accompanying balance
sheet. These deferred gains and losses are recognized in income in the period in
which the underlying anticipated transaction occurs. Unrealized gains and losses
resulting from the impact of currency exchange rate movements on fair-value
hedges are recognized in earnings in the period in which the exchange rates
change and offset the currency losses and gains on the underlying exposure being
hedged. Cash flows resulting from currency-exchange contracts qualifying as
cash-flow hedges are recorded in the accompanying statement of cash flows in the
same category as the item being hedged. At December 28, 2002, the company had
deferred losses, net of income taxes, relating to forward currency-exchange
contracts of approximately $1.5 million, substantially all of which is expected
to be recognized as expense over the next 12 months to approximately offset
gains on the exposures being hedged. The ineffective portion of the gain or loss
on derivative instruments is recorded in other income (expense), net, in the
accompanying 2002 and 2001 statement of operations and is not material.

       See Note 15 for the effect in 2000 of a majority-owned subsidiary's early
adoption of SFAS No. 133.

       Prior to adoption of SFAS No. 133, gains and losses arising from forward
currency-exchange contracts were recognized as offsets to losses and gains
resulting from the exposures being hedged.

Recent Accounting Pronouncements

       In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs and is effective in 2003. The company does not
expect the adoption of this new standard to have a material impact on its
financial statements.

       In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets." The standard provides guidance on
measuring impairment of long-lived assets and applying discontinued operations
accounting upon adoption. The company adopted the standard during the first
quarter of 2002. Adoption of the standard did not materially affect the
company's financial statements.

<
                                      F-18

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

       In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." Adoption of the standard is generally required in 2003. Under the
standard, gains and losses on early extinguishment of debt, currently classified
by the company as extraordinary items, will no longer be treated as such but
instead will be reported as other nonoperating income or expense. Prior periods
will be restated to conform to this presentation.

       In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which supersedes Emerging Issues
Task Force Issue (EITF) 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (Including Certain
Costs Incurred in a Restructuring)." The standard affects the accounting for
restructuring charges and related activities and generally will lengthen the
timeframe for reporting of expenses relating to restructuring activities beyond
the period in which a plan is initiated. The provisions of this statement are
required to be adopted for exit or disposal activities that are initiated after
2002. The provisions of EITF 94-3 will continue to apply with regard to the
company's previously announced restructuring plans.

       In November 2002, the EITF reached a final consensus on EITF Issue No.
00-21, "Accounting for Revenue Arrangements with Multiple Deliverables." The
provisions of EITF 00-21 are required to be adopted for revenue arrangements
entered into by the company after June 28, 2003, although early adoption is
permitted. EITF 00-21 addresses arrangements with customers that have multiple
deliverables such as equipment and installation and provides guidance as to when
recognition of revenue for each deliverable is appropriate. The company is
evaluating the timing and impact of adoption of EITF 00-21.

       In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN No. 45 clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a liability
for the fair value of the obligation undertaken in issuing the guarantee. The
initial recognition and initial measurement provisions of FIN No. 45 are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002, while the disclosure requirements are applicable in 2002. The
company is complying with the disclosure requirements of FIN No. 45 and is
evaluating the effect the other requirements may have on its financial
statements.

       In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
Statement No. 123." SFAS No. 148 amends SFAS No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for a
voluntary change to the fair-value-based method of accounting for stock-based
employee compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results. As
provided for in SFAS No. 123, the company has elected to apply APB No. 25
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock-based compensation plans. APB No. 25 does not require
options to be expensed when granted with an exercise price equal to fair market
value. The company is complying with the disclosure requirements of SFAS No.
148.

       In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities, an Interpretation of ARB 51." The primary objectives of FIN
No. 46 are to provide guidance on the identification of entities for which
control is achieved through means other than through voting rights ("variable
interest entities" or "VIEs") and how to determine when and which business
enterprise should consolidate the VIE. This new model for consolidation applies
to an entity for which either: (a) the equity investors (if any) do not have a
controlling financial interest; or (b) the

<
                                      F-19

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 1.    Nature of Operations and Summary of Significant Accounting Policies
           (continued)

equity investment at risk is insufficient to finance that entity's activities
without receiving additional subordinated financial support from other parties.
In addition, FIN No. 46 requires that both the primary beneficiary and all other
enterprises with a significant variable interest in a VIE make additional
disclosures. The company is required to apply FIN No. 46 to all new variable
interest entities created or acquired after January 31, 2003. For variable
interest entities created or acquired prior to February 1, 2003, the company is
required to apply FIN No. 46 on July 1, 2003. The company does not expect FIN
No. 46 will have a material effect on its financial statements.

Use of Estimates

       The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. In addition, significant estimates were made in determining
the loss on disposition of the company's discontinued operations including
post-closing adjustments (Note 17), in estimating future cash flows to quantify
impairment of assets, and in determining the ultimate loss from abandoning
leases at facilities being exited (Note 15). Actual results could differ from
those estimates.

Note 2.    Acquisitions and Dispositions

Acquisitions

       In July 2002, the Measurement and Control segment acquired the
radiation-monitoring products business (RMP) of Saint-Gobain Corporation to
further enhance its line of security products. The aggregate purchase price was
$31.4 million in cash. The purchase price exceeded the fair value of the
acquired net assets and, accordingly, $2.4 million has been allocated as
goodwill. RMP is a major supplier of radiation safety, security, and industrial
equipment to the U.S. market, and the leader in personal radiation monitoring in
the United Kingdom.

       In a transaction undertaken in April and May 2002, the Life and
Laboratory Sciences segment acquired CRS Robotics Corporation (CRS), a Toronto
Stock Exchange-listed company, for 5.75 Canadian dollars per share
(approximately $3.68 per share). The segment subsequently renamed the business
Thermo CRS. The aggregate purchase price was $43.0 million in cash, net of cash
acquired. The purchase price exceeded the fair value of the acquired net assets
and, accordingly, $21.9 million has been allocated as goodwill. Thermo CRS is a
global supplier of lab automation robotics, software, and equipment to the
drug-discovery market. The acquisition was made to further enhance the segment's
product offering for laboratory automation equipment.

       In 2002, in addition to the acquisitions of RMP and CRS, the company made
two other acquisitions for $4.3 million in cash.



<
                                      F-20

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 2.    Acquisitions and Dispositions (continued)

       The components of the purchase price allocation for 2002 acquisitions are
as follows:



                                                                                                            

                                                                         CRS              RMP             Other            Total
                                                                    --------         --------          --------         --------
                                                                                           (In thousands)

       Purchase Price:
        Cash paid (a)                                               $ 43,187         $ 31,367          $  4,271         $ 78,825
        Cash acquired                                                   (142)               -                 -             (142)
                                                                    --------         --------          --------         --------

                                                                    $ 43,045         $ 31,367          $  4,271         $ 78,683
                                                                    ========         ========          ========         ========

       Allocation:
        Current assets                                              $  5,874         $ 15,620          $  3,137         $ 24,631
        Property, plant, and equipment                                   837            6,799                 -            7,636
        Acquired intangible assets                                    22,935           11,800             2,330           37,065
        Goodwill                                                      21,946            2,361               720           25,027
        Other assets                                                       -              380                 -              380
        Liabilities assumed and other                                 (8,547)          (5,593)           (1,916)         (16,056)
                                                                    --------         --------          --------         --------

                                                                    $ 43,045         $ 31,367          $  4,271         $ 78,683
                                                                    ========         ========          ========         ========

       (a) Includes acquisition expenses.

       Acquired intangible assets for 2002 acquisitions are as follows:

                                                                         CRS              RMP             Other            Total
                                                                    --------         --------          --------         --------
                                                                                           (In thousands)

       Product Technology                                           $ 20,367         $  8,451          $  2,330         $ 31,148
       Patents                                                             -              499                 -              499
       Trademarks                                                      1,183              864                 -            2,047
       Other                                                           1,385            1,986                 -            3,371
                                                                    --------         --------          --------         --------

                                                                    $ 22,935         $ 11,800          $  2,330         $ 37,065
                                                                    ========         ========          ========         ========

       The weighted-average amortization periods for intangible assets acquired
in 2002 are: 11 years for product technology and patents; 6 years for
trademarks; and 8 years for other intangible assets. The weighted-average
amortization period for all intangible assets acquired in 2002 is 10 years.

       In 2001 and 2000, the company made several acquisitions for $14.1 million
and $15.8 million in cash, net of cash acquired, respectively.

       These acquisitions have been accounted for using the purchase method of
accounting, and the acquired companies' results have been included in the
accompanying financial statements from their respective dates of acquisition.
The aggregate cost of the acquisitions in 2001 and 2000 exceeded the estimated
fair value of the acquired net assets by $25.0 million, which was amortized
principally over 40 years through 2001. Allocation of the purchase price for
acquisitions was based on estimates of the fair value of the net assets acquired
and, for acquisitions completed

<
                                      F-21

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 2.    Acquisitions and Dispositions (continued)

in 2002, is subject to adjustment upon finalization of the purchase price
allocation. The company has gathered no information that indicates the final
purchase price allocations will differ materially from the preliminary
estimates. Pro forma results are not presented as the acquisitions did not
materially affect the company's results of operations individually or in the
aggregate.

       The company has undertaken restructuring activities at acquired
businesses. These activities, which were accounted for in accordance with EITF
95-3, "Recognition of Liabilities in Connection with a Purchase Business
Combination," have primarily included reductions in staffing levels and the
abandonment of excess facilities. In connection with these restructuring
activities, as part of the cost of acquisitions, the company established
reserves as detailed below, primarily for severance and excess facilities. In
accordance with EITF 95-3, the company finalizes its restructuring plans no
later than one year from the respective dates of the acquisitions. Accrued
acquisition expenses are included in other accrued expenses in the accompanying
balance sheet.

       A summary of the changes in accrued acquisition expenses for acquisitions
completed during 2002 is as follows:



                                                                                                              

                                                                                  Abandonment
                                                                                    of Excess
                                                                 Severance         Facilities             Other            Total
                                                                 ---------        -----------            ------           ------
                                                                                              (In thousands)

        Reserves established                                        $1,727             $  509            $  487           $2,723
        Payments                                                      (477)                 -                 -             (477)
        Currency translation                                            69                 79                12              160
                                                                    ------             ------            ------          -------

       Balance at December 28, 2002                                 $1,319             $  588            $  499           $2,406
                                                                    ======             ======            ======           ======

       The principal accrued acquisition expenses for 2002 acquisitions were for
severance for approximately 102 employees at the acquired businesses, primarily
in manufacturing, research and development, and sales and service; closure of a
Thermo CRS manufacturing facility in Austria, with a lease expiring in 2003,
whose operations were consolidated into other existing facilities; and
relocation of RMP employees from the seller's operations in Ohio and the United
Kingdom to the company's facilities. The company expects to pay amounts accrued
for acquisition expenses primarily through the third quarter of 2003.



<
                                      F-22

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 2.    Acquisitions and Dispositions (continued)

       A summary of the changes in accrued acquisition expenses for acquisitions
completed before 2000 is as follows:



                                                                                                              

                                                                                  Abandonment
                                                                                    of Excess
                                                                 Severance         Facilities             Other             Total
                                                                 ---------        -----------           -------           -------
                                                                                            (In thousands)

       Balance at January 1, 2000                                  $ 5,566            $11,215           $ 2,664           $19,445
        Reserves established                                            90                111                 -               201
        Payments                                                    (2,971)            (2,326)           (1,034)           (6,331)
        Decrease recorded as a reduction in goodwill                  (279)              (193)              (39)             (511)
        Reserves of businesses sold                                   (715)              (154)             (999)           (1,868)
        Currency translation                                           155               (976)              (79)             (900)
                                                                   -------            -------           -------           -------

       Balance at December 30, 2000                                  1,846              7,677               513            10,036
        Payments                                                      (467)            (1,038)             (358)           (1,863)
        Decrease recorded as a reduction in other
           intangible assets                                          (720)              (194)                -              (914)
        Currency translation                                           (33)              (219)              (24)             (276)
                                                                   -------            -------           -------           -------

       Balance at December 29, 2001                                    626              6,226               131             6,983
        Payments                                                      (353)              (452)              (73)             (878)
        Decrease recorded as a reduction in goodwill
           and other intangible assets                                (329)                 -               (73)             (402)
        Currency translation                                            56                648                15               719
                                                                   -------            -------           -------           -------

       Balance at December 28, 2002                                $     -            $ 6,422           $     -           $ 6,422
                                                                   =======            =======           =======           =======

       The principal acquisition expenses for pre-2000 acquisitions were for
severance for approximately 776 employees across all functions and for abandoned
facilities, primarily related to the company's acquisitions of Life Sciences
International PLC in 1997, the product-monitoring businesses of Graseby Limited
in 1998, and Spectra-Physics AB in 1999. The abandoned facilities for the 1997
and 1998 acquisitions include two operating facilities in North America with
leases that expired in 2001 and four operating facilities in England with leases
expiring through 2014. The abandoned facilities at Spectra-Physics include
operating facilities in Sweden, Germany, and France with obligations that
principally expired in 2001. The amounts captioned as "other" primarily
represent employee relocation, contract termination, and other exit costs. Upon
finalization of restructuring plans or settlement of obligations for less than
the expected amount, any excess reserves have been reversed with a corresponding
decrease in goodwill or other intangible assets when no goodwill exists.

       The company did not establish material reserves for restructuring
businesses acquired in 2000 or 2001.

<
                                      F-23

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 2.    Acquisitions and Dispositions (continued)

Dispositions

       In 2002 and 2001, the company's continuing operations sold several
noncore businesses for net cash proceeds of $23.6 million and $46.8 million,
respectively, and recorded $2.5 million of net pretax gains in 2002 and $10.9
million of pretax losses in 2001, which are included in restructuring and other
costs (income), net, in the accompanying statement of operations.

       In July 2000, the company's Measurement and Control segment completed the
sale of its wholly owned Spectra Precision businesses to Trimble Navigation
Limited for $208.1 million in net cash proceeds and $80.0 million in seller debt
financing at an initial interest rate of 10%. The note from the buyer called for
repayment in two equal, annual installments beginning in July 2001, but
permitted extension of maturity under certain conditions. Trimble elected to
defer the note payable due in July 2001, and the company and Trimble negotiated
a change in terms in March 2002. Under the revised terms, Trimble paid $11
million of principal, together with $10 million of accrued interest. Maturity
for the remaining balance was extended to July 2004, and the amended note
carries an interest rate of 10.41% and has provisions that require earlier
repayment under certain conditions. Interest on the note is added to the note's
principal balance if payment of the interest would cause Trimble to violate
covenants under its primary bank agreements. As of December 28, 2002, the
principal balance of the note had increased to $69.1 million as a result of this
provision. The note is included in other assets in the accompanying balance
sheet. In addition, the company obtained warrants to purchase up to 376,233
shares of Trimble, of which 200,000 shares were exercisable immediately at
$15.11 per share through 2007, and the balance of which becomes exercisable for
five-year terms at various times and prices depending on the outstanding balance
of the note. At December 28, 2002, warrants to purchase an additional 35,188
shares had become exercisable at prices ranging from $9.18 to $14.46 per share.
Spectra Precision, formerly part of the Measurement and Control segment, was
acquired as part of Spectra-Physics AB in 1999 and provides the construction,
surveying, and heavy-machine industries with precision-positioning equipment.

       In addition, in 2000, the company's continuing operations sold several
other noncore businesses for net cash proceeds of $45.5 million. The company
realized aggregate pretax gains of $126.3 million in 2000 from the sale of
businesses, which are included in restructuring and other costs (income), net,
in the accompanying statement of operations.

Note 3.    Business Segment and Geographical Information

       The company's businesses are managed in three segments:

       Life and Laboratory Sciences: serves the pharmaceutical, biotechnology,
and other research and industrial laboratory markets, as well as scientists in
government and academia, with tools that enable discovery, R&D, and quality
assurance. The segment also serves the healthcare market with rapid
point-of-care diagnostic tests, and with equipment, laboratory-automation
systems, and consumables for clinical and anatomical pathology laboratories.

       Measurement and Control: enables customers in key industrial markets,
including chemical, semiconductor, pharmaceutical, food and beverage, minerals
and mining, and steel, to control and optimize their manufacturing processes.
The segment's analytical tools, online process instruments, and precision
temperature-control systems increase quality, improve productivity, and ensure
worker safety, environmental protection, and regulatory compliance. The segment
also offers a comprehensive range of chemical, radiation, and
explosives-detection instruments.

<
                                      F-24

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 3.    Business Segment and Geographical Information (continued)

       Optical Technologies: provides high-power semiconductor and solid-state
lasers, as well as other photonic components and devices used in applications
ranging from industrial and microelectronic manufacturing and scientific
research to medical diagnostics and analytical instrumentation. Under the
Spectra-Physics brand, the segment offers a broad range of photonics products,
an extensive catalog, and specialized services for the design, prototyping, and
manufacturing of optical-based equipment.

       During 2002, the company transferred management responsibility for
several businesses between segments as follows: (1) the spectroscopy businesses
were moved to the Life and Laboratory Sciences segment from the Measurement and
Control segment; (2) the temperature-control businesses were moved to the
Measurement and Control segment from the Optical Technologies segment; (3) the
electrochemistry products business was moved to the Measurement and Control
segment from the Life and Laboratory Sciences segment; and (4) the Thermo
Projects unit was moved from a separate segment (previously included as "Other")
to the Life and Laboratory Sciences segment. Prior-period segment information
has been restated to reflect these changes.



                                                                                                             

                                                                                           2002           2001           2000
                                                                                        ----------     ----------     ----------
                                                                                                    (In thousands)

       Business Segment Information
       Revenues:
           Life and Laboratory Sciences                                                 $1,139,671     $1,113,780     $1,046,087
           Measurement and Control                                                         614,377        676,271        880,315
           Optical Technologies                                                            342,220        408,935        363,938
           Intersegment (a)                                                                 (9,913)       (10,776)        (9,818)
                                                                                        ----------     ----------     ----------

                                                                                        $2,086,355     $2,188,210     $2,280,522
                                                                                        ==========     ==========     ==========

       Income from Continuing Operations Before Provision for Income Taxes,
        Minority Interest, Extraordinary Item, and Cumulative Effect of Change
        in Accounting Principle:
           Life and Laboratory Sciences (b)                                             $  177,664     $  105,655     $  119,622
           Measurement and Control (c)                                                      50,288         16,879        181,493
           Optical Technologies (d)                                                        (22,139)       (37,366)        18,665
                                                                                        ----------     ----------     ----------

             Total Segment Operating Income (e)                                            205,813         85,168        319,780
           Corporate/Other (f)                                                              82,173        (14,487)      (134,949)
                                                                                        ----------     ----------     ----------

                                                                                        $  287,986     $   70,681     $  184,831
                                                                                        ==========     ==========     ==========

       Total Assets:
           Life and Laboratory Sciences                                                 $1,636,778     $1,454,028     $1,526,741
           Measurement and Control                                                         958,267      1,133,303      1,164,371
           Optical Technologies                                                            409,551        521,527        493,124
           Corporate (g)                                                                   642,466        716,212        775,448
           Net Assets of Discontinued Operations                                                 -              -        903,293
                                                                                        ----------     ----------     ----------

                                                                                        $3,647,062     $3,825,070     $4,862,977
                                                                                        ==========     ==========     ==========


<
                                      F-25

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 3.    Business Segment and Geographical Information (continued)

                                                                                           2002           2001           2000
                                                                                        ----------     ----------     ----------
                                                                                                    (In thousands)

       Depreciation:
           Life and Laboratory Sciences                                                 $   20,853     $   21,046     $   21,548
           Measurement and Control                                                          10,131         13,649         18,079
           Optical Technologies                                                             14,193         14,633         12,098
           Corporate                                                                         2,880          2,100          1,189
                                                                                        ----------     ----------     ----------

                                                                                        $   48,057     $   51,428     $   52,914
                                                                                        ==========     ==========     ==========

       Amortization:
           Life and Laboratory Sciences                                                 $    5,323     $   27,838     $   24,182
           Measurement and Control                                                           1,600         13,344         15,209
           Optical Technologies                                                              1,396          5,911          4,681
           Corporate                                                                             -              -            500
                                                                                        ----------     ----------     ----------

                                                                                        $    8,319     $   47,093     $   44,572
                                                                                        ==========     ==========     ==========

       Capital Expenditures:
           Life and Laboratory Sciences                                                 $   24,937     $   28,307     $   21,689
           Measurement and Control                                                          10,329         13,268         21,652
           Optical Technologies                                                             13,981         37,218         29,095
           Corporate                                                                         1,965          6,006          1,603
                                                                                        ----------     ----------     ----------

                                                                                        $   51,212     $   84,799     $   74,039
                                                                                        ==========     ==========     ==========

       Geographical Information
       Revenues (h):
           United States                                                                $1,379,673     $1,480,033     $1,574,737
           England                                                                         293,643        315,033        311,660
           Germany                                                                         244,396        184,175        198,416
           Other                                                                           567,649        520,133        540,445
           Transfers among geographical areas (a)                                         (399,006)      (311,164)      (344,736)
                                                                                        ----------     ----------     ----------

                                                                                        $2,086,355     $2,188,210     $2,280,522
                                                                                        ==========     ==========     ==========

       Long-lived Assets (i):
           United States                                                                $  168,044     $  199,111     $  222,169
           England                                                                          27,544         24,613         28,215
           Germany                                                                          27,319         21,358         21,963
           Other                                                                            57,785         46,840         38,930
                                                                                        ----------     ----------     ----------

                                                                                        $  280,692     $  291,922     $  311,277
                                                                                        ==========     ==========     ==========

       Export Sales Included in United States Revenues Above (j)                        $  376,142     $  386,799     $  436,378
                                                                                        ==========     ==========     ==========



<
                                      F-26

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 3.    Business Segment and Geographical Information (continued)

(a)  Intersegment sales and transfers among geographical areas are accounted for
     at prices that are representative of transactions with unaffiliated
     parties.
(b)  Includes restructuring and other costs, net, of $18.3 million, $45.6
     million, and $24.7 million in 2002, 2001, and 2000, respectively.
(c)  Includes restructuring and other costs of $13.3 million and $44.6 million
     in 2002 and 2001, respectively, and restructuring and other income, net, of
     $99.8 million in 2000.
(d)  Includes restructuring and other costs, net, of $27.1 million, $57.1
     million, and $6.0 million in 2002, 2001, and 2000, respectively.
(e)  Segment operating income is operating income excluding costs incurred at
     the company's corporate office.
(f)  Includes corporate general and administrative expenses and other income and
     expense. Includes corporate restructuring and other costs of $2.6 million,
     $11.5 million, and $20.5 million at the company's corporate office in 2002,
     2001, and 2000, respectively. Other income and expense includes $111.4
     million and $35.1 million of income in 2002 and 2001, respectively, and
     $45.1 million of charges in 2000, primarily related to the company's
     investment in FLIR, and other expense of $2.8 million for impairment of
     investments in 2001.
(g)  Primarily cash and cash equivalents, short- and long-term investments, and
     property and equipment at the company's corporate office.
(h)  Revenues are attributed to countries based on selling location.
(i)  Includes property, plant, and equipment, net, and other long-term tangible
     assets.
(j)  In general, export revenues are denominated in U.S. dollars.

Note 4.    Other Income (Expense), Net

       The components of other income (expense), net, in the accompanying
statement of operations are as follows:



                                                                                                             

                                                                                               2002          2001          2000
                                                                                             --------      --------      --------
                                                                                                       (In thousands)

       Interest Income                                                                       $ 47,874      $ 68,490      $ 40,151
       Interest Expense (Note 10)                                                             (40,916)      (71,769)      (83,142)
       Equity in Earnings (Loss) of Unconsolidated Subsidiaries (Note 15)                       2,533         4,699       (47,315)
       Gain on Investments, Net (Notes 9 and 15)                                              123,134        35,579         6,849
       Other Items, Net                                                                           (92)         (520)        2,273
                                                                                             --------      --------      --------

                                                                                             $132,533      $ 36,479      $(81,184)
                                                                                             ========      ========      ========

       The company acquired 4,162,000 shares of FLIR common stock in connection
with a business acquired in 1999. FLIR designs, manufactures, and markets
thermal imaging and broadcast camera systems that detect infrared radiation or
heat emitted directly by all objects and materials. Through the first quarter of
2002, the company accounted for its investment in FLIR using the equity method
with a one quarter lag to ensure the availability of FLIR's operating results in
time to enable the company to include its pro-rata share of FLIR's results with
its own. The investment in FLIR is included in other assets in the accompanying
2001 balance sheet. In December 2001, following a sale of shares, the company's
ownership of FLIR fell below 20%. In the first quarter of 2002, the company
recorded $2.1 million of income as its share of FLIR's fourth quarter 2001
earnings through the date on which the company's ownership fell below 20%.
Effective March 30, 2002, the company accounts for its investment in FLIR as an
available-for-sale security and no longer records its share of FLIR's earnings.
As an available-for-sale security, the investment in FLIR is recorded at quoted
market value in current assets and unrealized gains or losses are recorded as a
part of accumulated other comprehensive items in the accompanying 2002 balance
sheet.

<
                                      F-27

>


                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 4.    Other Income (Expense), Net (continued)

       The company sold 2,669,700 and 1,150,000 shares of FLIR common stock
during 2002 and 2001, respectively, and realized gains of $111.4 million and
$35.1 million, respectively. These gains included $39.5 million and $14.2
million in 2002 and 2001, respectively, from the recovery of amounts written
down in prior years. At December 28, 2002, the company owned 334,175 shares of
FLIR with a market value of $15.8 million.

       During 2000, the company recorded a charge to reflect an impairment of
its investment in FLIR that was deemed to be other than temporary (Note 15).

       Summary unaudited financial information for FLIR as of and for the 12
months ended September 30, 2001 and 2000, is as follows:



                                                                                                                   

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

       Current Assets                                                                                $118,093            $114,494
       Noncurrent Assets                                                                               43,903              51,439
                                                                                                     --------            --------

       Total Assets                                                                                  $161,996            $165,933
                                                                                                     ========            ========

       Current Liabilities                                                                           $103,804            $132,917
       Noncurrent Liabilities                                                                           8,948               4,251
       Shareholders' Equity                                                                            49,244              28,765
                                                                                                     --------            --------

       Total Liabilities and Shareholders' Equity                                                    $161,996            $165,933
                                                                                                     ========            ========


                                                                                                       Twelve Months Ended
                                                                                                ---------------------------------
                                                                                                September 30,       September 30,
                                                                                                         2001                2000
                                                                                                -------------       -------------
                                                                                                         (In thousands)

       Revenues                                                                                      $206,573            $181,562
       Cost of Revenues                                                                                95,587             114,211
                                                                                                     --------            --------

       Gross Profit                                                                                  $110,986            $ 67,351
                                                                                                     ========            ========

       Net Earnings (Loss)                                                                           $ 18,247            $(59,992)
                                                                                                     ========            ========



<
                                      F-28

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 5.    Employee Benefit Plans

Stock-based Compensation Plans

Stock Option Plans
- ------------------

       The company has stock-based compensation plans for its key employees,
directors, and others. These plans permit the grant of a variety of stock and
stock-based awards as determined by the human resources committee of the
company's Board of Directors (the Board Committee) or by the company's chief
executive officer in limited circumstances, including restricted stock, stock
options, stock bonus shares, or performance-based shares. Generally, options
granted prior to July 2000 under these plans are exercisable immediately, but
shares acquired upon exercise are subject to certain transfer restrictions and
the right of the company to repurchase the shares at the exercise price upon
certain events, primarily termination of employment. The restrictions and
repurchase rights lapse over periods ranging from 0-10 years, depending on the
term of the option, which may range from 3-12 years. Options granted in or after
July 2000 under these plans generally vest over three to five years, assuming
continued employment with certain exceptions. Upon a change in control of the
company, all options, regardless of grant date, become immediately exercisable
and shares acquired upon exercise cease to be subject to transfer restrictions
and the company's repurchase rights. Nonqualified options are generally granted
at fair market value, although options may be granted at a price at or above 85%
of the fair market value on the date of grant. Incentive stock options must be
granted at not less than the fair market value of the company's stock on the
date of grant. Generally, stock options have been granted at fair market value.
The company also has a directors' stock option plan that provides for the annual
grant of stock options of the company to outside directors pursuant to a formula
approved by the company's shareholders. Options awarded under this plan are
immediately exercisable and expire three to seven years after the date of grant.

       Following the completion of a cash tender offer in December 2001 for all
the shares of Spectra-Physics it did not previously own, the company completed a
short-form merger with Spectra-Physics in February 2002. Options to purchase
shares of Spectra-Physics became options to purchase 2,242,000 shares of Thermo
Electron common stock, which was accounted for in accordance with the
methodology set forth in FIN No. 44, "Accounting for Certain Transactions
Involving Stock Compensation" (Note 17).

       In August and November 2001, the company distributed all of its shares of
two subsidiaries to the company's shareholders (Note 17). The intrinsic value of
the options issued under the company's employee stock plans prior to the
spinoffs was maintained following the spinoffs in accordance with the
methodology set forth in FIN No. 44. The data in the accompanying tables has
been adjusted to reflect the spinoffs. Options to purchase 908,000 shares of
company common stock held by employees of these businesses were cancelled on the
dates of the spinoffs. These employees received equivalent options in stock of
their respective business.

       In 2002, 2001, and 2000, the company awarded to a number of key employees
323,000, 17,120, and 372,800 shares, respectively, of restricted company common
stock or restricted units that convert into an equivalent number of shares of
common stock assuming continued employment, with some exceptions. The awards had
an aggregate value of $6.5 million, $0.4 million, and $7.8 million,
respectively. The awards generally vest over three years, assuming continued
employment, with some exceptions. Of the shares/units awarded in 2002, 112,000
units vested immediately. During 2000, restricted common stock of the company's
formerly majority-owned subsidiaries was converted into 100,715 shares of
restricted company common stock with the same terms. The company has recorded
the fair value of the restricted stock as deferred compensation in the
accompanying balance sheet and is amortizing the amount over the vesting
periods.

<
                                      F-29

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 5.    Employee Benefit Plans (continued)

       A summary of the company's stock option activity is as follows:



                                                                                                        

                                                                   2002                     2001                     2000
                                                           --------------------     --------------------     -------------------
                                                                       Weighted                 Weighted                Weighted
                                                           Number       Average     Number       Average     Number      Average
                                                               of      Exercise         of      Exercise         of     Exercise
                                                           Shares         Price     Shares         Price     Shares        Price
                                                           ------      --------     ------      --------     ------     --------
                                                                                 (Shares in thousands)

       Options Outstanding, Beginning of Year              19,663        $17.78     24,579        $16.62     15,849       $16.86
        Granted                                             5,322         19.69      3,086         22.00      2,595        18.49
        Assumed in mergers with subsidiaries (Note 17)      2,242         42.71          -             -     16,221        14.62
        Exercised                                          (2,049)        13.03     (4,258)        13.16     (5,915)       13.53
        Forfeited                                          (2,706)        26.46     (2,836)        19.27     (4,171)       15.25
        Canceled due to spinoffs                                -             -       (908)        17.53          -            -
                                                           ------                   ------                   ------

       Options Outstanding, End of Year                    22,472        $20.11     19,663        $17.78     24,579       $16.62
                                                           ======        ======     ======        ======     ======       ======

       Options Exercisable                                 11,391        $19.44     15,612        $16.83     23,120       $16.41
                                                           ======        ======     ======        ======     ======       ======

       Options Available for Grant                          3,667                    8,234                    3,826
                                                           ======                   ======                   ======

       A summary of the status of the company's stock options at December 28, 2002, is as follows:



                                                                                                         

                                                         Options Outstanding                             Options Exercisable
                                           ------------------------------------------------           --------------------------
                                                              Weighted             Weighted                             Weighted
                                           Number              Average              Average           Number             Average
       Range of                                of            Remaining             Exercise               of            Exercise
       Exercise Prices                     Shares     Contractual Life                Price           Shares               Price
       -----------------                   ------     ----------------             --------           ------            --------
                                                                          (Shares in thousands)

       $  3.49 - $ 11.20                    2,731            3.1 years               $ 9.17            1,986              $ 9.24
         11.21 -   16.99                    6,008            3.3 years                14.43            4,416               14.57
         17.00 -   20.85                    7,627            6.8 years                19.50            1,862               18.75
         20.86 -   30.50                    4,127            5.4 years                23.89            1,889               24.35
         30.51 -   38.22                    1,029            5.6 years                33.94              641               33.60
         38.23 -   69.10                      803            7.2 years                56.01              505               55.49
         69.11 - $196.48                      147            6.8 years                88.35               92               90.56
                                           ------                                                     ------

       $  3.49 - $196.48                   22,472            5.1 years               $20.11           11,391              $19.44
                                           ======                                                     ======



<
                                      F-30

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 5.    Employee Benefit Plans (continued)

Employee Stock Purchase Plan

       Qualifying employees are eligible to participate in an employee stock
purchase plan sponsored by the company. Under this program, shares of the
company's common stock may be purchased at 85% of the lower of the fair market
value at the beginning or end of the purchase period, and the shares purchased
are subject to a one-year resale restriction. Shares are purchased through
payroll deductions of up to 10% of each participating employee's gross wages.
Effective with the 2002 plan year, the company changed the fiscal year-end of
its plan from October 31 to December 31. In February 2003, the company issued
147,000 shares of its common stock for the 2002 plan year. During 2001 and 2000,
the company issued 184,000 shares and 693,000 shares, respectively, of its
common stock under this plan.

401(k) Savings Plan and Other Defined Contribution Plans

       The company's 401(k) savings plan covers the majority of the company's
eligible full-time U.S. employees. Contributions to the plan are made by both
the employee and the company. Company contributions are based on the level of
employee contributions.

       Certain of the company's subsidiaries offer retirement plans in lieu of
participation in the company's principal 401(k) savings plan. Company
contributions to these plans are based on formulas determined by the company.

       For these plans, the company contributed and charged to expense $20.0
million, $19.0 million, and $18.0 million in 2002, 2001, and 2000, respectively.

Defined Benefit Pension Plans

       Two of the company's German subsidiaries and one of its U.K. subsidiaries
have defined benefit pension plans covering substantially all full-time
employees at those subsidiaries. One of the German subsidiaries' plans is
unfunded, as permitted under the plan and applicable laws. Net periodic benefit
costs for the plans in aggregate included the following components:



                                                                                                                 

                                                                                                 2002          2001         2000
                                                                                               -------       -------      -------
                                                                                                         (In thousands)

       Service Cost                                                                            $ 1,778       $ 2,615      $ 2,238
       Interest Cost on Benefit Obligation                                                       4,245         3,941        3,834
       Expected Return on Plan Assets                                                           (4,567)       (4,951)      (5,793)
       Recognized Net Actuarial (Gain) Loss                                                        106           (19)        (180)
       Amortization of Unrecognized Gain                                                             -             -           (2)
       Amortization of Unrecognized Initial Obligation                                              37            35           36
                                                                                               -------       -------      -------

                                                                                               $ 1,599       $ 1,621      $   133
                                                                                               =======       =======      =======


<
                                      F-31

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 5.    Employee Benefit Plans (continued)

       The activity under the company's defined benefit plans is as follows:



                                                                                                                   

                                                                                                            2002           2001
                                                                                                          --------       --------
                                                                                                              (In thousands)

       Change in Benefit Obligation:
        Benefit obligation, beginning of year                                                             $ 67,169       $ 73,772
        Service cost                                                                                         1,778          2,615
        Interest cost                                                                                        4,245          3,941
        Benefits paid                                                                                       (2,841)        (2,212)
        Actuarial (gain) loss                                                                                5,999         (8,358)
        Currency translation                                                                                 8,814         (2,589)
                                                                                                          --------       --------

        Benefit obligation, end of year                                                                     85,164         67,169
                                                                                                          --------       --------

       Change in Plan Assets:
        Fair value of plan assets, beginning of year                                                        62,555         76,579
        Company contributions                                                                                  634            580
        Benefits paid                                                                                       (2,841)        (2,212)
        Actual loss on plan assets                                                                         (10,275)       (10,064)
        Currency translation                                                                                 6,060         (2,328)
                                                                                                          --------       --------

        Fair value of plan assets, end of year                                                              56,133         62,555
                                                                                                          --------       --------

       Funded Status                                                                                       (29,031)        (4,614)
       Unrecognized Net Actuarial Loss                                                                      29,997          7,126
       Unrecognized Initial Obligation                                                                          40             67
                                                                                                          --------       --------

       Net Amount Recognized                                                                              $  1,006       $  2,579
                                                                                                          ========       ========

       Amounts Recognized in the Balance Sheet:
        Prepaid pension asset                                                                             $      -       $ 16,468
        Accrued pension liability                                                                          (26,104)       (13,956)
        Other assets                                                                                            40             67
        Accumulated other comprehensive items                                                               27,070              -
                                                                                                          --------       --------

       Net Amount Recognized                                                                              $  1,006       $  2,579
                                                                                                          ========       ========

       The aggregate projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets were $85.2 million, $80.5 million,
and $56.1 million, respectively, at year-end 2002, and $18.5 million, $17.6
million, and $5.6 million, respectively, at year-end 2001.

       The weighted average rates used to determine the net periodic benefit
costs were as follows:



                                                                                                                    

                                                                                               2002           2001           2000
                                                                                               ----           ----           ----

       Discount Rate                                                                           5.8%           6.1%           5.6%
       Rate of Increase in Salary Levels                                                       3.7%           4.4%           4.4%
       Expected Long-term Rate of Return on Assets                                             7.4%           7.0%           6.9%


<
                                      F-32

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 6.    Income Taxes

       The components of income from continuing operations before provision for
income taxes, minority interest, extraordinary item, and cumulative effect of
change in accounting principle are as follows:



                                                                                                                

                                                                                             2002           2001           2000
                                                                                           --------       --------       --------
                                                                                                     (In thousands)

       U.S.                                                                                $210,171       $  5,745       $ 91,342
       Non-U.S.                                                                              77,815         64,936         93,489
                                                                                           --------       --------       --------

                                                                                           $287,986       $ 70,681       $184,831
                                                                                           ========       ========       ========

       The components of the provision for income taxes of continuing operations are as follows:

                                                                                             2002           2001           2000
                                                                                           --------       --------       --------
                                                                                                     (In thousands)
       Currently Payable:
        Federal                                                                            $ 54,154       $ 11,117       $ 55,819
        Non-U.S.                                                                             24,115         23,572         53,586
        State                                                                                 1,837          3,318          8,311
                                                                                           --------       --------       --------

                                                                                             80,106         38,007        117,716
                                                                                           --------       --------       --------

       Net Deferred (Prepaid):
        Federal                                                                              11,086        (12,787)          (635)
        Non-U.S.                                                                              1,429          2,667         (4,535)
        State                                                                                   366           (958)          (329)
                                                                                           --------       --------       --------

                                                                                             12,881        (11,078)        (5,499)
                                                                                           --------       --------       --------

                                                                                           $ 92,987       $ 26,929       $112,217
                                                                                           ========       ========       ========

       The total provision for income taxes included in the accompanying
statement of operations is as follows:



                                                                                                               

                                                                                             2002           2001           2000
                                                                                          ---------      ---------      ---------
                                                                                                     (In thousands)

       Continuing Operations                                                              $  92,987      $  26,929      $ 112,217
       Discontinued Operations                                                                    -              -         10,427
       Gain/Loss on Disposal of Discontinued Operations                                     (21,008)       (22,741)      (104,000)
       Extraordinary Item                                                                      (522)           637            333
       Cumulative Effect of Change in Accounting Principle                                        -           (663)        (8,543)
                                                                                          ---------      ---------      ---------

                                                                                          $  71,457      $   4,162      $  10,434
                                                                                          =========      =========      =========

       The company receives a tax deduction upon the exercise of nonqualified
stock options by employees for the difference between the exercise price and the
market price of the underlying common stock on the date of exercise. The
provision for income taxes that is currently payable does not reflect $6.7
million, $9.5 million, and $18.0 million of such benefits of the company that
have been allocated to capital in excess of par value in 2002, 2001, and 2000,
respectively. In addition, the provision for income taxes that is currently
payable does not reflect $19.0 million of tax benefits used to reduce goodwill
in 2000.


<
                                      F-33

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 6.    Income Taxes (continued)

       The provision for income taxes in the accompanying statement of
operations differs from the provision calculated by applying the statutory
federal income tax rate of 35% to income from continuing operations before
provision for income taxes, minority interest, extraordinary item, and
cumulative effect of change in accounting principle due to the following:



                                                                                                                

                                                                                             2002           2001           2000
                                                                                           --------       --------       --------
                                                                                                      (In thousands)

       Provision for Income Taxes at Statutory Rate                                        $100,795       $ 24,738       $ 64,691
       Increases (Decreases) Resulting From:
        Federal tax credits                                                                  (3,016)        (2,955)        (4,113)
        Foreign sales corporation/extraterritorial income exclusion                          (2,357)        (2,401)        (7,325)
        Losses not benefited in the year they occurred                                       (3,192)        (4,687)         1,005
        Non-U.S. tax rate and tax law differential                                           (1,873)        (1,017)           301
        State income taxes, net of federal tax                                                1,432          1,535          5,188
        Nondeductible expenses                                                                  927            926          1,347
        Goodwill of businesses sold                                                             206              -         30,190
        Amortization and write off of goodwill                                                  151         13,095         11,330
        Writedown and equity in loss of unconsolidated subsidiary                                 -              -         12,062
        Other, net                                                                              (86)        (2,305)        (2,459)
                                                                                           --------       --------       --------

                                                                                           $ 92,987       $ 26,929       $112,217
                                                                                           ========       ========       ========

       Net deferred tax asset in the accompanying balance sheet consists of the following:



                                                                                                                    

                                                                                                            2002            2001
                                                                                                          --------        --------
                                                                                                              (In thousands)

       Deferred Tax Asset (Liability):
        Net operating loss and credit carryforwards                                                       $ 66,859        $ 46,568
        Reserves and accruals                                                                               49,408          52,234
        Inventory basis difference                                                                          31,308          39,246
        Accrued compensation                                                                                19,506          10,952
        Depreciation and amortization                                                                       (5,252)         11,299
        Available-for-sale investments                                                                     (15,162)        (18,114)
        Other, net                                                                                             734          (2,750)
                                                                                                          --------        --------

                                                                                                           147,401         139,435
        Less: Valuation allowance                                                                           65,476          45,370
                                                                                                          --------        --------

                                                                                                          $ 81,925        $ 94,065
                                                                                                          ========        ========

       The company estimates the degree to which tax assets and loss
carryforwards will result in a benefit based on expected profitability by tax
jurisdiction and provides a valuation allowance for tax assets and loss
carryforwards that it believes will more likely than not go unused.
Approximately $8 million of the valuation allowance in 2002 relates to
unbenefited foreign tax credit carryforwards. The balance of the valuation
allowance primarily relates to the uncertainty surrounding the realization of
acquired tax loss and credit carryforwards. Any tax benefit resulting from the
use of acquired loss carryforwards is used to reduce goodwill.


<
                                      F-34

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 6.    Income Taxes (continued)

       At year-end 2002, the company had federal, state, and non-U.S. net
operating loss carryforwards of $3 million, $322 million, and $139 million,
respectively. Use of the carryforwards is limited based on the future income of
certain subsidiaries. The federal and state net operating loss carryforwards
expire in the years 2003 through 2021. Of the non-U.S. net operating loss
carryforwards, $12 million expire in the years 2003 through 2015, and the
remainder do not expire.

       A provision has not been made for U.S. or additional non-U.S. taxes on
$576 million of undistributed earnings of international subsidiaries that could
be subject to taxation if remitted to the U.S. because the company plans to keep
these amounts permanently reinvested overseas.

Note 7.    Earnings (Loss) per Share



                                                                                                               

                                                                                            2002           2001            2000
                                                                                         ---------      ---------       ---------
                                                                                         (In thousands except per share amounts)

       Income from Continuing Operations Before Extraordinary Item and Cumulative
        Effect of Change in Accounting Principle                                         $ 195,330      $  49,592       $  62,047
       Income from Discontinued Operations                                                       -              -          14,228
       Gain (Loss) on Disposal of Discontinued Operations, Net                             115,370        (50,440)       (100,000)
       Extraordinary Item                                                                     (970)         1,061             532
       Cumulative Effect of Change in Accounting Principle                                       -           (994)        (12,918)
                                                                                         ---------      ---------       ---------

       Net Income (Loss) for Basic Earnings per Share                                      309,730           (781)        (36,111)
       Effect of:
        Convertible debentures                                                              13,986              -               -
        Majority-owned subsidiaries' dilutive securities - continuing operations                 -              -          (1,331)
        Majority-owned subsidiaries' dilutive securities - discontinued operations              -               -            (113)
                                                                                         ---------      ---------       ---------

       Income (Loss) Available to Common Shareholders, as Adjusted for Diluted
        Earnings per Share                                                               $ 323,716      $    (781)      $ (37,555)
                                                                                         ---------      ---------       ---------

       Basic Weighted Average Shares                                                       168,572        180,560         167,462
       Effect of:
        Convertible debentures                                                              15,952            463             238
        Stock options                                                                        2,068          2,893           2,819
        Contingently issuable shares                                                            19              -               -
                                                                                         ---------      ---------       ---------

       Diluted Weighted Average Shares                                                     186,611        183,916         170,519
                                                                                         ---------      ---------       ---------


<
                                      F-35

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 7.    Earnings (Loss) per Share (continued)

                                                                                            2002           2001            2000
                                                                                         ---------      ---------       ---------
                                                                                          (In thousands except per share amounts)

       Basic Earnings (Loss) per Share:
        Continuing operations before extraordinary item and cumulative effect of
           change in accounting principle                                                $    1.16      $     .27       $     .37
        Discontinued operations                                                                .68           (.28)           (.51)
        Extraordinary item                                                                    (.01)           .01               -
        Cumulative effect of change in accounting principle                                      -           (.01)           (.08)
                                                                                         ---------      ---------       ---------

                                                                                         $    1.84      $       -       $    (.22)
                                                                                         =========      =========       =========

       Diluted Earnings (Loss) per Share:
        Continuing operations before extraordinary item and cumulative effect of
           change in accounting principle                                                $    1.12      $     .27       $     .36
        Discontinued operations                                                                .62           (.27)           (.50)
        Extraordinary item                                                                    (.01)           .01               -
        Cumulative effect of change in accounting principle                                      -           (.01)           (.08)
                                                                                         ---------      ---------       ---------

                                                                                         $    1.73      $       -       $    (.22)
                                                                                         =========      =========       =========

       Options to purchase 10,786,000, 4,755,000, and 4,726,000 shares of common
stock were not included in the computation of diluted earnings (loss) per share
for 2002, 2001, and 2000, respectively, because the options' exercise prices
were greater than the average market price for the common stock and their effect
would have been antidilutive.

       The computation of diluted earnings per share for 2002 excludes the
effect of assuming the conversion of the company's 4 3/8% subordinated
convertible debentures with a principal balance of $71.9 million and convertible
at $111.83 per share, because the effect would be antidilutive. The computation
of diluted earnings (loss) per share for 2001 and 2000 excludes the effect of
all convertible debentures except the company's noninterest-bearing subordinated
convertible debentures because the effect would be antidilutive.

Note 8.    Comprehensive Income

       Comprehensive income combines net income (loss) and other comprehensive
items. Other comprehensive items represents certain amounts that are reported as
components of shareholders' equity in the accompanying balance sheet, including
currency translation adjustments, unrealized net of tax gains and losses on
available-for-sale investments and hedging instruments, and minimum pension
liability adjustment.

       Accumulated other comprehensive items in the accompanying balance sheet
consists of the following:



                                                                                                                  

                                                                                                           2002            2001
                                                                                                        ---------       ---------
                                                                                                             (In thousands)

       Cumulative Translation Adjustment                                                                $ (41,448)      $(132,709)
       Net Unrealized Gains on Available-for-sale Investments                                              28,229          32,081
       Net Unrealized Gains (Losses) on Hedging Instruments                                                (1,490)          1,338
       Minimum Pension Liability Adjustment (net of tax benefit of $8,121)                                (18,949)              -
                                                                                                        ---------       ---------

                                                                                                        $ (33,658)      $ (99,290)
                                                                                                        =========       =========



<
                                      F-36

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 8.    Comprehensive Income (continued)

       Comprehensive income in 2002 excludes the effect of unrealized gains of
$111 million that existed at the date the company reclassified equity interests
in FLIR and Thoratec Corporation to available-for-sale investments (Notes 4 and
17).

       The change in unrealized gains (losses) on available-for-sale
investments, a component of other comprehensive items in the accompanying
statement of comprehensive income and shareholders' equity, includes the
following:



                                                                                                                

                                                                                            2002           2001            2000
                                                                                          --------       --------        --------
                                                                                                      (In thousands)

       Unrealized Holding Gains (Losses) Arising During the Year (net of
        income tax provision (benefit) of $(22,067), $12,136, and $5,257)                 $(34,481)      $ 21,077        $  8,668
       Reclassification Adjustment for Gains Included in Net Income/ Loss
        (net of income tax provision of $15,746, $505, and $2,739)                         (31,413)          (757)         (4,110)
                                                                                          --------       --------        --------

       Net Unrealized Gains (Losses) (net of income tax provision (benefit)
        of $(37,813), $11,631, and $2,518)                                                $(65,894)      $ 20,320        $  4,558
                                                                                          ========       ========        ========

       The change in unrealized gains (losses) on hedging instruments, a
component of other comprehensive items in the accompanying statement of
comprehensive income and shareholders' equity, includes the following:




                                                                                                                    
                                                                                                            2002            2001
                                                                                                          -------         -------
                                                                                                              (In thousands)

       Unrealized Holding Gains (Losses) Arising During the Year (net of
        income tax provision (benefit) of $(1,794) and $2,861)                                            $(2,852)        $ 4,330
       Reclassification Adjustment for (Gains) Losses Included in Net
        Income/Loss (net of income tax (provision) benefit of $15 and
        $(1,995))                                                                                              24          (2,992)
                                                                                                          -------         -------

       Net Unrealized Gains (Losses) (net of income tax provision (benefit)
        of $(1,779) and $866)                                                                             $(2,828)        $ 1,338
                                                                                                          =======         =======



<
                                      F-37

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 9.    Available-for-sale Investments

       The aggregate market value, cost basis, and gross unrealized gains and
losses of short- and long-term available-for-sale investments by major security
type are as follows:



                                                                                                          

                                                                                                          Gross            Gross
                                                                       Market             Cost       Unrealized       Unrealized
                                                                        Value            Basis            Gains           Losses
                                                                     --------         --------       ----------       ----------
                                                                                            (In thousands)

       2002
       Corporate Bonds and Notes                                     $431,222         $424,681         $  6,731         $   (190)
       Other                                                          105,208           68,321           37,138             (251)
                                                                     --------         --------         --------         --------

                                                                     $536,430         $493,002         $ 43,869         $   (441)
                                                                     ========         ========         ========         ========

       2001
       Corporate Bonds and Notes                                     $682,520         $666,432         $ 16,372         $   (284)
       Other                                                           71,161           37,054           34,231             (124)
                                                                     --------         --------         --------         --------

                                                                     $753,681         $703,486         $ 50,603         $   (408)
                                                                     ========         ========         ========         ========

       Amortized cost for short-term available-for-sale investments was $493.0
million and $697.8 million in the accompanying 2002 and 2001 balance sheets,
respectively. Amortized cost for long-term available-for-sale investments was
$5.7 million in the accompanying 2001 balance sheet.

       Short-term available-for-sale investments in the accompanying 2002
balance sheet include equity securities of $105.2 million and debt securities of
$350.7 million with contractual maturities of one year or less and $80.5 million
with contractual maturities of more than one year through five years. Actual
maturities may differ from contractual maturities as a result of the company's
intent to sell these securities prior to maturity.

       The cost of available-for-sale investments that were sold was based on
specific identification in determining realized gains and losses recorded in the
accompanying statement of operations. The net gain on the sale of
available-for-sale investments resulted from gross realized gains of $126.6
million, $5.0 million, and $9.3 million, and gross realized losses of $3.5
million, $3.7 million, and $2.5 million in 2002, 2001, and 2000, respectively.



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                                      F-38

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 10.   Long-term Obligations and Other Financing Arrangements



                                                                                                                 

                                                                                                           2002           2001
                                                                                                        ----------     ----------
                                                                                                          (In thousands except
                                                                                                           per share amounts)

       7 5/8% Senior Notes, Due 2008                                                                    $  141,032     $  128,725
       4% Subordinated Convertible Debentures, Due 2005, Convertible at $35.77 per Share                   226,501        231,508
       3 1/4% Subordinated Convertible Debentures, Due 2007, Convertible at $41.84 per Share                78,048         78,048
       4 3/8% Subordinated Convertible Debentures, Due 2004, Convertible at $111.83 per Share
        (called for redemption in April 2003; Note 19)                                                      71,873         75,168
       Noninterest-bearing Subordinated Convertible Debentures, Due 2003, Convertible at $61.67
        per Share                                                                                           31,320         31,420
       2 7/8% Subordinated Convertible Debentures, Due 2003, Convertible at $28.16 per Share                11,536         11,583
       4 1/2% Senior Convertible Debentures, Due 2003, Convertible at $34.42 per Share (called
        for redemption in October 2002)                                                                          -        145,414
       4 1/4% Subordinated Convertible Debentures, Due 2003, Convertible at $32.09 per Share
        (called for redemption in March 2002)                                                                    -        398,498
       4 5/8% Subordinated Convertible Debentures, Due 2003, Convertible at $34.22 per Share
        (called for redemption in March 2002)                                                                    -         69,614
       4 7/8% Subordinated Convertible Debentures, Due 2004, Convertible at $32.50 per Share
        (called for redemption in October 2002)                                                                  -         17,650
       Other                                                                                                 8,175         10,303
                                                                                                        ----------     ----------

                                                                                                           568,485      1,197,931
       Less: Current Maturities                                                                            117,144        470,429
                                                                                                        ----------     ----------

                                                                                                        $  451,341     $  727,502
                                                                                                        ==========     ==========

       As a result of the spinoffs to shareholders discussed in Note 17, the
conversion price of each of the company's convertible debentures was reduced in
2001 to approximately 85% of the conversion price at December 30, 2000, in
accordance with the terms of the convertible debentures.

       Outstanding debentures issued by subsidiaries that were taken private in
transactions in which the consideration paid to stockholders of the subsidiary
was Thermo Electron common stock have become convertible into the company's
common stock. Outstanding debentures issued by subsidiaries that were taken
private in transactions in which the consideration paid to stockholders of the
subsidiary was cash became convertible into an amount based on the same cash
consideration payable in the merger transactions. The interest cost of this debt
has been included as interest expense of continuing operations in the
accompanying statement of operations. No allocation of interest expense for debt
of the company's continuing operations has been made to discontinued operations.

<
                                      F-39

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 10.   Long-term Obligations and Other Financing Arrangements (continued)

       The annual requirements for long-term obligations are as follows (in
thousands):



                                                                                                                      

       2003                                                                                                              $117,144
       2004                                                                                                                 1,016
       2005                                                                                                               226,945
       2006                                                                                                                   405
       2007                                                                                                                78,471
       2008 and thereafter                                                                                                144,504
                                                                                                                         --------

                                                                                                                         $568,485
                                                                                                                         ========

       See Note 13 for fair value information pertaining to the company's
long-term obligations.

       Short-term obligations and current maturities of long-term obligations in
the accompanying balance sheet includes $75.4 million and $58.5 million at
year-end 2002 and 2001, respectively, of short-term bank borrowings and
borrowings under lines of credit of certain of the company's subsidiaries. The
weighted average interest rate for these borrowings was 2.3% and 3.1% at
year-end 2002 and 2001, respectively. Unused lines of credit for non-U.S.
subsidiaries were $180 million as of year-end 2002. The unused lines of credit
generally provide for short-term unsecured borrowings at various interest rates.
In addition, the company has facilities of $250 million discussed below.

       In 2002, the company redeemed all of its outstanding 4 1/2% senior
convertible debentures due 2003, 4 1/4% and 4 5/8% subordinated convertible
debentures due 2003, and 4 7/8% subordinated convertible debentures due 2004
with the objective of reducing interest costs. The principal amounts redeemed
for the 4 1/2%, 4 1/4%, 4 5/8%, and 4 7/8% debentures were $121.1 million,
$398.4 million, $57.9 million, and $13.3 million, respectively. The redemption
price was 100% of the principal amount of the debentures plus accrued interest.
Redemptions and repurchases of subordinated convertible debentures resulted in
an extraordinary charge of $1.0 million, net of a tax benefit of $0.5 million,
in 2002, and extraordinary gains of $1.1 million and $0.5 million in 2001 and
2000, respectively. The gains are net of taxes of $0.6 million and $0.3 million
in 2001 and 2000, respectively. Effective in 2003, gains or losses resulting
from the repurchase or redemption of the company's debentures will be reported
as other nonoperating income or expense, and prior periods will be restated to
conform to this presentation (Note 1).

       In connection with the 2002 debt redemption discussed above, the company
entered into securities-lending agreements with third parties under which the
company may borrow funds for short-term needs. Borrowings are collateralized by
available-for-sale investments. As of December 28, 2002, the company had
outstanding borrowings of $292.0 million under these arrangements with
maturities between January 2003 and June 2003 and a weighted average interest
rate of 1.87%. The proceeds of the borrowings were used to partially fund the
debt redemption discussed above. The company has pledged $306.6 million of
available-for-sale securities in the accompanying 2002 balance sheet as
collateral for such borrowings.

       In December 2002, the company entered into revolving credit agreements
with a bank group that provide for up to $250 million of unsecured borrowings.
These arrangements consist of a 364-day revolving credit facility of $125
million that will expire in December 2003, and a three-year $125 million
revolving credit facility that will expire in December 2005. The agreements call
for interest at either a LIBOR-based rate or a rate based on the prime lending
rate of the agent bank, at the company's option. The rate at December 28, 2002,
was 2.14% under the more favorable of the two rates. The company has agreed to
certain financial covenants including interest coverage and debt-to-capital
ratios. As of year-end 2002, no borrowings were outstanding. The company may use
the credit facilities for working capital needs and possible acquisitions.


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                                      F-40

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 10.   Long-term Obligations and Other Financing Arrangements (continued)

       During 2002, the company entered into interest-rate swap arrangements for
its $128.7 million principal amount 7.625% senior notes, due in 2008, with the
objective of reducing interest costs. The arrangements provide that the company
will receive a fixed interest rate of 7.625%, and will pay a variable rate of
90-day LIBOR plus 2.19% (3.58% as of December 28, 2002). The swaps have terms
expiring at the maturity of the debt. The swaps are designated as fair-value
hedges and as such, are carried at fair value, which resulted in an increase in
other long-term assets and long-term debt of $12.3 million at December 28, 2002.
The swap arrangements are with different counterparties than the holders of the
underlying debt. Management believes that any credit risk associated with the
swaps is remote based on the creditworthiness of the financial institutions
issuing the swaps.

Note 11.   Commitments and Contingencies

Operating Leases

       The company leases portions of its office and operating facilities under
various operating lease arrangements. Income from continuing operations includes
expense from operating leases of $36.0 million, $43.9 million, and $42.2 million
in 2002, 2001, and 2000, respectively. Future minimum payments due under
noncancelable operating leases at December 28, 2002, are $40.3 million in 2003,
$36.2 million in 2004, $30.3 million in 2005, $22.9 million in 2006, $20.0
million in 2007, and $83.1 million in 2008 and thereafter. Total future minimum
lease payments are $232.8 million.

Letters of Credit and Guarantees

       Outstanding letters of credit totaled $44.6 million at December 28, 2002,
including $7.4 million for businesses that have been sold. The expiration of
these credits ranges through 2012 for existing businesses and through 2003 for
businesses that have been sold.

       Outstanding surety bonds totaled $26.0 million at December 28, 2002,
including $23.1 million for businesses that have been sold or included within
discontinued operations. The expiration of these bonds ranges through 2010 for
existing businesses and primarily through 2006 for businesses that have been
sold and for discontinued operations.

       The letters of credit and surety bonds principally secure performance
obligations, and allow the holder to draw funds up to the face amount of the
letter of credit or bond if the applicable business unit does not perform as
contractually required.

       The company has other outstanding guarantees totaling $1.2 million at
December 28, 2002, that relate to the payment of customs and third-party
indebtedness of an equity investee. These carry no expiration.

Indemnifications

       In conjunction with certain transactions, primarily divestitures, the
company has agreed to indemnify the other parties with respect to certain
liabilities related to the businesses that were sold or leased properties that
were abandoned (e.g., retention of certain environmental, tax, employee, and
product liabilities). The scope and duration of such indemnity obligations vary
from transaction to transaction. Where appropriate, an obligation for such
indemnifications is recorded as a liability. Generally, a maximum obligation
cannot be reasonably estimated. Other than obligations recorded as liabilities
at the time of divestiture, historically the company has not made significant
payments for these indemnifications.

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                                      F-41

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 11.   Commitments and Contingencies (continued)

       In connection with the company's efforts to reduce the number of
facilities that it occupies, the company has vacated some of its leased
facilities or sublet them to third parties. When the company sublets a facility
to a third party, it remains the primary obligor under the master lease
agreement with the owner of the facility. As a result, if a third party vacates
the sublet facility, the company would be obligated to make lease or other
payments under the master lease agreement. The company believes that the
financial risk of default by sublessors is individually and in the aggregate not
material to the company's financial position or results of operations.

       In connection with the sale of products in the ordinary course of
business, the company often makes representations affirming, among other things,
that its products do not infringe on the intellectual property rights of others
and agrees to indemnify customers against third-party claims for such
infringement. The company has not been required to make material payments under
such provisions.

Litigation and Related Contingencies

Continuing Operations
- ---------------------

       The company has been named a defendant, along with many other companies,
in a patent-infringement lawsuit brought by the Lemelson Medical, Education &
Research Foundation, L.P. The suit asserts that products manufactured, used, or
sold by the defendants infringe one or more patents related to methods of
machine vision or computer-image analysis. The Lemelson action seeks damages,
including enhanced damages for alleged willful infringement, attorney's fees,
and injunctive relief.

       During 2002, the company settled a patent-infringement matter that
Rockwell International Corp. had brought against Spectra-Physics and its Opto
Power subsidiary. Under the settlement, the company paid Rockwell $4.0 million.
The settlement was charged against a reserve established for this matter except
for $0.7 million that was included in restructuring and other costs in the
accompanying 2002 statement of operations (Note 15).

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

       The company's Thermo Coleman Corporation subsidiary has been named as a
defendant in a lawsuit initiated by two former employees. The suit alleges,
among other things, that Thermo Coleman violated the Federal False Claims Act in
connection with the performance of a government contract. The complaint seeks
the award of treble damages in an unspecified amount, plus other penalties. The
amount of billings under the contract activities in question were approximately
$7.6 million. Thermo Coleman sold its core business in 2000, but retained this
litigation as a term of the sale.

       During 2002, the company settled a patent-infringement matter that
Fischer Imaging Corporation had brought against the company's former Trex
Medical subsidiary. The company sold Trex Medical in 2000, but retained this
obligation as a term of the sale. Under the settlement, the company paid Fischer
$25 million and agreed to pay an additional $7.2 million over eight years. The
portion of the settlement that was paid was charged against a reserve
established for this matter. The balance of the amount to be paid will also be
charged against the reserve as paid.

       The company intends to vigorously defend the unresolved matters in
continuing and discontinued operations described above. In the opinion of
management, an unfavorable outcome in one or more of the unresolved matters
described above could materially affect the company's financial position as well
as its results of operations and cash flows for a particular quarterly or annual
period.

       The company's continuing and discontinued operations are a defendant in a
number of other pending legal proceedings incidental to present and former
operations. The company does not expect the outcome of these proceedings, either
individually or in the aggregate, to have a material adverse effect on its
financial position, results of operations, or cash flows.


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                                      F-42

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 12.   Common and Preferred Stock

       At December 28, 2002, the company had reserved 36,594,369 unissued shares
of its common stock for possible issuance under stock-based compensation plans
and for possible conversion of the company's convertible debentures.

       The company has 50,000 shares of authorized but unissued $100 par value
preferred stock.

       In 2002, the company restored 32,000,000 shares of common stock to
authorized but unissued status, which had been held in treasury stock.

       In 2000, the company issued 22.6 million shares of its common stock
valued at $448.7 million to complete mergers with several of its formerly
majority-owned subsidiaries (Note 17).

       During 1998 and 1999, in a series of transactions with an institutional
counterparty, the company sold put options and purchased call options. No cash
was exchanged as a result of these transactions. The company had the right to
settle the put options by physical settlement of the options or by net share
settlement using shares of the company's common stock. During 2000, the company
purchased 1,183,500 shares of its common stock under the call options for $17.5
million. During 1999, the company purchased 1,536,000 shares of its common stock
under the put options for $24.6 million. During 1999 and 2000, put options for
4,165,000 shares expired. No remaining obligation under the put options existed
after 2000.

       The company has distributed rights under a shareholder rights plan
adopted by the company's Board of Directors to holders of outstanding shares of
the company's common stock. Each right entitles the holder to purchase one
ten-thousandth of a share (a Unit) of Series B Junior Participating Preferred
Stock, $100 par value, at a purchase price of $250 per Unit, subject to
adjustment. The rights will not be exercisable until the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an Acquiring Person) has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of common
stock (the Stock Acquisition Date), or (ii) 10 business days following the
commencement of a tender offer or exchange offer for 15% or more of the
outstanding shares of common stock.

       In the event that a person becomes the beneficial owner of 15% or more of
the outstanding shares of common stock, except pursuant to an offer for all
outstanding shares of common stock approved by at least a majority of the
members of the Board of Directors, each holder of a right (except for the
Acquiring Person) will thereafter have the right to receive, upon exercise, that
number of shares of common stock that equals the exercise price of the right
divided by one-half of the current market price of the common stock. In the
event that, at any time after any person has become an Acquiring Person, (i) the
company is acquired in a merger or other business combination transaction in
which the company is not the surviving corporation or its common stock is
changed or exchanged (other than a merger that follows an offer approved by the
Board of Directors), or (ii) 50% or more of the company's assets or earning
power is sold or transferred, each holder of a right (except for the Acquiring
Person) shall thereafter have the right to receive, upon exercise, the number of
shares of common stock of the acquiring company that equals the exercise price
of the right divided by one half of the current market price of such common
stock.

       At any time until 10 days following the Stock Acquisition Date, the
company may redeem the rights in whole, but not in part, at a price of $.01 per
right (payable in cash or stock). The rights expire on January 29, 2006, unless
earlier redeemed or exchanged.

<
                                      F-43

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 13.   Fair Value of Financial Instruments

       The company's financial instruments consist mainly of cash and cash
equivalents, available-for-sale investments, accounts receivable, a note
receivable from Trimble (Note 2), short-term obligations and current maturities
of long-term obligations, accounts payable, long-term obligations, and forward
currency-exchange contracts. The carrying amounts of cash and cash equivalents,
accounts receivable, short-term obligations and current maturities of long-term
obligations (excluding convertible obligations), and accounts payable
approximate fair value due to their short-term nature.

       Available-for-sale investments are carried at fair value in the
accompanying balance sheet. The fair values were determined based on quoted
market prices (Note 9).

       The carrying amount and fair value of the company's note receivable,
long-term obligations, and forward currency-exchange contracts are as follows:



                                                                                                             

                                                                                    2002                           2001
                                                                          ------------------------       ------------------------
                                                                          Carrying            Fair       Carrying            Fair
                                                                            Amount           Value         Amount           Value
                                                                          --------        --------       --------        --------
                                                                                              (In thousands)

Note Receivable                                                           $ 69,136        $ 70,002       $ 80,000        $ 80,201
                                                                          ========        ========       ========        ========

Current Maturities of Convertible Obligations                             $114,729        $112,121       $468,112        $466,720
                                                                          ========        ========       ========        ========

Long-term Obligations:
 Convertible obligations                                                  $304,549        $292,138       $590,791        $562,264
 Other                                                                     146,792         146,792        136,711         140,006
                                                                          --------        --------       --------        --------

                                                                          $451,341        $438,930       $727,502        $702,270
                                                                          ========        ========       ========        ========

Forward Currency-exchange Contracts Receivable                            $  1,111        $  1,111       $  3,585        $  3,585

       The fair value of the note receivable was determined based on borrowing
rates available to companies of comparable creditworthiness at the respective
year ends.

       The fair value of long-term obligations was determined based on quoted
market prices and on borrowing rates available to the company at the respective
year ends.

       The notional amounts of forward currency-exchange contracts outstanding
totaled $89.2 million and $90.1 million at year-end 2002 and 2001, respectively.
The fair value of such contracts is the estimated amount that the company would
receive upon liquidation of the contracts, taking into account the change in
currency exchange rates.

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                                      F-44

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 14.   Supplemental Cash Flow Information



                                                                                                               

                                                                                       2002              2001             2000
                                                                                     --------          --------         --------
                                                                                                   (In thousands)
       Cash Paid For
        Interest                                                                     $ 51,156          $ 61,797         $ 84,380
                                                                                     ========          ========         ========

        Income taxes                                                                 $ 64,309          $ 44,822         $ 93,136
                                                                                     ========          ========         ========

       Noncash Activities
        Fair value of assets of acquired companies                                   $ 94,881          $ 18,161         $ 25,114
        Cash paid for acquired companies                                              (78,825)          (14,834)         (17,311)
                                                                                     --------          --------         --------

             Liabilities assumed of acquired companies                               $ 16,056          $  3,327         $  7,803
                                                                                     ========          ========         ========

        Issuance of company common stock in exchange for minority
           interests of subsidiaries (Note 17)                                       $      -          $      -         $448,747
                                                                                     ========          ========         ========

        Receipt of note in connection with sale of business (Note 2)                 $      -          $      -         $ 80,000
                                                                                     ========          ========         ========

Note 15.   Restructuring and Other Costs (Income), Net

2002

       In response to a continued downturn in markets served by the company,
restructuring actions were initiated in 2002 in a number of business units to
reduce costs and shed unproductive assets. The restructuring and related actions
primarily consisted of headcount reductions, writedowns of production equipment
for telecommunications products at Spectra-Physics, discontinuation of three
mature or unprofitable product lines, and consolidation of facilities to
streamline operations and reduce costs. During 2002, the company recorded $61.3
million of restructuring and other charges primarily associated with these
actions, including $9.1 million of charges to cost of revenues. These charges
are detailed by segment below. The company expects to incur an additional $6
million of restructuring costs in 2003 for charges associated with these actions
that cannot be recorded until incurred, such as relocation and moving costs. The
company believes that restructuring actions undertaken in 2002 will be
substantially completed by mid-2003. The company expects to identify additional
sites to consolidate in 2003 and will record charges in connection with any such
actions.

       The company recorded net restructuring and other charges by segment for
2002 as follows:



                                                                                                          

                                                  Life and
                                                Laboratory       Measurement          Optical
                                                  Sciences       and Control     Technologies         Corporate            Total
                                                ----------       -----------     ------------         ---------          -------
                                                                                  (In thousands)

       Cost of Revenues                            $   734           $ 1,384          $ 7,008           $     -          $ 9,126
       Restructuring and Other Costs, Net           17,572            11,910           20,102             2,562           52,146
                                                   -------           -------          -------           -------          -------

                                                   $18,306           $13,294          $27,110           $ 2,562          $61,272
                                                   =======           =======          =======           =======          =======


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                                      F-45

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                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)

       The components of net restructuring and other charges by segment are as
follows:

Life and Laboratory Sciences
- ----------------------------

       The Life and Laboratory Sciences segment recorded $18.3 million of net
restructuring and other charges in 2002. The segment recorded charges to cost of
revenues of $0.7 million, which consisted of $0.5 million for the sale of
inventory revalued at the date of acquisition and $0.2 million for a
discontinued product line, and $17.6 million of other costs. These other costs
consisted of $11.4 million of cash costs, including $5.2 million of severance
for 236 employees across all functions; $2.0 million of ongoing lease costs
through 2005 for abandoned facilities described below; $1.4 million of
employee-retention costs; $0.7 million of pension costs for terminated employees
that was accrued as a pension liability; $0.5 million for the termination of a
distributor agreement; and $1.6 million of other cash costs, primarily
relocation expenses. In addition, the segment realized a net loss of $4.8
million on the sale of assets and small business units, principally its Dynex
automated diagnostics product line, and wrote down $1.4 million of fixed assets
at abandoned facilities. The abandoned-facility costs included $1.6 million of
additional expense related to a facility in Finland that was abandoned in 2001,
at which time the segment recorded estimated abandonment cost. The segment has
been unable to sublease the space and has reserved the remaining obligation
through the expiration of the lease in 2005. Other facility consolidations in
2002 included closure of three sales and services offices in the Netherlands,
the United Kingdom, and California, and a manufacturing facility in Texas. The
activities of these facilities were transferred to other locations. In addition,
certain other office and manufacturing space in Massachusetts that was abandoned
and reserved for in 2001 has been occupied by the company's Measurement and
Control segment, and consequently, the remaining reserve for abandonment of $1.5
million has been reversed.

Measurement and Control
- -----------------------

       The Measurement and Control segment recorded $13.3 million of net
restructuring and other charges in 2002. The segment recorded charges to cost of
revenues of $1.4 million for the sale of inventory revalued at the date of
acquisition, and $11.9 million of other costs. These other costs consisted of
$20.1 million of cash costs, including $10.7 million of severance for 352
employees across all functions; $4.9 million of ongoing lease costs through 2007
for abandoned facilities described below; $2.0 million of employee-retention
costs; and $2.5 million of other cash costs, primarily relocation expenses. The
charge also included $0.5 million of asset writedowns, and was offset by $8.7
million of net gains, primarily on the sale of businesses, principally the
segment's Thermo BLH and Thermo Nobel subsidiaries (Note 2). The charges for
severance, abandoned facilities, and other items are net of reversals of $2.4
million, $2.3 million, and $0.4 million, respectively, that the segment had
provided in 2000 and 2001. Of the total amount reversed, $2.1 million had been
initially provided in 2001 to downsize the segment's operations in Maryland.
During 2002, following a change in that operation's management, the 2001 plan to
restructure the Maryland operations was substantially revised to include closure
of the plant. The amounts provided in 2001 were reversed and all of the actions
contemplated in the 2001 plan are components of the expanded 2002 plan, recorded
in 2002. The remainder of the 2000 and 2001 plan reserves that were reversed
were not required primarily due to employee attrition and favorable settlement
of lease obligations. The facility consolidations in the 2002 plan included
closure of six manufacturing facilities in the United States and one sales and
service facility in Australia, and the transfer of their activities to other
locations.

Optical Technologies
- --------------------

       The Optical Technologies segment recorded $27.1 million of net
restructuring and other charges in 2002. The segment recorded charges to cost of
revenues of $7.0 million, which consisted of $6.5 million for two discontinued
product lines and $0.5 million for the sale of inventory revalued at the date of
acquisition, and $20.1 million of other costs. These other costs consisted of
$10.7 million of cash costs, including $6.4 million of severance for 315
employees across all functions; $1.6 million of ongoing lease costs, primarily
for abandoned equipment; $0.5 million of employee-retention costs; $0.7 million
for the settlement of litigation (Note 11); $1.1 million of cancellation fees
for

<
                                      F-46

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)

fixed asset purchases; and $0.4 million of other cash costs, primarily
relocation expenses. The charges for severance and abandoned facilities are net
of reversals of $1.3 million and $3.3 million, respectively, that the segment
had provided in 2001 and 2002. The severance reserves that were reversed were no
longer required primarily due to employee attrition. The reversal of the
abandoned facility reserves is primarily due to the favorable settlement of
lease obligations. In addition, this segment wrote off assets totaling $8.8
million, primarily for abandoned telecommunication and other manufacturing
equipment. The segment also recorded a charge of $0.8 million as a result of the
options to purchase shares of Spectra-Physics becoming options to purchase
shares of Thermo Electron, following the acquisition of the minority interest in
this business in February 2002 (Note 17). These charges were offset in part by a
$0.2 million net gain from the sale of a small business unit and land. Following
these actions in 2002, the company suspended initiatives for products that
address telecom markets based on the continuing economic downturn in these
markets.

Corporate
- ---------

       The company recorded $2.6 million of restructuring and other charges at
its corporate office in 2002, which were primarily cash costs, principally for
third-party advisory fees. While the company no longer has any public
subsidiaries, it has numerous non-U.S. subsidiaries through which the formerly
public subsidiaries conducted business. The third-party advisory fees are being
incurred to simplify this legal structure.

2001

       In response to a downturn in telecommunications, semiconductor, and other
markets served by the company's businesses and in an effort to further integrate
business units, the company initiated restructuring actions in the second
quarter of 2001 in a number of business units to reduce costs and shed
unproductive assets. Further actions were initiated in the fourth quarter of
2001. The restructuring and related actions primarily consisted of headcount
reductions, writedowns of telecommunication equipment and excess
telecommunication inventories at Spectra-Physics, discontinuation of a number of
mature or unprofitable product lines, and consolidation of facilities to
streamline operations and reduce costs. During 2001, the company recorded $158.8
million of restructuring and other charges primarily associated with these
actions, including $26.1 million of charges to cost of revenues. In addition,
the company recorded $2.8 million of other nonoperating charges during 2001.
These charges are detailed by segment below.

       The company recorded net restructuring and other charges by segment for
2001 as follows:



                                                                                                         

                                                  Life and
                                                Laboratory       Measurement          Optical
                                                  Sciences       and Control     Technologies         Corporate            Total
                                                ----------       -----------     ------------         ---------         --------
                                                                                  (In thousands)

       Cost of Revenues                           $  6,863          $  8,196         $ 11,036          $      -         $ 26,095
       Restructuring and Other Costs, Net           38,696            36,396           46,092            11,518          132,702
       Loss on Investments                               -             1,983              801                 -            2,784
                                                  --------          --------         --------          --------         --------

                                                  $ 45,559          $ 46,575         $ 57,929          $ 11,518         $161,581
                                                  ========          ========         ========          ========         ========



<
                                      F-47

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)

       The components of net restructuring and other charges by segment are as
follows:

Life and Laboratory Sciences
- ----------------------------

       The Life and Laboratory Sciences segment recorded $45.6 million of net
restructuring and other charges in 2001. The segment recorded charges to cost of
revenues of $6.9 million, primarily for discontinued product lines, and $38.7
million of other costs. These other costs consisted of $27.3 million of cash
costs, including $17.1 million of severance for 570 employees across all
functions; $8.7 million of ongoing lease costs through 2012 for facilities
described below; and $1.5 million of other costs. The charge also included a
$3.4 million writeoff of in-process research and development costs at an
acquired business, $8.3 million of asset writedowns, and $0.7 million of noncash
severance costs, offset by $1.0 million of gains for the sale of a small
business unit and a product line. The writeoff of in-process research and
development was determined through established valuation techniques and was
charged to expense upon acquisition because technological feasibility had not
been established and no future alternative uses existed. The asset writedowns
principally included $5.1 million of goodwill for business units that were
closed, $2.3 million of fixed assets at facilities being consolidated, and $0.9
million of other assets. The facility consolidations included closure of 17
sales and service offices, including 16 in Europe and one in the United States,
and the closure of nine factories, including five in Europe and four in the
United States. The activities of these facilities were transferred to other
locations in those regions.

Measurement and Control
- -----------------------

       The Measurement and Control segment recorded $44.6 million of net
restructuring and other charges in 2001. The segment recorded charges to cost of
revenues of $8.2 million, primarily for discontinued product lines, and $36.4
million of other costs, net. These other costs consisted of $20.7 million of
cash costs, including $15.4 million of severance for 777 employees across all
functions; $4.0 million of ongoing lease costs through 2009 for facilities
described below; and $1.3 million of other cash costs. The charge also included
losses of $12.0 million on the sale of businesses and writedowns of goodwill for
businesses subsequently sold, $4.6 million of asset writedowns, and $0.2 million
of other costs, offset in part by a gain of $1.1 million on the sale of a
building. The principal businesses that were sold that resulted in losses were
noncore businesses and included Pharos Marine, a marine navigation unit, in
August 2001, and ThermoMicroscopes, a manufacturer of scanning probe
microscopes, in July 2001. The asset writedowns included $3.6 million of fixed
assets at facilities being closed and $1.0 million for impairment of a note
receivable that was a preacquisition asset of a business acquired in 1999. The
facility consolidations included closure of 12 sales and service offices,
including 11 in Europe and one in the United States, and the closure of 14
factories, including eight in the United States, five in Europe, and one in
Canada. The activities of these sales and service offices and factories were
transferred to other facilities in those regions.

       This segment also recorded $2.0 million of other nonoperating charges in
2001 to write down to market value an available-for-sale investment that was a
preacquisition asset of a business acquired in 1999, due to an impairment that
the company deemed other than temporary.

Optical Technologies
- --------------------

       The Optical Technologies segment recorded $57.1 million of net
restructuring and other charges in 2001. The segment recorded charges to cost of
revenues of $11.0 million, primarily for excess telecommunication inventories at
Spectra-Physics and discontinued product lines, and $46.1 million of other
costs. The excess telecommunication inventories resulted from a severe slowdown
in this market and the writedown reduced the carrying value of these and other
inventories to estimated net realizable value. The $46.1 million of other costs
consisted of $22.1 million of cash

<
                                      F-48

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)

costs, including $5.6 million of severance for 346 employees, primarily in
manufacturing positions; $7.0 million for leases on abandoned equipment; $5.9
million of loss on litigation; $1.2 million of ongoing lease costs through 2005
for facilities described below; and $2.4 million of other cash costs. The other
cash costs primarily represented cancellation fees for fixed-asset purchases and
termination of distributor agreements. The segment also recorded $24.0 million
of asset writedowns including $21.3 million of fixed assets, principally
equipment used in telecommunication manufacturing for which estimated future
cash flows were not sufficient to recover the carrying value. The asset
writedowns also included $2.3 million of goodwill to reduce the carrying value
of two small business units held for sale to their estimated disposal value, and
$0.4 million of costs associated with an abandoned financing at Spectra-Physics.
The facility consolidations included closure of three sales and service offices,
including two in Europe and one in the United States; the closure of three
factories in the United States; and the closure of two distribution facilities
in Europe. The activities of these sites were transferred to other facilities in
those regions.

       This segment also recorded $0.8 million of other nonoperating charges in
2001 to write down an investment to its market value due to an impairment that
the company deemed other than temporary.

Corporate
- ---------

       The company recorded $11.5 million of restructuring and other charges at
its corporate office in 2001. This amount included $11.3 million of cash costs,
including $5.9 million of investment banking, consulting, and legal fees
associated with the company's reorganization plan; $3.5 million of
employee-retention costs that was accrued ratably through 2001, the period
through which the employees had to work to qualify for a payment; and $1.9
million for severance for 21 employees. The charge also included $0.2 million of
noncash severance costs.

2000

       As a result of a review of existing businesses following the appointment
of a new president and chief operating officer in July 2000, the company
commenced the restructuring of a number of business units to reduce costs and
shed unproductive assets. The restructuring primarily consisted of headcount
reductions, discontinuation of a number of mature or unprofitable product lines,
and consolidation of facilities to streamline operations and reduce costs.
During 2000, the company recorded $81.4 million of restructuring and other
charges primarily associated with these actions, including $19.3 million of
charges to cost of revenues. These charges are detailed by segment below. In
addition, the company recorded other income, net, of $130.0 million and
nonoperating charges of $45.1 million during 2000, as detailed by segment below.

       The company recorded net restructuring and other charges (income) by
segment for 2000 as follows:



                                                                                                        

                                                  Life and
                                                Laboratory       Measurement          Optical
                                                  Sciences       and Control     Technologies         Corporate            Total
                                                ----------       -----------     ------------         ---------        ---------
                                                                                 (In thousands)

       Cost of Revenues                          $  13,704         $   2,665        $   2,916         $       -        $  19,285
       Restructuring and Other Costs
        (Income), Net                               11,006          (102,475)           3,118            20,496          (67,855)
       Equity in Loss of Unconsolidated
        Subsidiaries                                     -                 -           47,421                 -           47,421
       Other Income, Net                                 -                 -           (2,281)                -           (2,281)
                                                 ---------         ---------        ---------         ---------        ---------

                                                 $  24,710         $ (99,810)       $  51,174         $  20,496        $  (3,430)
                                                 =========         =========        =========         =========        =========


<
                                      F-49

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)

       The components of net restructuring and other charges (income) by segment
are as follows:

Life and Laboratory Sciences
- ----------------------------

       The Life and Laboratory Sciences segment recorded $24.7 million of
restructuring and other charges in 2000. The segment recorded charges to cost of
revenues of $13.7 million, primarily for discontinued product lines, and $11.0
million of other costs. These other costs consisted of $7.0 million of cash
costs, including $5.3 million of severance for 142 employees across all
functions; $0.8 million for ongoing lease costs through 2003 for facilities
described below; a $0.3 million provision for a lawsuit; and $0.6 million for
other exit costs. The segment also recorded $4.0 million of asset writedowns in
connection with the closure of a small business and the consolidation and
abandonment of facilities. The asset writedowns included $2.3 million of
goodwill and $1.7 million of fixed assets. The facility consolidations included
closure of sales offices in Spain, Belgium, and Japan and the transfer of their
activities to other offices, consolidation of two German units into one
facility, and the closure of a manufacturing operation in the U.K.

Measurement and Control
- -----------------------

       The Measurement and Control segment recorded $99.8 million of
restructuring and other income, net, in 2000. The segment recorded charges to
cost of revenues of $2.7 million, primarily for discontinued product lines, and
recorded $102.5 million of other income, net. The segment had a net gain of
$126.7 million on the sale of several businesses, primarily Spectra Precision
(Note 2), Nicolet Imaging Systems (NIS), and Sierra Research and Technology Inc.
(SRT). NIS and SRT manufacture products that include imaging systems used in
assembling complex printed circuit boards and in airbag manufacturing. Spectra
Precision, NIS, and SRT had aggregate revenues and operating income of $125.7
million and $11.0 million, respectively, in 2000 through their respective
disposal dates. The segment also recorded charges of $18.7 million for asset
writedowns including $16.1 million of goodwill to reduce the carrying value of
businesses held for sale to estimated disposal value, $2.4 million of fixed
assets unique to certain discontinued products and $0.2 million of other assets,
and recorded $6.1 million of cash costs. The cash costs included $1.6 million of
severance for 64 employees across all functions; $2.8 million of lease costs
through 2001; a $0.5 million provision for a lawsuit; and $1.2 million of other
exit costs, primarily employee-retention and relocation costs incurred in 2000.
The lease costs included amounts for the closure of sales offices in Norway, New
Zealand, and Germany, and relocation of a business unit to other facilities
within Colorado. The businesses held for sale primarily included CAC Inc. and
the Mid South Companies, which provide the oil and gas industry with wellhead
safety and control products; the Test and Measurement business, which
manufactures and sells data acquisition systems, digital oscilloscopes, and
recorders; and Pharos Marine. The segment also had other income of $0.6 million
in 2000, primarily representing a gain on the termination of a lease.

Optical Technologies
- --------------------

       The Optical Technologies segment recorded $6.0 million of restructuring
and other costs in 2000. The segment recorded charges to cost of revenues of
$2.9 million, primarily for discontinued product lines, and $3.1 million of
other costs. These other costs consisted of a charge of $1.5 million for
in-process research and development in connection with an acquisition; $0.5
million of asset writedowns; and $1.1 million of cash costs, including $0.4
million of severance for 22 employees across all functions, $0.3 million for
ongoing lease costs, and $0.4 million of other exit costs. The asset writedowns
primarily consisted of a writedown of goodwill in order to reduce the carrying
value of a small business unit that was held for sale to estimated disposal
value. The lease costs related to the closure of a facility in California with
lease payments that ceased in 2000.


<
                                      F-50

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)

       The Optical Technologies segment recorded a charge of $23.7 million in
2000 to write down the carrying value of its equity-method investment in FLIR
(Note 4) based on a decline in the market value of FLIR shares that the company
deemed other than temporary. The segment also recorded other noncash charges of
$23.7 million in 2000, representing the company's pro rata share of FLIR's
losses. Both of these charges were recorded to equity in earnings (loss) of
unconsolidated subsidiaries, a component of other income (expense), net, in the
accompanying statement of operations.

       Prior to its acquisition by the company, Spectra-Physics elected early
adoption of SFAS No. 133. Under SFAS No. 133, Spectra-Physics is permitted under
certain conditions to enter into currency-exchange contracts to hedge probable
anticipated transactions without recording gains and losses on such contracts in
income. The company did not adopt SFAS No. 133 until 2001, and through 2000
accounted for hedging transactions under SFAS No. 52. Under SFAS No. 52, such
contracts were deemed to be speculative hedges and were marked to market with
the resulting gain or loss reported as a component of the company's results of
operations. During 2000, the company recorded income on currency-exchange
contracts entered into by Spectra-Physics of $2.3 million, which is included in
other income (expense), net, in the accompanying statement of operations.

Corporate

       The company recorded $20.5 million of restructuring and other charges,
net, at its corporate office in 2000. This amount included $16.1 million of
investment banking, consulting, and legal fees associated with the company's
reorganization plan; $3.6 million of employee-retention costs that was accrued
ratably over the period through which the employees had to work to qualify for a
payment; $3.0 million of severance for 21 employees; and $1.6 million of noncash
costs. The company also recorded other income of $3.8 million, representing a
gain from the sale of an office building adjacent to the company's corporate
office.

       The following table summarizes the severance actions of the company in
2000, 2001, and 2002.



                                                                                                                    

                                                                                                                       Number of
                                                                                                                       Employees
                                                                                                                       ---------

       2000 Restructuring Plans
       Terminations Announced in 2000                                                                                        249
       Terminations Occurring in 2000                                                                                       (168)
       Adjustment to Plan                                                                                                     (1)
                                                                                                                            ----

       Remaining Terminations at December 30, 2000                                                                            80

       Additional Terminations Announced in 2001                                                                              16
       Terminations Occurring in 2001                                                                                        (91)
       Adjustment to Plan                                                                                                     (1)
                                                                                                                            ----

       Remaining Terminations at December 29, 2001                                                                             4
       Terminations Occurring in 2002                                                                                         (4)
                                                                                                                            ----

       Remaining Terminations at December 28, 2002                                                                             -
                                                                                                                            ====



<
                                      F-51

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)

                                                                                                                       Number of
                                                                                                                       Employees
                                                                                                                       ---------

       2001 Restructuring Plans
       Terminations Announced in 2001                                                                                      1,714
       Terminations Occurring in 2001                                                                                     (1,001)
                                                                                                                          ------

       Remaining Terminations at December 29, 2001                                                                           713

       Additional Terminations Announced in 2002                                                                             247
       Terminations Occurring in 2002                                                                                       (877)
       Adjustment to Plan                                                                                                    (53)
                                                                                                                          ------

       Remaining Terminations at December 28, 2002                                                                            30
                                                                                                                          ======

       2002 Restructuring Plans
       Terminations Announced in 2002                                                                                        665
       Terminations Occurring in 2002                                                                                       (354)
                                                                                                                          ------

       Remaining Terminations at December 28, 2002                                                                           311
                                                                                                                          ======

       The following table summarizes the cash components of the company's
restructuring plans. The noncash components and other amounts reported as
restructuring and other costs (income), net, in the accompanying statement of
operations have been summarized in the notes to the tables.



                                                                                                              

                                                                                  Abandonment
                                                                                    of Excess
                                                                 Severance         Facilities             Other             Total
                                                                ----------        -----------           -------           -------
                                                                                          (In thousands)

       Pre-2000 Restructuring Plans
        Balance at January 1, 2000                                 $ 4,636            $   225           $   564           $ 5,425
        Costs incurred in 2000                                           -                144                 -               144
        2000 usage                                                  (3,625)              (284)                -            (3,909)
        Reserves reversed                                               (6)               (84)                -               (90)
        Currency translation                                           (22)                (1)              (44)              (67)
                                                                   -------            -------           -------           -------

        Balance at December 30, 2000                                   983                  -               520             1,503
        2001 usage                                                    (405)                 -                 -              (405)
        Currency translation                                            (7)                 -               (14)              (21)
                                                                   -------            -------           -------           -------

        Balance at December 29, 2001                                   571                  -               506             1,077
        2002 usage                                                    (307)                 -                 -              (307)
        Transfer to accrued pension costs (a)                            -                  -              (534)             (534)
        Currency translation                                             -                  -                28                28
                                                                   -------            -------           -------           -------

        Balance at December 28, 2002                               $   264            $     -           $     -           $   264
                                                                   =======            =======           =======           =======


<
                                      F-52

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)



                                                                                                          

                                                                                  Abandonment
                                                                   Employee         of Excess
                                                Severance     Retention (b)        Facilities             Other             Total
                                                ---------     -------------       -----------          --------          --------
                                                                                  (In thousands)

       2000 Restructuring Plans
        Costs incurred in 2000 (c)               $ 10,469          $  4,116          $  3,818          $ 17,533          $ 35,936
        2000 usage                                 (6,488)             (830)           (1,031)           (7,958)          (16,307)
        Reserves reversed                            (205)                -                 -                 -              (205)
        Currency translation                           48                (3)               33                19                97
                                                 --------          --------          --------          --------          --------

        Balance at December 30, 2000                3,824             3,283             2,820             9,594            19,521
        Costs incurred in 2001                        328             3,472                21             5,963             9,784
        2001 usage                                 (2,415)             (468)             (909)          (14,277)          (18,069)
        Reserves reversed                            (105)                -               (21)                -              (126)
        Currency translation                          (44)                -               (45)              (80)             (169)
                                                 --------          --------          --------          --------          --------

        Balance at December 29, 2001                1,588             6,287             1,866             1,200            10,941
        Reserves reversed (d)                         (85)                -              (990)              (36)           (1,111)
        2002 usage                                 (1,214)           (6,054)             (925)           (1,088)           (9,281)
        Currency translation                          137                 -               114                 4               255
                                                 --------          --------          --------          --------          --------

        Balance at December 28, 2002             $    426          $    233          $     65          $     80          $    804
                                                 ========          ========          ========          ========          ========

       2001 Restructuring Plans
        Costs incurred in 2001 (e)               $ 40,076          $    297          $ 21,058          $  5,099          $ 66,530
        2001 usage                                (13,585)             (155)           (1,180)           (2,353)          (17,273)
        Reserves reversed                            (385)                -              (182)              (90)             (657)
        Currency translation                          (14)                1                69                11                67
                                                 --------          --------          --------          --------          --------

        Balance at December 29, 2001               26,092               143            19,765             2,667            48,667
        Costs incurred in 2002 (f)                  9,539             2,812             8,013             4,406            24,770
        Reserves reversed (d)                      (4,900)               (4)           (6,831)             (562)          (12,297)
        2002 usage                                (27,176)           (2,558)          (10,190)           (4,961)          (44,885)
        Currency translation                        2,050                24               744               115             2,933
                                                 --------          --------          --------          --------          --------

        Balance at December 28, 2002             $  5,605          $    417          $ 11,501          $  1,665          $ 19,188
                                                 ========          ========          ========          ========          ========

       2002 Restructuring Plans
        Costs incurred in 2002 (g)               $ 18,021          $  1,015          $  8,326          $  4,496          $ 31,858
        Reserves reversed (d)                         (77)                -                 -                 -               (77)
        2002 usage                                 (6,305)              (50)             (579)           (3,850)          (10,784)
        Currency translation                          229                 2                53                42               326
                                                 --------          --------          --------          --------          --------

        Balance at December 28, 2002             $ 11,868          $    967          $  7,800          $    688          $ 21,323
                                                 ========          ========          ========          ========          ========


<
                                      F-53

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 15.   Restructuring and Other Costs (Income), Net (continued)

(a)  Balance of accrued restructuring costs from 1998 plans related to pension
     liability associated with employees terminated in 1998, which was
     transferred to accrued pension costs in 2002.
(b)  Employee-retention costs are accrued ratably over the period through which
     employees must work to qualify for a payment. The 2000 awards were based on
     specified percentages of employees' salaries and were generally awarded to
     help ensure continued employment at least through completion of the
     company's reorganization plan.
(c)  Excludes noncash charges, net, of $4.0 million and $2.0 million in the Life
     and Laboratory Sciences and Optical Technologies segments, respectively,
     and noncash income, net, of $108.6 million and $2.2 million in the
     Measurement and Control segment and at the company's corporate office,
     respectively. Also excludes $0.3 million and $0.5 million of cash costs in
     the Life and Laboratory Sciences and Measurement and Control segments,
     respectively, related to two lawsuits.
(d)  Represents reductions in cost of plans as described in the discussion of
     restructuring actions by segment.
(e)  Excludes noncash charges, net, of $11.4 million, $15.6 million, $24.0
     million, and $0.2 million in the Life and Laboratory Sciences, Measurement
     and Control, and Optical Technologies segments, and at the company's
     corporate office, respectively, and loss on litigation of $5.9 million in
     the Optical Technologies sector.
(f)  Excludes net gains from the sale of businesses and other assets of $0.9
     million and $2.4 million in the Life and Laboratory Sciences and
     Measurement and Control segments, respectively; noncash charges of $7.0
     million in the Optical Technologies segment; a cash charge of $0.7 million
     recorded in accrued pension costs in the Life and Laboratory Sciences
     segment; and loss on litigation of $0.7 million in the Optical Technologies
     segment.
(g)  Excludes noncash charges of $7.1 million, $2.3 million, and $0.2 million in
     the Life and Laboratory Sciences and Optical Technologies segments and at
     the company's corporate office, respectively, and net gains from the sale
     of businesses and other assets of $5.8 million in the Measurement and
     Control segment.

       The company expects to pay accrued restructuring costs as follows:
severance, employee-retention obligations, and other costs, which primarily
represent cancellation/termination fees, primarily through 2003; and
abandoned-facility payments over lease terms expiring through 2012.

Note 16.   Adoption of SAB No. 101

       In December 1999, the SEC issued SAB No. 101, "Revenue Recognition in
Financial Statements," which established criteria for recording revenue when the
terms of the sale include customer acceptance provisions or an obligation of the
seller to install the product. In instances where these terms exist and the
company is unable to demonstrate that the customer's acceptance criteria has
been met prior to customer use or when the installation is essential to
functionality or is not deemed inconsequential or perfunctory, SAB No. 101
requires that revenue recognition occur at completion of installation and/or
upon customer acceptance. In accordance with the requirements of SAB No. 101,
the company adopted the pronouncement as of January 2, 2000, and recorded the
cumulative effect of the change in accounting principle on periods prior to 2000
in the restated results for the first quarter of 2000. The cumulative effect on
net income totaled $12.9 million, net of an income tax benefit of $8.5 million
and minority interest of $0.5 million. Revenues of $41.3 million in 2000 (as
restated for the adoption of SAB No. 101) related to shipments that occurred in
1999 but for which installation and/or acceptance did not occur until 2000.
These revenues were recorded in 1999 prior to the adoption of SAB No. 101 and
thus were a component in the determination of the cumulative effect of the
change in accounting principle for periods prior to 2000.

<
                                      F-54

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 17.   Reorganization and Discontinued Operations

Reorganization

       During 2000 and 2001, the company completed the principal aspects of a
major corporate reorganization. The reorganization split the company into three
independent public entities and resulted in the divestiture of a number of
businesses. The company spun off as a dividend to its shareholders Kadant Inc.
and Viasys Healthcare Inc. in August and November 2001, respectively. The
company's continuing operations solely include its instruments businesses.

       During 2000, the company completed the acquisition of the minority
interest in certain of its privately held subsidiaries and all of its formerly
publicly held subsidiaries other than Spectra-Physics, Thermo Cardiosystems,
Kadant, and Thermo Fibergen. In connection with these acquisitions, the company
expended $368.6 million of cash and issued 22.6 million shares of its common
stock valued at $448.7 million. In addition, the stock options of the
subsidiaries were converted into stock options exercisable into 13.9 million
shares of company common stock. The stock options had a fair value of $115.3
million. As a result of the completion of the cash tender offers and other
repurchases, exchange offers, and stock option conversions, the company recorded
an increase in goodwill of approximately $380 million in 2000.

       In 2001, the company increased its ownership in Spectra-Physics to 93.6%
through a cash tender offer of $17.50 per share. In connection with this offer,
and an earlier repurchase of Spectra-Physics shares in 2001, the company
expended $69.5 million in 2001 and recorded an increase in goodwill of $45.8
million. In February 2002, the company acquired the shares of Spectra-Physics it
did not previously own through a short-form merger at the same price as the
tender offer and Spectra-Physics ceased to be publicly traded. The company
expended $23.2 million of cash to complete the purchase of the minority interest
and recorded an increase in goodwill of $15.8 million. Options to purchase
shares of Spectra-Physics became options to purchase 2,242,000 shares of Thermo
Electron common stock, which was accounted for in accordance with the
methodology set forth in FIN No. 44, "Accounting for Certain Transactions
Involving Stock Compensation" (Note 5).

       As a result of the completion of the exchange offers for its formerly
majority-owned subsidiaries, Thermo Instrument Systems Inc., Thermedics Inc.,
Thermo Ecotek Corporation, ThermoLase Corporation, ThermoTrex Corporation, and
Thermo TerraTech Inc., $790.2 million principal amount of convertible
obligations of these subsidiaries became obligations convertible into company
common stock.

       Details of the transactions summarized above are as follows:

Acquisition of Minority Interests - Continuing Operations
- ---------------------------------------------------------

2000

       Thermo Instrument completed a merger with Thermo Vision Corporation
pursuant to which Thermo Instrument acquired, for $7.00 per share in cash, all
of the outstanding shares of common stock of Thermo Vision not already owned by
Thermo Instrument or the company. The common stock of Thermo Vision ceased to be
publicly traded.

       Thermo Instrument completed cash tender offers of $28.00 per share for
Thermo BioAnalysis Corporation, $9.00 per share for Metrika Systems Corporation,
and $9.00 per share for ONIX Systems Inc. in order to bring its and the
company's collective ownership of these businesses to at least 90%.
Subsequently, Thermo Instrument completed the acquisition of the outstanding
minority interest in each of these companies through short-form mergers at the
same prices as the tender offers, and their common stock ceased to be publicly
traded. Because Thermo Instrument owned more than 90% of the outstanding shares
of Thermo Optek Corporation and ThermoQuest Corporation common stock, each of
these companies were repurchased through short-form mergers at $15.00 and $17.00
per share, respectively, and their common stock ceased to be publicly traded.

<
                                      F-55

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 17.   Reorganization and Discontinued Operations (continued)

       Thermedics completed cash tender offers of $8.00 and $15.50 per share for
Thermedics Detection Inc. and Thermo Sentron Inc., respectively, in order to
bring its and the company's collective ownership of these businesses to at least
90%. Subsequently, Thermedics completed the acquisition of the outstanding
minority interest in each of these companies through short-form mergers at the
same prices as the tender offers, and their common stock ceased to be publicly
traded.

       The company completed an exchange offer for Thermo Instrument in which
shares of company common stock were offered to Thermo Instrument shareholders in
exchange for their shares in order to bring the company's ownership in Thermo
Instrument to at least 90%. The exchange ratio for Thermo Instrument was 0.85
shares of company common stock for each share of Thermo Instrument common stock.
Subsequently, Thermo Instrument was spun into the company through a short-form
merger at the same exchange ratio that was offered in the exchange offer, and
its common stock ceased to be publicly traded. As a result of the completion of
the merger with Thermo Instrument, the company issued 12.6 million shares of its
common stock valued at $265.9 million.

Acquisition of Minority Interests - Discontinued Operations
- -----------------------------------------------------------

2000

       The company completed a merger with Thermedics pursuant to which the
company acquired all of Thermedics' outstanding shares of common stock not
already owned by the company in exchange for company common stock at a ratio of
0.45 shares for each share of Thermedics common stock. The common stock of
Thermedics ceased to be publicly traded.

       The company completed a merger with Thermo TerraTech pursuant to which
the company acquired all of Thermo TerraTech's outstanding shares of common
stock not already owned by the company in exchange for company common stock at a
ratio of 0.3945 shares for each share of Thermo TerraTech common stock. The
common stock of Thermo TerraTech ceased to be publicly traded.

       The company completed a merger with ThermoLase pursuant to which the
company acquired all of ThermoLase's outstanding shares of common stock not
already owned by ThermoTrex or the company in exchange for company common stock
at a ratio of 0.132 shares for each share of ThermoLase common stock. The common
stock of ThermoLase ceased to be publicly traded. In addition, under the
agreement, units of ThermoLase were modified so that each unit consisted of a
fractional share of company common stock. The units were redeemed in April 2001
for $7.5 million in cash.

       The company completed a merger with ThermoTrex pursuant to which the
company acquired all of ThermoTrex's outstanding shares of common stock not
already owned by the company in exchange for company common stock at a ratio of
0.5503 shares for each share of ThermoTrex common stock. The common stock of
ThermoTrex ceased to be publicly traded.

       The company completed a cash tender offer of $2.15 per share for Trex
Medical to bring its ownership of this business to at least 90%. Subsequently,
the company completed the acquisition of the outstanding minority interest in
Trex Medical through a short-form merger at the same price as the tender offer,
and the common stock of Trex Medical ceased to be publicly traded.

<
                                      F-56

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 17.   Reorganization and Discontinued Operations (continued)

       The company completed mergers with ThermoRetec Corporation and The
Randers Killam Group Inc. pursuant to which the company acquired, for $7.00 and
$4.50 per share in cash, respectively, all of the outstanding shares of common
stock of ThermoRetec and Randers Killam not already owned by Thermo TerraTech or
the company. The common stock of each of ThermoRetec and Randers Killam ceased
to be publicly traded.

       Because the company owned more than 90% of the outstanding shares of
Thermo Ecotek, the company repurchased Thermo Ecotek through a short-form
merger. Thermo Ecotek shareholders received 0.431 shares of company common stock
for each share of Thermo Ecotek common stock. The common stock of Thermo Ecotek
ceased to be publicly traded.

       As a result of the completion of the mergers with Thermedics, Thermo
TerraTech, ThermoLase, ThermoTrex, and Thermo Ecotek, the company issued 10.0
million shares of its common stock valued at $182.8 million.

Discontinued Operations

       In January 2000, the company announced its intention to sell several of
its businesses. These businesses, together with the businesses spun off,
constituted the company's former Biomedical and Emerging Technologies and
Recycling and Resource Recovery segments, as well as the company's environmental
businesses and its Thermo Power subsidiary. In addition, in June and July 2001,
the company sold its power-generation business. In accordance with the
provisions of APB No. 30 concerning reporting the effects of disposal of a
segment of a business, the company classified the results of these businesses,
as well as the results of the businesses spun off as dividends (collectively,
"the discontinued businesses"), as discontinued operations in the accompanying
statement of operations. In 2001, net liabilities of discontinued operations
principally represents remaining obligations of the discontinued businesses
including severance, lease, litigation, and tax obligations, net of the carrying
value of the company's shares of Thoratec common stock, discussed below, and the
net assets of three remaining operating units held for sale. In 2002, the
Thoratec shares were reclassified to available-for-sale investments as discussed
below and two of the three remaining operating units were sold.

       Summary operating results for 2000 of the power-generation business were
as follows (in thousands):



                                                                                                                      

                                                                                                                           2000
                                                                                                                         --------

       Revenues                                                                                                          $120,256
       Costs and Expenses                                                                                                  93,779
                                                                                                                         --------

       Income from Discontinued Operations Before Income Taxes and Minority Interest                                       26,477
       Income Tax Provision                                                                                               (10,427)
       Minority Interest Expense                                                                                           (1,822)
                                                                                                                         --------

       Income from Discontinued Operations                                                                               $ 14,228
                                                                                                                         ========

       During 2002, the company's discontinued operations had revenues and
operating income of $82.7 million and $7.4 million, respectively. During 2001,
the company's discontinued operations had revenues and operating income of
$658.3 million and $50.4 million, respectively. During 2000, the company's
discontinued operations (excluding the power-generation business) had revenues
and an operating loss of $1.49 billion and $40.2 million, respectively. The
company received proceeds from the sale of discontinued businesses of $42.7
million, $347.8 million, and $390.1 million in 2002, 2001, and 2000,
respectively. In 2000, the company recorded a charge of $100 million, net of an

<
                                      F-57

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 17.   Reorganization and Discontinued Operations (continued)

income tax benefit of $104 million, for changes in the actual and estimated
proceeds of businesses discontinued in 2000. Of the businesses announced for
sale, all but one with revenues of $31 million in 2002 have been sold as of
December 28, 2002.

Spinoffs
- --------

       On July 9, 2001, the company's Board of Directors approved the spinoff of
the company's 91%-owned Kadant subsidiary as a dividend to the company's
shareholders. On August 8, 2001, the company distributed all of its shares of
Kadant to Thermo Electron shareholders of record as of July 30, 2001.
Immediately after the distribution, the company no longer owned shares of
Kadant. The company received a ruling from the Internal Revenue Service (IRS)
that the dividend of Kadant shares qualified in large part as a tax-free
distribution for U.S. federal income tax purposes. Approximately 8% of the
shares distributed to each shareholder were taxable because the company
purchased them during the past five years. Cash distributed in lieu of
fractional shares was also taxable. The stock dividend resulted in a reduction
of net assets of discontinued operations and retained earnings of $197 million.

       In connection with the spinoff, the company and Kadant entered into a
plan and agreement of distribution. The agreement provided for, among other
things, the company to continue to guarantee Kadant's $153.0 million principal
amount subordinated convertible debentures due 2004. The agreement required
Kadant to maintain certain financial ratios during the time that the company
guaranteed these obligations. In December 2002, Kadant redeemed all of its
outstanding subordinated convertible debentures.

       On October 11, 2001, the company's Board of Directors approved the
spinoff of the company's wholly owned Viasys Healthcare subsidiary as a dividend
to the company's shareholders. On November 15, 2001, the company distributed all
of its shares of Viasys Healthcare to Thermo Electron shareholders of record as
of November 7, 2001. Immediately after the planned distribution, the company no
longer owned shares of Viasys Healthcare. The company received a ruling from the
IRS that the dividend of Viasys Healthcare shares qualified as a tax-free
distribution for U.S. federal income tax purposes, except that the cash received
in lieu of fractional shares was taxable. The stock dividend resulted in a
reduction of net assets of discontinued operations and retained earnings of $298
million.

       The ruling from the IRS required that the spinoffs raise additional
equity capital in public offerings within one year of their spinoffs. Kadant
completed an offering in 2002 and Viasys Healthcare obtained an extension from
the IRS until November 2003 to conduct an offering.

Thermo Cardiosystems
- --------------------

       In February 2001, the company sold its interest in Thermo Cardiosystems
to Thoratec in exchange for 19.3 million shares of Thoratec common stock, which
represented a 34% interest that had a market value of $11.56 per share on the
date of the transaction. Certain restrictions, which lapsed in August 2002,
limited the timing of the company's ability to sell these shares. The company
accounted for the sale of Thermo Cardiosystems and the ownership of the Thoratec
shares as discontinued operations. The company recorded an after-tax charge of
$66.0 million in the first quarter of 2001 for a decline in market value of
Thoratec common stock as a loss on disposal of discontinued operations, and
thereafter, carried the shares at a new cost basis of $6.50 per share. Following
a sale of shares in February 2002 for net proceeds of $104 million and an
after-tax gain of $38.4 million, the company owned less than 20% of Thoratec's
outstanding shares. Accordingly, pursuant to SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," the company began accounting
for its investment as an available-for-sale security in continuing operations in
the first quarter of 2002. As such, the investment is recorded as quoted market
value in current assets, and unrealized gains or losses are recorded as a part
of accumulated other comprehensive items in the accompanying 2002 balance sheet.
As of December 28, 2002, the company held 7.7 million shares of Thoratec with a
market value of $62 million.

<
                                      F-58

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 17.   Reorganization and Discontinued Operations (continued)

Power-Generation Business
- -------------------------

       In March 2002, the company sold the last remaining component of its
former power-generation business and realized a gain from the disposition
totaling $13.0 million, principally for previously unrecognized tax benefits
that were realized upon the sale.

       In June and July 2001, the company sold the chief components of the
power-generation business for proceeds of $249 million, net of cash divested.
The company realized a gain on disposition of $15.6 million, net of tax.

Other
- -----

       During 2002, primarily as a result of new tax regulations concerning
deductible losses from divested businesses, the company revised its estimate of
the tax consequences of business disposals in discontinued operations and
recorded a tax benefit of $46.6 million. Also in 2002, the company sold its
Trophy Radiologie business for approximately $51 million in cash and,
principally as a result of this transaction, recorded an after-tax gain of $17.4
million. This business is engaged in the production and sale of dental X-ray
imaging systems and related software.

Note 18.   Unaudited Quarterly Information



                                                                                                           

                                                                                                    2002
                                                                           ------------------------------------------------------
                                                                           First (a)     Second (b)      Third (c)     Fourth (d)
                                                                           ---------     ----------      ---------     ----------
                                                                                   (In thousands except per share amounts)

Revenues                                                                    $491,326       $509,113       $517,171       $568,745
Gross Profit                                                                 223,656        229,788        228,657        245,275
Income from Continuing Operations Before Extraordinary Item                   64,381         49,490         38,983         42,476
Income Before Extraordinary Item                                             115,751         68,490         38,983         87,476
Net Income (e)                                                               115,044         68,517         39,017         87,152
Earnings per Share from Continuing Operations Before Extraordinary
 Item:
    Basic                                                                        .37            .29            .24            .26
    Diluted                                                                      .34            .28            .23            .25
Earnings per Share:
    Basic                                                                        .66            .40            .24            .53
    Diluted                                                                      .59            .38            .23            .51

Amounts reflect aggregate restructuring and other items, net, and nonoperating
items, net, as follows:

(a)  Costs of $8.4 million, gains of $56.3 million from the sale of shares of
     FLIR, and a net of tax gain of $51.4 million related to the company's
     discontinued operations.
(b)  Costs of $17.0 million, gains of $31.6 million from the sale of shares of
     FLIR, and a tax benefit of $19.0 million related to the company's
     discontinued operations.
(c)  Costs of $8.6 million and gains of $6.6 million from the sale of shares of
     FLIR.
(d)  Costs of $27.2 million, gains of $16.9 million from the sale of shares of
     FLIR, and a net of tax gain of $45.0 million related to the company's
     discontinued operations.
(e)  Extraordinary loss, net of tax, of $0.7 million and $0.3 million in the
     first and fourth quarters, respectively, and nominal extraordinary income,
     net of tax, in the second and third quarters.


<
                                      F-59

>

                           THERMO ELECTRON CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Note 18.   Unaudited Quarterly Information (continued)

                                                                                                    2001
                                                                           ------------------------------------------------------
                                                                           First (f)     Second (g)      Third (h)     Fourth (i)
                                                                           ---------     ----------      ---------     ----------
                                                                                    (In thousands except per share amounts)

Revenues                                                                    $573,089       $542,472       $512,941       $559,708
Gross Profit                                                                 255,254        238,062        228,486        236,820
Income (Loss) from Continuing Operations Before Extraordinary Item and
 Cumulative Effect of Change in Accounting Principle                          21,819          9,423         25,677         (7,327)
Income (Loss) Before Extraordinary Item and Cumulative Effect of
 Change in Accounting Principle                                              (44,181)        24,983         25,677         (7,327)
Net Income (Loss) (j)                                                        (45,175)        24,983         26,279         (6,868)
Earnings (Loss) per Share from Continuing Operations Before
 Extraordinary Item and Cumulative Effect of Change in Accounting
 Principle:
    Basic                                                                        .12            .05            .14           (.04)
    Diluted                                                                      .12            .05            .14           (.04)
Earnings (Loss) per Share:
    Basic                                                                       (.25)           .14            .15           (.04)
    Diluted                                                                     (.24)           .14            .14           (.04)

Amounts reflect aggregate restructuring and other items, net, and nonoperating
items, net, as follows:

(f) Costs of $12.9 million, a net of tax charge of $66.0 million related to the
    company's discontinued operations, and a $1.0 million charge for the
    cumulative effect of change in accounting principle for the adoption of
    SFAS No. 133.
(g) Costs of $37.0 million and a net of tax gain of $15.6 million related to
    the company's discontinued operations.
(h) Costs of $9.6 million and gains of $8.6 million from the sale of shares of FLIR.
(i) Costs of $102.2 million and gains of $26.5 million from the sale of shares of FLIR.
(j) Extraordinary income, net of taxes, of $0.6 million and $0.5 million in the
    third and fourth quarters, respectively.

Note 19.   Subsequent Event

       In February 2003, the company announced that in April 2003, it will
redeem all of its outstanding 4 3/8% subordinated convertible debentures due
2004. As of December 28, 2002, the principal amount outstanding for these
debentures was $71.9 million. The redemption price is 100% of the principal
amount of the debentures, plus accrued interest. Accordingly, the obligations
have been presented as current liabilities in the accompanying 2002 balance
sheet.

<
                                      F-60

>


                           THERMO ELECTRON CORPORATION

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)



                                                                                                        

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

Allowance for Doubtful Accounts

Year Ended December 28, 2002                     $26,525        $ 4,114       $   165       $(7,444)       $ 2,216        $25,576

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

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



                                                                                                          

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

Accrued Acquisition Expenses (b)

Year Ended December 28, 2002                             $  7,104         $  2,723       $ (1,357)       $    358        $  8,828

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

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


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

Accrued Restructuring Costs (d)

Year Ended December 28, 2002                             $ 60,685         $ 43,143       $(65,257)       $  3,008        $ 41,579

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

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

(a)  Includes allowance of businesses acquired and sold during the year as
     described in Note 2 and the effect of currency translation.
(b)  The nature of activity in this account is described in Note 2.
(c)  Represents reversal of accrued acquisition expenses and corresponding
     reduction of goodwill or other intangible assets resulting from
     finalization of restructuring plans, the effect of currency translation
     and, in 2001 and 2000, the reserves of businesses sold.
(d)  The nature of activity in this account is described in Note 15.
(e)  In 2002, excludes $7.5 million of noncash costs, net, primarily for asset
     writedowns, and excludes a cash charge of $0.7 million recorded in accrued
     pension costs, and loss on litigation of $0.7 million. In 2001, excludes
     $51.1 million of noncash costs, net, primarily for asset writedowns, and
     excludes a $5.9 million loss on litigation. In 2000, excludes $104.6
     million of noncash income, net, primarily from the sale of businesses,
     offset by provisions for asset writedowns, and excludes $0.8 million of
     cash costs related to two lawsuits.
(f)  Represents the effect of currency translation and, in 2002, a transfer to
     accrued pension costs of $0.5 million.

<
                                      F-61

>


                           THERMO ELECTRON CORPORATION

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of Thermo Electron Corporation:

       Our audit of the consolidated financial statements referred to in our
report dated February 4, 2003 (except as to the information in Note 19, for
which the date is February 28, 2003), appearing in this Annual Report on Form
10-K of Thermo Electron Corporation also included an audit of the financial
statement schedule for the year ended December 28, 2002, listed in Item 15(a)(2)
of this Form 10-K. In our opinion, the financial statement schedule for the year
ended December 28, 2002, presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. The financial statement schedule of Thermo
Electron Corporation for the years ended December 29, 2001, and December 30,
2000, were audited by other independent accountants who have ceased operations.
Those independent accountants expressed an unqualified opinion on the financial
statement schedule in their report dated February 7, 2002.


PricewaterhouseCoopers LLP


Boston, Massachusetts
February 4, 2003

<
                                      F-62

>
                           THERMO ELECTRON CORPORATION

                        REPORT OF INDEPENDENT ACCOUNTANTS

THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP. THIS REPORT APPLIES TO
SUPPLEMENTAL SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED
DECEMBER 29, 2001, AND DECEMBER 30, 2000.

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

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


                                                            Arthur Andersen LLP

Boston, Massachusetts
February 7, 2002


*The discussion of the subsequent events discussed in Note 19 in 2001, is now
 included in Note 10 and Note 17.

**The schedule is now listed in Item 15 on page 35.


<
                                      F-63

>

EX-3.2

                                                                     Exhibit 3.2

                                As amended and effective as of February 27, 2003

                           THERMO ELECTRON CORPORATION

                                     BY-LAWS

                                TABLE OF CONTENTS



                                                                                             
Title                                                                                                 Page

Article I - Stockholders                                                                                 1
         Section 1.        Annual Meeting                                                                1
         Section 2.        Special Meetings                                                              1
         Section 3.        Notice of Meetings                                                            1
         Section 4.        Quorum; Adjournments                                                          1
         Section 5.        Voting; Proxies                                                               2
         Section 6         Inspectors of Elections                                                       2
         Section 7.        Presiding Officer and Secretary                                               2
         Section 8.        List of Stockholders                                                          3
         Section 9.        Advance Notice of Stockholder Nominations and Proposals                       3
         Section 10.       Action Without Meeting                                                        5


Article II- Directors                                                                                    6
         Section 1.        General Powers                                                                6
         Section 2.        Number and Qualification                                                      6
         Section 3.        Classes of Directors                                                          6
         Section 4.        Terms of Office                                                               6
         Section 5.        Vacancies                                                                     7
         Section 6.        Resignations                                                                  7
         Section 7.        Meetings                                                                      7
         Section 8.        Notice of Meetings                                                            7
         Section 9.        Quorum                                                                        7
         Section 10.       Action at Meeting                                                             7
         Section 11.       Action by Consent                                                             8
         Section 12.       Meetings by Telephone Conference Call                                         8
         Section 13.       Compensation of Directors                                                     8
         Section 14.       Committees                                                                    8



                                      (i)


Title                                                                                                 Page

Article III - Officers                                                                                   9
         Section 1.        General Provisions; Qualification                                             9
         Section 2.        Election                                                                      9
         Section 3.        Tenure                                                                        9
         Section 4.        Resignation and Removal                                                       9
         Section 5.        Vacancies                                                                     9
         Section 6.        The Chief Executive Officer                                                   9
         Section 7.        The President                                                                 9
         Section 8.        Vice Presidents                                                              10
         Section 9.        Chief Financial Officer                                                      10
         Section 10.       General Counsel                                                              10
         Section 11.       The Treasurer                                                                10
         Section 12.       The Secretary                                                                10
         Section 13.       Assistant Treasurers                                                         10
         Section 14.       Assistant Secretaries                                                        11
         Section 15.       Other Officers                                                               11
         Section 16.       Delegation of Duties                                                         11
         Section 17.       Salaries                                                                     11


Article IV - Capital Stock                                                                              11
         Section 1.        Certificates for Shares                                                      11
         Section 2.        Transfer of Shares of Stock                                                  11
         Section 3.        Lost, Stolen or Destroyed Certificates                                       11
         Section 4.        Record Date                                                                  11
         Section 5.        Regulations                                                                  12


Article V - General Provisions                                                                          13
         Section 1.        Fiscal Year                                                                  13
         Section 2.        Corporate Seal                                                               13
         Section 3.        Waiver of Notice                                                             13
         Section 4.        Voting of Securities                                                         13
         Section 5.        Evidence of Authority                                                        13
         Section 6.        Certificate of Incorporation                                                 13
         Section 7.        Transactions with Interested Parties                                         13
         Section 8.        Severability                                                                 14
         Section 9.        Limitation on Stock Option Repricing                                         14


Article VI - Amendments                                                                                 14
         Section 1.        By the Board of Directors                                                    14
         Section 2.        By the Stockholders                                                          14
         Section 3.        Certain Provisions                                                           15


                                      (ii)


                           THERMO ELECTRON CORPORATION

                                     BY-LAWS

                            ARTICLE I - STOCKHOLDERS

     Section 1. Annual Meeting. The annual meeting of the stockholders,  for the
election  of  directors  to  succeed  those  whose  terms  expire  and  for  the
transaction  of such other  business as may  properly  come before the  meeting,
shall be held at such  place,  on such  date,  and at such  time as the Board of
Directors may each year fix.

     Section 2. Special Meetings. Special meetings of stockholders may be called
only by the Board of Directors,  the Chairman of the Board of Directors,  or the
Chief  Executive  Officer.  Special  meetings may be held at such place, on such
date,  and at such  time as the  person(s)  calling  the  meeting  may  specify.
Business  transacted at any special meeting of stockholders  shall be limited to
matters relating to the purpose or purposes stated in the notice of meeting. The
Board of Directors may postpone or reschedule any previously  scheduled  special
meeting.

     Section 3. Notice of Meetings.  Written notice of the place, date, and time
of all meetings of the  stockholders  shall be given, not less than ten (10) nor
more than sixty (60) days before the date on which the meeting is to be held, to
each stockholder entitled to vote at such meeting,  except as otherwise required
by the Delaware  General  Corporation Law (meaning,  here and  hereinafter,  the
General Corporation Law of the State of Delaware,  as amended and in effect from
time to time, the "Delaware General Corporation Law").

     Section 4. Quorum;  Adjournments.  At any meeting of the stockholders,  the
holders of a majority of all of the shares of the stock  entitled to vote at the
meeting,  present  in person  or by proxy,  shall  constitute  a quorum  for all
purposes,  unless or except to the extent that the  presence of a larger  number
may be required by the  Certificate  of  Incorporation  or the Delaware  General
Corporation  Law.  Where a  separate  vote by a class or  classes  or  series is
required, a majority of the shares of such class or classes or series present in
person or represented by proxy shall constitute a quorum entitled to take action
with respect to that vote on that matter.

     If a quorum shall fail to attend any  meeting,  the  presiding  officer may
adjourn the meeting to another place, date, or time. When a meeting is adjourned
to  another  place,  date or  time,  written  notice  need  not be  given of the
adjourned  meeting if the place,  date and time  thereof  are  announced  at the
meeting at which the adjournment is taken;  provided,  however, that if the date
of any adjourned  meeting is more than thirty (30) days after the date for which
the meeting  was  originally  noticed,  or if a new record date is fixed for the
adjourned meeting,  written notice of the place, date, and time of the adjourned
meeting shall be given in conformity  herewith.  At any adjourned  meeting,  any
business  may be  transacted  that could have been  transacted  at the  original
meeting.

<
                                       1

>

     Section 5. Voting;  Proxies.  Each stockholder shall have one vote for each
share of stock  entitled  to vote  held of  record  by such  stockholder  unless
otherwise provided by the Delaware General Corporation Law or the Certificate of
Incorporation.  Each  stockholder  of record  entitled  to vote at a meeting  of
stockholders,  or to express  consent or dissent to corporate  action in writing
without a meeting,  may vote or express such consent or dissent in person or may
authorize  another person or persons to vote or act for the stockholder by proxy
authorized by an instrument  in writing or by a  transmission  permitted by law,
delivered in accordance with the procedure  established for the meeting. No such
proxy  shall be  voted or acted  upon  after  three  years  from the date of its
execution, unless the proxy expressly provides for a longer period.

     When a quorum is present at any meeting, the affirmative vote of holders of
a majority of the stock present or  represented  and entitled to vote and voting
affirmatively  or negatively on a matter (or if there are two or more classes or
series of stock entitled to vote as separate  classes,  then in the case of each
such class or  series,  the  holders  of a  majority  of the stock of that class
present or represented and voting affirmatively or negatively on a matter) shall
constitute stockholder action on any matter to be voted upon by the stockholders
at such  meeting,  except  when a different  vote is  required  by the  Delaware
General  Corporation  Law, the  Certificate of  Incorporation  or these By-laws.
Except as may be otherwise  required by the  Certificate of  Incorporation,  any
election by  stockholders of directors shall be determined by a plurality of the
votes cast by the stockholders entitled to vote at the election.

     Section 6. Inspectors of Elections.  The Corporation may, and to the extent
required by the  Delaware  General  Corporation  Law,  shall,  in advance of any
meeting  of the  stockholders,  appoint  one or  more  inspectors  to act at the
meeting  and make a written  report  thereof  and  perform  the other  duties of
inspectors  at meetings of  stockholders  as set forth in the  Delaware  General
Corporation  Law. The Corporation may designate one or more persons as alternate
inspectors  to  replace  any  inspector  who fails to act.  If no  inspector  or
alternate is able to act at a meeting of  stockholders,  the person presiding at
the meeting may, and to the extent required by the Certificate of  Incorporation
or the Delaware General  Corporation Law, shall,  appoint one or more persons to
act at the  meeting.  Each  inspector,  before  entering  the  discharge  of the
inspector's duties, shall take and sign an oath faithfully to execute the duties
of  inspector  with  strict  impartiality  and  according  to  the  best  of the
inspector's ability.

     Section 7. Presiding  Officer and Secretary.  The Chairman of the Board, or
in the  Chairman's  absence,  the  Chief  Executive  Officer,  or in  the  Chief
Executive Officer's absence,  the President,  or in the President's absence, the
Chief Financial Officer,  in such order, shall call meetings of the stockholders
to order,  and shall act as presiding  officer of such  meeting.  The  presiding
officer  shall  determine  the order of business and the  procedure at meetings,
including such  regulation of the manner of voting and the conduct of discussion
as seem to the presiding  officer in order. The presiding officer shall have the
power to adjourn meetings to another place, date, and time. The date and time of
the opening and closing of the polls for each matter upon which the stockholders
will vote at a meeting  shall be announced at the meeting.  The Secretary of the
Corporation,  or in the Secretary's absence, any Assistant Secretary,  shall act
as the secretary at all meetings of the stockholders,  but in the absence of the
Secretary and any  Assistant  Secretary,  the presiding  officer may appoint any
person to act as secretary of the meeting.

                                       2




     Section 8. List of Stockholders.  The Secretary shall prepare,  at least 10
days before every meeting of  stockholders,  a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each  stockholder and the number of shares  registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting,  during ordinary  business hours,  for a
period of at least 10 days  prior to the  meeting,  at a place  within  the city
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting  during the whole time of the meeting,  and may be
inspected by any stockholder who is present.

     Section 9. Advance Notice of Stockholder Nominations and Proposals.

     1.  Nominations  of persons for election to the Board of Directors  and the
proposal of  business to be  transacted  by the  stockholders  may be made at an
annual meeting of  stockholders  (a) pursuant to the  Corporation's  notice with
respect to such  meeting,  (b) by or at the direction of the Board or (c) by any
stockholder of record of the  Corporation who was a stockholder of record at the
time of the giving of the notice provided for in the following paragraph, who is
entitled to vote at the meeting and who has complied with the notice  procedures
set forth in this Section 9.

     2. For  nominations  or other  business  to be properly  brought  before an
annual  meeting  by a  stockholder  pursuant  to  clause  (c) of  the  foregoing
paragraph,  (1) the stockholder must have given timely notice thereof in writing
to the Secretary of the  Corporation,  (2) such business must be a proper matter
for stockholder  action under the Delaware  General  Corporation Law, (3) if the
stockholder,  or the  beneficial  owner on whose  behalf  any such  proposal  or
nomination is made, has provided the Corporation with a Solicitation  Notice, as
that term is defined in subclause  (c)(iii) of this paragraph,  such stockholder
or  beneficial  owner must,  in the case of a proposal,  have  delivered a proxy
statement  and form of proxy  to  holders  of at  least  the  percentage  of the
Corporation's  voting shares required under the Delaware General Corporation Law
to carry any such proposal, or, in the case of a nomination or nominations, have
delivered a proxy  statement and form of proxy to holders of a percentage of the
Corporation's   voting  shares  reasonably   believed  by  such  stockholder  or
beneficial  holder to be sufficient to elect the nominee or nominees proposed to
be nominated by such  stockholder,  and must,  in either case,  have included in
such  materials  the  Solicitation  Notice,  and (4) if no  Solicitation  Notice
relating  thereto  has been  timely  provided  pursuant  to this  Section 9, the
stockholder or beneficial  owner  proposing such business or nomination must not
have  solicited a number of proxies  sufficient to have required the delivery of
such a Solicitation  Notice under this Section 9. To be timely,  a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the  Corporation  not  less  than 60 or more  than 75 days  prior  to the  first
anniversary  (the  "Anniversary")  of the date on which  the  Corporation  first
mailed  its  proxy  materials  for  the  preceding   year's  annual  meeting  of
stockholders;  provided,  however,  that if the date of the  annual  meeting  is
advanced  more than 30 days  prior to or  delayed by more than 30 days after the
anniversary of the preceding year's annual meeting, notice by the stockholder to
be timely must be so delivered not later than the close of business on the later
of (i) the 90th day prior to such annual  meeting or (ii) the 10th day following
the day on which public  announcement of the date of such meeting is first made.
Such  stockholder's  notice  shall  set  forth  (a) as to each  person  whom the

                                       3


stockholder  proposes to nominate for election or  reelection  as a director all
information  relating to such person as would be  required  to be  disclosed  in
solicitations of proxies for the election of such nominees as directors pursuant
to  Regulation  14A under the  Securities  Exchange Act of 1934, as amended (the
"Exchange  Act"),  and such person's  written  consent to serve as a director if
elected;  (b) as to any other  business that the  stockholder  proposes to bring
before the  meeting,  a brief  description  of such  business,  the  reasons for
conducting  such  business  at the  meeting  and any  material  interest in such
business of such  stockholder and the beneficial  owner, if any, on whose behalf
the nomination or proposal is made; (c) as to the stockholder  giving the notice
and the beneficial owner, if any, on whose behalf the nomination is made (i) the
name and address of such stockholder, as they appear on the Corporation's books,
and of such  beneficial  owner,  (ii) the  class  and  number  of  shares of the
Corporation  that are owned  beneficially  and of record by such stockholder and
such beneficial  owner,  and (iii) whether either such stockholder or beneficial
owner  intends to deliver a proxy  statement and form of proxy to holders of, in
the case of a proposal,  at least the  percentage  of the  Corporation's  voting
shares required under the Delaware General Corporation Law to carry the proposal
or, in the case of a nomination or nominations,  a sufficient  number of holders
of the  Corporation's  voting  shares to elect  such  nominee  or  nominees  (an
affirmative statement of such intent, a "Solicitation Notice").

     3. Notwithstanding  anything in the second sentence of the second paragraph
of this Section 9 to the contrary,  in the event that the number of directors to
be elected to the Board is increased and there is no public  announcement naming
all of the nominees for director or specifying  the size of the increased  Board
made  by  the  Corporation  at  least  70  days  prior  to  the  Anniversary,  a
stockholder's  notice  required by this By-law shall also be considered  timely,
but  only  with  respect  to  nominees  for any new  positions  created  by such
increase,  if it shall be delivered to the Secretary at the principal  executive
offices of the  Corporation not later than the close of business on the 10th day
following  the day on  which  such  public  announcement  is  first  made by the
Corporation.

     4. Only persons  nominated in accordance  with the  procedures set forth in
this  Section 9 shall be eligible to serve as directors  and only such  business
shall be  conducted  at an annual  meeting  of  stockholders  as shall have been
brought  before the meeting in accordance  with the procedures set forth in this
Section 9. The  presiding  officer of the  meeting  shall have the power and the
duty to determine  whether a nomination  or any business  proposed to be brought
before the meeting has been made in accordance  with the procedures set forth in
these  By-laws and, if any proposed  nomination or business is not in compliance
with  these  By-laws,  to  declare  that such  defective  proposed  business  or
nomination  shall not be  presented  for  stockholder  action at the meeting and
shall be disregarded.

     5.  Only  such  business  shall  be  conducted  at  a  special  meeting  of
stockholders  as shall have been  brought  before the  meeting  pursuant  to the
Corporation's  notice of meeting.  Nominations  of persons  for  election to the
Board may be made at a special meeting of stockholders at which directors are to
be elected  pursuant  to the  Corporation's  notice of meeting  (a) by or at the
direction of the Board or (b) by any  stockholder  of record of the  Corporation
who is a stockholder  of record at the time of giving of notice  provided for in
this  paragraph,  who shall be entitled to vote at the meeting and who  complies

                                       4


with the procedures set forth in this Section 9, including,  without limitation,
the procedures regarding  Solicitation  Notices.  Nominations by stockholders of
persons  for  election  to the Board may be made at such a  special  meeting  of
stockholders if the  stockholder's  notice  required by the second  paragraph of
this Section 9 shall be delivered to the  Secretary at the  principal  executive
offices of the  Corporation not later than the close of business on the later of
the 90th day prior to such special  meeting or the 10th day following the day on
which public  announcement  is first made of the date of the special meeting and
of the nominees proposed by the Board to be elected at such meeting.

     For purposes of this Section 9, "public announcement" shall mean disclosure
in a press release reported by the Dow Jones News Service, Associated Press or a
comparable  national  news  service  or in a  document  publicly  filed  by  the
Corporation with the Securities and Exchange  Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.

     Notwithstanding  the foregoing  provisions of this Section 9, a stockholder
shall also comply with all applicable  requirements  of the Exchange Act and the
rules and  regulations  thereunder  with  respect to  matters  set forth in this
Section  9.  Nothing  in this  Section 9 shall be deemed to affect any rights of
stockholders  to request  inclusion  of  proposals  in the  Corporation's  proxy
statement pursuant to Rule 14a-8 under the Exchange Act.

     Section  10.  Action  Without  Meeting.  Unless  otherwise  provided in the
Certificate of  Incorporation,  any action  required or permitted to be taken by
stockholders for or in connection with any corporate action may be taken without
a meeting,  without prior notice and without a vote, if a consent or consents in
writing,  setting  forth the action so taken,  shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary  to  authorize  or take such  action at a meeting  at which all shares
entitled to vote  thereon  were  present and voted and shall be delivered to the
Corporation  by delivery to its  registered  office in Delaware,  its  principal
place of business,  or an officer or agent of the Corporation  having custody of
the  book in  which  proceedings  of  meetings  of  stockholders  are  recorded.
Deliveries made to the  Corporation's  registered office in Delaware shall be by
hand or  certified or  registered  mail,  return  receipt  requested.  Each such
written  consent shall bear the date of signature of each  stockholder who signs
the consent.  No written consent shall be effective to take the corporate action
referred to therein unless written  consents  signed by a number of stockholders
sufficient  to take such action are delivered to the  Corporation  in the manner
specified in this paragraph within sixty (60) days of the earliest dated consent
so delivered.

     If action is taken by consent of  stockholders  and in accordance  with the
foregoing, there shall be filed with the records of the meetings of stockholders
the writing or writings comprising such consent.

     If action is taken by less than unanimous  consent of stockholders,  prompt
notice of the taking of such  action  without a meeting  shall be given to those
who have not  consented in writing and a  certificate  signed and attested to by
the Secretary of the Corporation  that such notice was given shall be filed with
the records of the meetings of stockholders.

     In the event that the action  consented  to is such as would have  required
the  filing  of a  certificate  under  any  provision  of the  Delaware  General


                                       5


Corporation  Law,  if such action had been voted upon by the  stockholders  at a
meeting thereof, the certificate filed under such provision shall state, in lieu
of any statement  required by such provision  concerning a vote of stockholders,
that written  consent has been given under  Section 228 of the Delaware  General
Corporation Law.

                             ARTICLE II - DIRECTORS

     Section 1. General  Powers.  The  business  and affairs of the  Corporation
shall be  managed by or under the  direction  of a Board of  Directors,  who may
exercise all of the powers of the  Corporation  except as otherwise  provided by
the Certificate of Incorporation or the Delaware General Corporation Law. In the
event of a vacancy in the Board of Directors, the remaining directors, except as
otherwise  provided by the Certificate of  Incorporation or the Delaware General
Corporation  Law, may  exercise the powers of the full Board of Directors  until
the  vacancy is filled.  The Board of  Directors  may  appoint a Chairman of the
Board.  The Chairman of the Board shall  preside at all meetings of the Board of
Directors  and shall perform such duties and possess such powers as are assigned
to the Chairman by the Board of Directors.

     Section 2. Number and  Qualification.  Except as otherwise  required by the
Certificate of Incorporation,  the number of directors that shall constitute the
whole Board of  Directors  shall be  determined  by  resolution  of the Board of
Directors, but in no event shall be less than three (3). The number of directors
may be increased at any time by resolution of the Board of Directors. The number
of directors may be decreased at any time and from time to time by a majority of
the directors then in office, but only to eliminate vacancies existing by reason
of the  death,  resignation,  removal or  expiration  of the term of one or more
directors.  A majority of the Board of Directors shall be comprised of directors
who  are  outside  directors  within  the  meaning  of  Treasury  Regulation  of
ss.1/162-27 as in effect on January 1, 2002.

     Section 3. Classes of  Directors.  The Board of Directors  shall be divided
into three  classes as nearly as equal in number as  possible.  If the number of
directors is changed,  any increase or decrease shall be  apportioned  among the
classes so as to  maintain  the number of  directors  in each class as nearly as
equal as possible.  Such  classes  shall  consist of one class of directors  who
shall be  elected  for a  three-year  term  expiring  at the  annual  meeting of
stockholders  held in 1986; a second class of directors who shall be elected for
a three-year term expiring at the annual meeting of  stockholders  held in 1987;
and a third  class of  directors  who shall be  elected  for a  three-year  term
expiring  at the annual  meeting of  stockholders  held in 1988.  At each annual
meeting  of  stockholders  beginning  in 1986,  the  successors  of the class of
directors  whose term  expires at that  annual  meeting  shall be elected  for a
three-year term.

     Section 4. Terms of Office.  Subject to Section 5 of this  Article II, each
director  shall serve for a term ending on the date of the third annual  meeting
following the annual  meeting at which such director was elected;  provided that
the term of each director shall be subject to the election and  qualification of
such director's  successor and to such director's earlier death,  resignation or
removal.

                                       6


     Section 5.  Vacancies.  Except as otherwise  required by the Certificate of
Incorporation or the Delaware General  Corporation Law, any vacancy in the Board
of Directors,  however occurring,  or any newly-created  directorship  resulting
from an enlargement of the size of the Board of Directors,  shall be filled only
by vote of a  majority  of the  directors  then in  office,  even if less than a
quorum,  or by the  sole  remaining  director  and  not by the  stockholders.  A
director  elected to fill a vacancy shall be elected for the  unexpired  term of
such  director's  predecessor in office,  and a director  chosen to fill a newly
created  directorship shall hold office until the next election of the class for
which such director shall have been chosen, subject in each case to the election
and  qualification  of the director's  successor and to the  director's  earlier
death, resignation or removal.

     Section 6.  Resignations.  Any director may resign by  delivering a written
resignation to the Corporation at its principal office or to the Chief Executive
Officer or Secretary. Such resignation shall be effective upon receipt unless it
is specified  to be  effective at some other time or upon the  happening of some
other event.

     Section 7. Meetings. Regular meetings of the Board of Directors may be held
without  notice at such time and place,  either  within or without  the State of
Delaware, as shall be determined from time to time by the Board of Directors.  A
regular meeting of the Board of Directors may be held without notice immediately
after and at the same  place as the  annual  meeting  of  stockholders.  Special
meetings of the Board of  Directors  may be called by the Chairman of the Board,
the Chief Executive  Officer,  a majority of the total number of the whole Board
of  Directors,  or by one  director  in the  event  that  there is only a single
director  in office  and may held at any time and place,  within or without  the
State of Delaware, as specified by the person(s) calling the meeting.

     Section 8.  Notice of  Meetings.  No notice of the annual or other  regular
meetings of the Board of Directors need be given.  Notice of any special meeting
of directors  shall be given to each director by the  Secretary.  Notice to each
director  shall be duly  given by  mailing  the same not later  than the  second
business  day before the  meeting,  or by giving  notice in person,  by fax,  by
telephone, or by any other electronic means not later than four hours before the
meeting.  No notice of a meeting need be given if all  directors  are present in
person. Any business may be transacted at any meeting of the Board of Directors,
whether or not specified in a notice of the meeting.

     Section 9.  Quorum.  A majority  of the total  number of the whole Board of
Directors  shall  constitute a quorum at all meetings of the Board of Directors.
In the  absence of a quorum at any such  meeting,  a majority  of the  directors
present may adjourn the meeting from time to time to a different date, place, or
time without further notice (or waiver of notice) other than announcement at the
meeting, until a quorum shall be present.

     Section 10. Action at Meeting.  At any meeting of the Board of Directors at
which a quorum is present, the vote of a majority of the directors present shall
be  sufficient to take any action,  unless a different  vote is specified by the
Delaware  General  Corporation  Law, the Certificate of  Incorporation  or these
By-laws.

                                       7


     Section 11. Action by Consent. Any action required or permitted to be taken
at any meeting of the Board of  Directors  or of any  committee  of the Board of
Directors  may be taken  without  a  meeting,  if all  members  of the  Board of
Directors or  committee,  as the case may be,  consent to the action in writing,
and the written  consents are filed with the minutes of proceedings of the Board
of Directors or committee.

     Section 12. Meetings by Telephone Conference Call. Directors or any members
of any committee designated by the directors may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or similar
communications  equipment  by means of which all  persons  participating  in the
meeting can hear each other,  and  participation  by such means shall constitute
presence in person at such meeting.

     Section  13.  Compensation  of  Directors.   Directors  may  be  paid  such
compensation  for  their  services  and  such   reimbursement  for  expenses  of
attendance  at meetings of the Board of Directors or  committees of the Board of
Directors  as the Board of  Directors  or any  committee  to which the Board has
delegated responsibility for establishing director compensation may from time to
time  determine.  No such payment  shall  preclude any director from serving the
Corporation or any of its parent,  subsidiary,  or affiliate corporations in any
other capacity and receiving compensation for such service.

     Section 14.  Committees.  The Board of Directors  may designate one or more
committees,  each  committee  to consist of one or more of the  directors of the
Corporation.  In addition to other  committees that the Board may designate from
time to time, the Board shall  designate a Human Resources  Committee,  an Audit
Committee,  a Nominating  and Corporate  Governance  Committee and a Shareholder
Rights Plan Committee,  each of which shall be, as of January 1, 2003, comprised
only of directors of the Corporation who shall have been determined by the Board
of Directors to be outside  directors within the meaning of Treasury  Regulation
ss.1.162-27  as in  effect on  January  1,  2002.  The  Board of  Directors  may
designate one or more directors as alternate  members of any committee,  who may
replace any absent or  disqualified  member at any meeting of the committee.  In
the  absence  or  disqualification  of a member of a  committee,  the  member or
members  of the  committee  present at any  meeting  and not  disqualified  from
voting,  whether  or  not  the  member  or  members  constitute  a  quorum,  may
unanimously  appoint  another  member  of the Board of  Directors  to act at the
meeting  in the  place of any  such  absent  or  disqualified  member.  Any such
committee,  to the extent  provided in the  resolution of the Board of Directors
and subject to the  provisions of the Delaware  General  Corporation  Law, shall
have and may exercise all the powers and  authority of the Board of Directors in
the management of the business and affairs of the  Corporation and may authorize
the seal of the  Corporation  to be affixed to all papers  that may  require it.
Each such  committee  shall keep  minutes and make such  reports as the Board of
Directors  may from time to time  request.  Except as the Board of Directors may
otherwise  determine,  any  committee  may make  rules  for the  conduct  of its
business,  but unless otherwise  provided by the directors or in such rules, its
business  shall be  conducted  as nearly as  possible  in the same  manner as is
provided in these By-laws for the Board of Directors.  A majority of the members
of a committee shall constitute a quorum unless the committee  consist of one or
two members,  in which event, one member shall constitute a quorum.  All matters
shall be determined by a majority vote of the committee members present.

                                       8



                             ARTICLE III - OFFICERS

     Section  1.  General  Provisions;   Qualification.   The  officers  of  the
Corporation shall be a Chief Executive Officer,  a President,  a Chief Financial
Officer, a General Counsel, a Treasurer and a Secretary,  and may include one or
more Vice Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries  and  such  other  officers  as the  Board  of  Directors  may  deem
appropriate. Any two or more offices may be held by the same person.

     Section 2. Election. The Chief Executive Officer, the President,  the Chief
Financial  Officer,  the General  Counsel,  the Treasurer and Secretary shall be
elected  annually by the Board of Directors at its first  meeting  following the
annual meeting of stockholders.  Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.

     Section 3.  Tenure.  Except as otherwise  provided by the Delaware  General
Corporation Law, by the Certificate of  Incorporation or by these By-laws,  each
officer  shall  hold  office  until such  officer's  successor  is  elected  and
qualified,  unless  a  different  term is  specified  in the  vote  choosing  or
appointing such officer,  or until such officer's earlier death,  resignation or
removal.

     Section 4. Resignation and Removal.  Any officer may resign by delivering a
written  resignation to the Corporation at its principal  office or to the Chief
Executive  Officer or the Secretary.  Such  resignation  shall be effective upon
receipt  unless it is  specified  to be effective at some other time or upon the
happening of some other event.  Any officer may be removed at any time,  with or
without cause by vote of the Board of Directors.

     Section  5.  Vacancies.  The  Board of  Directors  may at any time fill any
vacancy  occurring in any office for any reason.  Each such successor shall hold
office for the unexpired  term of such  successor's  predecessor  and until such
successor's  successor  is elected  and  qualified,  or until  such  successor's
earlier death, resignation or removal.

     Section 6. The Chief Executive  Officer.  The Chief Executive Officer shall
be the principal executive officer of the Corporation. Subject to the control of
the Board of Directors, the Chief Executive Officer shall have general charge of
the business and affairs of the Corporation.  The Chief Executive  Officer shall
employ and  discharge  employees and agents of the  Corporation,  except such as
shall hold their offices by appointment of the Board of Directors, but the Chief
Executive  Officer may delegate  these powers to other  officers as to employees
under their immediate  supervision.  The Chief Executive Officer shall have such
other powers and perform such other duties as may be  prescribed by the Board of
Directors.

     Section 7. The President.  The Board of Directors may appoint an officer of
the  Corporation  to serve as the  President of the  Corporation.  The President
shall  perform  such  of  the  duties  of the  Chief  Executive  Officer  of the
Corporation  on behalf of the  Corporation  as may be assigned to the  President
from time to time by the Board of Directors or the Chief Executive  Officer.  In
the absence or inability of the Chief  Executive  Officer to act, the  President


                                       9


shall have and possess all of the powers and  discharge all of the duties of the
Chief Executive Officer, subject to the control of the Board of Directors.

     Section 8. Vice Presidents.  Each Vice President shall have such powers and
perform such duties as the Board of Directors,  the Chief Executive Officer,  or
the President may from time to time prescribe.

     Section 9. Chief Financial Officer. The Board of Directors shall appoint an
officer to serve as the Chief Financial  Officer of the  Corporation.  The Chief
Financial  Officer shall be responsible for the  Corporation's  public financial
reporting  obligations  and shall  have such  further  powers  and duties as are
incident to the position of Chief Financial Officer, subject to the direction of
the Chief Executive Officer and the Board of Directors.

     Section  10.  General  Counsel.  The Board of  Directors  shall  appoint an
officer to serve as the General Counsel of the Corporation.  The General Counsel
shall be the chief legal officer of the Corporation and shall be responsible for
all legal  affairs of the  Corporation,  and shall have such further  powers and
duties as are incident to the position of General Counsel.

     Section 11. The  Treasurer.  The  Treasurer  shall  perform such duties and
shall have such powers as may from time to time be assigned to the  Treasurer by
the Board of Directors or the Chief Executive Officer.  In addition,  subject to
the direction of the Board of Directors, the Treasurer shall perform such duties
and have such  powers as are  incident  to the office of  treasurer,  including,
without limitation,  the duty and power to keep and be responsible for all funds
and  securities  of the  Corporation,  to deposit  funds of the  Corporation  in
depositories, to disburse such funds, to make proper accounts of such funds, and
to render statements of all such transactions and of the financial  condition of
the  Corporation.  The Treasurer  shall report  directly to the Chief  Executive
Officer.

     Section  12. The  Secretary.  The  Secretary  shall keep the minutes of all
meetings of the Board of Directors and of the  stockholders  and shall attend to
the giving and serving of all notices of the  Corporation.  The Secretary  shall
have  custody  of the seal of the  Corporation  and shall  affix the seal to all
certificates  of shares of stock of the  Corporation and to such other papers or
documents as may be proper and, when the seal is so affixed, the Secretary shall
attest the same by the Secretary's  signature wherever  required.  The Secretary
shall  have  charge of the stock  certificate  book,  transfer  book,  and stock
ledger,  and such other books and papers as the Board of  Directors  may direct.
The Secretary shall, in general, perform all the duties of secretary, subject to
the control of the Board of Directors.

     Section  13.  Assistant  Treasurers.  In the  absence or  inability  of the
Treasurer  to act,  any  Assistant  Treasurer  may  perform  all the  duties and
exercise all of the powers of the Treasurer, subject to the control of the Board
of Directors. An Assistant Treasurer shall also perform such other duties as the
Board of Directors,  the Chief Executive Officer, or the Treasurer may from time
to time prescribe.


                                       10


     Section  14.  Assistant  Secretaries.  In the absence or  inability  of the
Secretary  to act,  any  Assistant  Secretary  may  perform  all the  duties and
exercise all the powers of the Secretary, subject to the control of the Board of
Directors.  An Assistant  Secretary  shall also perform such other duties as the
Board of Directors,  the Chief Executive Officer, or the Secretary may from time
to time prescribe.

     Section 15. Other  Officers.  Other  officers shall perform such duties and
have such  powers as may from time to time be  assigned  to them by the Board of
Directors.

     Section 16.  Delegation of Duties. In case of the absence of any officer of
the  Corporation,  or for any other reason that the Board of Directors  may deem
sufficient, the Board of Directors may confer, for the time being, the powers or
duties,  or any of them,  of such  officer upon any other  officer,  or upon any
director.

     Section 17. Salaries. Officers of the Corporation shall be entitled to such
salaries,  compensation, or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.

                           ARTICLE IV - CAPITAL STOCK

     Section 1. Certificates for Shares. Each stockholder shall be entitled to a
certificate signed by, or in the name of the Corporation by, the Chairman of the
Board, the Chief Executive Officer, or the President or a Vice President, and by
the Secretary or an Assistant Secretary, or Treasurer or an Assistant Treasurer,
certifying  the class and number of shares of record owned by such  stockholder.
Any or all of the signatures may be a facsimile.

     Section 2.  Transfer of Shares of Stock.  Transfers  of stock shall be made
only  upon  the  transfer  books of the  Corporation  kept at an  office  of the
Corporation or by transfer agents  designated to transfer shares of the stock of
the Corporation. Except where a certificate is issued in accordance with Section
3 of this Article IV of these By-laws, an outstanding certificate for the number
of  shares  involved  shall  be  surrendered  for  cancellation   before  a  new
certificate is issued therefor.

     Section  3. Lost,  Stolen or  Destroyed  Certificates.  In the event of the
loss, theft or destruction of any certificate of stock, another may be issued in
its place  pursuant to such  regulations  as the Board of  Directors or transfer
agent may establish  concerning  proof of such loss,  theft,  or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.

     Section 4. Record Date.

     (a) In order that the Corporation may determine the  stockholders  entitled
to notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any  change,  conversion,  or  exchange of stock or for the
purpose  of any other  lawful  action,  the Board of  Directors  may,  except as
otherwise required by the Delaware General Corporation Law, fix a record date,


                                       11


which record date shall not precede the date on which the resolution  fixing the
record date is adopted  and which  record date shall not be more than sixty (60)
nor less than ten (10) days before the date of any meeting of stockholders,  nor
more  than  sixty  (60)  days  prior  to the  time  for  such  other  action  as
hereinbefore  described;  provided,  however, that if no record date is fixed by
the Board of Directors, the record date for determining stockholders entitled to
notice  of or to vote at a  meeting  of  stockholders  shall be at the  close of
business  on the day next  preceding  the day on which  notice  is given  or, if
notice is waived,  at the close of business on the day next preceding the day on
which the meeting is held, and, for determining stockholders entitled to receive
payment of any  dividend  or other  distribution  or  allotment  of rights or to
exercise any rights of change, conversion, or exchange of stock or for any other
purpose,  the record  date shall be at the close of business on the day on which
the Board of Directors adopts a resolution  relating thereto. A determination of
stockholders  of  record  entitled  to  notice  of or to  vote at a  meeting  of
stockholders shall apply to any adjournment of the meeting;  provided,  however,
that the Board of Directors may fix a new record date for the adjourned meeting.

     (b) In order that the Corporation may determine the  stockholders  entitled
to  consent to  corporate  action in  writing  without a  meeting,  the Board of
Directors  may fix a record  date,  which record date shall not precede the date
upon which the  resolution  fixing  the  record  date is adopted by the Board of
Directors,  and which  date  shall not be more than ten (10) days after the date
upon which the  resolution  fixing  the  record  date is adopted by the Board of
Directors.  Any stockholder of record seeking to have the stockholders authorize
or take  corporate  action by written  consent  shall,  by written notice to the
Secretary  of the  Corporation,  request the Board of  Directors to fix a record
date. The Board of Directors shall  promptly,  but in all events within ten (10)
days after the date on which such a request is received by the Secretary,  adopt
a  resolution  fixing the record  date.  If no record date has been fixed by the
Board of  Directors  within ten (10) days of the date on which such a request is
received,  the record date for determining  stockholders  entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by applicable  law,  shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the  Corporation by delivery to its registered  office in the State
of Delaware,  its  principal  place of business,  or any officer or agent of the
Corporation  having  custody  of the book in which  proceeding  of  meetings  of
stockholders are recorded.  Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail,  return receipt  requested.
If no record date has been fixed by the Board of  Directors  and prior action by
the Board of  Directors  is  required  by  applicable  law,  the record date for
determining  stockholders  entitled  to consent to  corporate  action in writing
without a meeting  shall be at the  close of  business  on the date on which the
Board of Directors adopts the resolution taking such prior action.

     Section 5. Regulations. The issue, transfer, conversion and registration of
certificates  of stock shall be governed by such other  regulations as the Board
of Directors may establish.


                                       12



                         ARTICLE V - General Provisions

     Section 1. Fiscal Year. Except as from time to time otherwise designated by
the Board of Directors, the fiscal year of the Corporation shall end on December
31, beginning with the fiscal year ending December 31, 2003.

     Section 2. Corporate  Seal. The corporate seal shall be in such form as may
be approved by the Board of Directors.  The  corporate  seal may be altered from
time to time by the Board.

     Section 3. Waiver of Notice.  Whenever any notice whatsoever is required to
be  given  by the  Delaware  General  Corporation  Law,  by the  Certificate  of
Incorporation or by these By-laws, a written waiver of such notice signed by the
person  entitled  to such  notice or such  person's  duly  authorized  attorney,
whether  before or after  the time of the event for which  notice is to be given
shall be deemed  equivalent  to the notice  required to be given to such person.
Neither the  business nor the purpose of any meeting need be specified in such a
waiver.  The  appearance  of such person at such  meeting in person or by proxy,
shall  constitute  waiver of notice  except  attendance  for the sole purpose of
objecting to the timeliness or lack of notice.

     Section 4. Voting of Securities.  Subject always to the specific directions
of the Board of Directors,  any officer of the  Corporation may waive notice of,
and  act  as,  or  appoint   any   person  or  persons  to  act  as,   proxy  or
attorney-in-fact  for this  Corporation  (with or without power of substitution)
at, any meeting of  stockholders  or  shareholders  of any other  corporation or
organization, the securities of which may be held by this Corporation. The Board
of Directors,  by resolution  from time to time, may confer like powers upon any
other person or persons.

     Section 5. Evidence of Authority.  A certificate  by the  Secretary,  or an
Assistant  Secretary as to any action taken by the  stockholders,  directors,  a
committee or any officer or  representative  of the Corporation  shall as to all
persons who rely on the certificate in good faith be conclusive evidence of such
action.

     Section 6. Certificate of Incorporation. All references in these By-laws to
the Certificate of  Incorporation  shall be deemed to refer to the Third Amended
and  Restated  Certificate  of  Incorporation  of the  Corporation,  as amended,
restated and in effect from time to time.

     Section 7. Transactions with Interested Parties. No contract or transaction
between the Corporation and one or more of the directors or officers, or between
the Corporation  and any other  corporation,  partnership,  association or other
organization  in which one or more of the directors or officers are directors or
officers,  or have a financial  interest,  shall be void or voidable  solely for
this  reason,  or solely  because  the  director  or  officer  is  present at or
participates  in the meeting of the Board of  Directors  or a  committee  of the
Board of Directors that authorizes the contract or transaction or solely because
the interested directors' votes are counted for such purpose, if:

                                       13


          (1) The material facts as to the director's or officer's  relationship
     or interest  and as to the  contract or  transaction  are  disclosed or are
     known  to the  Board  of  Directors  or the  committee,  and the  Board  of
     Directors or committee in good faith authorizes the contract or transaction
     by the affirmative votes of a majority of the disinterested directors, even
     though the disinterested directors be less than a quorum;

          (2) The material facts as to the director's or officer's  relationship
     or interest  and as to the  contract or  transaction  are  disclosed or are
     known to the  stockholders  entitled to vote  thereon,  and the contract or
     transaction  is  specifically  approved  in  good  faith  by  vote  of  the
     stockholders; or

          (3) The contract or  transaction  is fair as to the  Corporation as of
     the time it is authorized, approved or ratified, by the Board of Directors,
     a committee of the Board of Directors, or the stockholders.

     Common or interested  directors may be counted in determining  the presence
of a quorum  at a meeting  of the  Board of  Directors  or of a  committee  that
authorizes the contract or transaction.

     Section 8.  Severability.  Any  determination  that any  provision of these
By-laws is for any reason inapplicable, illegal, or ineffective shall not affect
or invalidate any other provision of these By-laws.

     Section 9. Limitation on Stock Option Repricing. No stock option granted to
an officer or director of the Corporation shall, after issuance,  be repriced to
a  lower  exercise  price  (other  than  adjustments  for  stock  splits,  stock
dividends,  spinoffs,  recapitalizations  and like  events),  without  the prior
affirmative  vote of the holders of a majority of the shares of capital stock of
the  Corporation  present  at a  stockholders  meeting in person or by proxy and
entitled to vote thereon.

                             ARTICLE VI - AMENDMENTS

     Section 1. By the Board of Directors.  In furtherance and not in limitation
of the  powers  conferred  by the  Delaware  General  Corporation  Law  and  the
Certificate of Incorporation,  the Board of Directors is expressly authorized to
alter, amend or repeal any provision of these By-laws or make new by-laws.

     Section 2. By the Stockholders.  Except as otherwise  provided in Section 3
of this Article VI, the stockholders of the Corporation  shall have the power to
alter,  amend or repeal any  provision  of these  By-laws or make new by-laws by
affirmative  vote of the holders of a majority of the shares of capital stock of
the Corporation  issued and outstanding and entitled to vote, voting together as
a single class; provided, however, that the power of the stockholders to, alter,
amend or repeal  any  provision  of these  By-laws  or make any new  by-laws  is
further subject to any affirmative  vote of the holders of any particular  class
or series of capital stock of the Corporation as may be required by the Delaware
General Corporation Law, the Certificate of Incorporation, or these By-laws.

                                       14


     Section 3. Certain  Provisions.  Notwithstanding any other provision of the
Delaware  General  Corporation Law, the Certificate of  Incorporation,  or these
By-laws  (including  Section 2 of this Article VI), the affirmative  vote of the
holders of at least sixty-six and two-thirds  percent (66 2/3%) of the shares of
capital stock of the  Corporation  issued and  outstanding  and entitled to vote
shall  be  required  to  alter,  amend  or  repeal,  or  make  any  new  by-laws
inconsistent with, Article II or this Article VI of these By-laws.  This Section
3 is not  intended  to abrogate  or  otherwise  affect the power of the Board of
Directors  to amend  Article  II or  Article  VI  pursuant  to Section 1 of this
Article VI.



                                       15

EX-10.11

                                                                   Exhibit 10.11

                           THERMO ELECTRON CORPORATION

                      2000 EMPLOYEES EQUITY INCENTIVE PLAN

                  As adopted and in effect as of June 27, 2000


1.   Purpose

     The purpose of this 2000 Employees Equity Incentive Plan (the "Plan") is to
secure for Thermo Electron  Corporation (the "Company") and its Stockholders the
benefits  arising from capital stock  ownership by employees of, and consultants
to, the Company and its  subsidiaries  or other persons who are expected to make
significant  contributions  to the future  growth and success of the Company and
its subsidiaries. The Plan is intended to accomplish these goals by enabling the
Company to offer such persons equity-based interests, equity-based incentives or
performance-based  stock incentives in the Company,  or any combination  thereof
("Awards").

2.   Administration

     The Plan will be administered by the Board of Directors of the Company (the
"Board").  The Board shall have full power to interpret and administer the Plan,
to prescribe,  amend and rescind rules and regulations  relating to the Plan and
Awards,  and full authority to select the persons to whom Awards will be granted
("Participants"),  determine  the type and  amount of Awards  to be  granted  to
Participants  (including  any  combination  of Awards),  determine the terms and
conditions of Awards  granted  under the Plan  (including  terms and  conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture,  restrictions,  dividends and interest, if any,
on deferred  amounts),  waive compliance by a participant with any obligation to
be  performed  by him or her under an Award,  waive any term or  condition of an
Award,  cancel  an  existing  Award in whole or in part  with the  consent  of a
Participant,  grant replacement  Awards,  accelerate the vesting or lapse of any
restrictions  of any Award 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").

3.   Effective Date

     The Plan shall be effective  as of the date first  approved by the Board of
Directors.  Grants of Awards under the Plan made prior to such approval shall be
effective  when made  (unless  otherwise  specified  by the Board at the time of
grant).

                                       1


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 960,000  shares.  Such shares shall consist  solely of treasury  shares
held by the Corporation.

     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  of, and  consultants  to, the Company and its  subsidiaries,  or
other persons who are expected to make  significant  contributions to the future
growth and  success of the  Company  and its  subsidiaries  shall be eligible to
receive Awards under the Plan.  Directors and executive  officers of the Company
shall not be eligible to receive Awards under the Plan,  unless such Award shall
be exempt from shareholder  approval at the time of such Award under Rule 312.03
of the New York Stock  Exchange,  as the same may be amended  from time to time.
The Board,  or other  appropriate  committee  or person to the extent  permitted
pursuant to the last  sentence of Section 2, shall from time to time select from
among such eligible persons those who will receive Awards under the Plan.

6.   Types of Awards

     The  Board  may offer  Awards  under  the Plan in any form of  equity-based
interest,  equity-based incentive or performance-based stock incentive in Common
Stock of the Company or any combination  thereof. The type, terms and conditions
and  restrictions  of an Award shall be determined by the Board at the time such
Award is made to a Participant.

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

     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


                                       2


Plan shall be options that are not intended to meet the  requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code")  applicable to
incentive stock options ("non-statutory options").

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

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

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

     Any exercise of an option must be in 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.

     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


                                       3


establish  and  communicate  to the option holder at the time that such offer is
made.

     6.2 Restricted and Unrestricted Stock

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

     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.

     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.


                                       4




     6.3.2 Other Awards Settled with Deferred Stock.  The Board may, at the time
any Award  described in this  Section 6 is granted,  provide  that,  at the time
Common Stock would otherwise be delivered pursuant to the Award, the Participant
will instead  receive an instrument  evidencing the right to future  delivery of
deferred stock.

     6.4 Performance Awards

     6.4.1  Performance  Awards.  A performance  Award entitles the recipient to
receive,  without payment,  an amount,  in cash or Common Stock or a combination
thereof (such form to be determined by the Board),  following the  attainment of
performance  goals.  Performance  goals may be related to personal  performance,
corporate  performance,  departmental  performance  or  any  other  category  of
performance  deemed by the Board to be  important to the success of the Company.
The Board will  determine the  performance  goals,  the period or periods during
which  performance  is to  be  measured  and  all  other  terms  and  conditions
applicable to the Award.

     6.4.2 Other Awards Subject to Performance Conditions. The Board may, at the
time any Award described in this Section 6 is granted,  impose the condition (in
addition to any  conditions  specified  or  authorized  in this Section 6 of the
Plan) that performance  goals be met prior to the  Participant's  realization of
any payment or benefit under the Award.

7.   Purchase Price and Payment

     Except as  otherwise  provided in the Plan,  the  purchase  price of Common
Stock to be acquired  pursuant to an Award shall be the price  determined by the
Board,  provided  that  such  price  shall not be less than the par value of the
Common Stock.  Except as otherwise provided in the Plan, the Board may determine
the  method of  payment  of the  exercise  price or  purchase  price of an Award
granted under the Plan and the form of payment. The Board may determine that all
or any part of the purchase  price of Common Stock pursuant to an Award has been
satisfied by past services  rendered by the Participant.  The Board may agree at
any  time,  upon  request  of the  Participant,  to defer  the date on which any
payment under an Award will be made.

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.

                                       5


9.   Change in Control

     9.1 Impact of Event

     In the event of a "Change  in  Control"  as defined  in  Section  9.2,  the
following  provisions  shall apply,  unless the agreement  evidencing  the Award
otherwise  provides (by specific explicit  reference to Section 9.2 below). If a
Change in Control occurs while any Awards are outstanding,  then, effective upon
the Change in Control,  (i) each outstanding  stock option or other  stock-based
Award  awarded  under the Plan that was not  previously  exercisable  and vested
shall become immediately  exercisable in full and will no longer be subject to a
right of repurchase by the Company, (ii) each outstanding restricted stock award
or other  stock-based  Award subject to restrictions and to the extent not fully
vested,  shall be deemed to be fully vested,  free of restrictions and no longer
subject to a right of repurchase by the Company,  and (iii) deferral limitations
and conditions that relate solely to the passage of time,  continued  employment
or  affiliation  will be waived and  removed  as to  deferred  stock  Awards and
performance  Awards;  performance  of other  conditions  (other than  conditions
relating  solely to the passage of time,  continued  employment or  affiliation)
will continue to apply unless otherwise provided in the agreement evidencing the
Award or in any other  agreement  between  the  Participant  and the  Company or
unless otherwise agreed by the Board.

         9.2      Definition of "Change in Control"

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

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

     (b)  such  time as the  Continuing  Directors  (as  defined  below)  do not
constitute a majority of the Board of Directors of Thermo  Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo  Electron),  where  the term  "Continuing  Director"  means at any date a
member of the Thermo  Board (i) who was a member of the Thermo  Board as of July


                                       6


1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall
be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

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

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

10.  General Provisions

     10.1 Documentation of Awards

     Awards will be  evidenced  by written  instruments,  which may differ among
Participants, prescribed by the Board from time to time. Such instruments may be
in the form of agreements to be executed by both the Participant and the Company
or certificates,  letters or similar  instruments  which need not be executed by
the  participant  but  acceptance of which will evidence  agreement to the terms
thereof.  Such instruments shall conform to the requirements of the Plan and may
contain  such  other  provisions  (including  provisions  relating  to events of
merger,  consolidation,  dissolution  and  liquidations,  change of control  and
restrictions   affecting  either  the  agreement  or  the  Common  Stock  issued
thereunder), as the Board deems advisable.

                                       7


     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 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


                                       8


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.

         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


                                       9


respect to which any other  employee  benefits of such employee are  determined,
including without limitation benefits under any pension, stock ownership,  stock
purchase,  life insurance,  medical,  health,  disability or salary continuation
plan.

     10.9 Legal Holidays

     If any day on or before  which action under the Plan must be taken falls on
a  Saturday,  Sunday  or legal  holiday,  such  action  may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.

     10.10 Foreign Nationals

     Without amending the Plan, Awards may be granted to persons who are foreign
nationals  or  employed  outside  the United  States or both,  on such terms and
conditions  different from those  specified in the Plan, as may, in the judgment
of the Board, be necessary or desirable to further the purpose of the Plan.

11.  Termination and Amendment

     The Plan  shall  remain in full force and effect  until  terminated  by the
Board.  Subject to the last  sentence  of this  Section 11, the Board may at any
time or times amend the Plan or any  outstanding  Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards.  No amendment of the Plan or any agreement  evidencing
Awards under the Plan may adversely  affect the rights of any participant  under
any Award previously granted without such participant's consent.



                                       10

EX-10.12

                                                                   EXHIBIT 10.12

                           THERMO ELECTRON CORPORATION

        THERMO INFORMATION SOLUTIONS INC. NONQUALIFIED STOCK OPTION PLAN

              As amended and restated effective as of May 21, 1999


1.   Purpose

     This  Nonqualified  Stock Option Plan (the "Plan") is intended to encourage
ownership of Common Stock (the "Common Stock"), of Thermo Information  Solutions
Inc.   ("Subsidiary"),   a  subsidiary  of  Thermo  Electron   Corporation  (the
"Company"),  by  persons  selected  by the Board of  Directors  (or a  committee
thereof) in its sole discretion,  including directors,  executive officers,  key
employees and  consultants of the Company and its  subsidiaries,  and to provide
additional  incentive  for them to promote  the  success of the  business of the
Company and Subsidiary.  The Plan is intended to be a nonstatutory  stock option
plan.

2.   Effective Date of the Plan

     The Plan shall become  effective  when adopted by the Board of Directors of
the Company.

3.   Stock Subject to Plan

     Subject to adjustment as provided in Section 11, the total number of shares
of Common Stock  reserved  and  available  for issuance  under the Plan shall be
150,000  shares.  Shares to be issued upon the exercise of options granted under
the Plan shall be shares of Subsidiary beneficially owned by the Company. If any
option  expires or terminates  for any reason  without  having been exercised in
full,  the  unpurchased  shares  subject  thereto  shall again be available  for
options thereafter to be granted.

4.   Administration

     The Plan will be administered by the Board of Directors of the Company (the
"Board").  Subject to the  provisions of the Plan, the Board shall have complete
authority, in its discretion,  to make the following determinations with respect
to each  option to be granted  by the  Company:  (a) the  person to receive  the
option (the "Optionee");  (b) the time of granting the option; (c) the number of
shares subject thereto; (d) the option price; (e) the option period; and (f) the
terms and  conditions  of options  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); (g) waive compliance by an optionee with
any obligation to be performed by him or her under an option; (h) waive any term
or  condition  of an option;  (i) cancel an existing  option in whole or in part
with the consent of an Optionee;  (j) grant replacement  options; (k) accelerate
the vesting or lapse of any  restrictions of any option;  and (l) adopt the form
of instruments evidencing options under the Plan and change such forms from time


                                       1


to time.  In making such  determinations,  the Board may take into  account the
nature of the services  rendered by the  Optionees,  their present and potential
contributions  to  the  success  of  the  Company  and/or  one  or  more  of its
subsidiaries,  and such other factors as the Board in its discretion  shall deem
relevant.  Subject  to the  provisions  of the Plan,  the Board  shall also have
complete authority to interpret the Plan, to prescribe, amend, and rescind rules
and  regulations  relating to it, to determine  the terms and  provisions of the
respective  option  agreements  (which need not be  identical),  and to make all
other determinations  necessary or advisable for the administration of the Plan.
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").

5.   Eligibility

     An option may be granted  to any person  selected  by the Board in its sole
discretion.

6.   Time of Granting Options

     The  granting of an option  shall take place at the time  specified  by the
Board.  Only if  expressly  so provided  by the Board  shall the  granting of an
option be regarded as taking place at the time when a written  option  agreement
shall have been duly  executed and  delivered by or on behalf of the Company and
the Optionee to whom such option shall be granted.  The agreement shall provide,
among  other  things,  that it does not  confer  upon an  Optionee  any right to
continue in the employ of the Company and/or one or more of its  subsidiaries or
to continue as a director or  consultant  of the  Company,  and that it does not
interfere  in any way with the right of the  Company or any such  subsidiary  to
terminate  the  employment  of the  Optionee  at any time if the  Optionee is an
employee, to remove the Optionee as a director of the Company if the Optionee is
a director,  or to  terminate  the services of the Optionee if the Optionee is a
consultant.

7.   Option Period

     An option  may  become  exercisable  immediately  or in such  installments,
cumulative or noncumulative, as the Board may determine.

8.   Exercise of Option

     An option may be exercised in accordance  with its terms by written  notice
of intent to exercise the option,  specifying the number of shares of stock with
respect  to which the  option  is then  being  exercised.  The  notice  shall be
accompanied by payment in the form of cash or shares of Subsidiary  Common Stock
(the  "Tendered  Shares")  with a then current  market value equal to the option
price of the  shares to be  purchased;  provided,  however,  that such  Tendered
Shares shall have been  acquired by the  Optionee  more than six months prior to


                                       2


the date of  exercise,  unless  such  requirement  is waived in  writing  by the
Company. Against such payment the Company shall deliver or cause to be delivered
to the  Optionee a  certificate  for the number of shares then being  purchased,
registered in the name of the Optionee or other person exercising the option. If
any law or applicable  regulation of the Securities  and Exchange  Commission or
other body having  jurisdiction  in the  premises  shall  require  the  Company,
Subsidiary  or the Optionee to take any action in  connection  with shares being
purchased  upon  exercise of the option,  exercise of the option and delivery of
the  certificate  or  certificates  for such  shares  shall be  postponed  until
completion  of the  necessary  action,  which  shall be  taken at the  Company's
expense.

9.   Transferability

     Except as may be authorized by the Board, in its sole discretion, no Option
may be transferred  other than by will or the laws of descent and  distribution,
and during a Optionee's  lifetime an option 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 options  granted to an Optionee shall
be transferable,  and such provisions permitting or acknowledging transfer shall
be set  forth in the  written  agreement  evidencing  the  option  executed  and
delivered by or on behalf of the Company and the Optionee.

10.  Vesting, Restrictions and Termination of Options

     The  Board,  in its sole  discretion,  may  determine  the  manner in which
options shall vest,  the rights of the Company to  repurchase  the shares issued
upon the exercise of any option and the manner in which such rights shall lapse,
and the terms upon which any option  granted  shall  terminate.  The Board shall
have the right to  accelerate  the date of  exercise  of any  installment  or to
accelerate the lapse of the Company's repurchase rights. All of such terms shall
be  specified in a written  option  agreement  executed  and  delivered by or on
behalf of the Company and the Optionee to whom such option shall be granted.

11.  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 3 above, and
(ii)  appropriate  adjustments  to the  number  and kind of  shares  of stock or
securities  subject to Options then  outstanding or  subsequently  granted,  any
exercise prices relating to Options and any other  provisions of 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,  any  transaction  which  results in Thermo  Electron
Corporation   ceasing  to  be  the  beneficial   owner  of  a  majority  of  the


                                       3


then-outstanding  shares  of  Common  Stock,  or  any  similar  transaction,  as
determined  by the  Board,  the  Board in its  discretion  may make  appropriate
adjustments to outstanding  Options to avoid  distortion in the operation of the
Plan.

12.  Change in Control

     12.1 Impact of Event

     In the event of a "Change in  Control"  as defined  in  Section  12.2,  the
following  provisions  shall apply,  unless the agreement  evidencing the Option
otherwise  provides (by specific explicit reference to Section 12.2 below). If a
Change in Control occurs while any Options are outstanding, then, effective upon
the Change in Control,  (i) each outstanding stock option granted 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  Option 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) 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 Option or in any other
agreement between the Optionee and the Company or unless otherwise agreed by the
Board.

     12.2 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


                                       4


member of the Thermo  Board (i) who was a member of the Thermo  Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall
be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

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

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

13.  Limitation of Rights in Option Stock

     The Optionees  shall have no rights as stockholders in respect of shares as
to which their options shall not have been  exercised,  certificates  issued and
delivered and payment as herein  provided made in full, and shall have no rights
with respect to such shares not expressly conferred by this Plan.

14.  Stock Reserved

     The Company  shall at all times during the term of the options  reserve and
keep  available  such number of shares of the Common Stock as will be sufficient
to  satisfy  the  requirements  of this Plan and  shall  pay all other  fees and
expenses necessarily incurred by the Company in connection therewith.

                                       5


15.  Securities Laws Restrictions

     Each Optionee exercising an option, at the request of the Company,  will be
required  to give a  representation  in form  satisfactory  to  counsel  for the
Company  that he will not  transfer,  sell or  otherwise  dispose  of the shares
received upon exercise of the option at any time purchased by him, upon exercise
of any portion of the option, in a manner which would violate the Securities Act
of  1933,  as  amended,  and the  regulations  of the  Securities  and  Exchange
Commission  thereunder  and the Company  may, if required or at its  discretion,
make a notation  on any  certificates  issued  upon  exercise  of options to the
effect that such certificate may not be transferred  except after receipt by the
Company  of an opinion of  counsel  satisfactory  to it to the effect  that such
transfer will not violate such Act and such regulations.

16.  Tax Withholding

     The  Company  shall  have the right to  deduct  from  payments  of any kind
otherwise  due to an  Optionee  any  federal,  state or local  taxes of any kind
required by law to be withheld  with respect to any shares  issued upon exercise
of options under the Plan (the "withholding requirements").  The Board will have
the right to require that the Optionee 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 pursuant to exercise of an option.  If
and to the extent that such  withholding  is required,  the Board may permit the
Optionee  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 requirements.

17.  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 17, the Board may at any
time or times amend the Plan or any outstanding  Option 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 Options. No amendment of the Plan or any agreement  evidencing
Options under the Plan may adversely affect the rights of any participant  under
any Option previously granted without such participant's consent.


                                       6

EX-10.13

                                                                   EXHIBIT 10.13

                        THERMO INFORMATION SOLUTIONS INC.

                              EQUITY INCENTIVE PLAN

            As amended and restated effective as of December 16, 1999


1.   Purpose

     The purpose of this  Equity  Incentive  Plan (the  "Plan") is to secure for
Thermo  Information  Solutions  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").

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


                                       1



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 500,000  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 300,000 shares of Common
Stock.

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

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

                                       2


     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.

     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.

                                       3


     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.

     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.

                                       4


     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
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


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.

     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


                                       6


(i) the  then-outstanding  shares  of  common  stock  of  Thermo  Electron  (the
"Outstanding  TMO  Common  Stock")  or (ii)  the  combined  voting  power of the
then-outstanding securities of Thermo Electron entitled to vote generally in the
election of  directors  (the  "Outstanding  TMO Voting  Securities");  provided,
however,  that for purposes of this subsection  (a), the following  acquisitions
shall  not  constitute  a Change  in  Control:  (i) any  acquisition  by  Thermo
Electron,  (ii) any acquisition by any employee  benefit plan (or related trust)
sponsored or  maintained  by Thermo  Electron or any  corporation  controlled by
Thermo  Electron,  or (iii) any  acquisition  by any  corporation  pursuant to a
transaction  which  complies with clauses (i) and (ii) of subsection (c) of this
definition; or

     (b)  such  time as the  Continuing  Directors  (as  defined  below)  do not
constitute a majority of the Board of Directors of Thermo  Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo  Electron),  where  the term  "Continuing  Director"  means at any date a
member of the Thermo  Board (i) who was a member of the Thermo  Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall
be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

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

                                       7


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 amount  sufficient to satisfy all federal,  state and local  withholding  tax
requirements (the "withholding requirements").

                                       8


     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.

     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.

                                       9


     Whether  an  authorized  leave  of  absence,  or  absence  in  military  or
government  service,   shall  constitute  termination  of  employment  shall  be
determined  by the Board at the time.  For  purposes  of this Plan,  transfer of
employment  between  the  Company  and  its  subsidiaries  shall  not be  deemed
termination of employment.

     10.8 Other Employee Benefits

     The value of an Award granted to a Participant who is an employee,  and the
amount of any  compensation  deemed to be received by an employee as a result of
any exercise or purchase of Common Stock  pursuant to an Award or sale of shares
received under the Plan, will not constitute  "earnings" or "compensation"  with
respect to which any other  employee  benefits of such employee are  determined,
including without limitation benefits under any pension, stock ownership,  stock
purchase,  life insurance,  medical,  health,  disability or salary continuation
plan.

     10.9 Legal Holidays

     If any day on or before  which action under the Plan must be taken falls on
a  Saturday,  Sunday  or legal  holiday,  such  action  may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.

     10.10 Foreign Nationals

     Without amending the Plan, Awards may be granted to persons who are foreign
nationals  or  employed  outside  the United  States or both,  on such terms and
conditions  different from those  specified in the Plan, as may, in the judgment
of the Board, be necessary or desirable to further the purpose of the Plan.

11.  Termination and Amendment

     The Plan  shall  remain in full force and effect  until  terminated  by the
Board.  Subject to the last  sentence  of this  Section 11, the Board may at any
time or times amend the Plan or any  outstanding  Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards.  No amendment of the Plan or any agreement  evidencing
Awards under the Plan may adversely  affect the rights of any participant  under
any Award previously granted without such participant's consent.


                                       10

EX-10.15

                                                                   EXHIBIT 10.15

                           THERMO COLEMAN CORPORATION

                              EQUITY INCENTIVE PLAN

            As amended and restated effective as of December 16, 1999


1.   Purpose

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

2.   Administration

     The Plan will be administered by the Board of Directors of the Company (the
"Board").  The Board shall have full power to interpret and administer the Plan,
to prescribe,  amend and rescind rules and regulations  relating to the Plan and
Awards,  and full authority to select the persons to whom Awards will be granted
("Participants"),  determine  the type and  amount of Awards  to be  granted  to
Participants  (including  any  combination  of Awards),  determine the terms and
conditions of Awards  granted  under the Plan  (including  terms and  conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture,  restrictions,  dividends and interest, if any,
on deferred  amounts),  waive compliance by a participant with any obligation to
be  performed  by him or her under an Award,  waive any term or  condition of an
Award,  cancel  an  existing  Award in whole or in part  with the  consent  of a
Participant,  grant replacement  Awards,  accelerate the vesting or lapse of any
restrictions  of any Award 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").

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


                                       1


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  1,050,000  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 600,000 shares of Common
Stock.

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

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

     6.1 Options

     An option is an Award  that  entitles  the  holder on  exercise  thereof to


                                       2


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.

     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.

                                       3


     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.

     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.

                                       4



     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
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

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.

     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


                                       6

"Outstanding  TMO  Common  Stock")  or (ii)  the  combined  voting  power of the
then-outstanding securities of Thermo Electron entitled to vote generally in the
election of  directors  (the  "Outstanding  TMO Voting  Securities");  provided,
however,  that for purposes of this subsection  (a), the following  acquisitions
shall  not  constitute  a Change  in  Control:  (i) any  acquisition  by  Thermo
Electron,  (ii) any acquisition by any employee  benefit plan (or related trust)
sponsored or  maintained  by Thermo  Electron or any  corporation  controlled by
Thermo  Electron,  or (iii) any  acquisition  by any  corporation  pursuant to a
transaction  which  complies with clauses (i) and (ii) of subsection (c) of this
definition; or

     (b)  such  time as the  Continuing  Directors  (as  defined  below)  do not
constitute a majority of the Board of Directors of Thermo  Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo  Electron),  where  the term  "Continuing  Director"  means at any date a
member of the Thermo  Board (i) who was a member of the Thermo  Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall
be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

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

                                       7


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 amount  sufficient to satisfy all federal,  state and local  withholding  tax
requirements (the "withholding requirements").

                                       8


     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.

     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.

                                       9


     Whether  an  authorized  leave  of  absence,  or  absence  in  military  or
government  service,   shall  constitute  termination  of  employment  shall  be
determined  by the Board at the time.  For  purposes  of this Plan,  transfer of
employment  between  the  Company  and  its  subsidiaries  shall  not be  deemed
termination of employment.

     10.8 Other Employee Benefits

     The value of an Award granted to a Participant who is an employee,  and the
amount of any  compensation  deemed to be received by an employee as a result of
any exercise or purchase of Common Stock  pursuant to an Award or sale of shares
received under the Plan, will not constitute  "earnings" or "compensation"  with
respect to which any other  employee  benefits of such employee are  determined,
including without limitation benefits under any pension, stock ownership,  stock
purchase,  life insurance,  medical,  health,  disability or salary continuation
plan.

     10.9 Legal Holidays

     If any day on or before  which action under the Plan must be taken falls on
a  Saturday,  Sunday  or legal  holiday,  such  action  may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.

     10.10 Foreign Nationals

     Without amending the Plan, Awards may be granted to persons who are foreign
nationals  or  employed  outside  the United  States or both,  on such terms and
conditions  different from those  specified in the Plan, as may, in the judgment
of the Board, be necessary or desirable to further the purpose of the Plan.

11.  Termination and Amendment

     The Plan  shall  remain in full force and effect  until  terminated  by the
Board.  Subject to the last  sentence  of this  Section 11, the Board may at any
time or times amend the Plan or any  outstanding  Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards.  No amendment of the Plan or any agreement  evidencing
Awards under the Plan may adversely  affect the rights of any participant  under
any Award previously granted without such participant's consent.


                                       10

EX-10.18

                                                                   EXHIBIT 10.18

                         TREX COMMUNICATIONS CORPORATION

                              EQUITY INCENTIVE PLAN

              As amended and restated effective as of June 25, 1999


1.   Purpose

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

2.   Administration

     The Plan will be administered by the Board of Directors of the Company (the
"Board").  The Board shall have full power to interpret and administer the Plan,
to prescribe,  amend and rescind rules and regulations  relating to the Plan and
Awards,  and full authority to select the persons to whom Awards will be granted
("Participants"),  determine  the type and  amount of Awards  to be  granted  to
Participants  (including  any  combination  of Awards),  determine the terms and
conditions of Awards  granted  under the Plan  (including  terms and  conditions
relating to events of merger, consolidation, dissolution and liquidation, change
of control, vesting, forfeiture,  restrictions,  dividends and interest, if any,
on deferred  amounts),  waive compliance by a participant with any obligation to
be  performed  by him or her under an Award,  waive any term or  condition of an
Award,  cancel  an  existing  Award in whole or in part  with the  consent  of a
Participant,  grant replacement  Awards,  accelerate the vesting or lapse of any
restrictions  of any Award 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").

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


                                       1


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  1,800,000  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 500,000 shares of Common
Stock.

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

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



                                       2


     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.

     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.

                                       3


     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.

     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.




                                       4

     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
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

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.

     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


                                       6


(i) the  then-outstanding  shares  of  common  stock  of  Thermo  Electron  (the
"Outstanding  TMO  Common  Stock")  or (ii)  the  combined  voting  power of the
then-outstanding securities of Thermo Electron entitled to vote generally in the
election of  directors  (the  "Outstanding  TMO Voting  Securities");  provided,
however,  that for purposes of this subsection  (a), the following  acquisitions
shall  not  constitute  a Change  in  Control:  (i) any  acquisition  by  Thermo
Electron,  (ii) any acquisition by any employee  benefit plan (or related trust)
sponsored or  maintained  by Thermo  Electron or any  corporation  controlled by
Thermo  Electron,  or (iii) any  acquisition  by any  corporation  pursuant to a
transaction  which  complies with clauses (i) and (ii) of subsection (c) of this
definition; or

     (b)  such  time as the  Continuing  Directors  (as  defined  below)  do not
constitute a majority of the Board of Directors of Thermo  Electron (the "Thermo
Board") (or, if applicable, the Board of Directors of a successor corporation to
Thermo  Electron),  where  the term  "Continuing  Director"  means at any date a
member of the Thermo  Board (i) who was a member of the Thermo  Board as of July
1, 1999 or (ii) who was nominated or elected subsequent to such date by at least
a majority of the  directors who were  Continuing  Directors at the time of such
nomination or election or whose election to the Thermo Board was  recommended or
endorsed by at least a majority of the directors who were  Continuing  Directors
at the time of such nomination or election;  provided, however, that there shall
be excluded from this clause (ii) any  individual  whose  initial  assumption of
office  occurred as a result of an actual or  threatened  election  contest with
respect to the election or removal of  directors  or other actual or  threatened
solicitation of proxies or consents,  by or on behalf of a person other than the
Thermo Board; or

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

                                       7


     (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.

     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").

                                       8


     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.

     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


                                       9


termination  of  an  employment  relationship  even  if  the  termination  is in
violation of an obligation of the Company to the employee.

     Whether  an  authorized  leave  of  absence,  or  absence  in  military  or
government  service,   shall  constitute  termination  of  employment  shall  be
determined  by the Board at the time.  For  purposes  of this Plan,  transfer of
employment  between  the  Company  and  its  subsidiaries  shall  not be  deemed
termination of employment.

     10.8 Other Employee Benefits

     The value of an Award granted to a Participant who is an employee,  and the
amount of any  compensation  deemed to be received by an employee as a result of
any exercise or purchase of Common Stock  pursuant to an Award or sale of shares
received under the Plan, will not constitute  "earnings" or "compensation"  with
respect to which any other  employee  benefits of such employee are  determined,
including without limitation benefits under any pension, stock ownership,  stock
purchase,  life insurance,  medical,  health,  disability or salary continuation
plan.

     10.9 Legal Holidays

     If any day on or before  which action under the Plan must be taken falls on
a  Saturday,  Sunday  or legal  holiday,  such  action  may be taken on the next
succeeding day not a Saturday, Sunday or legal holiday.

     10.10 Foreign Nationals

     Without amending the Plan, Awards may be granted to persons who are foreign
nationals  or  employed  outside  the United  States or both,  on such terms and
conditions  different from those  specified in the Plan, as may, in the judgment
of the Board, be necessary or desirable to further the purpose of the Plan.

11.  Termination and Amendment

     The Plan  shall  remain in full force and effect  until  terminated  by the
Board.  Subject to the last  sentence  of this  Section 11, the Board may at any
time or times amend the Plan or any  outstanding  Award for any purpose that may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards.  No amendment of the Plan or any agreement  evidencing
Awards under the Plan may adversely  affect the rights of any participant  under
any Award previously granted without such participant's consent.



                                       10

EX-10.72

                                                                   EXHIBIT 10.72


                                                                       EXECUTION
                                                                         VERSION


===============================================================================



                                  $125,000,000


                            364-DAY CREDIT AGREEMENT


                                      among


                          THERMO ELECTRON CORPORATION,
                                  as Borrower,


              The Several Lenders from Time to Time Parties Hereto,


                               ABN AMRO BANK N.V.,
                              as Syndication Agent,


                             FLEET NATIONAL BANK and
                              JPMORGAN CHASE BANK,
                           as Co-Documentation Agents,




                                       and


                               BARCLAYS BANK PLC,
                             as Administrative Agent



                          Dated as of December 20, 2002
===============================================================================


                BARCLAYS Capital, as Lead Arranger and Bookrunner
                      ABN AMRO BANK N.V., as Lead Arranger






                                TABLE OF CONTENTS


                                                                                                         
                                                                                                                Page
SECTION 1.        DEFINITIONS.....................................................................................1

         1.1      Defined Terms...................................................................................1
         1.2      Other Definitional Provisions..................................................................16
         1.3      Exchange Rates.................................................................................16

SECTION 2.        AMOUNT AND TERMS OF COMMITMENTS................................................................17

         2.1      Commitments....................................................................................17
         2.2      Procedure for Borrowing........................................................................17
         2.3      Fees...........................................................................................18
         2.4      Optional Termination or Reduction of Commitments...............................................18
         2.5      Optional Prepayments...........................................................................19
         2.6      Mandatory Prepayments..........................................................................19
         2.7      Conversion and Continuation Options............................................................19
         2.8      Limitations on Eurocurrency Tranches...........................................................20
         2.9      Repayment of Loans; Extension of Termination Date..............................................20
         2.10     Interest Rates and Payment Dates...............................................................20
         2.11     Computation of Interest and Fees...............................................................21
         2.12     Inability to Determine Interest Rate...........................................................21
         2.13     Pro Rata Treatment and Payments................................................................22
         2.14     Requirements of Law............................................................................24
         2.15     Taxes..........................................................................................26
         2.16     Indemnity......................................................................................27
         2.17     Change of Lending Office.......................................................................28
         2.18     Replacement of Lenders.........................................................................28
         2.19     Judgment Currency..............................................................................29

SECTION 3.        REPRESENTATIONS AND WARRANTIES.................................................................29

         3.1      Financial Condition............................................................................29
         3.2      No Change......................................................................................30
         3.3      Existence; Compliance with Law.................................................................30
         3.4      Power; Authorization; Enforceable Obligations..................................................30
         3.5      No Legal Bar...................................................................................30
         3.6      Litigation.....................................................................................31
         3.7      Ownership of Property; Liens...................................................................31
         3.8      Taxes..........................................................................................31
         3.9      Federal Regulations............................................................................31
         3.10     ERISA..........................................................................................31
         3.11     Investment Company Act; Other Regulations......................................................32
         3.12     Use of Proceeds................................................................................32
         3.13     Environmental Matters..........................................................................32
         3.14     Accuracy of Information, etc...................................................................33



                                      -i-


SECTION 4.        CONDITIONS PRECEDENT...........................................................................33

         4.1      Conditions to Initial Loans....................................................................33
         4.2      Conditions to Each Loan........................................................................34

SECTION 5.        AFFIRMATIVE COVENANTS..........................................................................34

         5.1      Financial Statements...........................................................................34
         5.2      Certificates; Other Information................................................................35
         5.3      Payment of Obligations.........................................................................35
         5.4      Maintenance of Existence; Compliance...........................................................36
         5.5      Maintenance of Property; Insurance.............................................................36
         5.6      Inspection of Property; Books and Records; Discussions.........................................36
         5.7      Notices........................................................................................36
         5.8      Environmental Laws.............................................................................37

SECTION 6.        NEGATIVE COVENANTS.............................................................................37

         6.1      Financial Condition Covenants..................................................................37
         6.2      Standby and Performance Letters of Credit......................................................38
         6.3      Indebtedness of Subsidiaries...................................................................38
         6.4      Liens..........................................................................................38
         6.5      Fundamental Changes............................................................................40
         6.6      Disposition of Property........................................................................40
         6.7      Investments....................................................................................40
         6.8      Transactions with Affiliates...................................................................42
         6.9      Changes in Fiscal Periods......................................................................42
         6.10     Lines of Business..............................................................................42

SECTION 7.        EVENTS OF DEFAULT..............................................................................42

SECTION 8.        THE AGENTS.....................................................................................44

         8.1      Appointment....................................................................................44
         8.2      Delegation of Duties...........................................................................45
         8.3      Exculpatory Provisions.........................................................................45
         8.4      Reliance by Administrative Agent...............................................................45
         8.5      Notice of Default..............................................................................46
         8.6      Non-Reliance on Agents and Other Lenders.......................................................46
         8.7      Indemnification................................................................................46
         8.8      Agent in Its Individual Capacity...............................................................47
         8.9      Successor Administrative Agent.................................................................47
         8.10     Syndication Agent and Co-Documentation Agents..................................................47

SECTION 9.        MISCELLANEOUS..................................................................................47

         9.1      Amendments and Waivers.........................................................................47

                                      -ii-



         9.2      Notices........................................................................................48
         9.3      No Waiver; Cumulative Remedies.................................................................49
         9.4      Survival of Representations and Warranties.....................................................49
         9.5      Payment of Expenses and Taxes..................................................................49
         9.6      Successors and Assigns; Participations and Assignments.........................................50
         9.7      Adjustments; Set-off...........................................................................53
         9.8      Counterparts...................................................................................54
         9.9      Severability...................................................................................54
         9.10     Integration....................................................................................54
         9.11     Governing Law..................................................................................54
         9.12     Submission To Jurisdiction; Waivers............................................................54
         9.13     Acknowledgements...............................................................................55
         9.14     Confidentiality................................................................................55
         9.15     WAIVERS OF JURY TRIAL..........................................................................56




SCHEDULES:

1.1                        Commitments
6.3(b)                     Existing Indebtedness
6.4(f)                     Existing Liens
6.6                        Certain Dispositions

EXHIBITS:

A                          Form of Compliance Certificate
B                          Form of Closing Certificate
C                          Form of Assignment and Assumption
D                          Form of Legal Opinion of Seth Hoogasian
E                          Form of Exemption Certificate


                                     -iii-



     364-DAY CREDIT AGREEMENT, dated as of December 20, 2002 (this "Agreement"),
among THERMO ELECTRON CORPORATION, a Delaware corporation (the "Borrower"),  the
several  banks and other  financial  institutions  or entities from time to time
parties to this  Agreement (the  "Lenders"),  ABN AMRO BANK N.V., as syndication
agent (in such  capacity,  the  "Syndication  Agent"),  FLEET  NATIONAL BANK and
JPMORGAN  CHASE  BANK,  as  co-documentation   agents  (in  such  capacity,  the
"Co-Documentation  Agents"),  and BARCLAYS BANK PLC, as administrative agent (in
such capacity, the "Administrative Agent").

     The parties hereto hereby agree as follows:

                             SECTION 1. DEFINITIONS

     1.1 Defined  Terms.  As used in this  Agreement,  the terms  listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.

     "ABR": for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the  greater  of (a) the Prime  Rate in effect on such
day and (b) the Federal Funds  Effective  Rate in effect on such day plus 1/2 of
1%. For purposes hereof:  "Prime Rate" shall mean the rate of interest per annum
publicly  announced  from time to time by Barclays Bank PLC as its prime rate in
effect  at its  principal  office in New York  City  (the  Prime  Rate not being
intended  to be the lowest  rate of  interest  charged by  Barclays  Bank PLC in
connection with extensions of credit to debtors). Any change in the ABR due to a
change in the Prime Rate or the Federal Funds  Effective Rate shall be effective
as of the opening of business on the  effective  day of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.

     "ABR Loans":  Loans the rate of interest  applicable to which is based upon
the ABR.

     "Acquired Indebtedness": Indebtedness of any Person outstanding on the date
(i) such Person is acquired by the Borrower or any of its  Subsidiaries  or (ii)
such  Indebtedness  is assumed by the  Borrower  or any of its  Subsidiaries  in
connection with the acquisition of a business of such Person,  in each case in a
transaction  permitted by Section 6.7(f) or (h), provided that such Indebtedness
was not created in contemplation or in connection with such acquisition.

     "Administrative  Agent":  Barclays  Bank PLC,  as the lead  arranger of the
Commitments and as the administrative agent for the Lenders under this Agreement
and the other Loan Documents, together with any of its successors.

     "Affected Foreign Currency": as defined in Section 2.12(c).

     "Affiliate":  as  to  any  Person,  any  other  Person  that,  directly  or
indirectly, is in control of, is controlled by, or is under common control with,
such Person.  For purposes of this  definition,  "control" of a Person means the
power, directly or indirectly,  either to (a) vote 15% or more of the securities
having  ordinary  voting  power  for  the  election  of  directors  (or  persons
performing  similar  functions)  of such  Person  or (b)  direct  or  cause  the
direction of the management and policies of such Person,  whether by contract or
otherwise.


                                       2

     "Agents":   the  collective   reference  to  the  Syndication   Agent,  the
Co-Documentation Agents, and the Administrative Agent.

     "Agreement": as defined in the preamble hereto.

     "Agreement Currency": as defined in Section 2.19(b).

     "Approved Fund": as defined in Section 9.6(b).

     "Assignee": as defined in Section 9.6(b).

     "Assignment and Assumption": an Assignment and Assumption, substantially in
the form of Exhibit C.

     "Available  Commitment":  as to any Lender at any time,  an amount equal to
the excess, if any, of (a) such Lender's  Commitment then in effect over (b) the
sum of (i) such  Lender's  Dollar Loans and (ii) the Dollar  Equivalent  of such
Lender's Foreign Currency Loans.

     "Benefitted Lender": as defined in Section 9.7(a).

     "Board": the Board of Governors of the Federal Reserve System of the United
States (or any successor).

     "Borrower": as defined in the preamble hereto.

     "Borrowing  Date":  any Business Day specified by the Borrower as a date on
which the Borrower requests the relevant Lenders to make Loans hereunder.

     "Business  Day": a day other than a Saturday,  Sunday or other day on which
commercial  banks in New York City are  authorized  or required by law to close;
provided,  that,  when used in connection  with a  Eurocurrency  Loan,  the term
"Business  Day"  shall  also  exclude  any day on which  banks  are not open for
international  business  (including  dealings in Dollar  deposits) in the London
interbank market;  provided,  further, when used in connection with Eurocurrency
Loans  denominated in Euros,  the term "Business Day" shall also exclude any day
on  which  the  Trans-European  Automated  Real-Time  Gross  Settlement  Express
Transfer  System  (TARGET) (or, if such clearing  system ceases to be operative,
such other clearing system (if any) determined by the Administrative Agent to be
a suitable replacement) is not open for settlement of payment in Euros.

     "Capital  Lease  Obligations":  as to any Person,  the  obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such Person  under GAAP,  and, for the purposes of
this  Agreement,  the  amount  of such  obligations  at any  time  shall  be the
capitalized amount thereof at such time determined in accordance with GAAP.

     "Capital Stock":  any and all shares,  interests,  participations  or other
equivalents (however designated) of capital stock of a corporation,  any and all

                                       3



equivalent  ownership  interests in a Person (other than a corporation)  and any
and all warrants, rights or options to purchase any of the foregoing.

     "Cash  Equivalents":  (a)  marketable  direct  obligations  issued  by,  or
unconditionally  guaranteed  by, the United  States  Government or issued by any
agency thereof and backed by the full faith and credit of the United States,  in
each  case  maturing  within  three  years  from  the date of  acquisition;  (b)
certificates  of  deposit,  time  deposits,  eurodollar  time  deposits  or bank
deposits (including those maintained to facilitate  payments,  distributions and
collections)  having  maturities  of  eighteen  months  or less from the date of
acquisition  issued  by or with any  Lender  or by or with any  commercial  bank
organized  under the laws of the  United  States or any state  thereof or by any
financial  institution organized in any foreign country recognized by the United
States,  in each  case  rated  at least A- by S&P,  or A-3 by  Moody's;  (c) (i)
commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody's,  , or
carrying an equivalent rating by a nationally  recognized rating agency, if both
of the Rating  Agencies  cease  publishing  ratings of commercial  paper issuers
generally,  and maturing  within six months from the date of acquisition or (ii)
commercial  paper  issued by Ford  Motor  Company,  Ford Motor  Credit  Company,
DaimlerChrysler  NA Holdings,  John Deere Capital Corp., John Deere Credit Inc.,
Deere & Co.,  Walt Disney  Company,  General  Motors  Corp.,  or General  Motors
Acceptance Corp., which at the time of purchase is rated at least A-2 by S&P, or
P-2 by Moody's, and maturing within six months from the date of acquisition; (d)
repurchase  obligations of any Lender or of any commercial  bank  satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days,  with respect to securities  issued or fully  guaranteed or insured by the
United States  government;  (e) securities  with  maturities of one year or less
from  the  date  of  acquisition  issued  or  fully  guaranteed  by  any  state,
commonwealth or territory of the United States, by any political  subdivision or
taxing authority of any such state,  commonwealth or territory or by any foreign
government,  the securities of which state, commonwealth,  territory,  political
subdivision,  taxing  authority or foreign  government  (as the case may be) are
rated at least A- by S&P or A-3 by Moody's;  (f) securities  with  maturities or
put  features  of six  months  or less  from the date of  acquisition  backed by
standby letters of credit issued by any Lender or any commercial bank satisfying
the  requirements  of  clause  (b)  of  this  definition;  (g)  asset-backed  or
mortgaged-backed  securities  rated AAA by either S&P or Moody's,  (h) corporate
bonds or notes with maturities of three years or less and rated at least BBB- by
S&P or Baa3 by Moody's,  (i) money  market  mutual or similar  funds that invest
primarily in assets  satisfying the  requirements  of clauses (a) through (h) of
this definition; or (j) money market funds that (i) comply with the criteria set
forth in SEC Rule 2a-7 under the  Investment  Company  Act of 1940,  as amended,
(ii) are rated AAA by S&P or Aaa by Moody's and (iii) have  portfolio  assets of
at least $5,000,000,000.

     "Closing  Date":  the date on which the  conditions  precedent set forth in
Section 4.1 shall have been satisfied.

     "Code": the Internal Revenue Code of 1986, as amended from time to time.

     "Co-Documentation   Agents":   as   defined   in   the   preamble   hereto.

     "Commitment":  as to any Lender,  the obligation of such Lender, if any, to
make Loans in an aggregate Dollar and Dollar Equivalent  principal amount not to


                                       4


exceed  the  amount  set forth  under the  heading  "Commitment"  opposite  such
Lender's name on Schedule 1.1 or in the Assignment  and  Assumption  pursuant to
which such Lender became a party hereto, as the same may be changed from time to
time pursuant to the terms hereof.  The original amount of the Total Commitments
is $125,000,000.

     "Commitment  Period": the period from and including the Closing Date to the
Termination Date.

     "Commitment Utilization Percentage":  on any day, the percentage equivalent
of a  fraction  (a) the  numerator  of which is the sum of (i) the  Total  Loans
outstanding  on such day and (ii) the "Total  Loans"  under the Other  Agreement
outstanding  on such day and (b) the  denominator of which is the sum of (i) the
Total Commitments in effect on such day (or, on any day after termination of the
Total Commitments,  the Total Commitments in effect  immediately  preceding such
termination)  and (ii) the  "Total  Commitments"  under the Other  Agreement  in
effect on such day (or, on any day after termination of the "Total  Commitments"
under the Other Agreement,  the "Total Commitments" under the Other Agreement in
effect immediately preceding such termination).

     "Commonly Controlled Entity": an entity, whether or not incorporated,  that
is under common control with the Borrower  within the meaning of Section 4001 of
ERISA or is part of a group that  includes the Borrower and that is treated as a
single employer under Section 414 of the Code.

     "Compliance  Certificate":  a  certificate  duly  executed by a Responsible
Officer substantially in the form of Exhibit A.

     "Conduit   Lender":   any  special   purpose   corporation   organized  and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and  designated  by such Lender in a written  instrument;
provided,  that the  designation  by any  Lender of a Conduit  Lender  shall not
relieve the  designating  Lender of any of its  obligations to fund a Loan under
this  Agreement  if, for any reason,  its Conduit  Lender fails to fund any such
Loan,  and the  designating  Lender (and not the Conduit  Lender) shall have the
sole right and  responsibility  to deliver all consents and waivers  required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further,  that no Conduit  Lender  shall (a) be  entitled to receive any greater
amount pursuant to Section 2.14,  2.15, 2.16 or 9.5 than the designating  Lender
would have been entitled to receive in respect of the  extensions of credit made
by such Conduit Lender or (b) be deemed to have any Commitment.

     "Confidential   Information   Memorandum":   the  Confidential  Information
Memorandum dated October 2002 and furnished to certain Lenders.

     "Consolidated  EBITDA":  for any period,  Consolidated  Net Income for such
period plus, without  duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) interest expense, amortization or writeoff of debt discount and
debt  issuance  costs and  commissions,  discounts  and other  fees and  charges
associated  with  Indebtedness  (including  the  Loans),  (c)  depreciation  and
amortization  expense,  (d)  amortization  of  intangibles  (including,  but not


                                       5



limited to, goodwill) and organization costs, (e) any extraordinary,  unusual or
non-recurring  non-cash expenses or losses (including,  whether or not otherwise
includable as a separate item in the statement of such  Consolidated  Net Income
for such  period,  non-cash  losses on sales of assets  outside of the  ordinary
course of business) and (f) any  extraordinary,  unusual or  non-recurring  cash
expenses  or losses to the extent  that they do not  exceed,  in the  aggregate,
$25,000,000   during  such  period   (provided  that,  in  connection  with  the
calculation of  Consolidated  EBITDA for any period of four  consecutive  fiscal
quarters which includes the second,  third and/or fourth fiscal  quarters of the
Borrower's 2002 fiscal year, the Borrower shall also be entitled to add back, as
cash  expenses or losses of the type covered by this clause,  an amount equal to
$9,001,000  for such second fiscal  quarter,  $13,174,000  for such third fiscal
quarter and/or, as the case may be,  $15,000,000 for such fourth fiscal quarter)
minus, to the extent included in the statement of such  Consolidated  Net Income
for such period, the sum of (i) interest income, (ii) any extraordinary, unusual
or non-recurring  non-cash income or gains (including,  whether or not otherwise
includable as a separate item in the statement of such  Consolidated  Net Income
for such period,  non-cash  gains on the sales of assets outside of the ordinary
course of business),  (iii) any  extraordinary,  unusual or  non-recurring  cash
income or gains to the extent they exceed, in the aggregate,  $25,000,000 during
such  period,  (iv) income tax credits (to the extent not netted from income tax
expense) and (v) any other non-cash income.

     "Consolidated  Interest Coverage Ratio":  for any period,  the ratio of (a)
Consolidated  EBITDA for such period to (b)  Consolidated  Interest  Expense for
such period.

     "Consolidated  Interest  Expense":  for any period,  total interest expense
(including that  attributable to Capital Lease  Obligations) of the Borrower and
its Subsidiaries for such period with respect to all outstanding Indebtedness of
the Borrower and its  Subsidiaries  (including  all  commissions,  discounts and
other fees and charges owed with respect to bankers'  acceptance  financing  and
net costs under Swap  Agreements in respect of interest rates to the extent such
net costs are allocable to such period in accordance with GAAP).

     "Consolidated Net Income":  for any period, the consolidated net income (or
loss) of the Borrower and its Subsidiaries,  determined on a consolidated  basis
in accordance with GAAP.

     "Consolidated  Net  Worth":  at  any  date,  all  amounts  that  would,  in
conformity  with  GAAP,  be  included  on a  consolidated  balance  sheet of the
Borrower and its Subsidiaries under stockholders' equity at such date.

     "Consolidated  Total   Capitalization":   at  any  date,  the  sum  of  (a)
Consolidated Net Worth on such date and (b)Consolidated Total Debt or such date.

     "Consolidated  Total Debt": at any date, the aggregate  principal amount of
all Indebtedness of the Borrower and its  Subsidiaries at such date,  determined
on a consolidated basis in accordance with GAAP.

     "Consolidated  Total Debt to Capitalization  Ratio": on any date, the ratio
of  (a)  Consolidated  Total  Debt  on  such  date  to  (b)  Consolidated  Total
Capitalization on such date.

                                       6


     "Continuing Directors":  the directors of the Borrower on the Closing Date,
and  each  other  director  whose  election  by the  board of  directors  of the
Borrower,  or whose nomination for election by the stockholders of the Borrower,
was approved by a vote of at least a majority of the  directors  who were either
directors on the Closing Date or whose  election or nomination  for election was
previously so approved.

     "Contractual  Obligation":  as to any Person, any provision of any security
issued by such Person or of any  agreement,  instrument or other  undertaking to
which such Person is a party or by which it or any of its property is bound.

     "Default":  any of the events  specified  in Section 7,  whether or not any
requirement  for the  giving of  notice,  the lapse of time,  or both,  has been
satisfied.

     "Disposition":  with respect to any  property,  any sale,  lease,  sale and
leaseback,  assignment,  conveyance,  transfer or other disposition thereof. The
terms  "Dispose"  and  "Disposed of" shall have  correlative  meanings.

     "Dollar  Equivalent":  at any time or during  any  period as to any  amount
denominated in a Foreign  Currency,  the amount of Dollars that may be purchased
with such amount of such  Foreign  Currency at the  applicable  rate of exchange
determined in accordance with Section 1.3.

     "Dollar Loans": as defined in Section 2.1.

     "Dollars" and "$": dollars in lawful currency of the United States.

     "Environmental  Laws":  any and  all  foreign,  Federal,  state,  local  or
municipal  laws,  rules,  orders,  regulations,   statutes,  ordinances,  codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including  common  law)  regulating,  relating  to  or  imposing  liability  or
standards of conduct  concerning  protection of human health or the environment,
as now or may at any time hereafter be in effect.

     "ERISA":  the Employee  Retirement  Income Security Act of 1974, as amended
from time to time.

     "Eurocurrency  Applicable  Margin":  as determined  pursuant to the Pricing
Grid.

     "Eurocurrency  Base Rate": with respect to an Interest Period pertaining to
any Eurocurrency Loan, the rate of interest  determined on the basis of the rate
for deposits in Dollars or the relevant  Foreign  Currency,  as the case may be,
for a period equal to such Interest  Period  commencing on the first day of such
Interest Period  appearing on Page 3750 of the Telerate Screen as of 11:00 A.M.,
London time,  two Business Days prior to the beginning of such Interest  Period.
In the event that such rate does not appear on such page of the Telerate  Screen
(or  otherwise  on the Telerate  Service),  the  "Eurocurrency  Base Rate" shall
instead be the interest rate per annum (rounded  upwards,  if necessary,  to the
next 1/16 of 1%) equal to the average of the rates at which  deposits in Dollars
or the relevant Foreign  Currency,  as the case may be,  approximately  equal in
principal  amount to the  portion  of the  Eurocurrency  Tranche  of the  Lender
serving as  Administrative  Agent for a  maturity  comparable  to such  Interest


                                       7


Period,  are  offered  by the  principal  London  office  of  Barclays  Bank for
immediately  available  funds in the London  interbank  market at  approximately
11:00 A.M.,  London time,  two Business Days prior to the  commencement  of such
Interest Period.

     "Eurocurrency  Loans":  Loans the rate of interest  applicable  to which is
based upon the Eurocurrency Rate.

     "Eurocurrency  Rate":  with respect to each day during each Interest Period
pertaining to a Eurocurrency  Loan, a rate per annum  determined for such day in
accordance with the following  formula (rounded upward to the nearest 1/100th of
1%):

                             Eurocurrency Base Rate
            --------------------------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

     "Eurocurrency  Reserve   Requirements":   for  any  day  as  applied  to  a
Eurocurrency  Loan,  the aggregate  (without  duplication)  of the maximum rates
(expressed as a decimal fraction) of reserve  requirements in effect on such day
(including  basic,  supplemental,  marginal and  emergency  reserves)  under any
regulations of the Board or other  Governmental  Authority  having  jurisdiction
with  respect   thereto  dealing  with  reserve   requirements   prescribed  for
eurocurrency  funding  (currently  referred to as "Eurocurrency  Liabilities" in
Regulation D of the Board)  maintained  by a member bank of the Federal  Reserve
System.

     "Eurocurrency  Tranche":  the collective  reference to  Eurocurrency  Loans
denominated  in the same currency made by the Lenders to the Borrower,  the then
current Interest Periods with respect to all of which begin on the same date and
end on the same  later  date  (whether  or not  such  Eurocurrency  Loans  shall
originally have been made on the same day).

     "Euros": the single currency of participating member states of the European
Monetary Union  introduced in accordance  with the provisions of Article 109(1)4
of the Treaty of Rome of March 25, 1957 (as amended by the Single  European  Act
1986 and the  Maastricht  Treaty  (which was signed at Maastricht on February 7,
1992 and came into force on November 1, 1993) as amended  from time to time) and
as  referred  to  in  legislative   measures  of  the  European  Union  for  the
introduction  of,  changeover  to or operating of the euro in one or more member
states.

     "Event of Default": any of the events specified in Section 7, provided that
any requirement  for the giving of notice,  the lapse of time, or both, has been
satisfied.

     "Excess  Utilization  Day":  each day on which the  Commitment  Utilization
Percentage exceeds 50%.

     "Exchange  Rate":  on any day,  with respect to any  currency,  the rate at
which such currency may be exchanged  into any other  currency,  as set forth at
approximately  11:00  A.M.,  London  time,  on such  date on the  Reuters  World
Currency Page for such currency.  In the event that such rate does not appear on
any Reuters  World  Currency  Page,  the Exchange  Rate shall be  determined  by
reference to such other publicly available service for displaying exchange rates
as may be selected by the Administrative Agent, or, in the event no such service
is selected,  such Exchange Rate shall instead be the arithmetic  average of the


                                       8


spot rates of  exchange  of the  Administrative  Agent in the  market  where its
foreign currency exchange  operations in respect of such currency are then being
conducted,  at or about 10:00 A.M., local time, on such date for the purchase of
the relevant currency for delivery two Business Days later;  provided that if at
the time of any such  determination,  for any reason, no such spot rate is being
quoted, the Administrative Agent, after consultation with the Borrower,  may use
any  reasonable  method it deems  appropriate  to determine  such rate, and such
determination  shall  be  presumed  correct  absent  manifest  error;  provided,
further,  that in any event, the Administrative Agent shall provide the Borrower
with reasonable details of the source for such rate.

     "Facility Fee": as defined in Section 2.3(a).

     "Facility Fee Rate": as determined pursuant to the Pricing Grid.

     "Federal Funds Effective  Rate":  for any day, the weighted  average of the
rates on  overnight  federal  funds  transactions  with  members of the  Federal
Reserve  System  arranged by federal  funds  brokers,  as  published on the next
succeeding  Business Day by the Federal  Reserve  Bank of New York,  or, if such
rate is not so published  for any day that is a Business Day, the average of the
quotations for the day of such  transactions  received by Barclays Bank PLC from
three federal funds brokers of recognized standing selected by it.

     "Fee Payment  Date":  (a) the third  Business Day following the last day of
each March, June,  September and December,  (b) the Termination Date and (c) the
date the  Commitments  shall have been terminated and the principal of the Loans
shall have been paid in full.

     "Foreign Currency": each of Euros, Sterling and Yen.

     "Foreign Currency Loans": as defined in Section 2.1.

     "Funding  Office":  the office of the  Administrative  Agent  specified  in
Section 9.2 or such other  office as may be  specified  from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.

     "GAAP": generally accepted accounting principles in the United States as in
effect from time to time, except that for purposes of Section 6.1, GAAP shall be
determined  on the basis of such  principles  in effect on the date  hereof  and
consistent  with  those  used in the  preparation  of the  most  recent  audited
financial statements referred to in Section 3.1(b).

     "Governmental  Authority":  any  nation or  government,  any state or other
political   subdivision   thereof,  any  agency,   authority,   instrumentality,
regulatory  body,  court,  central  bank or other entity  exercising  executive,
legislative,  judicial,  taxing,  regulatory or  administrative  functions of or
pertaining  to  government,  any  securities  exchange  and any  self-regulatory
organization.

     "Group  Members":   the  collective  reference  to  the  Borrower  and  its
Subsidiaries  (or,  in the  case  of  Sections  7(e),  (f)  and  (h)  only,  its
Significant Subsidiaries).

                                       9


     "Guarantee  Obligation":  as to any Person (the "guaranteeing person"), any
obligation,  including a reimbursement,  counterindemnity or similar obligation,
of the guaranteeing Person that guarantees or in effect guarantees,  or which is
given to  induce  the  creation  of a  separate  obligation  by  another  Person
(including  any bank under any letter of credit)  that  guarantees  or in effect
guarantees,  any  Indebtedness  (the "primary  obligations")  of any other third
Person (the "primary  obligor") in any manner,  whether  directly or indirectly,
including any obligation of the guaranteeing person,  whether or not contingent,
(i) to purchase any such primary obligation or any property  constituting direct
or  indirect  security  therefor,  (ii) to advance  or supply  funds (A) for the
purchase or payment of any such primary  obligation  or (B) to maintain  working
capital or equity  capital of the primary  obligor or  otherwise to maintain the
net worth or  solvency  of the  primary  obligor,  (iii) to  purchase  property,
securities  or services  primarily  for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary  obligation or (iv)  otherwise to assure or hold harmless the owner
of any such  primary  obligation  against  loss in  respect  thereof;  provided,
however,  that the term Guarantee  Obligation shall not include  endorsements of
instruments  for deposit or collection in the ordinary  course of business.  The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or determinable  amount of the
primary obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing  person may be liable pursuant to
the terms of the instrument  embodying such  Guarantee  Obligation,  unless such
primary obligation and the maximum amount for which such guaranteeing person may
be liable  are not  stated or  determinable,  in which  case the  amount of such
Guarantee  Obligation shall be such  guaranteeing  person's  maximum  reasonably
anticipated  liability in respect  thereof as determined by the Borrower in good
faith.

     "Indebtedness":  of any Person at any date,  without  duplication,  (a) all
indebtedness  of such Person for borrowed  money,  (b) all  obligations  of such
Person for the  deferred  purchase  price of  property  or  services  (excluding
accounts  payable  and accrued  expenses),  (c) all  obligations  of such Person
evidenced by notes,  bonds,  debentures  or other similar  instruments,  (d) all
indebtedness  created  or  arising  under any  conditional  sale or other  title
retention  agreement  with  respect to property  acquired  by such Person  (even
though the rights and remedies of the seller or lender  under such  agreement in
the event of default are limited to repossession or sale of such property),  (e)
all Capital  Lease  Obligations  of such  Person,  (f) all  obligations  of such
Person,  contingent or otherwise,  as an account party or applicant  under or in
respect of  bankers'  acceptances,  (g) all  reimbursement  obligations  of such
Person in respect of drawings or payments made under  letters of credit,  surety
or performance bonds or other similar arrangements that are not satisfied within
three  Business  Days  following the date of receipt by such Person of notice of
such drawing or payment, (h) the liquidation value of all manditorily redeemable
preferred  Capital Stock of such Person,  (i) all Guarantee  Obligations of such
Person in respect of  obligations of the kind referred to in clauses (a) through
(f) and (h) above,  (j) all  obligations  of the kind referred to in clauses (a)
through  (i) above  secured  by any Lien on  property  (including  accounts  and
contract rights) owned by such Person, whether or not such Person has assumed or
become  liable for the  payment of such  obligation  (it being  understood  that
obligations  in  respect of a  Permitted  Receivables  Securitization  shall not
constitute  Indebtedness),  and (k) for the purposes of Section  7(e) only,  all
obligations of such Person in respect of Swap  Agreements.  The  Indebtedness of
any Person shall include the  Indebtedness  of any other entity  (including  any
partnership in which such Person is a general partner) to the extent such Person


                                       10


is liable therefor as a result of such Person's  ownership  interest in or other
relationship  with  such  entity,  except  to  the  extent  the  terms  of  such
Indebtedness expressly provide that such Person is not liable therefor.

     "Insolvency":  with respect to any  Multiemployer  Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.

     "Insolvent": pertaining to a condition of Insolvency.

     "Intellectual Property": the collective reference to all rights, priorities
and privileges relating to intellectual  property,  whether arising under United
States,  multinational  or  foreign  laws or  otherwise,  including  copyrights,
copyright licenses,  patents, patent licenses,  trademarks,  trademark licenses,
technology,  know-how and  processes,  and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

     "Interest  Payment  Date":  (a) as to any ABR  Loan,  the  last day of each
March, June,  September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any Eurocurrency  Loan having an
Interest  Period of three months or less, the last day of such Interest  Period,
(c) as to any  Eurocurrency  Loan  having an Interest  Period  longer than three
months,  each day that is three months, or a whole multiple  thereof,  after the
first day of such Interest  Period and the last day of such Interest  Period and
(d) as to any Loan  (other  than any Loan that is an ABR Loan),  the date of any
repayment or prepayment made in respect thereof.

     "Interest Period":  as to any Eurocurrency Loan, (i) initially,  the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurocurrency  Loan and ending one, two, three or six months  thereafter,
as selected by the Borrower in its notice of borrowing or notice of  conversion,
as the case may be, given with respect thereto; and (ii) thereafter, each period
commencing on the last day of the next preceding  Interest Period  applicable to
such Eurocurrency Loan and ending one, two, three or six months  thereafter,  as
selected by the Borrower by irrevocable notice to the  Administrative  Agent not
later than 11:00 A.M.,  New York City time, in the case of Loans  denominated in
Dollars,  and 10:00 A.M.,  New York City time,  in the case of Foreign  Currency
Loans,  three  Business Days prior to the last day of the then current  Interest
Period with respect  thereto;  provided  that,  all of the foregoing  provisions
relating to Interest Periods are subject to the following:

          (i) if any Interest  Period would otherwise end on a day that is not a
     Business Day, such Interest Period shall be extended to the next succeeding
     Business  Day unless the  result of such  extension  would be to carry such
     Interest  Period into another  calendar  month in which event such Interest
     Period shall end on the immediately preceding Business Day;

          (ii) the Borrower may not select an Interest  Period that would extend
     beyond the Termination  Date, unless the Termination Date has been extended
     pursuant  to  Section  2.9,  in which case the  Borrower  may not select an
     Interest Period that would extend beyond December 19, 2004; and

                                       11


          (iii)any  Interest  Period that begins on the last  Business  Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest  Period) shall end on
     the last Business Day of a calendar month.

     "Investments": as defined in Section 6.7.

     "Judgment Currency": as defined in Section 2.19(b).

     "Lender":  as defined in the preamble hereto;  provided that unless context
otherwise  requires each reference to the Lenders shall be deemed to include any
Conduit Lender.

     "Lien":   any  mortgage,   pledge,   hypothecation,   assignment,   deposit
arrangement,  encumbrance,  lien (statutory or other),  charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever  (including any conditional sale or
other title retention  agreement and any capital lease having  substantially the
same economic effect as any of the foregoing).

     "Loan  Documents":  this  Agreement,  the Notes and any amendment,  waiver,
supplement or other modification to any of the foregoing.

     "Loan Percentage":  as to any Lender at any time, the percentage which such
Lender's  Commitment then  constitutes of the Total  Commitments or, at any time
after the Commitments shall have expired or terminated, the percentage which the
aggregate  principal amount of such Lender's Loans then outstanding  constitutes
of the aggregate principal amount of the Loans then outstanding.

     "Loans": as defined in Section 2.1.

     "London Banking Day": any day on which banks in London are open for general
banking business, including dealings in foreign currency and exchange.

     "Margin Stock": as defined in Regulation U.

     "Material  Adverse Effect":  a material adverse effect on (a) the business,
property,  operations or condition  (financial or otherwise) of the Borrower and
its Subsidiaries  taken as a whole or (b) the validity or enforceability of this
Agreement  or any of the other Loan  Documents  or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder.

     "Materials of Environmental  Concern": any gasoline or petroleum (including
crude oil or any  fraction  thereof) or petroleum  products or any  hazardous or
toxic substances,  materials or wastes, defined or regulated as such in or under
any  Environmental  Law,  including  asbestos,   polychlorinated  biphenyls  and
urea-formaldehyde insulation.

     "Moody's": Moody's Investors Service, Inc.

     "Multiemployer  Plan":  a Plan that is a  multiemployer  plan as defined in
Section 4001(a)(3) of ERISA.

                                       12


     "Non-Excluded Taxes": as defined in Section 2.15(a).

     "Non-U.S. Lender": as defined in Section 2.15(d).

     "Notes": the collective reference to any promissory note evidencing Loans.

     "Obligations":  the unpaid principal of and interest on (including interest
accruing after the maturity of the Loans and interest  accruing after the filing
of  any  petition  in  bankruptcy,   or  the  commencement  of  any  insolvency,
reorganization  or like proceeding,  relating to the Borrower,  whether or not a
claim for post-filing or  post-petition  interest is allowed in such proceeding)
the Loans and all other  obligations  and  liabilities  of the  Borrower  to the
Administrative Agent or to any Lender,  whether direct or indirect,  absolute or
contingent,  due or to become due, or now existing or hereafter incurred,  which
may arise under, out of, or in connection  with, this Agreement,  any other Loan
Document or any other document made,  delivered or given in connection  herewith
or  therewith,  whether  on  account  of  principal,   interest,   reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the  Administrative  Agent or to any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.

     "Other  Agreement":  the Three-Year Credit Agreement,  dated as of the date
hereof, among the Borrower,  the several banks and other financial  institutions
or  entities  from  time to  time  parties  thereto,  ABN  Amro  Bank  N.V.,  as
syndication  agent, and Barclays Bank PLC, as administrative  agent, as amended,
supplemented or otherwise modified or replaced from time to time.

     "Other Taxes":  any and all present or future stamp or documentary taxes or
any other excise or property  taxes,  charges or similar levies arising from any
payment made  hereunder or from the execution,  delivery or  enforcement  of, or
otherwise with respect to, this Agreement or any other Loan Document.

     "Participant": as defined in Section 9.6(c).

     "PBGC": the Pension Benefit Guaranty  Corporation  established  pursuant to
Subtitle A of Title IV of ERISA (or any successor).

     "Permitted  Receivables  Securitization":  any  Receivables  Securitization
Transaction,  provided that the aggregate amount of the financing represented by
such transactions at any one time outstanding does not exceed $200,000,000.

     "Person":  an  individual,  partnership,   corporation,  limited  liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

     "Plan":  at a particular time, any employee benefit plan that is covered by
and  subject  to ERISA  and in  respect  of which  the  Borrower  or a  Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an  "employer" as defined in Section 3(5)
of ERISA.

                                       13



     "Pricing Grid": the table set forth below (expressed in basis points):



                                                                                 
       Rating Agency Rating          Facility Fee       Eurocurrency        Utilization      Term-Out Premium
                                         Rate         Applicable Margin       Fee Rate
- ----------------------------------- ---------------- --------------------- ---------------- -------------------
Greater than or
equal to A/A2 .............               7.0                28.0                7.5               12.5
- ----------------------------------- ---------------- --------------------- ---------------- -------------------
A-/A3 .....................               8.0                32.0               12.5               25.0
- ----------------------------------- ---------------- --------------------- ---------------- -------------------
BBB+/Baa1 .................              10.0                52.5               12.5               25.0
- ----------------------------------- ---------------- --------------------- ---------------- -------------------
BBB/Baa2 ..................              12.5                62.5               12.5               25.0
- ----------------------------------- ---------------- --------------------- ---------------- -------------------
BBB-/Baa3 .................              17.5                70.0               25.0               25.0
- ----------------------------------- ---------------- --------------------- ---------------- -------------------
Less than BBB-/Baa3
or No Rating ..............              25.0               112.5               37.5               50.0
- ----------------------------------- ---------------- --------------------- ---------------- -------------------


     In any case where the Ratings of the two Rating  Agencies  are at different
levels, the higher Rating will determine the Facility Fee Rate, the Eurocurrency
Applicable  Margin, the Utilization Fee Rate and the Term-Out Premium unless the
S&P and Moody's  Ratings are more than one level apart, in which case the Rating
one level above the lower Rating will be determinative.  Each change in a Rating
by a Rating  Agency  shall be  effective on the date such change is announced by
such Rating Agency, and if such change in Rating shall result in a change in the
Facility  Fee Rate,  Eurocurrency  Applicable  Margin,  Utilization  Fee Rate or
Term-Out Premium, such latter change shall be effective on the effective date of
such change in Rating.

     "Properties": as defined in Section 3.13(a).

     "Rating Agencies" Moody's and S&P.

     "Ratings" the ratings from time to time  established by the Rating Agencies
for senior, unsecured, non-credit-enhanced long-term debt of the Borrower.

     "Receivables":   accounts   receivable  of  the  Borrower  or  any  of  its
Subsidiaries  (including any thereof constituting or evidenced by chattel paper,
instruments  or  general  intangibles),  and all  proceeds  thereof  and  rights
(contractual and other) and collateral related thereto.

     "Receivables  Securitization  Transaction":  with  respect to the  Borrower
and/or any of its  Subsidiaries,  the transfer of Receivables by any such Person
to a trust,  partnership,  corporation or other entity in a transaction in which
(x) the transferred  Receivables,  after giving effect to such transaction,  are
not, in accordance with GAAP, treated as assets on the books of the Borrower and
its Subsidiaries and (y) the liabilities of the transferee  trust,  partnership,
corporation or other entity,  after giving effect to such transaction,  are not,
in accordance with GAAP, treated as liabilities on the books of the Borrower and
its Subsidiaries.

     "Refunding Borrowing": a borrowing of Loans which, after application of the
proceeds  thereof,  results  in no net  increase  in the  aggregate  outstanding
principal amount of Loans made by any Lender.

                                       14


     "Register": as defined in Section 9.6(b).

     "Regulation U": Regulation U of the Board as in effect from time to time.

     "Reorganization":  with respect to any  Multiemployer  Plan,  the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

     "Reportable  Event":  any of the  events  set forth in  Section  4043(c) of
ERISA,  other  than those  events as to which the  thirty  day notice  period is
waived under  subsections  .27,  .28,  .29,  .30,  .31,  .32, .34 or .35 of PBGC
Reg.ss. 4043.

     "Required Lenders":  at any time, the holders of more than 50% of the Total
Commitments then in effect or, if the Commitments have been terminated, the then
outstanding Loans.

     "Requirement of Law": as to any Person,  the  Certificate of  Incorporation
and By-Laws or other  organizational or governing  documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its  property or to which such Person or any of its property is
subject.

     "Responsible  Officer":  the chief  executive  officer,  president or chief
financial  officer of the Borrower,  but in any event, with respect to financial
matters, the chief financial officer of the Borrower.

     "Restricted  Margin  Stock":  Margin  Stock  owned by the  Borrower  or any
Subsidiary which represents not more than 25% of the aggregate value (determined
in accordance with  Regulation U), on a consolidated  basis, of the property and
assets of the Borrower and the Subsidiaries (including any Margin Stock) that is
subject to the provisions of Section 6 (including Section 6.4).

     "SEC": the Securities and Exchange  Commission,  any successor  thereto and
any analogous Governmental Authority.

     "SEC Filings": as defined in Section 3.1.


     "Significant   Subsidiary":   any   Subsidiary   which  is  a  "Significant
Subsidiary,"  as defined in Regulation  S-X part 210.1-02 of the Code of Federal
Regulations.

     "Single  Employer Plan": any Plan that is covered by Title IV of ERISA, but
that is not a Multiemployer Plan.

     "Specified Swap Agreement": any Swap Agreement entered into by the Borrower
and any Lender or  affiliate  thereof in respect of  interest  rates or currency
exchange rates.

     "Sterling":  British  Pounds  Sterling,  the lawful  currency of the United
Kingdom.

                                       15


     "Subsidiary":  as  to  any  Person,  a  corporation,  partnership,  limited
liability  company or other entity of which  shares of stock or other  ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect  a  majority  of  the  board  of  directors  or  other  managers  of  such
corporation,  partnership  or  other  entity  are  at  the  time  owned,  or the
management of which is otherwise controlled,  directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to  "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.

     "Swap Agreement":  any agreement with respect to any swap, forward,  future
or derivative  transaction or option or similar agreement involving,  or settled
by  reference  to, one or more rates,  currencies,  commodities,  equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic,  financial or pricing risk or value or any similar  transaction  or
any combination of these transactions; provided that no phantom stock or similar
plan  providing for payments only on account of services  provided by current or
former directors,  officers,  employees or consultants of the Borrower or any of
its Subsidiaries shall be a "Swap Agreement".

     "S&P":  Standard & Poor's Ratings  Services,  a division of the McGraw-Hill
Companies, Inc.

     "Syndication Agent": as defined in the preamble hereto.

     "Term-Out  Period":  the period from but excluding the Termination  Date to
and including December 19, 2004.

     "Term-Out Premium": as determined pursuant to the Pricing Grid.

     "Termination Date":  December 19, 2003 or, if the Termination Date shall be
extended in accordance with Section 2.9, December 19, 2004.

     "Total  Commitments":  at any time, the aggregate amount of the Commitments
of the Lenders then in effect.


     "Total  Loans":  at any time,  the sum of (a) the  aggregate  amount of the
Dollar Loans outstanding at such time and (b) the aggregate Dollar Equivalent of
the Foreign Currency Loans outstanding at such time.

     "Transferee": any Assignee or Participant.

     "Type": as to any Loan, its nature as an ABR Loan or a Eurocurrency Loan.


     "United States": the United States of America.

     "Unrestricted  Margin Stock": any Margin Stock owned by the Borrower or any
Subsidiary which is not Restricted Margin Stock.

                                       16


     "Utilization Fee Rate": as determined pursuant to the Pricing Grid.


     "Wholly Owned  Subsidiary":  as to any Person,  any other Person all of the
Capital Stock of which (other than directors' qualifying shares required by law)
is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

     "Yen": the lawful currency of Japan.

     1.2 Other Definitional Provisions.  (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the other Loan Documents or any  certificate or other document made or delivered
pursuant hereto or thereto.

     (b) As used herein and in the other Loan Documents,  and any certificate or
other  document made or delivered  pursuant  hereto or thereto,  (i)  accounting
terms  relating  to any Group  Member not  defined in Section 1.1 shall have the
respective  meanings  given  to them  under  GAAP,  (ii)  the  words  "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation",  (iii) the word "incur"  shall be construed to mean incur,  create,
issue,  assume,  become  liable in  respect of or suffer to exist (and the words
"incurred" and  "incurrence"  shall have correlative  meanings),  (iv) the words
"asset" and  "property"  shall be  construed to have the same meaning and effect
and to refer to any and all  tangible  and  intangible  assets  and  properties,
including  cash,  Capital  Stock,  securities,   revenues,  accounts,  leasehold
interests  and  contract  rights,  and (v)  references  to  agreements  or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.

     (c) The words  "hereof",  "herein"  and  "hereunder"  and words of  similar
import,  when used in this  Agreement,  shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.

     (d) The meanings given to terms defined herein shall be equally  applicable
to both the singular and plural forms of such terms.

     1.3 Exchange Rates.  For purposes of calculating  (a) the aggregate  Dollar
Equivalent of Foreign  Currency Loans  outstanding at any time during any period
and (b) the Dollar  Equivalent  of any Foreign  Currency Loan at the time of the
making of such Loan  pursuant to Section 2.1, the  Administrative  Agent will at
least once during each calendar  month and at such other times as it in its sole
discretion  decides to do so (including on or prior to the date of any borrowing
and the last day of any  Interest  Period),  determine  the  respective  rate of
exchange into Dollars of each Foreign  Currency (which rate of exchange shall be
based upon the Exchange Rate in effect on the date of such determination).  Such
rates of exchange  so  determined  on each such  determination  date shall,  for
purposes of the calculations  described in the preceding sentence,  be deemed to
remain unchanged and in effect until the next such determination date.

                                       17


                   SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

     2.1 Commitments.  Subject to the terms and conditions  hereof,  each Lender
severally  agrees to make revolving  credit loans in Dollars ("Dollar Loans") or
in any Foreign  Currency (the "Foreign  Currency  Loans",  and together with the
Dollar  Loans,  the  "Loans")  to the  Borrower  from  time to time  during  the
Commitment  Period in an aggregate  principal amount at any one time outstanding
which does not exceed the amount of such Lender's Commitment. The Borrower shall
not request and no Lender  shall be required to make any Loan if,  after  making
such Loan,  the Total Loans shall exceed the Total  Commitments  then in effect.
During the Commitment  Period the Borrower may use the Commitments by borrowing,
prepaying the Loans in whole or in part, and reborrowing, all in accordance with
the terms and conditions hereof, provided, that the Commitments shall be reduced
on the Termination Date to an amount equal to the amount of the Total Loans then
outstanding  and,  if the Total  Loans shall at any time or from time to time be
reduced  thereafter  (whether as a result of a prepayment,  a change in exchange
rates or otherwise), the Commitments shall be reduced pro rata simultaneously by
an amount equal to such  reduction in the Total Loans,  and  provided,  further,
that on and  after the  Termination  Date,  no Loans  may be made  which are not
Refunding  Borrowings.  The Dollar  Loans may from time to time be  Eurocurrency
Loans  or  ABR  Loans,  as  determined  by  the  Borrower  and  notified  to the
Administrative  Agent in  accordance  with  Sections  2.2 and 2.7.  All  Foreign
Currency Loans shall be Eurocurrency Loans.

     2.2  Procedure  for  Borrowing.  (a) The Borrower  may borrow  Dollar Loans
during the  Commitment  Period on any Business  Day,  provided that the Borrower
shall give the  Administrative  Agent  irrevocable  notice (which notice must be
received  by the  Administrative  Agent (a) prior to 10:00  A.M.,  New York City
time, three Business Days prior to the requested  Borrowing Date, in the case of
Eurocurrency  Loans or (b)  prior to 11:00  A.M.,  New York  City  time,  on the
requested  Borrowing Date, in the case of ABR Loans),  specifying (i) the amount
and Type of Dollar Loans to be borrowed,  (ii) the requested Borrowing Date, and
(iii) in the case of  Eurocurrency  Loans,  the respective  amounts of each such
Type of Loan and the respective lengths of the initial Interest Period therefor.
Any Dollar  Loans made on the Closing Date shall  initially  be ABR Loans.  Each
borrowing of Dollar Loans under the  Commitments  shall be in an amount equal to
(x) in the case of ABR Loans, $1,000,000 or a whole multiple thereof (or, if the
then  aggregate  Available  Commitments  are less than  $1,000,000,  such lesser
amount)  and  (y) in the  case of  Eurocurrency  Loans,  $10,000,000  or a whole
multiple of $1,000,000 in excess  thereof.  Upon receipt of any such notice from
the  Borrower,  the  Administrative  Agent  shall  promptly  notify  each Lender
thereof.  Each  Lender  will  make  the  amount  of its pro  rata  share of each
borrowing available to the Administrative  Agent for the account of the Borrower
at the Funding  Office prior to 12:00 Noon, New York City time, on the Borrowing
Date  requested  by  the  Borrower  in  funds   immediately   available  to  the
Administrative Agent. Such borrowing will then be made available to the Borrower
by the  Administrative  Agent crediting the account of the Borrower on the books
of  such  Office  with  the  aggregate  of the  amounts  made  available  to the
Administrative  Agent  by the  Lenders  and in like  funds  as  received  by the
Administrative Agent.

     (b) The Borrower may borrow  Foreign  Currency  Loans during the Commitment
Period  on  any  Business  Day,  provided  that  the  Borrower  shall  give  the
Administrative  Agent  irrevocable  notice (which notice must be received by the
Administrative  Agent prior to 10:00 A.M.,  New York City time,  three  Business


                                       18


Days  prior to the  requested  Borrowing  Date),  specifying  (i) the  requested
Borrowing  Date,  (ii) the respective  amounts of each Foreign  Currency Loan in
each Foreign  Currency and (iii) the respective  lengths of the initial Interest
Period therefor. Each Foreign Currency Loan under the Commitments shall be in an
amount  equal  to (x) in the  case of  Foreign  Currency  Loans  denominated  in
Sterling,  (pound)7,000,000  or a whole  multiple  of  (pound)500,000  in excess
thereof,  (y) in the  case of  Foreign  Currency  Loans  denominated  in  Euros,
(euro)10,000,000  or a whole multiple of (euro)1,000,000 in excess thereof,  and
(z) in the case of Foreign Currency Loans denominated in Yen,  Y1,000,000,000 or
a whole multiple of  Y100,000,000  in excess  thereof.  Upon receipt of any such
notice from the Borrower,  the  Administrative  Agent shall promptly notify each
Lender  thereof.  Each Lender will make the amount of its pro rata share of each
borrowing available to the Administrative  Agent for the account of the Borrower
at the Funding  Office prior to 12:00 Noon,  London time,  in each case,  on the
Borrowing Date requested by the Borrower in funds  immediately  available in the
relevant Foreign Currency to the Administrative  Agent. Such borrowing will then
be made  available to the Borrower by the  Administrative  Agent  crediting  the
account of the  Borrower on the books of such Office with the  aggregate  of the
amounts made  available to the  Administrative  Agent by the Lenders and in like
funds  as  received  by the  Administrative  Agent or by wire  transfer  of such
amounts  to  an  account   designated   in  writing  by  the   Borrower  to  the
Administrative Agent in connection with the relevant borrowing.

     2.3 Fees. (a) The Borrower  agrees to pay to the  Administrative  Agent for
the account of each Lender a facility fee (a "Facility Fee") for the period from
and including the date hereof to the date upon which the Commitments  shall have
terminated  and all Loans  shall have been paid in full,  computed at a rate per
annum  equal  to the  Facility  Fee  Rate on the  average  daily  amount  of the
Commitment of such Lender (whether or not utilized)  during the period for which
payment  is made  (or,  if any  Lender  continues  to have any  Loans  after its
Commitment  terminates,  on the average daily amount of such Lender's Loans from
and including the date on which its  Commitment  terminates to but excluding the
date on which  such  Lender  ceases to have any Loans  outstanding),  payable in
arrears on each Fee Payment Date.

     (b) The Borrower agrees to pay to the Administrative  Agent for the account
of each  Lender in  arrears  on each Fee  Payment  Date,  a  utilization  fee (a
"Utilization  Fee") at a rate per annum  equal to the  Utilization  Fee Rate for
each Excess  Utilization  Day during the period covered by such Fee Payment Date
on such Lender's Loans then outstanding on such Excess Utilization Day.

     (c) The Borrower agrees to pay to the Administrative  Agent the fees in the
amounts and on the dates as set forth in the Fee Letter, dated as of November 1,
2002,  between the Borrower and the  Administrative  Agent, and in any other fee
agreements between the Borrower and the  Administrative  executed after the date
of this Agreement, and to perform any other obligations contained therein.

     2.4 Optional  Termination or Reduction of  Commitments.  The Borrower shall
have  the  right,  upon  not  less  than  three  Business  Days'  notice  to the
Administrative  Agent,  to terminate the  Commitments  or, from time to time, to
reduce the  amount of the  Commitments;  provided  that no such  termination  or
reduction of Commitments  shall be permitted if, after giving effect thereto and
to any  prepayments  of the  Loans,  the  Total  Loans  would  exceed  the Total
Commitments.  Any such reduction shall be in an amount equal to $10,000,000,  or


                                       19


an  integral  multiple  of  $1,000,000  in  excess  thereof,  and  shall  reduce
permanently the Commitments then in effect.

     2.5  Optional  Prepayments.  The  Borrower may at any time and from time to
time prepay the Loans,  in whole or in part,  without  premium or penalty,  upon
irrevocable  notice delivered to the  Administrative  Agent not later than 10:00
A.M.,  New York City time,  three Business Days prior to the date of prepayment,
in the case of Eurocurrency  Loans, and not later than 11:00 A.M., New York City
time,  one  Business  Day  prior to the date of  prepayment,  in the case of ABR
Loans,  which notice shall specify the date and amount of prepayment and whether
the prepayment is of Eurocurrency  Loans or ABR Loans and, if such prepayment is
of Foreign Currency Loans, the applicable Foreign Currency;  provided, that if a
Eurocurrency  Loan is prepaid on any day other than the last day of the Interest
Period  applicable  thereto,  the  Borrower  shall  also pay any  amounts  owing
pursuant to Section  2.16.  Upon  receipt of any such notice the  Administrative
Agent shall promptly  notify each Lender  thereof.  If any such notice is given,
the  amount  specified  in such  notice  shall  be due and  payable  on the date
specified  therein,  together  with  (except  in the case of Loans  that are ABR
Loans) accrued interest to such date on the amount prepaid.  Partial prepayments
of Dollar Loans shall be in an aggregate  principal  amount of  $10,000,000 or a
whole multiple of $1,000,000 in excess thereof.  Partial  prepayments of Foreign
Currency Loans shall be in a minimum principal amount of (x) (pound)7,000,000 or
a whole multiple of  (pound)500,000  in excess  thereof,  in the case of Foreign
Currency Loans denominated in Sterling, (y) (euro)10,000,000 or a whole multiple
or  (euro)1,000,000  in excess  thereof,  in the case of Foreign  Currency Loans
denominated in Euros, and (z) Y1,000,000,000 or a whole multiple or Y100,000,000
in excess thereof, in the case of Foreign Currency Loans denominated in Yen.

     2.6 Mandatory Prepayments.  If, on any date, the Total Loans outstanding on
such date  exceed  102% of the Total  Commitments  in effect on such  date,  the
Borrower  shall,  without notice or demand,  promptly (but in any event,  within
three Business Days of such date) prepay such outstanding  Loans in an aggregate
principal amount such that, after giving effect thereto,  the Total Loans do not
exceed the Total Commitments. Any amounts prepaid pursuant to this Section shall
be  accompanied  by  interest  accrued  to the  date of such  prepayment  on the
principal so prepaid and any amounts  payable  under  Section 2.16 in connection
therewith.

     2.7 Conversion and  Continuation  Options.  (a) The Borrower may elect from
time to time to convert  Eurocurrency  Loans denominated in Dollars to ABR Loans
by giving the Administrative Agent irrevocable notice of such election not later
than 11:00  A.M.,  New York City  time,  one  Business  Day prior to the date of
conversion,  provided that any such conversion of Eurocurrency Loans may only be
made on the last day of an Interest  Period with respect  thereto.  The Borrower
may elect  from time to time to  convert  its ABR  Loans to  Eurocurrency  Loans
denominated in Dollars by giving the Administrative  Agent irrevocable notice of
such election  (which  notice shall  specify the length of the initial  Interest
Period  therefor) not later than 11:00 A.M., New York City time,  three Business
Days prior to the date of conversion, provided that no ABR Loan may be converted
into a  Eurocurrency  Loan  when  any  Event  of  Default  has  occurred  and is
continuing and the Administrative  Agent or the Required Lenders have determined
in its or their sole discretion not to permit such conversions.  Upon receipt of
any such  notice the  Administrative  Agent  shall  promptly  notify each Lender
thereof.

                                       20


     (b) Any  Eurocurrency  Loan may be continued as such upon the expiration of
the then current  Interest  Period with respect  thereto by the Borrower  giving
irrevocable  notice  to  the  Administrative   Agent,  in  accordance  with  the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans,  provided
that no Eurocurrency  Loan  denominated in Dollars may be continued as such when
any Event of Default has occurred and is continuing and the Administrative Agent
has or the Required  Lenders have determined in its or their sole discretion not
to permit such continuation,  and provided,  further, that if the Borrower shall
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted  pursuant to the preceding  proviso any such Loans
denominated in Dollars shall be automatically converted to ABR Loans on the last
day of such then  expiring  Interest  Period and, if the Borrower  shall fail to
give such  notice of  continuation  of a Foreign  Currency  Loan,  such  Foreign
Currency Loan shall be  automatically  continued  for an Interest  Period of one
month. Upon receipt of any such notice the  Administrative  Agent shall promptly
notify each relevant Lender thereof.

     2.8 Limitations on Eurocurrency Tranches.  Notwithstanding  anything to the
contrary in this Agreement,  all borrowings,  conversions and  continuations  of
Eurocurrency  Loans and all  selections  of  Interest  Periods  shall be in such
amounts  and be made  pursuant  to such  elections  so  that  no more  than  ten
Eurocurrency Tranches shall be outstanding at any one time.

     2.9 Repayment of Loans;  Extension of Termination Date. The Borrower hereby
unconditionally  promises to pay to each Lender on the Termination Date (or such
earlier  date as the Loans  become due and  payable  pursuant to Section 7), the
unpaid  principal amount of each Loan made by such Lender.  Notwithstanding  the
foregoing,  the Borrower may request, in a notice provided to the Administrative
Agent not less than 30 nor more than 60 days prior to the Termination Date, that
the Loans comprising any Borrowing outstanding on the Termination Date mature on
December 19, 2004, and the unpaid  principal  amount of such Loans shall then be
due and payable on such date. The  Administrative  Agent shall  promptly  notify
each relevant  Lender of such request.  Any  extension of the  Termination  Date
pursuant to this Section shall be subject to the  satisfaction of the conditions
set forth in Section  4.2 on the  Termination  Date to the same extent as if the
Lenders  were  requested  to make Loans on the  Termination  Date.  The Borrower
hereby  further  agrees to pay interest in  immediately  available  funds at the
office of the Administrative  Agent on the unpaid principal amount of such Loans
from time to time from the date  hereof  until  payment  in full  thereof at the
rates per annum, and on the dates, set forth in Section 2.10.

     2.10 Interest Rates and Payment  Dates.  (a) Each  Eurocurrency  Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the  Eurocurrency  Rate determined for such day plus the
Eurocurrency  Applicable  Margin  and plus,  during the  Term-Out  Period (if it
occurs), the Term-Out Premium.

     (b) Each ABR Loan shall bear  interest at a rate per annum equal to the ABR
plus, during the Term-Out Period (if it occurs), the Term-Out Premium.

     (c) (i) If all or a portion of the  principal  amount of any Loan shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),


                                       21


such overdue  amount  shall bear  interest at a rate per annum equal to the rate
that would otherwise be applicable thereto pursuant to the foregoing  provisions
of this Section plus 2% and (ii) if all or a portion of any interest  payable on
any  Loan  or any  facility  fee or  utilization  fee or  other  amount  payable
hereunder  shall  not be paid  when due  (whether  at the  stated  maturity,  by
acceleration  or  otherwise),  such overdue amount shall bear interest at a rate
per annum equal to the rate then  applicable  to ABR Loans plus 2% (unless  such
overdue amount is denominated in a Foreign Currency,  in which case such overdue
amount  shall bear  interest of a rate per annum equal to the highest  rate then
applicable  under this Agreement to Foreign  Currency Loans  denominated in such
Foreign  Currency  plus 2%), in each case,  with respect to clauses (i) and (ii)
above,  from the date of such non-payment  until such amount is paid in full (as
well after as before judgment).

     (d) Interest  shall be payable in arrears on each  Interest  Payment  Date,
provided that interest  accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.

     2.11  Computation  of Interest  and Fees.  (a)  Interest  and fees  payable
pursuant  hereto  shall be  calculated  on the basis of a  360-day  year for the
actual days  elapsed,  except  that,  with  respect to (i) ABR Loans the rate of
interest on which is  calculated  on the basis of the Prime Rate,  the  interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed and (ii) Foreign Currency Loans denominated
in Sterling,  interest  shall be  calculated  on the basis of a 365-day year for
actual days  elapsed.  The  Administrative  Agent  shall as soon as  practicable
notify  the  Borrower  and  the  relevant  Lenders  of each  determination  of a
Eurocurrency  Rate.  Any change in the interest rate on a Loan  resulting from a
change  in the  Eurocurrency  Applicable  Margin,  the  ABR or the  Eurocurrency
Reserve Requirements shall become effective as of the opening of business on the
day on which such change becomes effective.  The  Administrative  Agent shall as
soon as  practicable  notify  the  Borrower  and  the  relevant  Lenders  of the
effective date and the amount of each such change in interest rate.

     (b) Each  determination  of an interest  rate by the  Administrative  Agent
pursuant to any provision of this  Agreement  shall be conclusive and binding on
the  Borrower  and the relevant  Lenders in the absence of manifest  error.  The
Administrative  Agent  shall,  at the  request of the  Borrower,  deliver to the
Borrower a statement showing the quotations used by the Administrative  Agent in
determining any interest rate pursuant to Section 2.10(a).

     2.12 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:

     (a) the  Administrative  Agent shall have determined  (which  determination
shall  be  conclusive  and  binding  upon  the  Borrower)  that,  by  reason  of
circumstances  affecting the relevant  market,  adequate and reasonable means do
not exist for ascertaining the Eurocurrency Rate for such Interest Period,

     (b) the  Administrative  Agent shall have received notice from the Required
Lenders that the  Eurocurrency  Rate  determined  or to be  determined  for such
Interest  Period will not adequately and fairly reflect the cost to the relevant
Lenders (as  conclusively  certified by such  Lenders) of making or  maintaining
their affected Loans during such Interest Period, or

                                       22


     (c) the  Administrative  Agent  determines  (which  determination  shall be
conclusive  and binding  upon the  Borrower)  that  deposits  in the  applicable
currency  are not  generally  available,  or cannot be obtained by the  relevant
Lenders,  in  the  applicable  market  (any  Foreign  Currency  affected  by the
circumstances described in clause (a), (b) or (c) is referred to as an "Affected
Foreign Currency"),

then the  Administrative  Agent shall give telecopy or telephonic notice thereof
to the Borrower and the relevant Lenders as soon as practicable  thereafter.  If
such notice is given (x)  pursuant to clause (a) or (b) of this  Section 2.12 in
respect of Eurocurrency Loans denominated in Dollars,  then (i) any Eurocurrency
Loans  denominated  in  Dollars  requested  to be made on the  first day of such
Interest Period shall be made as ABR Loans, (ii) any ABR Loans that were to have
been converted on the first day of such Interest  Period to  Eurocurrency  Loans
denominated in Dollars shall be continued as ABR Loans and (iii) any outstanding
Eurocurrency Loans denominated in Dollars shall be converted, on the last day of
the then-current Interest Period, to ABR Loans and (y) in respect of any Foreign
Currency  Loans,  then (i) any Foreign  Currency  Loans in an  Affected  Foreign
Currency requested to be made on the first day of such Interest Period shall not
be made and (ii) any outstanding  Foreign  Currency Loans in an Affected Foreign
Currency shall be due and payable on the last day of the  then-current  Interest
Period.  Until such  relevant  notice has been  withdrawn by the  Administrative
Agent, no further  Eurocurrency Loans denominated in Dollars or Foreign Currency
Loans in an Affected  Foreign  Currency  shall be made or continued as such, nor
shall the  Borrower  have the right to convert ABR Loans to  Eurocurrency  Loans
denominated in Dollars.

     2.13 Pro Rata  Treatment and Payments.  (a) Each  borrowing by the Borrower
from the  Lenders  hereunder,  each  payment by the  Borrower  on account of any
facility fee or  utilization  fee and any  reduction of the  Commitments  of the
Lenders shall be made pro rata according to the respective  Loan  Percentages of
the Lenders.

     (b) Each payment  (including each prepayment) by the Borrower on account of
principal of and  interest on the Loans shall be made pro rata  according to the
respective outstanding principal amounts of the Loans then held by the Lenders.

     (c) All  payments  (including  prepayments)  to be  made  by the  Borrower,
whether on account of  principal,  interest,  fees or  otherwise,  shall be made
without setoff or  counterclaim  and shall be made prior to 12:00 Noon, New York
City time, on the due date thereof to the Administrative  Agent, for the account
of the relevant Lenders, at its Funding Office, in immediately  available funds.
Except as otherwise  specified in this  Agreement,  amounts  owing  hereunder on
account of  principal  and  interest on Loans  shall be paid in the  currency in
which such Loan was  borrowed,  and amounts  owing  hereunder on account of fees
shall  be paid in  Dollars.  The  Administrative  Agent  shall  distribute  such
payments  to the  relevant  Lenders  promptly  upon  receipt  in like  funds  as
received.  If any payment  hereunder  (other than  payments on the  Eurocurrency
Loans)  becomes due and payable on a day other than a Business Day, such payment
shall be  extended  to the next  succeeding  Business  Day.  If any payment on a
Eurocurrency  Loan  becomes due and payable on a day other than a Business  Day,
the  maturity  thereof  shall be extended to the next  succeeding  Business  Day
unless the result of such extension would be to extend such payment into another
calendar  month,  in which event such payment  shall be made on the  immediately


                                       23


preceding Business Day. In the case of any extension of any payment of principal
pursuant to the preceding two  sentences,  interest  thereon shall be payable at
the then applicable rate during such extension.

     (d) Unless the Administrative  Agent shall have been notified in writing by
any Lender  prior to a borrowing  that such Lender will not make the amount that
would  constitute  its share of such borrowing  available to the  Administrative
Agent,  the  Administrative  Agent may assume  that such  Lender is making  such
amount available to the Administrative  Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative  Agent by the
required  time on the  Borrowing  Date  therefor,  such Lender  shall pay to the
Administrative  Agent,  on  demand,  (i) in the case of amounts  denominated  in
Dollars, such amount with interest thereon at a rate equal to the greater of (x)
the Federal Funds Effective Rate and (y) a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank  compensation,  for
the period  until such Lender  makes such amount  immediately  available  to the
Administrative  Agent  or (ii) in the case of  amounts  denominated  in  Foreign
Currencies,  such  amount  with  interest  thereon at a rate  determined  by the
Administrative  Agent to be the cost to it of  funding  such  amount  until such
Lender makes such amount immediately  available to the  Administrative  Agent. A
certificate of the Administrative  Agent submitted to any Lender with respect to
any amounts  owing under this  paragraph  shall be  conclusive in the absence of
manifest  error.  If such Lender's share of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the  Administrative  Agent shall also be entitled to recover (i)
in the case of amounts denominated in Dollars, such amount with interest thereon
at the rate per annum  applicable to ABR Loans, on demand,  from the Borrower or
(ii) in the case of amounts denominated in Foreign Currencies,  such amount with
interest thereon at a rate determined by the Administrative  Agent to be the sum
of (x)  the  cost  to it of  funding  such  amount  plus  (y)  the  Eurocurrency
Applicable Margin, on demand,  from the Borrower.  The failure or refusal of any
Lender to make available to the Administrative Agent such Lender's share of such
borrowing  shall  not  relieve  any other  Lender  from its  several  obligation
hereunder to make available to the Administrative Agent the amount of such other
Lender's  share of such  borrowing.  Nothing herein shall be deemed to limit the
rights of the  Borrower  against  any Lender  that has failed or refused to make
available such Lender's share of any borrowing.

     (e) Unless the Administrative  Agent shall have been notified in writing by
the  Borrower  prior to the date of any payment  due to be made by the  Borrower
hereunder  that the Borrower  will not make such  payment to the  Administrative
Agent,  the  Administrative  Agent may assume  that the  Borrower is making such
payment,  and the  Administrative  Agent may,  but shall not be required  to, in
reliance upon such  assumption,  make available to the Lenders their  respective
pro rata shares of a  corresponding  amount.  If such payment is not made to the
Administrative  Agent by the Borrower  within three Business Days after such due
date, the  Administrative  Agent shall be entitled to recover,  on demand,  from
each relevant  Lender to which any amount which was made  available  pursuant to
the preceding sentence,  (i) in the case of amounts denominated in Dollars, such
amount with  interest  thereon at the rate per annum equal to the daily  average
Federal  Funds  Effective  Rate and (ii) in the case of amounts  denominated  in
Foreign  Currencies,  such  amount  with  interest  thereon  at a rate per annum
determined  by the  Administrative  Agent to be the cost to it of  funding  such


                                       24


amount. Nothing herein shall be deemed to limit the rights of the Administrative
Agent or any Lender against the Borrower with respect to such payment.

     2.14  Requirements  of Law.  (a) If the  adoption  of or any  change in any
Requirement  of Law or in  the  interpretation  or  application  thereof  by any
Governmental Authority charged with the interpretation or administration thereof
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central  bank or other  Governmental  Authority  made
subsequent to the date hereof:

          (i) shall  subject any Lender to any tax of any kind  whatsoever  with
     respect  to this  Agreement  or any Loan made by it, or change the basis of
     taxation  of  payments  to such  Lender  in  respect  thereof  (except  for
     Non-Excluded  Taxes  covered by Section 2.15 and changes in the rate of tax
     on the overall net income of such Lender);

          (ii) shall  impose,  modify or hold  applicable  any reserve,  special
     deposit,  compulsory  loan or similar  requirement  against assets held by,
     deposits or other liabilities in or for the account of, advances,  loans or
     other  extensions of credit by, or any other  acquisition  of funds by, any
     office of such Lender that is not otherwise  included in the  determination
     of the Eurocurrency Rate; or

          (iii)  shall  impose on such  Lender any other  condition  relating to
     funding of assets that would include the Eurodollar  Loans or the income or
     earnings in respect  thereof  (except  for  Non-Excluded  Taxes  covered by
     Section  2.15 and  changes in the rate of tax on the  overall net income of
     such Lender);

and the result of any of the  foregoing  is to increase the cost to such Lender,
by an amount  that such  Lender  reasonably  deems to be  material,  of  making,
converting into, continuing or maintaining  Eurocurrency Loans, or to reduce any
amount  receivable  hereunder in respect  thereof,  then, in any such case,  the
Borrower  shall,  promptly after its receipt of a notice with respect thereto in
accordance  with  Section  2.14(d),  pay  such  Lender,  upon  its  demand,  any
additional  amounts  necessary to compensate such Lender for such increased cost
or reduced amount receivable.

     (b) If any Lender shall have reasonably  determined that the adoption of or
any  change in any  Requirement  of Law  regarding  capital  adequacy  or in the
interpretation or application  thereof by a Governmental  Authority charged with
the interpretation or administration thereof or compliance by such Lender or any
corporation  controlling  such Lender with any  request or  directive  regarding
capital adequacy  (whether or not having the force of law) from any Governmental
Authority  made  subsequent to the date hereof shall have the effect of reducing
the  rate  of  return  on  such  Lender's  or such  corporation's  capital  as a
consequence of its obligations hereunder to a level below that which such Lender
or such  corporation  could  have  achieved  but for such  adoption,  change  or
compliance  (taking  into  consideration  such  Lender's  or such  corporation's
policies  with respect to capital  adequacy) by an amount  reasonably  deemed by
such  Lender to be  material,  then from time to time,  after  such  Lender  has
provided  written  notice in  accordance  with  Section  2.14(d) to the Borrower
requesting  compensation  for such reduction under this paragraph,  the Borrower
shall pay to such Lender such  additional  amount or amounts as will  compensate
such Lender or such corporation for such reduction.

                                       25


     (c) If  any  Governmental  Authority  of the  jurisdiction  of any  Foreign
Currency  (or any other  jurisdiction  in which the  funding  operations  of any
Lender shall be conducted with respect to such Foreign  Currency)  shall have in
effect any  reserve,  liquid  asset or similar  requirement  with respect to any
category  of  deposits  or  liabilities  customarily  used to fund loans in such
Foreign Currency, or by reference to which interest rates applicable to loans in
such Foreign Currency are determined,  and the result of such requirement  shall
be to  increase  the cost to such  Lender of making or  maintaining  any Foreign
Currency  Loan in such Foreign  Currency,  and such Lender shall  deliver to the
Borrower  a  written  notice  in  accordance  with  Section  2.14(d)  requesting
compensation  for such additional  cost under this paragraph,  then the Borrower
will pay to such  Lender on each  Interest  Payment  Date with  respect  to each
affected  Foreign  Currency Loan an amount that will  compensate such Lender for
such additional cost.

     (d) If any  Lender  becomes  entitled  to  claim  any  additional  amounts,
compensation  or additional  costs pursuant to this Section,  it shall deliver a
written notice in accordance with this paragraph to the Borrower (with a copy to
the Administrative  Agent) requesting such additional  amounts,  compensation or
additional  costs and  notifying the Borrower of the event by reason of which it
has become so entitled.  Such Lender agrees to use reasonable efforts to deliver
such notice  promptly  following the time at which it becomes aware of the event
giving rise to such additional amounts,  compensation or additional cost payable
(provided that the failure by such Lender to give such notice promptly shall not
adversely  affect  any  of  its  rights  hereunder).  A  certificate  as to  any
additional  amounts,  compensation  or  additional  costs  payable to any Lender
pursuant to this  Section 2.14  submitted by any Lender to the Borrower  (with a
copy to the Administrative Agent) shall be conclusive in the absence of manifest
error. Notwithstanding anything to the contrary contained in paragraphs (a), (b)
and (c)  above,  the  Borrower  shall not be  required  to  compensate  a Lender
pursuant to such  paragraphs  for any amounts  incurred  more than three  months
prior to the date  that such  Lender  notifies  the  Borrower  of such  Lender's
intention to claim  compensation  therefor;  and provided  further  that, if the
circumstances  giving rise to such claim have a  retroactive  effect,  then such
three-month  period shall be extended to include the period of such  retroactive
effect.  The  obligations  of the  Borrower  pursuant to this Section 2.14 shall
survive the  termination  of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

     (e)  Notwithstanding  any other  provision  of this  Agreement,  if (x) the
adoption of or any change in any Requirement of Law or in the  interpretation or
application thereof by a Governmental  Authority charged with the interpretation
or  administration  thereof  or  compliance  by any Lender  with any  request or
directive  (whether  or not  having the force of law) from any  central  bank or
other  Governmental  Authority made  subsequent to the date hereof shall make it
unlawful for any Lender to make or maintain any Foreign Currency Loan or to give
effect to its  obligations  as  contemplated  hereby with respect to any Foreign
Currency  Loan,  or (y) there  shall have  occurred  any change in  national  or
international  financial,   political  or  economic  conditions  (including  the
imposition  of or any change in  exchange  controls,  but  excluding  conditions
otherwise  covered by this Section 2.14) which would make it  impracticable  for
any  Lender  to make or  maintain  Foreign  Currency  Loans  denominated  in the
relevant  Foreign  Currency after the date hereof to, or for the account of, the
Borrower,  then,  by written  notice to the Borrower  and to the  Administrative
Agent:

                                       26


          (i) such  Lender  may  declare  that  Foreign  Currency  Loans (in the
     affected  Foreign  Currency or  Currencies)  will not  thereafter  (for the
     duration  of such  unlawfulness  or change in  conditions)  be made by such
     Lender or  Lenders  hereunder  (or be  continued  for  additional  Interest
     Periods),  whereupon  any  request  for a  Foreign  Currency  Loan  (in the
     affected  Foreign Currency or Currencies) or to continue a Foreign Currency
     Loan (in the affected Foreign Currency or Currencies),  as the case may be,
     for an additional  Interest Period) shall, as to such Lender only, be of no
     force and effect, unless such declaration shall be subsequently  withdrawn;
     and

          (ii) such Lender may require  that all  outstanding  Foreign  Currency
     Loans (in the  affected  Foreign  Currency  or  Currencies),  made by it be
     converted to ABR Loans or Eurocurrency Loans denominated in Dollars, as the
     case may be  (unless  repaid  by the  Borrower),  in which  event  all such
     Foreign  Currency  Loans (in the affected  Foreign  Currency or Currencies)
     shall be  converted  to ABR  Loans or  Eurocurrency  Loans  denominated  in
     Dollars,  as the case may be, as of the  effective  date of such  notice as
     provided in  paragraph  (f) below and at the  Exchange  Rate on the date of
     such  conversion or, at the option of the Borrower,  repaid on the last day
     of the then current Interest Period with respect thereto.

In the event any Lender shall  exercise its rights under (i) or (ii) above,  all
payments and  prepayments of principal made thereafter that would otherwise have
been applied to repay the converted  Foreign Currency Loans of such Lender shall
instead be applied to repay the ABR Loans or Eurocurrency  Loans  denominated in
Dollars, as the case may be, made by such Lender resulting from such conversion.

     (f) For purposes of Section 2.14(e), a notice to the Borrower by any Lender
shall be  effective  as to each Foreign  Currency  Loan made by such Lender,  if
lawful,  on the last day of the Interest  Period  currently  applicable  to such
Foreign  Currency Loan; in all other cases such notice shall be effective on the
date of receipt thereof by the Borrower.

     2.15 Taxes.  (a) All  payments  made by the Borrower  under this  Agreement
shall be made free and clear of, and without  deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties,  charges,  fees,  deductions or withholdings,  now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income  taxes and  franchise  taxes  (imposed  in lieu of net income  taxes)
imposed  on the  Administrative  Agent or any Lender as a result of a present or
former  connection  between  the  Administrative  Agent or such  Lender  and the
jurisdiction of the  Governmental  Authority  imposing such tax or any political
subdivision  or  taxing  authority  thereof  or  therein  (other  than  any such
connection  arising solely from the  Administrative  Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced,  this Agreement or any other Loan Document).  If any such non-excluded
taxes,  levies,  imposts,  duties,  charges,  fees,  deductions or  withholdings
("Non-Excluded  Taxes") or Other  Taxes are  required  to be  withheld  from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative  Agent or such Lender shall be increased to the
extent  necessary  to yield to the  Administrative  Agent or such Lender  (after
payment of all  Non-Excluded  Taxes and Other Taxes)  interest or any such other
amounts  payable  hereunder  at the rates or in the  amounts  specified  in this


                                       27


Agreement,  provided,  however,  that the  Borrower  shall  not be  required  to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are  attributable  to such  Lender's  failure to comply  with the
requirements  of  paragraph  (d) or (e) of this  Section or (ii) that are United
States  withholding  taxes imposed on amounts payable to such Lender at the time
such Lender  becomes a party to this  Agreement,  except to the extent that such
Lender's assignor (if any) was entitled,  at the time of assignment,  to receive
additional  amounts from the Borrower  with respect to such  Non-Excluded  Taxes
pursuant to this paragraph.

     (b) In  addition,  the  Borrower  shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

     (c)  Whenever  any  Non-Excluded  Taxes or Other  Taxes are  payable by the
Borrower,  as promptly as possible  thereafter  the  Borrower  shall send to the
Administrative  Agent for its own  account or for the  account  of the  relevant
Lender,  as the case may be, a certified  copy of an original  official  receipt
received by the Borrower showing payment  thereof.  If the Borrower fails to pay
any  Non-Excluded  Taxes  or Other  Taxes  when  due to the  appropriate  taxing
authority or fails to remit to the Administrative Agent the required receipts or
other  required   documentary   evidence,   the  Borrower  shall  indemnify  the
Administrative  Agent and the Lenders  for any  incremental  taxes,  interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.

     (d) Each Lender (or Transferee)  that is not a "U.S.  Person" as defined in
Section  7701(a)(30)  of the Code (a  "Non-U.S.  Lender")  shall  deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant,  to the
Lender  from which the  related  participation  shall have been  purchased)  two
copies of either U.S.  Internal Revenue Service Form W-8BEN or Form W-8ECI,  or,
in  the  case  of  a  Non-U.S.  Lender  claiming  exemption  from  U.S.  federal
withholding  tax under  Section  871(h) or  881(c) of the Code with  respect  to
payments  of  "portfolio  interest",  a statement  substantially  in the form of
Exhibit E and a Form W-8BEN,  or any subsequent  versions  thereof or successors
thereto,  properly completed and duly executed by such Non-U.S.  Lender claiming
complete  exemption  from U.S.  federal  withholding  tax on all payments by the
Borrower under this Agreement and the other Loan Documents.  Such forms shall be
delivered  by each  Non-U.S.  Lender on or before the date it becomes a party to
this Agreement (or, in the case of any  Participant,  on or before the date such
Participant  purchases the related  participation).  In addition,  each Non-U.S.
Lender shall deliver such forms promptly upon the  obsolescence or invalidity of
any form  previously  delivered  by such  Non-U.S.  Lender,  to the extent  such
Non-U.S.  Lender is  legally  able to  deliver  such  replacement  forms..  Each
Non-U.S.  Lender shall  promptly  notify the Borrower at any time it  determines
that  it  is no  longer  in a  position  to  provide  any  previously  delivered
certificate to the Borrower (or any other form of  certification  adopted by the
U.S. taxing authorities for such purpose).

     (e) The  agreements in this Section shall survive the  termination  of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

     2.16  Indemnity.  The Borrower  agrees to indemnify each Lender for, and to
hold each Lender harmless from, any loss or expense that such Lender may sustain
or incur as a  consequence  of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurocurrency Loans after the Borrower has


                                       28


given a notice  requesting  the same in accordance  with the  provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from  Eurocurrency  Loans  after  the  Borrower  has given a notice  thereof  in
accordance  with  the  provisions  of  this  Agreement  or (c) the  making  of a
prepayment  of  Eurocurrency  Loans  on a day  that  is not the  last  day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the  excess,  if any,  of (i) the  amount of  interest  that would have
accrued on the amount so prepaid,  or not so borrowed,  converted or  continued,
for the period from the date of such  prepayment  or of such  failure to borrow,
convert or continue to the last day of such Interest  Period (or, in the case of
a failure to borrow,  convert or continue,  the Interest  Period that would have
commenced on the date of such  failure) in each case at the  applicable  rate of
interest for such Loans provided for herein (excluding,  however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable  period with leading banks in
the  interbank  Eurocurrency  market.  A certificate  as to any amounts  payable
pursuant  to this  Section  submitted  to the  Borrower  by any Lender  shall be
conclusive in the absence of manifest  error.  This  covenant  shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

     2.17 Change of Lending Office. Each Lender agrees that, upon the occurrence
of any event  giving  rise to the  operation  of Section  2.14 or  2.15(a)  with
respect to such Lender,  it will, if requested by the Borrower,  use  reasonable
efforts (subject to overall policy  considerations  of such Lender) to designate
another  lending  office for any Loans affected by such event with the object of
avoiding the consequences of such event; provided, that such designation is made
on terms that,  in the sole  judgment of such Lender,  cause such Lender and its
lending   office(s)  to  suffer  no  economic,   legal,   regulatory   or  other
disadvantage,  and provided,  further, that nothing in this Section shall affect
or postpone any of the  obligations  of the Borrower or the rights of any Lender
pursuant to Section 2.14 or 2.15(a).

     2.18 Replacement of Lenders. The Borrower shall be permitted to replace any
Lender that (a) requests  reimbursement  for amounts  owing  pursuant to Section
2.14 or 2.15(a) or (b) defaults in its obligation to make Loans hereunder,  with
a replacement financial institution; provided that (i) such replacement does not
conflict  with any  Requirement  of Law,  (ii) no Event of  Default  shall  have
occurred and be continuing at the time of such  replacement,  (iii) prior to any
such  replacement,  such Lender shall have taken no action under Section 2.17 so
as to eliminate the continued  need for payment of any amounts owing pursuant to
Section  2.14 or  2.15(a),  (iv) the  replacement  financial  institution  shall
purchase,  at par (unless the Lender being replaced otherwise agrees to accept a
lesser  payment in its  discretion),  all Loans and other  amounts owing to such
replaced Lender on or prior to the date of  replacement,  (v) the Borrower shall
be liable to such replaced  Lender under Section 2.16 if any  Eurocurrency  Loan
owing to such replaced  Lender shall be purchased  other than on the last day of
the  Interest  Period   relating   thereto,   (vi)  the  replacement   financial
institution,  if not already a Lender,  shall be reasonably  satisfactory to the
Administrative  Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance  with the provisions of Section 9.6 (provided that the
Borrower shall be obligated to pay the  registration and processing fee referred
to therein),  (viii) until such time as such  replacement  shall be consummated,
the Borrower  shall pay all  additional  amounts (if any)  required  pursuant to


                                       29


Section 2.14 or 2.15(a), as the case may be, and (ix) any such replacement shall
not be deemed to be a waiver of any rights that the Borrower, the Administrative
Agent or any other Lender shall have against the replaced Lender.

     2.19 Judgment  Currency.  (a) If, for the purpose of obtaining  judgment in
any court, it is necessary to convert a sum owing hereunder in one currency into
another  currency,  each party hereto agrees,  to the fullest extent that it may
effectively  do so,  that the rate of exchange  used shall be that at which,  in
accordance  with normal  banking  procedures in the relevant  jurisdiction,  the
first  currency  could be purchased with such other currency on the Business Day
immediately preceding the day on which final judgment is given.

     (b) The  obligations of the Borrower in respect of any sum due to any party
hereto  or any  holder  of the  obligations  owing  hereunder  (the  "Applicable
Creditor")  shall,  notwithstanding  any judgment in a currency  (the  "Judgment
Currency")  other  than the  currency  in which  such  sum is  stated  to be due
hereunder (the "Agreement Currency"),  be discharged only to the extent that, on
the  Business  Day  following  receipt  by the  Applicable  Creditor  of any sum
adjudged to be so due in the Judgment Currency,  the Applicable  Creditor may in
accordance with normal banking procedures in the relevant  jurisdiction purchase
the  Agreement  Currency  with  the  Judgment  Currency;  if the  amount  of the
Agreement  Currency  so  purchased  is less than the sum  originally  due to the
Applicable  Creditor  in the  Agreement  Currency,  the  Borrower  as a separate
obligation  and  notwithstanding  any such  judgment,  agrees to  indemnify  the
Applicable Creditor against such loss. The obligations of the Borrower contained
in this Section shall survive the  termination of this Agreement and the payment
of all other amounts owing hereunder.

                   SECTION 3. REPRESENTATIONS AND WARRANTIES

     To induce  the  Administrative  Agent and the  Lenders  to enter  into this
Agreement and to make the Loans, the Borrower hereby  represents and warrants to
the  Administrative  Agent  and each  Lender,  as of the date of this  Agreement
(except as to the  representations  and  warranties  made as of a date  certain,
which  shall be true  and  correct  as of such  date)  and as of the  date  such
representations and warranties are deemed to be made under Section 4.2(a), that:

     3.1 Financial  Condition.  The audited  consolidated  balance sheets of the
Borrower and its consolidated  Subsidiaries as at January 1, 2000,  December 30,
2000 and December 29, 2001 and the related consolidated statements of income and
of cash flows for the  fiscal  years  ended on such  dates,  reported  on by and
accompanied by an unqualified  report from Arthur  Andersen LLP,  present fairly
the  consolidated  financial  condition  of the  Borrower  and its  consolidated
Subsidiaries as at such dates,  and the  consolidated  results of its operations
and its consolidated  cash flows for the respective fiscal years then ended. The
unaudited  consolidated  balance  sheet  of the  Borrower  and its  consolidated
Subsidiaries  as at September 28, 2002, and the related  unaudited  consolidated
statements  of income and cash  flows for the  nine-month  period  ended on such
date,  present fairly the consolidated  financial  condition of the Borrower and
its consolidated  Subsidiaries as at such date, and the consolidated  results of
its operations and its  consolidated  cash flows for the nine-month  period then
ended  (subject  to  normal  year-end  audit  adjustments).  All such  financial
statements,  including  the  related  schedules  and  notes  thereto,  have been
prepared in  accordance  with GAAP  (subject to the  absence of  footnotes  with
respect to unaudited quarterly  statements) applied consistently  throughout the


                                       30


periods involved (except as approved by the  aforementioned  firm of accountants
and disclosed  therein).  As of the date of this Agreement,  no Group Member has
any material Guarantee  Obligations,  contingent liabilities and liabilities for
taxes,  or any  long-term  leases or unusual  forward or long-term  commitments,
including any interest rate or foreign currency swap or exchange  transaction or
other  obligation in respect of  derivatives,  other than those that (i) are not
material  to the  Borrower  and its  Subsidiaries  taken  as a whole or (ii) are
reflected in the most recent financial  statements referred to in this paragraph
or in the Borrower's most recent report on Form 10-K and any subsequent  reports
on Form 10-Q or Form 8-K filed with the SEC prior to the date of this  Agreement
(such filings,  the "SEC Filings").  During the period from December 29, 2001 to
and including the date of this  Agreement  there has been no  Disposition by any
Group  Member of any part of its  business or property  material to the Borrower
and its  Subsidiaries  taken as a whole  except as set forth in the most  recent
financial  statements  referred to in this  paragraph or in the  Borrower's  SEC
Filings.

     3.2 No Change.  Since  December 29, 2001,  there has been no development or
event that has had or could  reasonably  be expected to have a Material  Adverse
Effect.

     3.3  Existence;  Compliance  with  Law.  Each  Group  Member  (a)  is  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right,  to own and operate its  property,  to lease the  property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign  corporation  and in good standing under the laws of each
jurisdiction where its ownership,  lease or operation of property or the conduct
of its business  requires such  qualification  and (d) is in compliance with all
Requirements  of Law  except to the  extent  that the  failure to conform to the
requirements of clauses (a) through (d) could not, in the aggregate,  reasonably
be expected to have a Material Adverse Effect.

     3.4 Power;  Authorization;  Enforceable  Obligations.  The Borrower has the
power and authority,  and the legal right, to make, deliver and perform the Loan
Documents to which it is a party and to borrow hereunder. The Borrower has taken
all necessary  organizational  action to authorize the  execution,  delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower,  to authorize the  extensions of credit on the terms and conditions of
this Agreement.  No consent or authorization of, filing with, notice to or other
act by or in  respect  of, any  Governmental  Authority  or any other  Person is
required of any Group Member in connection  with the  borrowings by the Borrower
hereunder or with the execution,  delivery and  performance by the Borrower,  or
the validity or enforceability against the Borrower, of this Agreement or any of
the Loan  Documents.  Each Loan Document has been duly executed and delivered on
behalf of the Borrower. This Agreement constitutes, and each other Loan Document
upon execution will  constitute,  a legal,  valid and binding  obligation of the
Borrower,  enforceable against the Borrower in accordance with its terms, except
as  enforceability  may  be  limited  by  applicable   bankruptcy,   insolvency,
reorganization,   moratorium  or  similar  laws  affecting  the  enforcement  of
creditors'  rights  generally  and  by  general  equitable  principles  (whether
enforcement is sought by proceedings in equity or at law).

     3.5 No Legal Bar.  Except as, in the  aggregate,  could not  reasonably  be
expected  to  have a  Material  Adverse  Effect,  the  execution,  delivery  and
performance  of this  Agreement  and the other Loan  Documents,  the  borrowings


                                       31


hereunder and the use of the proceeds  thereof will not violate any  Requirement
of Law or any Contractual Obligation of any Group Member and will not result in,
or require,  the creation or imposition  of any Lien on any of their  respective
properties  or  revenues  pursuant  to  any  Requirement  of  Law  or  any  such
Contractual Obligation.

     3.6 Litigation. No litigation, investigation or proceeding of or before any
arbitrator  or  Governmental  Authority  is pending or, to the  knowledge of the
Borrower,  threatened  by or against  any Group  Member or against  any of their
respective  properties or revenues  that could  reasonably be expected to have a
Material Adverse Effect.

     3.7 Ownership of Property; Liens. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, each Group Member has
title in fee simple to, or a valid leasehold interest in, all its real property,
and good title to, or a valid leasehold interest in, all its other property, and
none of such property is subject to any Lien except as permitted by Section 6.4.

     3.8 Taxes. Except as, in the aggregate, could not reasonably be expected to
have a Material  Adverse  Effect,  each  Group  Member has filed or caused to be
filed all Federal,  state and other material tax returns that are required to be
filed and has paid all taxes shown to be due and  payable on said  returns or on
any assessments made against it or any of its property and all other taxes, fees
or  other  charges  imposed  on it or any of its  property  by any  Governmental
Authority  (other than any the amount or validity of which are  currently  being
contested  in good faith by  appropriate  proceedings  and with respect to which
reserves in conformity with GAAP have been provided on the books of the relevant
Group Member).

     3.9 Federal Regulations.  No part of the proceeds of any Loans will be used
for any purpose that violates the provisions of Regulation U or any of the other
Regulations  of the Board.  If  requested  by any  Lender or the  Administrative
Agent, the Borrower will furnish to the  Administrative  Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1, as applicable, referred to in Regulation U.

     3.10 ERISA.  Except as, in the aggregate,  could not reasonably be expected
to  have  a  Material  Adverse  Effect,   neither  a  Reportable  Event  nor  an
"accumulated  funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred  during the five-year  period prior to the
date on which this  representation  is made or deemed  made with  respect to any
Plan,  and each Plan has complied in all material  respects with the  applicable
provisions of ERISA and the Code. No termination  of a Single  Employer Plan has
occurred that could  reasonably be expected to have a Material  Adverse  Effect,
and no Lien in favor of the PBGC or a Plan has  arisen,  during  such  five-year
period.  The present value of all accrued  benefits  under each Single  Employer
Plan  (based on those  assumptions  used to fund such  Plans) did not, as of the
last annual  valuation  date prior to the date on which this  representation  is
made or deemed  made,  exceed the value of the assets of such Plan  allocable to
such accrued  benefits by an amount that is material in relation to Consolidated
Net Worth. Except as in the aggregate could not reasonably be expected to have a
Material Adverse Effect, neither the Borrower nor any Commonly Controlled Entity
has had a complete  or  partial  withdrawal  from any  Multiemployer  Plan,  and
neither the Borrower nor any Commonly  Controlled Entity would become subject to


                                       32


any liability under ERISA that, in the aggregate,  could  reasonably be expected
to result in a Material  Adverse  Effect if the  Borrower  or any such  Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which this  representation
is made or deemed  made.  No such  Multiemployer  Plan is in  Reorganization  or
Insolvent under  circumstances  that could reasonably be expected to result in a
Material Adverse Effect.

     3.11  Investment  Company Act;  Other  Regulations.  The Borrower is not an
"investment  company",  or a company  "controlled"  by an "investment  company",
within the  meaning of the  Investment  Company  Act of 1940,  as  amended.  The
Borrower is not subject to regulation  under any  Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.

     3.12  Use of  Proceeds.  The  proceeds  of the  Loans  shall be used by the
Borrower and its  Subsidiaries for working  capital,  non-hostile  acquisitions,
repurchases of Capital Stock,  debentures and other  securities of the Borrower,
the refinancing of present and future debt and general corporate purposes.

     3.13  Environmental  Matters.  Except  as,  in  the  aggregate,  could  not
reasonably be expected to have a Material Adverse Effect:

     (a) the facilities and  properties  owned,  leased or operated by any Group
Member (the "Properties") do not contain, and have not previously contained, any
Materials  of  Environmental  Concern  in  amounts  or  concentrations  or under
circumstances  that constitute or constituted a violation of, or could give rise
to liability under, any Environmental Law;

     (b) no Group  Member has  received or is aware of any notice of  violation,
alleged violation,  non-compliance,  liability or potential  liability regarding
environmental  matters or compliance with  Environmental Laws with regard to any
of the Properties or the business operated by any Group Member (the "Business"),
nor does the Borrower  have  knowledge or reason to believe that any such notice
will be received or is being threatened;

     (c)  Materials  of  Environmental  Concern  have  not been  transported  or
disposed of from the Properties in violation of, or in a manner or to a location
that could give rise to liability  under,  any  Environmental  Law, nor have any
Materials of Environmental Concern been generated,  treated,  stored or disposed
of at, on or under any of the  Properties  in violation  of, or in a manner that
could give rise to liability under, any applicable Environmental Law;

     (d) no judicial  proceeding or  governmental  or  administrative  action is
pending  or,  to  the   knowledge  of  the  Borrower,   threatened,   under  any
Environmental  Law to which any Group Member is or will be named as a party with
respect to the Properties or the Business,  nor are there any consent decrees or
other decrees,  consent orders,  administrative orders or other orders, or other
administrative or judicial requirements  outstanding under any Environmental Law
with respect to the Properties or the Business;

     (e)  there  has been no  release  or  threat of  release  of  Materials  of
Environmental  Concern at or from the Properties,  or arising from or related to
the  operations  of any  Group  Member  in  connection  with the  Properties  or


                                       33


otherwise in connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws;

     (f) the  Properties and all operations at the Properties are in compliance,
and  have in the  last  five  years  been in  compliance,  with  all  applicable
Environmental  Laws,  and  there is no  contamination  at,  under  or about  the
Properties or violation of any  Environmental Law with respect to the Properties
or the Business; and

     (g) no Group  Member has assumed any  liability  of any other  Person under
Environmental Laws.

     3.14 Accuracy of Information, etc. No statement or information contained in
this Agreement,  the Confidential  Information Memorandum or any other document,
certificate  or  statement  furnished  by or on  behalf of the  Borrower  to the
Administrative  Agent or the Lenders, or any of them, for use in connection with
the  transactions  contemplated  by this Agreement or the other Loan  Documents,
contained as of the date such  statement,  information,  document or certificate
was so furnished (or, in the case of the Confidential Information Memorandum, as
of the date of this  Agreement)  when taken  together with the SEC Filings,  any
untrue  statement  of a  material  fact or  omitted  to  state a  material  fact
necessary to make the statements contained herein or therein not misleading. The
projections  and pro forma  financial  information  contained  in the  materials
referenced above are based upon good faith estimates and assumptions believed by
management  of  the  Borrower  to be  reasonable  at the  time  made,  it  being
recognized  by the  Lenders  that such  financial  information  as it relates to
future  events is not to be viewed as fact and that  actual  results  during the
period or periods  covered by such  financial  information  may differ  from the
projected results set forth therein by a material amount.

                        SECTION 4. CONDITIONS PRECEDENT

     4.1 Conditions to Initial  Loans.  The agreement of each Lender to make the
initial Loans requested to be made by it is subject to the  satisfaction,  prior
to or concurrently  with the making of such Loans,  of the following  conditions
precedent:

     (a) Credit  Agreement.  The  Administrative  Agent shall have received this
Agreement,  executed and delivered by the Administrative  Agent, the Syndication
Agent,  the  Co-Documentation  Agents,  the Borrower  and each Person  listed on
Schedule 1.1.

     (b) Fees. The Lenders and the Administrative  Agent shall have received all
fees  required  to be paid,  and all  expenses  for  which  invoices  have  been
presented  (including the reasonable fees and expenses of legal counsel),  on or
before the Closing  Date.  All such amounts will be paid by wire transfer on the
Closing Date.

     (c)  Closing  Certificate;  Certified  Certificate  of  Incorporation.  The
Administrative  Agent shall have received a certificate  of the Borrower,  dated
the  Closing  Date,  substantially  in the form of Exhibit  B, with  appropriate
insertions and  attachments,  including the certificate of  incorporation of the
Borrower.

     (d) Legal Opinions.  The Administrative Agent shall have received the legal
opinion of Seth Hoogasian, General Counsel of the Borrower and its Subsidiaries,


                                       34


substantially  in the form of  Exhibit D. Such legal  opinion  shall  cover such
other matters incident to the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require.

     (e) Other  Agreement.  The Other  Agreement  shall have been  executed  and
delivered by the Borrower and all other  parties  thereto,  and the Closing Date
(as defined therein) shall have occurred thereunder.

     4.2  Conditions to Each Loan. The agreement of each Lender to make any Loan
(other  than a  Refunding  Borrowing)  requested  to be made  by it on any  date
(including  its initial  Loan) is subject to the  satisfaction  of the following
conditions precedent:

     (a)  Representations  and  Warranties.  Each  of  the  representations  and
warranties made by the Borrower in or pursuant to the Loan Documents (other than
representations  and warranties made as of a specified earlier date, which shall
be true and correct as of such earlier date) shall be true and correct on and as
of such date as if made on and as of such date.

     (b) No Default.  No Default or Event of Default  shall have occurred and be
continuing on such date or after giving effect to the Loans requested to be made
on such date.

Each borrowing by the Borrower hereunder shall constitute a representation
and  warranty  by the  Borrower  as of the  date  of  such  borrowing  that  the
conditions contained in this Section 4.2 have been satisfied.

                        SECTION 5. AFFIRMATIVE COVENANTS

     The Borrower  hereby  agrees  that,  so long as the  Commitments  remain in
effect or any Loan or other amount is owing to any Lender or the  Administrative
Agent  hereunder,  the Borrower  shall and (except in the case of Sections  5.1,
5.2, 5.4(a)(i) and 5.7) shall cause each of its Subsidiaries to:

     5.1 Financial Statements.  Furnish to the Administrative Agent (which shall
promptly make a copy thereof available to each Lender, including by posting on a
secure website):

     (a) as soon as available,  but in any event within 90 days after the end of
each fiscal year of the  Borrower,  a copy of the audited  consolidated  balance
sheet of the Borrower and its  consolidated  Subsidiaries  as at the end of such
year and the related audited consolidated statements of income and of cash flows
for such year,  setting forth in each case in  comparative  form the figures for
the previous year,  reported on without a "going concern" or like  qualification
or  exception,  or  qualification  arising  out of the  scope of the  audit,  by
PriceWaterhouseCoopers  LLP or other independent certified public accountants of
nationally recognized standing; and

     (b) as soon as available, but in any event not later than 45 days after the
end of each of the first  three  quarterly  periods of each  fiscal  year of the


                                       35


Borrower,  the  unaudited  consolidated  balance  sheet of the  Borrower and its
consolidated  Subsidiaries  as at the  end  of  such  quarter  and  the  related
unaudited  consolidated  statements of income and of cash flows for such quarter
and the portion of the fiscal  year  through  the end of such  quarter,  setting
forth in each  case in  comparative  form the  figures  for the  previous  year,
certified  by a  Responsible  Officer  as being  fairly  stated in all  material
respects (subject to normal year-end audit adjustments).

All such  financial  statements  shall be complete  and correct in all  material
respects and shall be prepared in reasonable  detail and in accordance with GAAP
(subject  to the  absence  of  footnotes  with  respect to  unaudited  quarterly
statements)  applied (except as approved by such accountants or officer,  as the
case may be, and disclosed in reasonable detail therein) consistently throughout
the periods reflected therein and with prior periods.  Notwithstanding  anything
to the  contrary  contained  in this  Section  5.1,  the  Borrower  shall not be
required to deliver any financial  statements to the  Administrative  Agent with
respect to any period for which it has timely  filed its Form 10-K or Form 10-Q,
as the case may be, with the SEC (provided  that such Form 10-K or Form 10-Q, as
the case may be,  is  publicly  available  on the  SEC's  website  (or a similar
website) within the time periods required by this Section).

     5.2 Certificates;  Other Information.  Furnish to the Administrative  Agent
(which shall promptly make a copy thereof available to each Lender, including by
posting on a secure website):

     (a) within the time period in which the Borrower is required to deliver any
financial statements pursuant to Section 5.1, (i) a certificate of a Responsible
Officer stating that, to the best of such Responsible  Officer's knowledge,  the
Borrower during the period covered by such financial  statements has observed or
performed  all of its  covenants  and  other  agreements,  and  satisfied  every
condition  contained in this  Agreement and the other Loan Documents to which it
is a  party  to be  observed,  performed  or  satisfied  by it,  and  that  such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except  as  specified  in such  certificate  and (ii) a  Compliance  Certificate
containing all information and calculations necessary for determining compliance
by the Borrower with the provisions of this Agreement  referred to therein as of
the last day of the fiscal  quarter or fiscal year of the Borrower,  as the case
may be;

     (b) as soon as available,  and in any event no later than 60 days after the
end of each fiscal year of the  Borrower,  a  reasonably  detailed  consolidated
budget (set forth on a quarter by quarter basis) for the following fiscal year;

     (c)  unless  publicly  available  at such time on the SEC's  website  (or a
similar  website),  within  five days  after  the same are  sent,  copies of all
financial  statements  and reports that the Borrower sends to the holders of any
class of its debt  securities or public equity  securities and, within five days
after the same are filed,  copies of all financial  statements  and reports that
the Borrower may make to, or file with, the SEC; and

     (d) promptly, such additional financial and other information as any Lender
may from time to time reasonably request.

     5.3 Payment of  Obligations.  Pay,  discharge  or  otherwise  satisfy at or
before  maturity or before they become  delinquent,  as the case may be, all its


                                       36


obligations of whatever nature that, if not paid,  could  reasonably be expected
to result in a Material  Adverse  Effect,  except  where the amount or  validity
thereof is currently  being  contested in good faith by appropriate  proceedings
and reserves in conformity  with GAAP with respect thereto have been provided on
the books of the relevant Group Member.

     5.4 Maintenance of Existence;  Compliance.  (a)(i) Preserve, renew and keep
in full force and effect the Borrower's  organizational  existence and (ii) take
all reasonable action to maintain all rights,  privileges and franchises of each
such Group Member  necessary or desirable in the normal conduct of its business,
except,  in each case, as otherwise  permitted by Section 6.5 and except, in the
case of  clause  (ii)  above,  to the  extent  that  failure  to do so could not
reasonably be expected to have a Material Adverse Effect;  and (b) except to the
extent that, in the aggregate,  non-compliance  could not reasonably be expected
to have a Material Adverse Effect,  comply with all Contractual  Obligations and
Requirements of Law.

5.5 Maintenance of Property; Insurance. Except to the extent that, in the
aggregate, non-compliance could not reasonably be expected to have a Material
Adverse Effect, (a) keep all property useful and necessary in its business in
good working order and condition, ordinary wear and tear excepted and (b)
maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business.

     5.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper
books of  records  and  account  in which  full,  true and  correct  entries  in
conformity  with GAAP and all  Requirements of Law shall be made of all dealings
and  transactions  material to the  Borrower  and its  Subsidiaries,  taken as a
whole, in relation to its business and activities and (b) permit representatives
of any Lender to visit and  inspect any of its  properties  and examine and make
abstracts from any of its books and records at any reasonable  time and as often
as may reasonably be desired and to discuss the business, operations, properties
and  financial  and other  condition  of the Group  Members  with  officers  and
employees  of the Group  Members  and with their  independent  certified  public
accountants.

     5.7 Notices. Promptly after the Borrower becomes aware thereof, give notice
to the Administrative  Agent (which shall promptly make a copy thereof available
to each Lender, including by posting on a secure website):

     (a) the occurrence of any Default or Event of Default;

     (b) any (i) default or event of default under any Contractual Obligation of
any Group Member or (ii) litigation,  investigation or proceeding that may exist
at any time between any Group  Member and any  Governmental  Authority,  that in
either case, if not cured or if adversely determined,  as the case may be, could
reasonably be expected to have a Material Adverse Effect;

                                       37


     (c) any  litigation or  proceeding  affecting any Group Member (i) in which
the amount  involved is $10,000,000 or more and not covered by insurance or (ii)
which relates to any Loan Document;

     (d) the  following  events,  as soon as possible and in any event within 30
days after the Borrower knows or has reason to know thereof:  (i) the occurrence
of any  Reportable  Event with  respect to any Plan which  could  reasonably  be
expected  to have a Material  Adverse  Effect,  a failure  to make any  required
contribution  to a Plan, the creation of any Lien in favor of the PBGC or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer  Plan,  (ii) the  institution  of proceedings or the taking of any
other  action  by  the  PBGC  with  respect  to  the  withdrawal  from,  or  the
termination, Reorganization or Insolvency of, any Plan, or (iii) the institution
of proceedings or the taking of any other action by the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan which, in the case
of this clause (iii),  could  reasonably be expected to have a Material  Adverse
Effect; and

     (e) any  development or event that has had or could  reasonably be expected
to have a Material Adverse Effect.

Each notice  pursuant to this Section shall be  accompanied  by a statement of a
Responsible  Officer setting forth details of the occurrence referred to therein
and stating what action the relevant Group Member  proposes to take with respect
thereto.

     5.8 Environmental Laws. Comply in all material respects with all applicable
Environmental  Laws,  and obtain and comply in all  material  respects  with and
maintain  any and  all  licenses,  approvals,  notifications,  registrations  or
permits required by applicable Environmental Laws, except to the extent that the
failure to comply, or obtain and comply,  therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

                         SECTION 6. NEGATIVE COVENANTS

     The Borrower  hereby  agrees  that,  so long as the  Commitments  remain in
effect or any Loan or other amount is owing to any Lender or the  Administrative
Agent  hereunder,  the  Borrower  shall  not,  and shall not  permit  any of its
Subsidiaries to, directly or indirectly:

     6.1 Financial Condition Covenants.

     (a) Consolidated  Interest Coverage Ratio. Permit the Consolidated Interest
Coverage  Ratio  for any  period  of four  consecutive  fiscal  quarters  of the
Borrower  ending on any fiscal  quarter of the  Borrower  ending on or after the
fiscal quarter ending on March 29, 2003 to be less than 3.75:1.00.

     (b)  Consolidated  Total  Debt to Total  Capitalization  Ratio.  Permit the
Consolidated Total Debt to Consolidated Total Capitalization Ratio at the end of
any fiscal quarter of the Borrower  ending on or after the fiscal quarter ending
on March 29, 2003 to be greater than 0.50:1.00.

                                       38


     6.2  Standby  and  Performance  Letters of  Credit.  Permit at any one time
outstanding  the sum of (a) the aggregate then undrawn face amount of surety and
performance bonds, bank guarantees and standby and performance letters of credit
as to which the Borrower  and/or any  Subsidiary is or are the account party and
which do not secure or otherwise  assure the payment of Indebtedness and (b) the
aggregate  then  unreimbursed  amount of all amounts paid in respect of drawings
under such surety and performance  bonds,  bank guarantees and letters of credit
to exceed $200,000,000.

     6.3  Indebtedness of Subsidiaries.  In the case of any Subsidiary,  create,
issue,  incur,  assume,  become  liable  in  respect  of or  suffer to exist any
Indebtedness of such Subsidiary, except:

     (a) Indebtedness of such Subsidiary to the Borrower or any other Subsidiary
and Guarantee  Obligations of any Subsidiary with respect to Indebtedness of the
Borrower or any other Subsidiary;

     (b) (i)  Indebtedness  outstanding  on the date  hereof  and  described  on
Schedule  6.3(b),  and  additional  Indebtedness  incurred after the date hereof
under the  revolving  credit  arrangements  described  on Schedule  6.3(b) in an
aggregate  principal  amount  at any one  time  outstanding  not to  exceed  the
commitments  or limits  existing  with  respect  thereto on the date  hereof and
described  on such  Schedule,  and (ii)  Indebtedness  under  any  replacements,
refinancings,  refundings,  renewals or extensions of the Indebtedness described
in clause (i) (without  increasing the principal amount above the commitments or
limits,  or shortening the maturity thereof to a date earlier than the maturity,
respectively, thereof described on Schedule 6.3(b));

     (c) Indebtedness (including, without limitation, Capital Lease Obligations)
secured by Liens  permitted by Section 6.4(g) in an aggregate  principal  amount
not to exceed the greater of  $25,000,000 or 2.5% of  Consolidated  Net Worth at
any one time outstanding; and

     (d)  additional  Indebtedness  in an  aggregate  principal  amount  for all
Subsidiaries (on a consolidated basis) not to exceed the greater of $100,000,000
or 10.1% of Consolidated Net Worth at any one time outstanding.

     6.4 Liens.  Create,  incur,  assume or suffer to exist any Lien upon any of
its property  (other than any Lien on Margin Stock created,  incurred or assumed
at a time when such Margin Stock constitutes Unrestricted Margin Stock), whether
now owned or hereafter acquired, except:

     (a) Liens for taxes not yet due or that are being  contested  in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP;

     (b) carriers', warehousemen's,  mechanics',  materialmen's,  repairmen's or
other like Liens arising in the ordinary course of business that are not overdue
for a period of more than 30 days or that are being  contested  in good faith by
appropriate proceedings;

                                       39


     (c)  pledges  or  deposits  in  connection   with  workers'   compensation,
unemployment insurance and other social security legislation;

     (d) deposits to secure the performance of bids, trade contracts (other than
for borrowed money),  leases,  statutory  obligations,  surety and appeal bonds,
performance  bonds  and  other  obligations  of a like  nature  incurred  in the
ordinary course of business;

     (e) easements,  rights-of-way,  restrictions and other similar encumbrances
incurred in the ordinary  course of business  that,  in the  aggregate,  are not
substantial  in amount and that do not in any case  materially  detract from the
value of the property subject thereto or materially  interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;

     (f)  Liens  in  existence  on the  date  hereof  (or,  in the case of Liens
securing  Indebtedness in respect of the securities  lending  arrangements  with
JPMorgan  Chase  Bank and ABN AMRO Inc.  described  on  Schedule  6.4(f),  Liens
created  with  respect  thereto)  and  described  on  Schedule  6.4(f)  securing
Indebtedness described on such Schedule, or Liens on the assets that are subject
to  such  existing  Liens  securing  any  replacement  or  refinancing  of  such
Indebtedness;  provided that  Indebtedness in respect of the securities  lending
arrangements  with JPMorgan  Chase Bank and ABN AMRO Inc.  described on Schedule
6.4(f) may not be replaced or refinanced beyond December 31, 2003; and provided,
further that (i) no Lien permitted by this Section 6.4(f) is spread to cover any
additional  property after the Closing Date and (ii) the amount of  Indebtedness
secured thereby is not increased  beyond the commitments or limits  described on
Schedule 6.4(f);

     (g) Liens securing  Indebtedness  incurred (in the case of any  Subsidiary,
pursuant  to  Section  6.3(c) or (d)) to  finance  the  acquisition  of fixed or
capital assets or Liens on such fixed or capital assets securing any refinancing
of such  Indebtedness,  provided that (i) such Liens (other than those  securing
any such refinancing Indebtedness) shall be created substantially simultaneously
with the acquisition of such fixed or capital assets,  (ii) such Liens do not at
any time  encumber  any  property  other  than  the  property  financed  by such
Indebtedness   and  (iii)  (in  the  case  of  any  Subsidiary)  the  amount  of
Indebtedness secured thereby is not increased;

     (h) any interest or title of a lessor  under any lease  entered into by the
Borrower or any other  Subsidiary  in the  ordinary  course of its  business and
covering only the assets so leased;

     (i) other incidental Liens that (i) are not, in the aggregate,  material to
the  Borrower  and  its  Subsidiaries  taken  as a  whole,  (ii)  do not  secure
Indebtedness  and (iii) do not cover at any time assets having an aggregate fair
market value in excess of $10,000,000;

     (j) Liens incurred  pursuant to a Permitted  Receivables  Securitization on
the Receivables that are subject thereto;

     (k)  Liens  on  assets  of  a  Subsidiary  securing  Acquired  Indebtedness
permitted  by  Section  6.3(d) in an  aggregate  principal  amount  for all such
Subsidiaries  not to exceed  $75,000,000 at any one time  outstanding;  provided
that such Liens are not spread to other assets of such Subsidiary  following the
consummation of the applicable acquisition; and

                                       40


     (l) Liens securing  Indebtedness  in an aggregate  principal  amount not to
exceed $25,000,000 at any one time outstanding.

     6.5  Fundamental   Changes.   Enter  into  any  merger,   consolidation  or
amalgamation,   or  liquidate,  wind  up  or  dissolve  itself  (or  suffer  any
liquidation  or  dissolution),  or  Dispose of all or  substantially  all of its
property or business, except that:

     (a) any  Subsidiary of the Borrower may be merged or  consolidated  with or
into the  Borrower  (provided  that the  Borrower  shall  be the  continuing  or
surviving corporation) or any other Subsidiary;

     (b) any  Subsidiary of the Borrower may Dispose of any or all of its assets
(i) to the  Borrower or any other  Subsidiary  (upon  voluntary  liquidation  or
otherwise) or (ii) pursuant to a Disposition permitted by Section 6.6;

     (c) any Investment  expressly permitted by Section 6.7 may be structured as
a merger, consolidation or amalgamation; and

     (d) any  Subsidiary  may be  liquidated,  wound up or dissolved,  as deemed
appropriate by the Borrower.

     6.6 Disposition of Property. Dispose of any of its property (other than any
property which, at the time of any Disposition thereof, constitutes Unrestricted
Margin Stock),  whether now owned or hereafter acquired,  or, in the case of any
Subsidiary,  issue or sell any shares of such Subsidiary's  Capital Stock to any
Person, except:

     (a) the Disposition of obsolete or worn out property in the ordinary course
of business;

     (b) the sale of inventory in the ordinary course of business;

     (c) Dispositions permitted by clause (i) of Section 6.5(b);

     (d) the sale or issuance of any Subsidiary's  Capital Stock to the Borrower
or any other Subsidiary;

     (e) the Dispositions listed on Schedule 6.6;

     (f) the Disposition  during any period of four consecutive  fiscal quarters
of the Borrower,  commencing with the  four-quarter  period ending on January 3,
2004,  of  other  property   having  an  aggregate  book  value  not  to  exceed
$200,000,000  at the beginning of such period,  provided that the Borrower shall
deliver to the Administrative  Agent written notice ten Business Days in advance
of any Disposition in excess of $50,000,000;

     (g)  Dispositions  of  Receivables  pursuant  to  a  Permitted  Receivables
Securitization;

     (h)  Dispositions  of  Investments  permitted  by Section  6.7(b);  and

                                       41


     (i)  Dispositions  by  any  Group  Member  to  the  Borrower  or any of its
Subsidiaries.

     6.7  Investments.  Make any advance,  loan,  extension of credit (by way of
guaranty or  otherwise)  or capital  contribution  to, or  purchase  any Capital
Stock,  bonds,  notes,  debentures  or other debt  securities  of, or any assets
constituting  a  business  unit of, or make any other  investment  in, any other
Person (all of the foregoing, "Investments"), except:

     (a) extensions of trade credit in the ordinary course of business;

     (b) investments in Cash Equivalents;

     (c)  obligations  in respect of letters of credit,  surety and  performance
bonds and bank  guarantees  permitted by Section 6.2, and Guarantee  Obligations
permitted by Section 6.3;

     (d) loans and  advances to  employees  of any Group  Member in the ordinary
course of business (including for travel, entertainment and relocation expenses)
in an aggregate amount for all Group Members not to exceed $5,000,000 at any one
time outstanding;

     (e)  intercompany  Investments  by any Group  Member in the Borrower or any
Subsidiary;

     (f)  non-hostile  acquisitions  of businesses or the  acquisition  (through
merger or  otherwise)  of or  Investments  in  Persons if (i) in the case of the
acquisition of the Capital Stock of any Person (whether by merger or otherwise),
such Person has become a  Subsidiary  of the Borrower as a result of thereof and
(ii) after giving pro forma effect to such  acquisition or Investment,  there is
no  Default  or Event  of  Default  (it  being  understood  and  agreed  that in
determining  pro forma  compliance  with Section 6.1,  such  covenants  shall be
recomputed  as of the most recent  fiscal-quarter-end  date for which  financial
statements  shall have been delivered  pursuant to Section 5.1,  adjusted (x) in
the case of Section 6.1(a), to recompute  Consolidated  EBITDA to give effect to
such  acquisition  or  Investment  as if it had occurred on the first day of the
applicable  four-quarter period and to recompute  Consolidated  Interest Expense
for such  period to include  the  additional  interest  that would have  accrued
during such period in respect of Indebtedness  acquired or assumed in connection
with such  acquisition  or Investment  if such  acquisition  or  Investment  had
occurred  on the first day of such  period and in  respect  of any  Indebtedness
incurred to finance such acquisition or Investment if such Indebtedness had been
incurred on such day (and had borne interest  throughout such period at the rate
per annum applicable thereto on the date it was incurred) and (y) in the case of
Section  6.1(b),  to recompute  Consolidated  Total Debt to include  therein all
Indebtedness acquired,  assumed or incurred by the Borrower and its Subsidiaries
in  connection  with  and to  finance  such  acquisition  or  Investment  and to
recompute  Consolidated  Net  Worth  to  give  effect  to  such  acquisition  or
Investment);

     (g)  Investments  consisting  of promissory  notes  received as proceeds of
Dispositions permitted by Section 6.6; and

     (h) in  addition  to  Investments  otherwise  expressly  permitted  by this
Section, Investments by the Borrower and its Subsidiaries in an aggregate amount


                                       42


(valued  at  cost)  not  to  exceed  $200,000,000  during  any  period  of  four
consecutive  fiscal quarters of the Borrower,  commencing with the  four-quarter
period ending on January 3, 2004.

     6.8 Transactions with Affiliates. Enter into any transaction, including any
purchase,  sale, lease or exchange of property,  the rendering of any service or
the payment of any  management,  advisory or similar  fees,  with any  Affiliate
(other than the Borrower or any other Group Member) unless such  transaction (a)
is (i)  otherwise  permitted  under  this  Agreement  and  (ii)  upon  fair  and
reasonable  terms no less  favorable to the relevant  Group Member than it would
obtain in a  comparable  arm's length  transaction  with a Person that is not an
Affiliate  or (b)  involves,  when taken  together  with all other  transactions
covered by this clause (b) entered  into during any fiscal year,  $1,000,000  or
less.

     6.9 Changes in Fiscal Periods.  Change the Borrower's method of determining
fiscal years and quarters  without  prior written  notice to the  Administrative
Agent.

     6.10 Lines of Business. Enter into any business, either directly or through
any  Subsidiary,  except  for those  businesses  in which the  Borrower  and its
Subsidiaries  are engaged on the date of this  Agreement or that are  reasonably
related thereto.

                          SECTION 7. EVENTS OF DEFAULT

     If any of the following events shall occur and be continuing:

     (a) the  Borrower  shall fail to pay any  principal of any Loan when due in
accordance with the terms hereof; or the Borrower shall fail to pay any interest
on any Loan,  or any other  amount  payable  hereunder  or under any other  Loan
Document,  within five days after any such interest or other amount  becomes due
in accordance with the terms hereof; or

     (b) any  representation  or warranty  made or deemed  made by the  Borrower
herein or in any other Loan  Document or that is contained  in any  certificate,
document or financial or other statement furnished by it at any time under or in
connection  with this  Agreement or any such other Loan Document  shall prove to
have been inaccurate in any material respect on or as of the date made or deemed
made; or

     (c) the Borrower  shall  default in the  observance or  performance  of any
agreement contained in clause (i) or (ii) of Section 5.4(a) (with respect to the
Borrower only), Section 5.7(a) or Section 6 of this Agreement; or

     (d) the Borrower  shall  default in the  observance or  performance  of any
other  agreement  contained in this Agreement or any other Loan Document  (other
than as  provided in  paragraphs  (a)  through  (c) of this  Section),  and such
default shall  continue  unremedied  for a period of 30 days after notice to the
Borrower from the Administrative Agent or the Required Lenders; or

     (e) any  Group  Member  shall (i)  default  in making  any  payment  of any
principal of any Indebtedness (including any Guarantee Obligation, but excluding
the Loans) on the scheduled or original due date with respect  thereto;  or (ii)
default in making any payment of any  interest on any such  Indebtedness  beyond


                                       43


the period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created; or (iii) default in the observance or performance
of any  other  agreement  or  condition  relating  to any such  Indebtedness  or
contained  in any  instrument  or  agreement  evidencing,  securing  or relating
thereto,  or any other event shall occur or condition exist, the effect of which
default  or other  event or  condition  is to cause,  or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder
or  beneficiary)  to  cause,  with  the  giving  of  notice  if  required,  such
Indebtedness  to become due prior to its stated  maturity or (in the case of any
such Indebtedness  constituting a Guarantee Obligation) to become payable (other
than any such default, event or condition arising solely out of the violation by
the  Borrower  or any  Subsidiary  of any  covenant in any way  restricting  the
Borrower's,  or any such  Subsidiary's,  right or  ability  to sell,  pledge  or
otherwise dispose of Unrestricted Margin Stock); provided, that a default, event
or condition  described in clause (i), (ii) or (iii) of this paragraph (e) shall
not at any time constitute an Event of Default unless, at such time, one or more
defaults,  events or conditions  of the type  described in clauses (i), (ii) and
(iii) of this  paragraph (e) shall have occurred and be continuing  with respect
to  Indebtedness  the  outstanding  principal  amount  of which  exceeds  in the
aggregate $15,000,000; or

     (f) (i) any Group  Member  shall  commence  any case,  proceeding  or other
action (A) under any  existing  or future law of any  jurisdiction,  domestic or
foreign,  relating  to  bankruptcy,  insolvency,  reorganization  or  relief  of
debtors,  seeking to have an order for  relief  entered  with  respect to it, or
seeking to  adjudicate it a bankrupt or  insolvent,  or seeking  reorganization,
arrangement,  adjustment, winding-up, liquidation,  dissolution,  composition or
other relief with respect to it or its debts,  or (B) seeking  appointment  of a
receiver,  trustee,  custodian,  conservator or other similar official for it or
for all or any substantial part of its assets,  or any Group Member shall make a
general  assignment  for the  benefit of its  creditors;  or (ii) there shall be
commenced  against any Group  Member any case,  proceeding  or other action of a
nature referred to in clause (i) above that (A) results in the entry of an order
for relief or any such  adjudication or appointment or (B) remains  undismissed,
undischarged  or  unbonded  for a period  of 60 days;  or (iii)  there  shall be
commenced against any Group Member any case,  proceeding or other action seeking
issuance of a warrant of  attachment,  execution,  distraint or similar  process
against all or any  substantial  part of its assets that results in the entry of
an order for any such relief that shall not have been  vacated,  discharged,  or
stayed or bonded pending  appeal within 60 days from the entry thereof;  or (iv)
any Group  Member shall take any action in  furtherance  of, or  indicating  its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its  inability to, pay its debts as they
become due; or

     (g) (i) any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code)  involving  any Plan,  (ii)
any  "accumulated  funding  deficiency"  (as  defined in Section  302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan  shall  arise on the  assets  of any  Group  Member or any
Commonly  Controlled  Entity,  (iii) a Reportable Event shall occur with respect
to, or  proceedings  shall  commence to have a trustee  appointed,  or a trustee
shall be appointed,  to administer or to terminate,  any Single  Employer  Plan,
which  Reportable  Event or  commencement  of  proceedings  or  appointment of a
trustee is, in the reasonable opinion of the Required Lenders,  likely to result
in the  termination  of such Plan for  purposes  of Title IV of ERISA,  (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,  (v) any


                                       44


Group Member or any  Commonly  Controlled  Entity  shall,  or in the  reasonable
opinion of the Required  Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization  of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan;  and in each  case in  clauses  (i)  through  (vi)  above,  such  event or
condition,  together  with all other such events or  conditions,  if any,  could
reasonably be expected to have a Material Adverse Effect; or

     (h) one or more  judgments  or decrees  shall be entered  against any Group
Member  involving  in the  aggregate a liability  (not paid or fully  covered by
insurance as to which the relevant insurance company has acknowledged  coverage)
of  $10,000,000  or more,  and all such judgments or decrees shall not have been
vacated,  discharged,  stayed or bonded  pending  appeal within 30 days from the
entry thereof; or

     (i) (i) any  "person" or "group" (as such terms are used in Sections  13(d)
and 14(d) of the  Securities  Exchange Act of 1934,  as amended  (the  "Exchange
Act")),  excluding  the  Permitted  Investors,  shall  become,  or obtain rights
(whether by means or warrants,  options or otherwise) to become, the "beneficial
owner"  (as  defined in Rules  13(d)-3  and  13(d)-5  under the  Exchange  Act),
directly or indirectly,  of more than 40% of the outstanding common stock of the
Borrower;  or (ii) the board of directors of the Borrower shall cease to consist
of a majority of Continuing Directors;

then, and in any such event, (A) if such event is an Event of Default  specified
in clause  (i) or (ii) of  paragraph  (f) above with  respect  to the  Borrower,
automatically the Commitments  shall  immediately  terminate and the Loans (with
accrued  interest  thereon) and all other amounts owing under this Agreement and
the other Loan Documents shall  immediately  become due and payable,  and (B) if
such  event is any  other  Event of  Default,  either  or both of the  following
actions  may be  taken:  (i) with  the  consent  of the  Required  Lenders,  the
Administrative  Agent may,  or upon the  request of the  Required  Lenders,  the
Administrative Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith,  whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders,  the Administrative Agent shall, by
notice to the Borrower,  declare the Loans (with accrued  interest  thereon) and
all other amounts owing under this  Agreement and the other Loan Documents to be
due and payable  forthwith,  whereupon the same shall immediately become due and
payable.  Except  as  expressly  provided  above in this  Section,  presentment,
demand, protest and all other notices of any kind are hereby expressly waived by
the Borrower.

                             SECTION 8. THE AGENTS

     8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative  Agent as the agent of such Lender under this  Agreement  and the
other  Loan  Documents,   and  each  such  Lender  irrevocably   authorizes  the
Administrative  Agent, in such capacity, to take such action on its behalf under
the  provisions of this  Agreement and the other Loan  Documents and to exercise
such  powers  and  perform  such  duties  as  are  expressly  delegated  to  the
Administrative  Agent  by the  terms  of  this  Agreement  and  the  other  Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding  any provision to the contrary elsewhere in this Agreement,  the


                                       45


Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary  relationship with any Lender,  and
no  implied  covenants,  functions,  responsibilities,  duties,  obligations  or
liabilities  shall be read into this  Agreement  or any other Loan  Document  or
otherwise exist against the Administrative Agent.

     8.2 Delegation of Duties. The  Administrative  Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining  to such  duties.  The  Administrative  Agent  shall  not be
responsible for the negligence or misconduct of any agents or attorneys  in-fact
selected by it with reasonable care.

     8.3 Exculpatory  Provisions.  Neither any Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable to any Lender for any action lawfully taken or omitted to be taken by
it or such Person under or in connection  with this  Agreement or any other Loan
Document  (except to the extent that any of the  foregoing  are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross  negligence or willful  misconduct)  or (ii)
responsible  in any manner to any of the Lenders for any  recitals,  statements,
representations  or  warranties  made by any Loan Party or any  officer  thereof
contained in this  Agreement or any other Loan  Document or in any  certificate,
report,  statement or other document referred to or provided for in, or received
by the Agents  under or in  connection  with,  this  Agreement or any other Loan
Document or for the value, validity, effectiveness,  genuineness, enforceability
or  sufficiency  of this Agreement or any other Loan Document or for any failure
of any Loan Party a party  thereto  to  perform  its  obligations  hereunder  or
thereunder.  The  Agents  shall not be under  any  obligation  to any  Lender to
ascertain  or to  inquire  as to the  observance  or  performance  of any of the
agreements  contained  in, or  conditions  of, this  Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.

     8.4 Reliance by  Administrative  Agent. The  Administrative  Agent shall be
entitled to rely, and shall be fully protected in relying,  upon any instrument,
writing, resolution, notice, consent, certificate,  affidavit, letter, telecopy,
telex or teletype  message,  statement,  order or other document or conversation
believed by it to be genuine and correct and to have been  signed,  sent or made
by the proper Person or Persons and upon advice and  statements of legal counsel
(including counsel to the Borrower),  independent  accountants and other experts
selected by the  Administrative  Agent.  The  Administrative  Agent may deem and
treat the  payee of any Note as the  owner  thereof  for all  purposes  unless a
written  notice of assignment,  negotiation or transfer  thereof shall have been
filed with the  Administrative  Agent. The  Administrative  Agent shall be fully
justified in failing or refusing to take any action under this  Agreement or any
other Loan Document  unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement,  all Lenders) as it
deems  appropriate or it shall first be indemnified to its  satisfaction  by the
Lenders  against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully  protected in acting,  or in refraining from acting,
under this Agreement and the other Loan  Documents in accordance  with a request
of the Required  Lenders (or, if so specified by this  Agreement,  all Lenders),
and such request and any action taken or failure to act pursuant  thereto  shall
be binding upon all the Lenders and all future holders of the Loans.

                                       46


     8.5 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the  occurrence of any Default or Event of Default unless
the  Administrative  Agent has  received  notice  from a Lender or the  Borrower
referring  to this  Agreement,  describing  such Default or Event of Default and
stating  that such  notice  is a  "notice  of  default".  In the event  that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders.  The Administrative  Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required  Lenders (or, if so specified by this  Agreement,  all Lenders);
provided that unless and until the Administrative Agent shall have received such
directions,  the  Administrative  Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of  Default  as it shall  deem  advisable  in the  best  interests  of the
Lenders.

     8.6  Non-Reliance  on  Agents  and Other  Lenders.  Each  Lender  expressly
acknowledges  that  neither  the  Agents nor any of their  respective  officers,
directors,  employees,  agents,  attorneys-in-fact  or affiliates  have made any
representations  or  warranties  to it and  that no act by any  Agent  hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party,  shall be deemed to constitute any representation or warranty by any
Agent  to any  Lender.  Each  Lender  represents  to the  Agents  that  it  has,
independently and without reliance upon any Agent or any other Lender, and based
on such  documents and  information as it has deemed  appropriate,  made its own
appraisal  of  and  investigation  into  the  business,  operations,   property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans  hereunder and enter into
this  Agreement.  Each Lender also represents  that it will,  independently  and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem  appropriate at the time,  continue to make its
own credit  analysis,  appraisals  and  decisions in taking or not taking action
under  this  Agreement  and  the  other  Loan   Documents,   and  to  make  such
investigation  as it  deems  necessary  to  inform  itself  as to the  business,
operations,  property, financial and other condition and creditworthiness of the
Loan  Parties  and their  affiliates.  Except  for  notices,  reports  and other
documents   expressly   required  to  be   furnished   to  the  Lenders  by  the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or  responsibility  to provide any Lender  with any credit or other  information
concerning  the  business,   operations,   property,   condition  (financial  or
otherwise),  prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the  possession of the  Administrative  Agent or
any  of  its  officers,  directors,  employees,  agents,   attorneys-in-fact  or
affiliates.

     8.7  Indemnification.  The  Lenders  agree to  indemnify  each Agent in its
capacity  as such (to the extent not  reimbursed  by the  Borrower  and  without
limiting the  obligation of the Borrower to do so),  ratably  according to their
respective Loan  Percentages in effect on the date on which  indemnification  is
sought under this Section (or, if  indemnification is sought after the date upon
which the  Commitments  shall have terminated and the Loans shall have been paid
in full,  ratably in accordance with such Loan Percentages  immediately prior to
such  date),  from and  against any and all  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (whether before or after the payment
of the Loans) be imposed on,  incurred by or asserted  against such Agent in any
way relating to or arising out of, the Commitments,  this Agreement,  any of the
other Loan Documents or any documents  contemplated  by or referred to herein or


                                       47


therein or the transactions  contemplated  hereby or thereby or any action taken
or omitted  by such  Agent  under or in  connection  with any of the  foregoing;
provided  that no Lender  shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  that are found by a final and  nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross  negligence or willful  misconduct.  The  agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

     8.8 Agent in Its  Individual  Capacity.  Each Agent and its  affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with any Loan Party as though such Agent were not an Agent.  With respect to its
Loans made or renewed by it,  each Agent  shall have the same  rights and powers
under this Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not an Agent,  and the terms  "Lender" and  "Lenders"
shall include each Agent in its individual capacity.

     8.9 Successor  Administrative Agent. The Administrative Agent may resign as
Administrative  Agent upon 10 days' notice to the Lenders and the  Borrower.  If
the  Administrative  Agent  shall  resign as  Administrative  Agent  under  this
Agreement and the other Loan Documents,  then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders,  which successor agent
shall  (unless  an Event of Default  under  Section  7(a) or  Section  7(f) with
respect to the Borrower  shall have  occurred and be  continuing)  be subject to
approval by the Borrower (which  approval shall not be unreasonably  withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative  Agent, and the term  "Administrative  Agent" shall
mean such successor agent effective upon such appointment and approval,  and the
former Administrative  Agent's rights, powers and duties as Administrative Agent
shall be  terminated,  without  any other or further  act or deed on the part of
such former  Administrative Agent or any of the parties to this Agreement or any
holders  of the  Loans.  If no  successor  agent  has  accepted  appointment  as
Administrative  Agent  by  the  date  that  is  10  days  following  a  retiring
Administrative  Agent's  notice  of  resignation,  the  retiring  Administrative
Agent's  resignation  shall  nevertheless  thereupon become  effective,  and the
Lenders shall assume and perform all of the duties of the  Administrative  Agent
hereunder  until such time, if any, as the Required  Lenders appoint a successor
agent  as  provided  for  above.  After  any  retiring   Administrative  Agent's
resignation  as  Administrative  Agent,  the  provisions of this Section 8 shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.

     8.10 Syndication Agent and Co-Documentation Agents. Neither the Syndication
Agent nor any Co-Documentation Agent shall have any duties or responsibilities
hereunder in its capacity as such.

                            SECTION 9. MISCELLANEOUS

     9.1  Amendments  and  Waivers.  Neither  this  Agreement,  any  other  Loan
Document,  nor any terms  hereof or  thereof  may be  amended,  supplemented  or
modified  except in  accordance  with the  provisions  of this  Section 9.1. The
Required  Lenders and the  Borrower  may,  or,  with the written  consent of the
Required Lenders,  the  Administrative  Agent and the Borrower may, from time to


                                       48


time, (a) enter into written amendments, supplements or modifications hereto and
to the other Loan  Documents  for the purpose of adding any  provisions  to this
Agreement  or the other Loan  Documents  or changing in any manner the rights of
the Lenders or the Borrower  hereunder or thereunder or (b) waive, on such terms
and conditions as the Required Lenders or the Administrative  Agent, as the case
may  be,  may  specify  in  such  instrument,  any of the  requirements  of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences;  provided,  however,  that no such  waiver and no such  amendment,
supplement or modification  shall (i) forgive the principal amount or extend the
final  scheduled  date of  maturity  of any Loan,  reduce the stated rate of any
interest  or fee  payable  hereunder  (except in  connection  with the waiver of
applicability of any post-default increase in interest rates (which waiver shall
be effective with the consent of the Required  Lenders)) or extend the scheduled
date of any payment  thereof,  or increase  the amount or extend the  expiration
date of any Lender's  Commitment,  in each case  without the written  consent of
each Lender  directly  affected  thereby;  (ii)  eliminate  or reduce the voting
rights of any Lender under this Section 9.1 without the written  consent of such
Lender;  (iii) reduce any  percentage  specified in the  definition  of Required
Lenders or consent to the  assignment  or transfer by the Borrower of any of its
rights and  obligations  under this Agreement and the other Loan  Documents,  in
each case  without the written  consent of all  Lenders;  (iv) amend,  modify or
waive  any   provision  of  Section  9  without  the  written   consent  of  the
Administrative  Agent; or (v) add additional currencies as Foreign Currencies in
which  Foreign  Currency  Loans may be made under  this  Agreement  without  the
written  consent of all the  Lenders.  Any such  waiver and any such  amendment,
supplement or modification  shall apply equally to each of the Lenders and shall
be binding upon the  Borrower,  the Lenders,  the  Administrative  Agent and all
future  holders of the  Loans.  In the case of any  waiver,  the  Borrower,  the
Lenders and the Administrative  Agent shall be restored to their former position
and rights  hereunder  and under the other Loan  Documents,  and any  Default or
Event of Default waived shall be deemed to be cured and not  continuing;  but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.

     9.2 Notices.  All notices,  requests and demands to or upon the  respective
parties hereto to be effective  shall be in writing  (including by telecopy) and
shall not be effective  until  received,  provided  that any notice given by the
Administrative  Agent  pursuant  to the final  paragraph  of  Section 7 shall be
deemed to have been duly given or made when  delivered,  or three  Business Days
after being deposited in the mail, postage prepaid,  or, in the case of telecopy
notice, when received. All such notices, requests and demands shall be addressed
as follows, in the case of the Borrower and the Administrative Agent, and as set
forth in an administrative  questionnaire  delivered to the Administrative Agent
in the  case  of the  Lenders,  or to such  other  address  as may be  hereafter
notified by the respective parties hereto:

        Borrower:                       Thermo Electron Corporation
                                        81 Wyman Street
                                        Waltham, Massachusetts 02454-9046
                                        Attention: Treasurer
                                        Telecopy: 781-622-1181
                                        Telephone: 781-622-1000

                                        With a copy to:

                                       49


                                       Thermo Electron Corporation
                                       81 Wyman Street
                                       Waltham, Massachusetts 02454-9046
                                       Attention: General Counsel
                                       Telecopy: 781-622-1283
                                       Telephone: 781-622-1000

      Administrative Agent:            Barclays Bank PLC
                                       222 Broadway
                                       New York, New York 10038
                                       Attention: Charles Ray
                                       Telecopy: 212-412-5306
                                       Telephone: 212-412-3355

     Notices and other  communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative  Agent;  provided that the  foregoing  shall not apply to notices
pursuant to Section 2 unless  otherwise agreed by the  Administrative  Agent and
the  applicable  Lender.  The  Administrative  Agent or the Borrower may, in its
discretion,  agree to accept notices and other communications to it hereunder by
electronic  communications  pursuant to procedures approved by it; provided that
approval  of  such   procedures   may  be  limited  to  particular   notices  or
communications.

     9.3 No Waiver;  Cumulative Remedies. No failure to exercise and no delay in
exercising,  on the part of the  Administrative  Agent or any Lender, any right,
remedy,  power or privilege  hereunder or under the other Loan  Documents  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right,  remedy,  power or  privilege  hereunder  preclude  any other or  further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights,  remedies,  powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

     9.4 Survival of Representations  and Warranties.  All  representations  and
warranties  made  hereunder,  in the other Loan  Documents  and in any document,
certificate or statement  delivered  pursuant  hereto or in connection  herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.

     9.5  Payment of  Expenses  and  Taxes.  The  Borrower  agrees (a) to pay or
reimburse the Administrative  Agent for all its reasonable  out-of-pocket  costs
and  expenses  incurred in  connection  with the  development,  preparation  and
execution of, and any amendment,  supplement or modification  to, this Agreement
and the other Loan  Documents  and any other  documents  prepared in  connection
herewith  or  therewith,   and  the  consummation  and   administration  of  the
transactions contemplated hereby and thereby,  including the reasonable fees and
disbursements  of counsel to the  Administrative  Agent,  with  statements  with
respect to the  foregoing to be  submitted to the Borrower  prior to the Closing
Date (in the case of  amounts to be paid on the  Closing  Date) and from time to
time  thereafter  on a  quarterly  basis  or such  other  periodic  basis as the
Administrative Agent shall deem appropriate, (b) after the occurrence and during
the continuance of an Event of Default,  to pay or reimburse each Lender and the
Administrative  Agent for all its  reasonable  out-of-pocket  costs and expenses


                                       50


incurred in connection  with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents, including
the fees and  disbursements  of  counsel  to each  Lender  and of counsel to the
Administrative  Agent and (c) to pay,  indemnify,  and hold each  Lender and the
Administrative  Agent  and  their  respective  officers,  directors,  employees,
affiliates, agents and controlling persons (each, an "Indemnitee") harmless from
and  against  any and  all  other  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any
kind or nature  whatsoever  (including  reasonable fees and expenses of counsel)
with  respect  to such  Lender  or  Administrative  Agent  being a party to this
Agreement or any other Loan Document,  or the enforcement or performance of this
Agreement, the other Loan Documents and any such other documents,  including any
of the  foregoing  relating to the use of proceeds of the Loans or the violation
of,  noncompliance  with or liability under, any Environmental Law applicable to
the operations of any Group Member or any of the  Properties  (all the foregoing
in this clause (c), collectively, the "Indemnified Liabilities"), provided, that
the Borrower shall have no obligation  hereunder to any Indemnitee  with respect
to Indemnified  Liabilities to the extent such Indemnified Liabilities are found
by a final and  nonappealable  decision of a court of competent  jurisdiction to
have resulted from the gross negligence or willful misconduct of such Indemnitee
or the  breach by such  Indemnitee  of its  obligations  under  this  Agreement.
Without  limiting the foregoing,  and to the extent permitted by applicable law,
the Borrower agrees not to assert and to cause its  Subsidiaries  not to assert,
and hereby waives and agrees to cause its  Subsidiaries to waive, all rights for
contribution  or any other  rights  of  recovery  with  respect  to all  claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature,  under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee.  All amounts due
under this  Section  9.5 shall be payable  not later than 10 days after  written
demand therefor. Statements payable by the Borrower pursuant to this Section 9.5
shall be  submitted  to Office  of the  General  Counsel  (Telephone  No.  (781)
622-1000)  (Telecopy  No.  (781)  622-1283),  at the address of the Borrower set
forth in Section  9.2,  or to such other  Person or address as may be  hereafter
designated by the Borrower in a written notice to the Administrative  Agent. The
agreements  in this  Section 9.5 shall  survive  repayment  of the Loans and all
other amounts payable hereunder.

     9.6  Successors  and  Assigns;  Participations  and  Assignments.  (a)  The
provisions of this  Agreement  shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby,
except that (i) the  Borrower  may not assign or  otherwise  transfer any of its
rights or obligations hereunder without the prior written consent of each Lender
(and any attempted  assignment or transfer by the Borrower  without such consent
shall be null and void) and (ii) no Lender may assign or otherwise  transfer its
rights or obligations hereunder except in accordance with this Section.

     (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender  may  assign to one or more  assignees  (each,  an  "Assignee")  all or a
portion of its rights and obligations  under this Agreement  (including all or a
portion of its Commitments and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:

          (A) the Borrower,  provided  that no consent of the Borrower  shall be
     required  for an  assignment  to a Lender,  or, if an Event of Default  has
     occurred and is continuing, any other Person; and

                                       51


          (B)  the  Administrative  Agent,  provided  that  no  consent  of  the
     Administrative  Agent shall be required for an assignment of any Commitment
     to an assignee  that is a Lender  with a  Commitment  immediately  prior to
     giving effect to such assignment.

     (ii) Assignments shall be subject to the following additional conditions:

          (A) except in the case of an assignment to a Lender, an affiliate of a
     Lender or an Approved Fund or an assignment of the entire  remaining amount
     of  the  assigning  Lender's  Commitments  or  Loans,  the  amount  of  the
     Commitments  or  Loans  of  the  assigning  Lender  subject  to  each  such
     assignment  (determined as of the date the  Assignment and Assumption  with
     respect to such assignment is delivered to the Administrative  Agent) shall
     not  be  less  than  $5,000,000   unless  each  of  the  Borrower  and  the
     Administrative  Agent otherwise consent,  provided that (1) no such consent
     of the  Borrower  shall be required if an Event of Default has occurred and
     is  continuing  and (2) such amounts shall be aggregated in respect of each
     Lender and its affiliates or Approved Funds, if any;

          (B) the parties to each  assignment  shall  execute and deliver to the
     Administrative  Agent  an  Assignment  and  Assumption,   together  with  a
     processing and recordation fee of $3,500; and

          (C) the  Assignee,  if it shall not be a Lender,  shall deliver to the
     Administrative Agent an administrative questionnaire.

     For the  purposes of this Section  9.6,  the term  "Approved  Fund" has the
following meaning:

          "Approved Fund" means any Person (other than a natural person) that is
     engaged  in making,  purchasing,  holding  or  investing  in bank loans and
     similar  extensions  of credit in the  ordinary  course of its business and
     that is  administered  or managed by (a) a Lender,  (b) an  Affiliate  of a
     Lender or (c) an entity or an  Affiliate of an entity that  administers  or
     manages a Lender.

     (iii) Subject to acceptance  and  recording  thereof  pursuant to paragraph
(b)(iv) below,  from and after the effective  date specified in each  Assignment
and  Assumption  the  Assignee  thereunder  shall be a party  hereto and, to the
extent of the interest  assigned by such  Assignment  and  Assumption,  have the
rights and  obligations  of a Lender  under this  Agreement,  and the  assigning
Lender  thereunder  shall,  to the  extent  of the  interest  assigned  by  such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption  covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall  continue to be entitled to the benefits of Sections
2.14,  2.15,  2.16 and 9.5). Any assignment or transfer by a Lender of rights or
obligations  under this  Agreement  that does not comply  with this  Section 9.6


                                       52


shall be treated for  purposes of this  Agreement  as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

     (iv) The Administrative  Agent,  acting for this purpose as an agent of the
Borrower,  shall  maintain at one of its offices a copy of each  Assignment  and
Assumption  delivered to it and a register for the  recordation of the names and
addresses of the Lenders,  and the Commitments  of, and principal  amount of the
Loans owing to, each Lender  pursuant to the terms hereof from time to time (the
"Register").  The entries in the Register shall be conclusive, and the Borrower,
the  Administrative  Agent,  and the Lenders may treat each Person whose name is
recorded in the Register  pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.

     (v) Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an Assignee, the Assignee's completed  administrative
questionnaire  (unless the Assignee  shall already be a Lender  hereunder),  the
processing and  recordation fee referred to in paragraph (b) of this Section and
any  written  consent  to such  assignment  required  by  paragraph  (b) of this
Section,  the  Administrative  Agent shall accept such Assignment and Assumption
and record the  information  contained  therein in the  Register.  No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

     (c)  (i) Any  Lender  may,  without  the  consent  of the  Borrower  or the
Administrative Agent, sell participations to one or more banks or other entities
(a  "Participant")  in all or a portion of such Lender's  rights and obligations
under this  Agreement  (including  all or a portion of its  Commitments  and the
Loans  owing to it);  provided  that (A) such  Lender's  obligations  under this
Agreement  shall  remain   unchanged,   (B)  such  Lender  shall  remain  solely
responsible to the other parties hereto for the performance of such  obligations
and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other
Lenders  shall  continue  to deal  solely  and  directly  with  such  Lender  in
connection with such Lender's rights and obligations  under this Agreement.  Any
agreement  pursuant to which a Lender sells such a  participation  shall provide
that such Lender shall retain the sole right to enforce  this  Agreement  and to
approve  any  amendment,  modification  or  waiver  of  any  provision  of  this
Agreement;  provided that such  agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment,  modification or
waiver that (1) requires the consent of each Lender  directly  affected  thereby
pursuant to the proviso to the second  sentence of Section 9.1 and (2)  directly
affects such  Participant.  Subject to paragraph  (c)(ii) of this  Section,  the
Borrower  agrees that each  Participant  shall be  entitled  to the  benefits of
Sections  2.14,  2.15 and 2.16 to the same extent as if it were a Lender and had
acquired its interest by  assignment  pursuant to paragraph (b) of this Section.
To the extent  permitted by law, each  Participant also shall be entitled to the
benefits of Section 9.7(b) as though it were a Lender, provided such Participant
shall be subject to Section 9.7(a) as though it were a Lender.

     (ii) A  Participant  shall not be entitled  to receive any greater  payment
under Section 2.14 or 2.15 than the  applicable  Lender would have been entitled
to receive with respect to the participation  sold to such  Participant,  unless


                                       53


the sale of the  participation  to such  Participant is made with the Borrower's
prior written consent.  Any Participant  that is a Non-U.S.  Lender shall not be
entitled to the benefits of Section 2.15 unless such  Participant  complies with
Section 2.15(d).

     (d) Any Lender may at any time pledge or assign a security  interest in all
or any portion of its rights under this Agreement to secure  obligations of such
Lender,  including any pledge or assignment to secure  obligations  to a Federal
Reserve Bank,  and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest  shall  release  a Lender  from  any of its  obligations  hereunder  or
substitute any such pledgee or Assignee for such Lender as a party hereto.

     (e) The Borrower,  upon receipt of written notice from the relevant Lender,
agrees to issue Notes to any Lender  requiring Notes to facilitate  transactions
of the type described in paragraph (d) above.

     (f)  Notwithstanding  the  foregoing,  any Lender may assign its rights and
obligations  to a Conduit  Lender  organized  and  administered  by such Lender,
provided that such  assignment  shall be subject to all the  requirements of the
definition  of the term  "Conduit  Lender" in Section 1.1.  Notwithstanding  the
foregoing,  any  Conduit  Lender  may assign any or all of the Loans it may have
funded  hereunder to its designating  Lender without the consent of the Borrower
or the  Administrative  Agent and without regard to the limitations set forth in
Section 9.6(b). Each of the Borrower,  each Lender and the Administrative  Agent
hereby confirms that it will not institute  against a Conduit Lender or join any
other  Person  in  instituting   against  a  Conduit   Lender  any   bankruptcy,
reorganization,  arrangement,  insolvency or  liquidation  proceeding  under any
state  bankruptcy  or similar law, for one year and one day after the payment in
full of the latest maturing commercial paper note issued by such Conduit Lender;
provided, however, that each Lender designating any Conduit Lender hereby agrees
to indemnify, save and hold harmless each other party hereto for any loss, cost,
damage or expense  arising out of its  inability to institute  such a proceeding
against such Conduit Lender during such period of forbearance.

     9.7  Adjustments;  Set-off.  (a) Except to the extent  that this  Agreement
expressly  provides for payments to be allocated to a particular  Lender, if any
Lender (a  "Benefitted  Lender") shall receive any payment of all or part of the
Obligations  owing to it  (whether  voluntarily  or  involuntarily,  by set-off,
pursuant to events or proceedings of the nature  referred to in Section 7(f), or
otherwise),  in a greater  proportion  than any such  payment  to or  collateral
received by any other  Lender,  if any, in respect of the  Obligations  owing to
such other Lender, such Benefitted Lender shall purchase for cash from the other
Lenders a  participating  interest in such portion of the  Obligations  owing to
each such other Lender, or shall provide such other Lenders with the benefits of
any such  collateral,  as shall be necessary to cause such Benefitted  Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter  recovered  from such  Benefitted  Lender,  such purchase
shall be rescinded,  and the purchase price and benefits returned, to the extent
of such recovery, but without interest.

     (b) In addition to any rights and remedies of the Lenders  provided by law,
each  Lender  shall  have  the  right  after  the   occurrence  and  during  the


                                       54


continuation of an Event of Default,  without prior notice to the Borrower,  any
such notice being  expressly  waived by the Borrower to the extent  permitted by
applicable  law,  upon any  amount  becoming  due and  payable  by the  Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits  (general
or special,  time or demand,  provisional  or final),  in any currency,  and any
other credits,  indebtedness  or claims,  in any currency,  in each case whether
direct or indirect,  absolute or contingent,  matured or unmatured,  at any time
held or owing by such  Lender  or any  branch or  agency  thereof  to or for the
credit or the account of the  Borrower,  as the case may be. Each Lender  agrees
promptly  to notify the  Borrower  and the  Administrative  Agent after any such
setoff and  application  made by such Lender,  provided that the failure to give
such notice shall not affect the validity of such setoff and application.

     9.8  Counterparts.  This  Agreement  may be  executed by one or more of the
parties to this  Agreement  on any number of separate  counterparts,  and all of
said counterparts  taken together shall be deemed to constitute one and the same
instrument.  Delivery  of an  executed  signature  page  of  this  Agreement  by
facsimile  transmission  shall be effective  as delivery of a manually  executed
counterpart  hereof.  A set of the  copies of this  Agreement  signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

     9.9  Severability.  Any provision of this  Agreement  that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

     9.10 Integration. This Agreement and the other Loan Documents represent the
entire agreement of the Borrower,  the Administrative Agent and the Lenders with
respect to the subject  matter  hereof and  thereof,  and there are no promises,
undertakings,  representations or warranties by the Borrower, the Administrative
Agent or any Lender  relative to the subject  matter  hereof not  expressly  set
forth or referred to herein or in the other Loan Documents.

     9.11 Governing  Law. THIS  AGREEMENT AND THE RIGHTS AND  OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     9.12 Submission To Jurisdiction;  Waivers.  The Borrower hereby irrevocably
and unconditionally:


     (a) submits for itself and its property in any legal  action or  proceeding
relating to this  Agreement and the other Loan Documents to which it is a party,
or for recognition and  enforcement of any judgment in respect  thereof,  to the
non-exclusive  general  jurisdiction of the courts of the State of New York, the
courts of the United States for the Southern District of New York, and appellate
courts from any thereof;

     (b)  consents  that any such  action or  proceeding  may be brought in such
courts and waives any objection  that it may now or hereafter  have to the venue


                                       55



of any such  action  or  proceeding  in any such  court or that  such  action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

     (c) agrees that service of process in any such action or proceeding  may be
effected  by mailing a copy  thereof by  registered  or  certified  mail (or any
substantially  similar form of mail),  postage  prepaid,  to the Borrower at its
address  set  forth  in  Section  9.2 or at such  other  address  of  which  the
Administrative Agent shall have been notified pursuant thereto;

     (d) agrees that nothing  herein shall affect the right to effect service of
process in any other manner  permitted by law or shall limit the right to sue in
any other jurisdiction; and

     (e) waives,  to the maximum  extent not prohibited by law, any right it may
have to claim or recover in any legal action or  proceeding  referred to in this
Section any special, exemplary, punitive or consequential damages.

     9.13 Acknowledgements. The Borrower hereby acknowledges that:


     (a) it has been  advised  by  counsel  in the  negotiation,  execution  and
delivery of this Agreement and the other Loan Documents;

     (b)  neither  the  Administrative  Agent nor any Lender  has any  fiduciary
relationship  with or duty to the Borrower  arising out of or in connection with
this Agreement or any of the other Loan Documents,  and the relationship between
Administrative Agent and Lenders, on one hand, and Holdings and the Borrower, on
the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

     (c) no joint  venture is created  hereby or by the other Loan  Documents or
otherwise  exists by virtue of the  transactions  contemplated  hereby among the
Lenders or among the Borrower and the Lenders.

     9.14  Confidentiality.  Each of the  Administrative  Agent and each  Lender
agrees  on its own  behalf  and on  behalf  of each  Affiliate  thereof  to keep
confidential all non-public  information provided to it by any Group Member, the
Administrative  Agent or any  Lender  pursuant  to or in  connection  with  this
Agreement that is designated by the provider thereof as  confidential;  provided
that nothing  herein shall prevent the  Administrative  Agent or any Lender from
disclosing  any such  information  (a) to the  Administrative  Agent,  any other
Lender or any  affiliate  thereof  solely for the  purposes  of, or otherwise in
connection with, this Agreement, (b) subject to an express agreement to maintain
the  confidentiality  of such  information in compliance  with the provisions of
this  Section  (which may be a standing  agreement  between such Lender and such
Transferee),  to any actual or prospective  Transferee or any direct or indirect
counterparty  to any  Swap  Agreement  (or  any  professional  advisor  to  such
counterparty),  (c) to its employees, directors, agents, attorneys,  accountants
and other professional advisors or those of any of its affiliates,  in each case
who have a need to know such  information in accordance with customary  business
practices (it being  understood  that the Person to whom such disclosure is made
will be informed of the  confidential  nature of such information and instructed
to keep such  information  confidential),  (d) upon the request or demand of any
Governmental  Authority,  (e) in  response  to any  order of any  court or other
Governmental  Authority  or  as  may  otherwise  be  required  pursuant  to  any
Requirement  of Law, (f) if required to do so in connection  with any litigation


                                       56



or similar proceeding, (g) that has been publicly disclosed, (h) to the National
Association  of  Insurance  Commissioners  or any  similar  organization  or any
nationally  recognized rating agency that requires access to information about a
Lender's investment  portfolio in connection with ratings issued with respect to
such Lender,  or (i) in connection with the exercise of any remedy  hereunder or
under any other Loan Document.  Unless specifically prohibited by applicable law
or court order,  the  Administrative  Agent and each Lender shall,  prior to any
disclosure under clause (d), (e) or (f) above to (x) any Governmental  Authority
that does not have  supervisory,  regulatory  or other  similar  authority  with
respect to the Administrative Agent or such Lender, as the case may be, and that
is  seeking  such  disclosure   solely  in  connection  with  an  investigation,
litigation   or  other   proceeding   that  does  not   otherwise   involve  the
Administrative Agent or such Lender, as the case may be, or (y) any other Person
that is not a  Governmental  Entity,  notify the Borrower of any request for the
disclosure of any such non-public information so as to provide the Borrower with
the  reasonable  opportunity  to obtain a protective  order or other  comparable
relief.

     9.15 WAIVERS OF JURY TRIAL. THE BORROWER,  THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY  WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING  RELATING TO THIS  AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.

                     [Rest of page left intentionally blank]






     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed and delivered by their proper and duly  authorized  officers as of
the day and year first above written.

                                THERMO ELECTRON CORPORATION


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


                                BARCLAYS BANK PLC, as Administrative Agent
                                and as a Lender


                                By:     /s/ John Giannone
                                        --------------------------------------
                                Name:   John Giannone
                                Title:  Director


                                ABN AMRO BANK N.V., as Syndication Agent
                                and as a Lender


                                By:     /s/ Richard Scrage   James S. Kreitler
                                        --------------------------------------
                                Name:   Richard Scrage       James S. Kreitler
                                Title:  Vice President       Senior Vice
                                                             President


                                FLEET NATIONAL BANK, as Co-
                                Documentation Agent and as a Lender


                                By:     /s/ Debra E. DelVecchio
                                        --------------------------------------
                                Name:   Debra E. DelVecchio
                                Title:  Director


                                JPMORGAN CHASE BANK, as Co-
                                Documentation Agent and as a Lender


                                By:     /s/ Dawn Lee Lum
                                        --------------------------------------
                                Name:   Dawn Lee Lum
                                Title:  Vice President







                                THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                NY BRANCH, as a Lender


                                By:     /s/ Lillian Kim
                                        --------------------------------------
                                Name:   Lillian Kim
                                Title:  Authorized Signatory








                                INTESABCI S.P.A., NEW YORK BRANCH, as a Lender



                                By:     /s/ F. Maffei
                                        --------------------------------------
                                Name:   F. Maffei
                                Title:  Vice President


                                By:     /s/ J. Dickerhof
                                        --------------------------------------
                                Name:   J. Dickerhof
                                Title:  Vice President








                                KEY CORPORATE CAPITAL INC., as a Lender



                                By:     /s/ Jeff Kalinowski
                                        --------------------------------------
                                Name:   Jeff Kalinowski
                                Title:  Vice President








                                NORDEA BANK FINLAND PLC, as a Lender



                                By:     /s/ Thomas P. Hickey
                                        --------------------------------------
                                Name:   Thomas P. Hickey
                                Title:  Vice President



                                By:     /s/ Henrik M. Steffensen
                                        --------------------------------------
                                Name:   Henrik M. Steffensen
                                Title:  First Vice President

EX-10.73

                                                                   Exhibit 10.73

                                                                       EXECUTION
                                                                        VERSION


================================================================================



                                  $125,000,000


                           THREE-YEAR CREDIT AGREEMENT


                                      among


                          THERMO ELECTRON CORPORATION,
                                  as Borrower,


              The Several Lenders from Time to Time Parties Hereto,


                               ABN AMRO BANK N.V.,
                              as Syndication Agent,


                             FLEET NATIONAL BANK and
                              JPMORGAN CHASE BANK,
                           as Co-Documentation Agents,




                                       and


                               BARCLAYS BANK PLC,
                             as Administrative Agent



                          Dated as of December 20, 2002
================================================================================


                BARCLAYS Capital, as Lead Arranger and Bookrunner
                      ABN AMRO BANK N.V., as Lead Arranger








                                                                                                          
                                TABLE OF CONTENTS
                                                                                                                 Page


SECTION 1.        DEFINITIONS.....................................................................................1

         1.1      Defined Terms...................................................................................1
         1.2      Other Definitional Provisions..................................................................16
         1.3      Exchange Rates.................................................................................16

SECTION 2.        AMOUNT AND TERMS OF COMMITMENTS................................................................16

         2.1      Commitments....................................................................................16
         2.2      Procedure for Borrowing........................................................................17
         2.3      Fees...........................................................................................18
         2.4      Optional Termination or Reduction of Commitments...............................................18
         2.5      Optional Prepayments...........................................................................18
         2.6      Mandatory Prepayments..........................................................................19
         2.7      Conversion and Continuation Options............................................................19
         2.8      Limitations on Eurocurrency Tranches...........................................................19
         2.9      Repayment of Loans.............................................................................20
         2.10     Interest Rates and Payment Dates...............................................................20
         2.11     Computation of Interest and Fees...............................................................20
         2.12     Inability to Determine Interest Rate...........................................................21
         2.13     Pro Rata Treatment and Payments................................................................21
         2.14     Requirements of Law............................................................................23
         2.15     Taxes..........................................................................................26
         2.16     Indemnity......................................................................................27
         2.17     Change of Lending Office.......................................................................27
         2.18     Replacement of Lenders.........................................................................28
         2.19     Judgment Currency..............................................................................28

SECTION 3.        REPRESENTATIONS AND WARRANTIES.................................................................29

         3.1      Financial Condition............................................................................29
         3.2      No Change......................................................................................29
         3.3      Existence; Compliance with Law.................................................................29
         3.4      Power; Authorization; Enforceable Obligations..................................................30
         3.5      No Legal Bar...................................................................................30
         3.6      Litigation.....................................................................................30
         3.7      Ownership of Property; Liens...................................................................30
         3.8      Taxes..........................................................................................30
         3.9      Federal Regulations............................................................................31
         3.10     ERISA..........................................................................................31
         3.11     Investment Company Act; Other Regulations......................................................31
         3.12     Use of Proceeds................................................................................31
         3.13     Environmental Matters..........................................................................31
         3.14     Accuracy of Information, etc...................................................................32

SECTION 4.        CONDITIONS PRECEDENT...........................................................................33

         4.1      Conditions to Initial Loans....................................................................33
         4.2      Conditions to Each Loan........................................................................33

SECTION 5.        AFFIRMATIVE COVENANTS..........................................................................34

         5.1      Financial Statements...........................................................................34
         5.2      Certificates; Other Information................................................................34
         5.3      Payment of Obligations.........................................................................35
         5.4      Maintenance of Existence; Compliance...........................................................35
         5.5      Maintenance of Property; Insurance.............................................................35
         5.6      Inspection of Property; Books and Records; Discussions.........................................36
         5.7      Notices........................................................................................36
         5.8      Environmental Laws.............................................................................36

SECTION 6.        NEGATIVE COVENANTS.............................................................................37

         6.1      Financial Condition Covenants..................................................................37
         6.2      Standby and Performance Letters of Credit......................................................37
         6.3      Indebtedness of Subsidiaries...................................................................37
         6.4      Liens..........................................................................................38
         6.5      Fundamental Changes............................................................................39
         6.6      Disposition of Property........................................................................39
         6.7      Investments....................................................................................40
         6.8      Transactions with Affiliates...................................................................41
         6.9      Changes in Fiscal Periods......................................................................41
         6.10     Lines of Business..............................................................................41

SECTION 7.        EVENTS OF DEFAULT..............................................................................41


SECTION 8.        THE AGENTS.....................................................................................44

         8.1      Appointment....................................................................................44
         8.2      Delegation of Duties...........................................................................44
         8.3      Exculpatory Provisions.........................................................................44
         8.4      Reliance by Administrative Agent...............................................................45
         8.5      Notice of Default..............................................................................45
         8.6      Non-Reliance on Agents and Other Lenders.......................................................45
         8.7      Indemnification................................................................................46
         8.8      Agent in Its Individual Capacity...............................................................46
         8.9      Successor Administrative Agent.................................................................46
         8.10     Syndication Agent and Co-Documentation Agents..................................................47

SECTION 9.        MISCELLANEOUS..................................................................................47

         9.1      Amendments and Waivers.........................................................................47
         9.2      Notices........................................................................................48
         9.3      No Waiver; Cumulative Remedies.................................................................49
         9.4      Survival of Representations and Warranties.....................................................49
         9.5      Payment of Expenses and Taxes..................................................................49
         9.6      Successors and Assigns; Participations and Assignments.........................................50
         9.7      Adjustments; Set-off...........................................................................53
         9.8      Counterparts...................................................................................53
         9.9      Severability...................................................................................54
         9.10     Integration....................................................................................54
         9.11     Governing Law..................................................................................54
         9.12     Submission To Jurisdiction; Waivers............................................................54
         9.13     Acknowledgements...............................................................................54
         9.14     Confidentiality................................................................................55
         9.15     WAIVERS OF JURY TRIAL..........................................................................55




SCHEDULES:

1.1                        Commitments
6.3(b)                     Existing Indebtedness
6.4(f)                     Existing Liens
6.6                        Certain Dispositions

EXHIBITS:

A                          Form of Compliance Certificate
B                          Form of Closing Certificate
C                          Form of Assignment and Assumption
D                          Form of Legal Opinion of Seth Hoogasian
E                          Form of Exemption Certificate





     THREE-YEAR  CREDIT   AGREEMENT,   dated  as  of  December  20,  2002  (this
"Agreement"),  among THERMO ELECTRON  CORPORATION,  a Delaware  corporation (the
"Borrower"), the several banks and other financial institutions or entities from
time to time parties to this Agreement (the  "Lenders"),  ABN AMRO BANK N.V., as
syndication agent (in such capacity,  the "Syndication  Agent"),  FLEET NATIONAL
BANK and JPMORGAN CHASE BANK, as co-documentation  agents (in such capacity, the
"Co-Documentation  Agents"),  and BARCLAYS BANK PLC, as administrative agent (in
such capacity, the "Administrative Agent").

     The parties hereto hereby agree as follows:

                             SECTION 1. DEFINITIONS

     1.1 Defined  Terms.  As used in this  Agreement,  the terms  listed in this
Section 1.1 shall have the respective meanings set forth  in this Section 1.1.

     "ABR": for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the  greater  of (a) the Prime  Rate in effect on such
day and (b) the Federal Funds  Effective  Rate in effect on such day plus 1/2 of
1%. For purposes hereof:  "Prime Rate" shall mean the rate of interest per annum
publicly  announced  from time to time by Barclays Bank PLC as its prime rate in
effect  at its  principal  office in New York  City  (the  Prime  Rate not being
intended  to be the lowest  rate of  interest  charged by  Barclays  Bank PLC in
connection with extensions of credit to debtors). Any change in the ABR due to a
change in the Prime Rate or the Federal Funds  Effective Rate shall be effective
as of the opening of business on the  effective  day of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.

     "ABR Loans":  Loans the rate of interest  applicable to which is based upon
the ABR.

     "Acquired Indebtedness": Indebtedness of any Person outstanding on the date
(i) such Person is acquired by the Borrower or any of its  Subsidiaries  or (ii)
such  Indebtedness  is assumed by the  Borrower  or any of its  Subsidiaries  in
connection with the acquisition of a business of such Person,  in each case in a
transaction  permitted by Section 6.7(f) or (h), provided that such Indebtedness
was not created in contemplation or in connection with such acquisition.

     "Administrative  Agent":  Barclays  Bank PLC,  as the lead  arranger of the
Commitments and as the administrative agent for the Lenders under this Agreement
and the other Loan Documents, together with any of its successors.

     "Affected Foreign Currency": as defined in Section 2.12(c).

     "Affiliate":  as  to  any  Person,  any  other  Person  that,  directly  or
indirectly, is in control of, is controlled by, or is under common control with,
such Person.  For purposes of this  definition,  "control" of a Person means the
power, directly or indirectly,  either to (a) vote 15% or more of the securities
having  ordinary  voting  power  for  the  election  of  directors  (or  persons
performing  similar  functions)  of such  Person  or (b)  direct  or  cause  the
direction of the management and policies of such Person,  whether by contract or
otherwise.

                                       2

     "Agents":   the  collective   reference  to  the  Syndication   Agent,  the
Co-Documentation Agents, and the Administrative Agent.

     "Agreement": as defined in the preamble hereto.

     "Agreement Currency": as defined in Section 2.19(b).

     "Approved Fund": as defined in Section 9.6(b).

     "Assignee": as defined in Section 9.6(b).

     "Assignment and Assumption": an Assignment and Assumption, substantially in
the form of Exhibit C.

     "Available  Commitment":  as to any Lender at any time,  an amount equal to
the excess, if any, of (a) such Lender's  Commitment then in effect over (b) the
sum of (i) such  Lender's  Dollar Loans and (ii) the Dollar  Equivalent  of such
Lender's Foreign Currency Loans.

     "Benefitted Lender": as defined in Section 9.7(a).

     "Board": the Board of Governors of the Federal Reserve System of the United
States (or any successor).

     "Borrower": as defined in the preamble hereto.

     "Borrowing  Date":  any Business Day specified by the Borrower as a date on
which the Borrower  requests the relevant Lenders to make Loans hereunder.

     "Business  Day": a day other than a Saturday,  Sunday or other day on which
commercial  banks in New York City are  authorized  or required by law to close;
provided,  that,  when used in connection  with a  Eurocurrency  Loan,  the term
"Business  Day"  shall  also  exclude  any day on which  banks  are not open for
international  business  (including  dealings in Dollar  deposits) in the London
interbank market;  provided,  further, when used in connection with Eurocurrency
Loans  denominated in Euros,  the term "Business Day" shall also exclude any day
on  which  the  Trans-European  Automated  Real-Time  Gross  Settlement  Express
Transfer  System  (TARGET) (or, if such clearing  system ceases to be operative,
such other clearing system (if any) determined by the Administrative Agent to be
a suitable replacement) is not open for settlement of payment in Euros.

     "Capital  Lease  Obligations":  as to any Person,  the  obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such Person  under GAAP,  and, for the purposes of
this  Agreement,  the  amount  of such  obligations  at any  time  shall  be the
capitalized amount thereof at such time determined in accordance with GAAP.

     "Capital Stock":  any and all shares,  interests,  participations  or other
equivalents (however designated) of capital stock of a corporation,  any and all


                                       3

equivalent  ownership  interests in a Person (other than a corporation)  and any
and all warrants, rights or options to purchase any of the foregoing.

     "Cash  Equivalents":  (a)  marketable  direct  obligations  issued  by,  or
unconditionally  guaranteed  by, the United  States  Government or issued by any
agency thereof and backed by the full faith and credit of the United States,  in
each  case  maturing  within  three  years  from  the date of  acquisition;  (b)
certificates  of  deposit,  time  deposits,  eurodollar  time  deposits  or bank
deposits (including those maintained to facilitate  payments,  distributions and
collections)  having  maturities  of  eighteen  months  or less from the date of
acquisition  issued  by or with any  Lender  or by or with any  commercial  bank
organized  under the laws of the  United  States or any state  thereof or by any
financial  institution organized in any foreign country recognized by the United
States,  in each  case  rated  at least A- by S&P,  or A-3 by  Moody's;  (c) (i)
commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody's,  , or
carrying an equivalent rating by a nationally  recognized rating agency, if both
of the Rating  Agencies  cease  publishing  ratings of commercial  paper issuers
generally,  and maturing  within six months from the date of acquisition or (ii)
commercial  paper  issued by Ford  Motor  Company,  Ford Motor  Credit  Company,
DaimlerChrysler  NA Holdings,  John Deere Capital Corp., John Deere Credit Inc.,
Deere & Co.,  Walt Disney  Company,  General  Motors  Corp.,  or General  Motors
Acceptance Corp., which at the time of purchase is rated at least A-2 by S&P, or
P-2 by Moody's, and maturing within six months from the date of acquisition; (d)
repurchase  obligations of any Lender or of any commercial  bank  satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days,  with respect to securities  issued or fully  guaranteed or insured by the
United States  government;  (e) securities  with  maturities of one year or less
from  the  date  of  acquisition  issued  or  fully  guaranteed  by  any  state,
commonwealth or territory of the United States, by any political  subdivision or
taxing authority of any such state,  commonwealth or territory or by any foreign
government,  the securities of which state, commonwealth,  territory,  political
subdivision,  taxing  authority or foreign  government  (as the case may be) are
rated at least A- by S&P or A-3 by Moody's;  (f) securities  with  maturities or
put  features  of six  months  or less  from the date of  acquisition  backed by
standby letters of credit issued by any Lender or any commercial bank satisfying
the  requirements  of  clause  (b)  of  this  definition;  (g)  asset-backed  or
mortgaged-backed  securities  rated AAA by either S&P or Moody's,  (h) corporate
bonds or notes with maturities of three years or less and rated at least BBB- by
S&P or Baa3 by Moody's,  (i) money  market  mutual or similar  funds that invest
primarily in assets  satisfying the  requirements  of clauses (a) through (h) of
this definition; or (j) money market funds that (i) comply with the criteria set
forth in SEC Rule 2a-7 under the  Investment  Company  Act of 1940,  as amended,
(ii) are rated AAA by S&P or Aaa by Moody's and (iii) have  portfolio  assets of
at least $5,000,000,000.

     "Closing  Date":  the date on which the  conditions  precedent set forth in
Section 4.1 shall have been satisfied.

     "Code": the Internal Revenue Code of 1986, as amended from time to time.

     "Co-Documentation   Agents":   as   defined   in   the   preamble   hereto.

     "Commitment":  as to any Lender,  the obligation of such Lender, if any, to
make Loans in an aggregate Dollar and Dollar Equivalent  principal amount not to

                                       4

exceed  the  amount  set forth  under the  heading  "Commitment"  opposite  such
Lender's name on Schedule 1.1 or in the Assignment  and  Assumption  pursuant to
which such Lender became a party hereto, as the same may be changed from time to
time pursuant to the terms hereof.  The original amount of the Total Commitments
is $125,000,000.

     "Commitment  Period": the period from and including the Closing Date to the
Termination Date.

     "Commitment Utilization Percentage":  on any day, the percentage equivalent
of a  fraction  (a) the  numerator  of which is the sum of (i) the  Total  Loans
outstanding  on such day and (ii) the "Total  Loans"  under the Other  Agreement
outstanding  on such day and (b) the  denominator of which is the sum of (i) the
Total Commitments in effect on such day (or, on any day after termination of the
Total Commitments,  the Total Commitments in effect  immediately  preceding such
termination)  and (ii) the  "Total  Commitments"  under the Other  Agreement  in
effect on such day (or, on any day after termination of the "Total  Commitments"
under the Other Agreement,  the "Total Commitments" under the Other Agreement in
effect immediately preceding such termination).

     "Commonly Controlled Entity": an entity, whether or not incorporated,  that
is under common control with the Borrower  within the meaning of Section 4001 of
ERISA or is part of a group that  includes the Borrower and that is treated as a
single employer under Section 414 of the Code.

     "Compliance  Certificate":  a  certificate  duly  executed by a Responsible
Officer substantially in the form of Exhibit A.

     "Conduit   Lender":   any  special   purpose   corporation   organized  and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and  designated  by such Lender in a written  instrument;
provided,  that the  designation  by any  Lender of a Conduit  Lender  shall not
relieve the  designating  Lender of any of its  obligations to fund a Loan under
this  Agreement  if, for any reason,  its Conduit  Lender fails to fund any such
Loan,  and the  designating  Lender (and not the Conduit  Lender) shall have the
sole right and  responsibility  to deliver all consents and waivers  required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further,  that no Conduit  Lender  shall (a) be  entitled to receive any greater
amount pursuant to Section 2.14,  2.15, 2.16 or 9.5 than the designating  Lender
would have been entitled to receive in respect of the  extensions of credit made
by such Conduit Lender or (b) be deemed to have any Commitment.

     "Confidential   Information   Memorandum":   the  Confidential  Information
Memorandum dated October 2002 and furnished to certain Lenders.

     "Consolidated  EBITDA":  for any period,  Consolidated  Net Income for such
period plus, without  duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) interest expense, amortization or writeoff of debt discount and
debt  issuance  costs and  commissions,  discounts  and other  fees and  charges
associated  with  Indebtedness  (including  the  Loans),  (c)  depreciation  and
amortization  expense,  (d)  amortization  of  intangibles  (including,  but not

                                       5

limited to, goodwill) and organization costs, (e) any extraordinary,  unusual or
non-recurring  non-cash expenses or losses (including,  whether or not otherwise
includable as a separate item in the statement of such  Consolidated  Net Income
for such  period,  non-cash  losses on sales of assets  outside of the  ordinary
course of business) and (f) any  extraordinary,  unusual or  non-recurring  cash
expenses  or losses to the extent  that they do not  exceed,  in the  aggregate,
$25,000,000   during  such  period   (provided  that,  in  connection  with  the
calculation of  Consolidated  EBITDA for any period of four  consecutive  fiscal
quarters which includes the second,  third and/or fourth fiscal  quarters of the
Borrower's 2002 fiscal year, the Borrower shall also be entitled to add back, as
cash  expenses or losses of the type covered by this clause,  an amount equal to
$9,001,000  for such second fiscal  quarter,  $13,174,000  for such third fiscal
quarter and/or, as the case may be,  $15,000,000 for such fourth fiscal quarter)
minus, to the extent included in the statement of such  Consolidated  Net Income
for such period, the sum of (i) interest income, (ii) any extraordinary, unusual
or non-recurring  non-cash income or gains (including,  whether or not otherwise
includable as a separate item in the statement of such  Consolidated  Net Income
for such period,  non-cash  gains on the sales of assets outside of the ordinary
course of business),  (iii) any  extraordinary,  unusual or  non-recurring  cash
income or gains to the extent they exceed, in the aggregate,  $25,000,000 during
such  period,  (iv) income tax credits (to the extent not netted from income tax
expense) and (v) any other non-cash income.

     "Consolidated  Interest Coverage Ratio":  for any period,  the ratio of (a)
Consolidated  EBITDA for such period to (b)  Consolidated  Interest  Expense for
such period.

     "Consolidated  Interest  Expense":  for any period,  total interest expense
(including that  attributable to Capital Lease  Obligations) of the Borrower and
its Subsidiaries for such period with respect to all outstanding Indebtedness of
the Borrower and its  Subsidiaries  (including  all  commissions,  discounts and
other fees and charges owed with respect to bankers'  acceptance  financing  and
net costs under Swap  Agreements in respect of interest rates to the extent such
net costs are allocable to such period in accordance with GAAP).

     "Consolidated Net Income":  for any period, the consolidated net income (or
loss) of the Borrower and its Subsidiaries,  determined on a consolidated  basis
in accordance with GAAP.

     "Consolidated  Net  Worth":  at  any  date,  all  amounts  that  would,  in
conformity  with  GAAP,  be  included  on a  consolidated  balance  sheet of the
Borrower and its Subsidiaries under stockholders' equity at such date.

     "Consolidated  Total   Capitalization":   at  any  date,  the  sum  of  (a)
Consolidated  Net Worth on such  date and (b)  Consolidated  Total  Debt or such
date.

     "Consolidated  Total Debt": at any date, the aggregate  principal amount of
all Indebtedness of the Borrower and its  Subsidiaries at such date,  determined
on a consolidated basis in accordance with GAAP.

                                       6

     "Consolidated  Total Debt to Capitalization  Ratio": on any date, the ratio
of  (a)  Consolidated  Total  Debt  on  such  date  to  (b)  Consolidated  Total
Capitalization on such date.

     "Continuing Directors":  the directors of the Borrower on the Closing Date,
and  each  other  director  whose  election  by the  board of  directors  of the
Borrower,  or whose nomination for election by the stockholders of the Borrower,
was approved by a vote of at least a majority of the  directors  who were either
directors on the Closing Date or whose  election or nomination  for election was
previously so approved.

     "Contractual  Obligation":  as to any Person, any provision of any security
issued by such Person or of any  agreement,  instrument or other  undertaking to
which such Person is a party or by which it or any of its property is bound.

     "Default":  any of the events  specified  in Section 7,  whether or not any
requirement  for the  giving of  notice,  the lapse of time,  or both,  has been
satisfied.

     "Disposition":  with respect to any  property,  any sale,  lease,  sale and
leaseback,  assignment,  conveyance,  transfer or other disposition thereof. The
terms  "Dispose"  and  "Disposed of" shall have  correlative  meanings.

     "Dollar  Equivalent":  at any time or during  any  period as to any  amount
denominated in a Foreign  Currency,  the amount of Dollars that may be purchased
with such amount of such  Foreign  Currency at the  applicable  rate of exchange
determined in accordance with Section 1.3.

     "Dollar Loans": as defined in Section 2.1.

     "Dollars" and "$": dollars in lawful currency of the United States.

     "Environmental  Laws":  any and  all  foreign,  Federal,  state,  local  or
municipal  laws,  rules,  orders,  regulations,   statutes,  ordinances,  codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including  common  law)  regulating,  relating  to  or  imposing  liability  or
standards of conduct  concerning  protection of human health or the environment,
as now or may at any time hereafter be in effect.

     "ERISA":  the Employee  Retirement  Income Security Act of 1974, as amended
from time to time.

     "Eurocurrency  Applicable  Margin":  as determined  pursuant to the Pricing
Grid.

     "Eurocurrency  Base Rate": with respect to an Interest Period pertaining to
any Eurocurrency Loan, the rate of interest  determined on the basis of the rate
for deposits in Dollars or the relevant  Foreign  Currency,  as the case may be,
for a period equal to such Interest  Period  commencing on the first day of such
Interest Period  appearing on Page 3750 of the Telerate Screen as of 11:00 A.M.,
London time,  two Business Days prior to the beginning of such Interest  Period.
In the event that such rate does not appear on such page of the Telerate  Screen
(or  otherwise  on the Telerate  Service),  the  "Eurocurrency  Base Rate" shall
instead be the interest rate per annum (rounded  upwards,  if necessary,  to the
next 1/16 of 1%) equal to the average of the rates at which  deposits in Dollars

                                       7

or the relevant Foreign  Currency,  as the case may be,  approximately  equal in
principal  amount to the  portion  of the  Eurocurrency  Tranche  of the  Lender
serving as  Administrative  Agent for a  maturity  comparable  to such  Interest
Period,  are  offered  by the  principal  London  office  of  Barclays  Bank for
immediately  available  funds in the London  interbank  market at  approximately
11:00 A.M.,  London time,  two Business Days prior to the  commencement  of such
Interest Period.

     "Eurocurrency  Loans":  Loans the rate of interest  applicable  to which is
based upon the Eurocurrency Rate.

     "Eurocurrency  Rate":  with respect to each day during each Interest Period
pertaining to a Eurocurrency  Loan, a rate per annum  determined for such day in
accordance with the following  formula (rounded upward to the nearest 1/100th of
1%):
                             Eurocurrency Base Rate
                       --------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

     "Eurocurrency  Reserve   Requirements":   for  any  day  as  applied  to  a
Eurocurrency  Loan,  the aggregate  (without  duplication)  of the maximum rates
(expressed as a decimal fraction) of reserve  requirements in effect on such day
(including  basic,  supplemental,  marginal and  emergency  reserves)  under any
regulations of the Board or other  Governmental  Authority  having  jurisdiction
with  respect   thereto  dealing  with  reserve   requirements   prescribed  for
eurocurrency  funding  (currently  referred to as "Eurocurrency  Liabilities" in
Regulation D of the Board)  maintained  by a member bank of the Federal  Reserve
System.

     "Eurocurrency  Tranche":  the collective  reference to  Eurocurrency  Loans
denominated  in the same currency made by the Lenders to the Borrower,  the then
current Interest Periods with respect to all of which begin on the same date and
end on the same  later  date  (whether  or not  such  Eurocurrency  Loans  shall
originally have been made on the same day).

     "Euros": the single currency of participating member states of the European
Monetary Union  introduced in accordance  with the provisions of Article 109(1)4
of the Treaty of Rome of March 25, 1957 (as amended by the Single  European  Act
1986 and the  Maastricht  Treaty  (which was signed at Maastricht on February 7,
1992 and came into force on November 1, 1993) as amended  from time to time) and
as  referred  to  in  legislative   measures  of  the  European  Union  for  the
introduction  of,  changeover  to or operating of the euro in one or more member
states.

     "Event of Default": any of the events specified in Section 7, provided that
any requirement  for the giving of notice,  the lapse of time, or both, has been
satisfied.

     "Excess  Utilization  Day":  each day on which the  Commitment  Utilization
Percentage exceeds 50%.

     "Exchange  Rate":  on any day,  with respect to any  currency,  the rate at
which such currency may be exchanged  into any other  currency,  as set forth at
approximately  11:00  A.M.,  London  time,  on such  date on the  Reuters  World
Currency Page for such currency.  In the event that such rate does not appear on
any Reuters  World  Currency  Page,  the Exchange  Rate shall be  determined  by
reference to such other publicly available service for displaying exchange rates
as may be selected by the Administrative Agent, or, in the event no such service
is selected,  such Exchange Rate shall instead be the arithmetic  average of the
spot rates of  exchange  of the  Administrative  Agent in the  market  where its

                                       8

foreign currency exchange  operations in respect of such currency are then being
conducted,  at or about 10:00 A.M., local time, on such date for the purchase of
the relevant currency for delivery two Business Days later;  provided that if at
the time of any such  determination,  for any reason, no such spot rate is being
quoted, the Administrative Agent, after consultation with the Borrower,  may use
any  reasonable  method it deems  appropriate  to determine  such rate, and such
determination  shall  be  presumed  correct  absent  manifest  error;  provided,
further,  that in any event, the Administrative Agent shall provide the Borrower
with reasonable details of the source for such rate.

     "Facility Fee": as defined in Section 2.3(a).

     "Facility Fee Rate": as determined pursuant to the Pricing Grid.

     "Federal Funds Effective  Rate":  for any day, the weighted  average of the
rates on  overnight  federal  funds  transactions  with  members of the  Federal
Reserve  System  arranged by federal  funds  brokers,  as  published on the next
succeeding  Business Day by the Federal  Reserve  Bank of New York,  or, if such
rate is not so published  for any day that is a Business Day, the average of the
quotations for the day of such  transactions  received by Barclays Bank PLC from
three federal funds brokers of recognized standing selected by it.

     "Fee Payment  Date":  (a) the third  Business Day following the last day of
each March, June,  September and December,  (b) the Termination Date and (c) the
date the  Commitments  shall have been terminated and the principal of the Loans
shall have been paid in full.

     "Foreign Currency": each of Euros, Sterling and Yen.

     "Foreign Currency Loans": as defined in Section 2.1.

     "Funding  Office":  the office of the  Administrative  Agent  specified  in
Section 9.2 or such other  office as may be  specified  from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.

     "GAAP": generally accepted accounting principles in the United States as in
effect from time to time, except that for purposes of Section 6.1, GAAP shall be
determined  on the basis of such  principles  in effect on the date  hereof  and
consistent  with  those  used in the  preparation  of the  most  recent  audited
financial statements referred to in Section 3.1(b).

     "Governmental  Authority":  any  nation or  government,  any state or other
political   subdivision   thereof,  any  agency,   authority,   instrumentality,
regulatory  body,  court,  central  bank or other entity  exercising  executive,
legislative,  judicial,  taxing,  regulatory or  administrative  functions of or
pertaining  to  government,  any  securities  exchange  and any  self-regulatory
organization.

     "Group  Members":   the  collective  reference  to  the  Borrower  and  its
Subsidiaries  (or,  in the  case  of  Sections  7(e),  (f)  and  (h)  only,  its
Significant Subsidiaries).

                                       9

     "Guarantee  Obligation":  as to any Person (the "guaranteeing person"), any
obligation,  including a reimbursement,  counterindemnity or similar obligation,
of the guaranteeing Person that guarantees or in effect guarantees,  or which is
given to  induce  the  creation  of a  separate  obligation  by  another  Person
(including  any bank under any letter of credit)  that  guarantees  or in effect
guarantees,  any  Indebtedness  (the "primary  obligations")  of any other third
Person (the "primary  obligor") in any manner,  whether  directly or indirectly,
including any obligation of the guaranteeing person,  whether or not contingent,
(i) to purchase any such primary obligation or any property  constituting direct
or  indirect  security  therefor,  (ii) to advance  or supply  funds (A) for the
purchase or payment of any such primary  obligation  or (B) to maintain  working
capital or equity  capital of the primary  obligor or  otherwise to maintain the
net worth or  solvency  of the  primary  obligor,  (iii) to  purchase  property,
securities  or services  primarily  for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary  obligation or (iv)  otherwise to assure or hold harmless the owner
of any such  primary  obligation  against  loss in  respect  thereof;  provided,
however,  that the term Guarantee  Obligation shall not include  endorsements of
instruments  for deposit or collection in the ordinary  course of business.  The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or determinable  amount of the
primary obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing  person may be liable pursuant to
the terms of the instrument  embodying such  Guarantee  Obligation,  unless such
primary obligation and the maximum amount for which such guaranteeing person may
be liable  are not  stated or  determinable,  in which  case the  amount of such
Guarantee  Obligation shall be such  guaranteeing  person's  maximum  reasonably
anticipated  liability in respect  thereof as determined by the Borrower in good
faith.

     "Indebtedness":  of any Person at any date,  without  duplication,  (a) all
indebtedness  of such Person for borrowed  money,  (b) all  obligations  of such
Person for the  deferred  purchase  price of  property  or  services  (excluding
accounts  payable  and accrued  expenses),  (c) all  obligations  of such Person
evidenced by notes,  bonds,  debentures  or other similar  instruments,  (d) all
indebtedness  created  or  arising  under any  conditional  sale or other  title
retention  agreement  with  respect to property  acquired  by such Person  (even
though the rights and remedies of the seller or lender  under such  agreement in
the event of default are limited to repossession or sale of such property),  (e)
all Capital  Lease  Obligations  of such  Person,  (f) all  obligations  of such
Person,  contingent or otherwise,  as an account party or applicant  under or in
respect of  bankers'  acceptances,  (g) all  reimbursement  obligations  of such
Person in respect of drawings or payments made under  letters of credit,  surety
or performance bonds or other similar arrangements that are not satisfied within
three  Business  Days  following the date of receipt by such Person of notice of
such drawing or payment, (h) the liquidation value of all manditorily redeemable
preferred  Capital Stock of such Person,  (i) all Guarantee  Obligations of such
Person in respect of  obligations of the kind referred to in clauses (a) through
(f) and (h) above,  (j) all  obligations  of the kind referred to in clauses (a)
through  (i) above  secured  by any Lien on  property  (including  accounts  and
contract rights) owned by such Person, whether or not such Person has assumed or
become  liable for the  payment of such  obligation  (it being  understood  that
obligations  in  respect of a  Permitted  Receivables  Securitization  shall not
constitute  Indebtedness),  and (k) for the purposes of Section  7(e) only,  all
obligations of such Person in respect of Swap  Agreements.  The  Indebtedness of
any Person shall include the  Indebtedness  of any other entity  (including  any


                                       10

partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's  ownership  interest in or other
relationship  with  such  entity,  except  to  the  extent  the  terms  of  such
Indebtedness expressly provide that such Person is not liable therefor.

     "Insolvency":  with respect to any  Multiemployer  Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.

     "Insolvent": pertaining to a condition of Insolvency.

     "Intellectual Property": the collective reference to all rights, priorities
and privileges relating to intellectual  property,  whether arising under United
States,  multinational  or  foreign  laws or  otherwise,  including  copyrights,
copyright licenses,  patents, patent licenses,  trademarks,  trademark licenses,
technology,  know-how and  processes,  and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

     "Interest  Payment  Date":  (a) as to any ABR  Loan,  the  last day of each
March, June,  September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any Eurocurrency  Loan having an
Interest  Period of three months or less, the last day of such Interest  Period,
(c) as to any  Eurocurrency  Loan  having an Interest  Period  longer than three
months,  each day that is three months, or a whole multiple  thereof,  after the
first day of such Interest  Period and the last day of such Interest  Period and
(d) as to any Loan  (other  than any Loan that is an ABR Loan),  the date of any
repayment or prepayment made in respect thereof.

     "Interest Period":  as to any Eurocurrency Loan, (i) initially,  the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurocurrency  Loan and ending one, two, three or six months  thereafter,
as selected by the Borrower in its notice of borrowing or notice of  conversion,
as the case may be, given with respect thereto; and (ii) thereafter, each period
commencing on the last day of the next preceding  Interest Period  applicable to
such Eurocurrency Loan and ending one, two, three or six months  thereafter,  as
selected by the Borrower by irrevocable notice to the  Administrative  Agent not
later than 11:00 A.M.,  New York City time, in the case of Loans  denominated in
Dollars,  and 10:00 A.M.,  New York City time,  in the case of Foreign  Currency
Loans,  three  Business Days prior to the last day of the then current  Interest
Period with respect  thereto;  provided  that,  all of the foregoing  provisions
relating to Interest Periods are subject to the following:

     (i) if any  Interest  Period  would  otherwise  end on a day  that is not a
Business  Day,  such  Interest  Period shall be extended to the next  succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;

     (ii) the  Borrower  may not select an  Interest  Period  that would  extend
beyond the Termination Date; and

     (iii)  any  Interest  Period  that  begins  on the last  Business  Day of a
calendar month (or on a day for which there is no numerically corresponding day


                                       11

in the calendar month at the end of such Interest  Period) shall end on the last
Business Day of a calendar month.

     "Investments": as defined in Section 6.7.

     "Judgment Currency": as defined in Section 2.19(b).

     "Lender":  as defined in the preamble hereto;  provided that unless context
otherwise  requires each reference to the Lenders shall be deemed to include any
Conduit Lender.

     "Lien":   any  mortgage,   pledge,   hypothecation,   assignment,   deposit
arrangement,  encumbrance,  lien (statutory or other),  charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever  (including any conditional sale or
other title retention  agreement and any capital lease having  substantially the
same economic effect as any of the foregoing).

     "Loan  Documents":  this  Agreement,  the Notes and any amendment,  waiver,
supplement or other modification to any of the foregoing.

     "Loan Percentage":  as to any Lender at any time, the percentage which such
Lender's  Commitment then  constitutes of the Total  Commitments or, at any time
after the Commitments shall have expired or terminated, the percentage which the
aggregate  principal amount of such Lender's Loans then outstanding  constitutes
of the aggregate principal amount of the Loans then outstanding.

     "Loans": as defined in Section 2.1.

     "London Banking Day": any day on which banks in London are open for general
banking business, including dealings in foreign currency and exchange.

     "Margin Stock": as defined in Regulation U.

     "Material  Adverse Effect":  a material adverse effect on (a) the business,
property,  operations or condition  (financial or otherwise) of the Borrower and
its Subsidiaries  taken as a whole or (b) the validity or enforceability of this
Agreement  or any of the other Loan  Documents  or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder.

     "Materials of Environmental  Concern": any gasoline or petroleum (including
crude oil or any  fraction  thereof) or petroleum  products or any  hazardous or
toxic substances,  materials or wastes, defined or regulated as such in or under
any  Environmental  Law,  including  asbestos,   polychlorinated  biphenyls  and
urea-formaldehyde insulation.

     "Moody's": Moody's Investors Service, Inc.

     "Multiemployer  Plan":  a Plan that is a  multiemployer  plan as defined in
Section 4001(a)(3) of ERISA.

     "Non-Excluded Taxes": as defined in Section 2.15(a).

                                       12

     "Non-U.S. Lender": as defined in Section 2.15(d).

     "Notes": the collective reference to any promissory note evidencing Loans.

     "Obligations":  the unpaid principal of and interest on (including interest
accruing after the maturity of the Loans and interest  accruing after the filing
of  any  petition  in  bankruptcy,   or  the  commencement  of  any  insolvency,
reorganization  or like proceeding,  relating to the Borrower,  whether or not a
claim for post-filing or  post-petition  interest is allowed in such proceeding)
the Loans and all other  obligations  and  liabilities  of the  Borrower  to the
Administrative Agent or to any Lender,  whether direct or indirect,  absolute or
contingent,  due or to become due, or now existing or hereafter incurred,  which
may arise under, out of, or in connection  with, this Agreement,  any other Loan
Document or any other document made,  delivered or given in connection  herewith
or  therewith,  whether  on  account  of  principal,   interest,   reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the  Administrative  Agent or to any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.

     "Other  Agreement":  the  364-Day  Credit  Agreement,  dated as of the date
hereof, among the Borrower,  the several banks and other financial  institutions
or  entities  from  time to  time  parties  thereto,  ABN  Amro  Bank  N.V.,  as
syndication  agent, and Barclays Bank PLC, as administrative  agent, as amended,
supplemented or otherwise modified or replaced from time to time.

     "Other Taxes":  any and all present or future stamp or documentary taxes or
any other excise or property  taxes,  charges or similar levies arising from any
payment made  hereunder or from the execution,  delivery or  enforcement  of, or
otherwise with respect to, this Agreement or any other Loan Document.

     "Participant": as defined in Section 9.6(c).

     "PBGC": the Pension Benefit Guaranty  Corporation  established  pursuant to
Subtitle A of Title IV of ERISA (or any ---- successor).

     "Permitted  Receivables  Securitization":  any  Receivables  Securitization
Transaction,  provided that the aggregate amount of the financing represented by
such transactions at any one time outstanding does not exceed $200,000,000.

     "Person":  an  individual,  partnership,   corporation,  limited  liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

     "Plan":  at a particular time, any employee benefit plan that is covered by
and  subject  to ERISA  and in  respect  of which  the  Borrower  or a  Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an  "employer" as defined in Section 3(5)
of ERISA.



                                                                                        
                                       13

     "Pricing Grid": the table set forth below (expressed in basis points):

- --------------------------------- ------------------ ------------------------------------ ---------------------
      Rating Agency Rating          Facility Fee                Eurocurrency                  Utilization
                                        Rate                  Applicable Margin                 Fee Rate
- --------------------------------- ------------------ ------------------------------------ ---------------------
Greater than or
equal to A/A2 .............              8.0                        27.0                           7.5
- --------------------------------- ------------------ ------------------------------------ ---------------------
A-/A3 .....................             10.0                        30.0                          12.5
- --------------------------------- ------------------ ------------------------------------ ---------------------
BBB+/Baa1 .................             12.5                        50.0                          12.5
- --------------------------------- ------------------ ------------------------------------ ---------------------
BBB/Baa2 ..................             15.0                        60.0                          12.5
- --------------------------------- ------------------ ------------------------------------ ---------------------
BBB-/Baa3 .................             22.5                        65.0                          25.0
- --------------------------------- ------------------ ------------------------------------ ---------------------
Less than BBB-/Baa3
or No Rating ..............             30.0                       107.5                          37.5
- --------------------------------- ------------------ ------------------------------------ ---------------------


     In any case where the Ratings of the two Rating  Agencies  are at different
levels, the higher Rating will determine the Facility Fee Rate, the Eurocurrency
Applicable  Margin  and the  Utilization  Fee Rate  unless  the S&P and  Moody's
Ratings are more than one level apart,  in which case the Rating one level above
the lower  Rating  will be  determinative.  Each  change in a Rating by a Rating
Agency  shall be  effective  on the date such change is announced by such Rating
Agency,  and if such change in Rating  shall  result in a change in the Facility
Fee Rate,  Eurocurrency  Applicable  Margin or Utilization Fee Rate, such latter
change shall be effective on the effective date of such change in Rating.

     "Properties": as defined in Section 3.13(a).

     "Rating Agencies" Moody's and S&P.

     "Ratings" the ratings from time to time  established by the Rating Agencies
for senior, unsecured, non-credit-enhanced long-term debt of the Borrower.

     "Receivables":   accounts   receivable  of  the  Borrower  or  any  of  its
Subsidiaries  (including any thereof constituting or evidenced by chattel paper,
instruments  or  general  intangibles),  and all  proceeds  thereof  and  rights
(contractual and other) and collateral related thereto.

     "Receivables  Securitization  Transaction":  with  respect to the  Borrower
and/or any of its  Subsidiaries,  the transfer of Receivables by any such Person
to a trust,  partnership,  corporation or other entity in a transaction in which
(x) the transferred  Receivables,  after giving effect to such transaction,  are
not, in accordance with GAAP, treated as assets on the books of the Borrower and
its Subsidiaries and (y) the liabilities of the transferee  trust,  partnership,
corporation or other entity,  after giving effect to such transaction,  are not,
in accordance with GAAP, treated as liabilities on the books of the Borrower and
its Subsidiaries.

     "Refunding Borrowing": a borrowing of Loans which, after application of the
proceeds  thereof,  results  in no net  increase  in the  aggregate  outstanding
principal amount of Loans made by any Lender.

     "Register": as defined in Section 9.6(b).

                                       14


     "Regulation U": Regulation U of the Board as in effect from time to time.

     "Reorganization":  with respect to any  Multiemployer  Plan,  the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

     "Reportable  Event":  any of the  events  set forth in  Section  4043(c) of
ERISA,  other  than those  events as to which the  thirty  day notice  period is
waived under  subsections  .27,  .28,  .29,  .30,  .31,  .32, .34 or .35 of PBGC
Reg. 4043.

     "Required Lenders":  at any time, the holders of more than 50% of the Total
Commitments then in effect or, if the Commitments have been terminated, the then
outstanding Loans.

     "Requirement of Law": as to any Person,  the  Certificate of  Incorporation
and By-Laws or other  organizational or governing  documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its  property or to which such Person or any of its property is
subject.

     "Responsible  Officer":  the chief  executive  officer,  president or chief
financial  officer of the Borrower,  but in any event, with respect to financial
matters, the chief financial officer of the Borrower.

     "Restricted  Margin  Stock":  Margin  Stock  owned by the  Borrower  or any
Subsidiary which represents not more than 25% of the aggregate value (determined
in accordance with  Regulation U), on a consolidated  basis, of the property and
assets of the Borrower and the Subsidiaries (including any Margin Stock) that is
subject to the provisions of Section 6 (including Section 6.4).

     "SEC": the Securities and Exchange  Commission,  any successor  thereto and
any analogous Governmental Authority.

     "SEC Filings": as defined in Section 3.1.

     "Significant   Subsidiary":   any   Subsidiary   which  is  a  "Significant
Subsidiary,"  as defined in Regulation  S-X part 210.1-02 of the Code of Federal
Regulations.

     "Single  Employer Plan": any Plan that is covered by Title IV of ERISA, but
that is not a Multiemployer Plan.

     "Specified Swap Agreement": any Swap Agreement entered into by the Borrower
and any Lender or  affiliate  thereof in respect of  interest  rates or currency
exchange rates.

     "Sterling":  British  Pounds  Sterling,  the lawful  currency of the United
Kingdom.

     "Subsidiary":  as  to  any  Person,  a  corporation,  partnership,  limited
liability  company or other entity of which  shares of stock or other  ownership

                                       15

interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect  a  majority  of  the  board  of  directors  or  other  managers  of  such
corporation,  partnership  or  other  entity  are  at  the  time  owned,  or the
management of which is otherwise controlled,  directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to  "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.

     "Swap Agreement":  any agreement with respect to any swap, forward,  future
or derivative  transaction or option or similar agreement involving,  or settled
by  reference  to, one or more rates,  currencies,  commodities,  equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic,  financial or pricing risk or value or any similar  transaction  or
any combination of these transactions; provided that no phantom stock or similar
plan  providing for payments only on account of services  provided by current or
former directors,  officers,  employees or consultants of the Borrower or any of
its Subsidiaries shall be a "Swap Agreement".

     "S&P":  Standard & Poor's Ratings  Services,  a division of the McGraw-Hill
Companies, Inc.

     "Syndication Agent": as defined in the preamble hereto.

     "Termination Date": December 20, 2005.

     "Total  Commitments":  at any time, the aggregate amount of the Commitments
of the Lenders then in effect.

     "Total  Loans":  at any time,  the sum of (a) the  aggregate  amount of the
Dollar Loans outstanding at such time and (b) the aggregate Dollar Equivalent of
the Foreign Currency Loans outstanding at such time.

     "Transferee": any Assignee or Participant.

     "Type":  as to any Loan, its nature as an ABR Loan or a Eurocurrency  Loan.

     "United States": the United States of America.

     "Unrestricted  Margin Stock": any Margin Stock owned by the Borrower or any
Subsidiary which is not Restricted Margin Stock.

     "Utilization Fee Rate": as determined pursuant to the Pricing Grid.

     "Wholly Owned  Subsidiary":  as to any Person,  any other Person all of the
Capital Stock of which (other than directors' qualifying shares required by law)
is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

     "Yen": the lawful currency of Japan.

                                       16

     1.2 Other Definitional Provisions.  (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the other Loan Documents or any  certificate or other document made or delivered
pursuant hereto or thereto.

     (b) As used herein and in the other Loan Documents,  and any certificate or
other  document made or delivered  pursuant  hereto or thereto,  (i)  accounting
terms  relating  to any Group  Member not  defined in Section 1.1 shall have the
respective  meanings  given  to them  under  GAAP,  (ii)  the  words  "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation",  (iii) the word "incur"  shall be construed to mean incur,  create,
issue,  assume,  become  liable in  respect of or suffer to exist (and the words
"incurred" and  "incurrence"  shall have correlative  meanings),  (iv) the words
"asset" and  "property"  shall be  construed to have the same meaning and effect
and to refer to any and all  tangible  and  intangible  assets  and  properties,
including  cash,  Capital  Stock,  securities,   revenues,  accounts,  leasehold
interests  and  contract  rights,  and (v)  references  to  agreements  or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.

     (c) The words  "hereof",  "herein"  and  "hereunder"  and words of  similar
import,  when used in this  Agreement,  shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.

     (d) The meanings given to terms defined herein shall be equally  applicable
to both the singular and plural forms of such terms.

     1.3 Exchange Rates.  For purposes of calculating  (a) the aggregate  Dollar
Equivalent of Foreign  Currency Loans  outstanding at any time during any period
and (b) the Dollar  Equivalent  of any Foreign  Currency Loan at the time of the
making of such Loan  pursuant to Section 2.1, the  Administrative  Agent will at
least once during each calendar  month and at such other times as it in its sole
discretion  decides to do so (including on or prior to the date of any borrowing
and the last day of any  Interest  Period),  determine  the  respective  rate of
exchange into Dollars of each Foreign  Currency (which rate of exchange shall be
based upon the Exchange Rate in effect on the date of such determination).  Such
rates of exchange  so  determined  on each such  determination  date shall,  for
purposes of the calculations  described in the preceding sentence,  be deemed to
remain unchanged and in effect until the next such determination date.

                   SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

     2.1 Commitments.  Subject to the terms and conditions  hereof,  each Lender
severally  agrees to make revolving  credit loans in Dollars ("Dollar Loans") or
in any Foreign  Currency (the "Foreign  Currency  Loans",  and together with the
Dollar  Loans,  the  "Loans")  to the  Borrower  from  time to time  during  the
Commitment  Period in an aggregate  principal amount at any one time outstanding
which does not exceed the amount of such Lender's Commitment. The Borrower shall
not request and no Lender  shall be required to make any Loan if,  after  making
such Loan,  the Total Loans shall exceed the Total  Commitments  then in effect.

                                       17

During the Commitment  Period the Borrower may use the Commitments by borrowing,
prepaying the Loans in whole or in part, and reborrowing, all in accordance with
the terms  and  conditions  hereof.  The  Dollar  Loans may from time to time be
Eurocurrency  Loans or ABR Loans,  as determined by the Borrower and notified to
the  Administrative  Agent in accordance  with Sections 2.2 and 2.7. All Foreign
Currency Loans shall be Eurocurrency Loans.

     2.2  Procedure  for  Borrowing.  (a) The Borrower  may borrow  Dollar Loans
during the  Commitment  Period on any Business  Day,  provided that the Borrower
shall give the  Administrative  Agent  irrevocable  notice (which notice must be
received  by the  Administrative  Agent (a) prior to 10:00  A.M.,  New York City
time, three Business Days prior to the requested  Borrowing Date, in the case of
Eurocurrency  Loans or (b)  prior to 11:00  A.M.,  New York  City  time,  on the
requested  Borrowing Date, in the case of ABR Loans),  specifying (i) the amount
and Type of Dollar Loans to be borrowed,  (ii) the requested Borrowing Date, and
(iii) in the case of  Eurocurrency  Loans,  the respective  amounts of each such
Type of Loan and the respective lengths of the initial Interest Period therefor.
Any Dollar  Loans made on the Closing Date shall  initially  be ABR Loans.  Each
borrowing of Dollar Loans under the  Commitments  shall be in an amount equal to
(x) in the case of ABR Loans, $1,000,000 or a whole multiple thereof (or, if the
then  aggregate  Available  Commitments  are less than  $1,000,000,  such lesser
amount)  and  (y) in the  case of  Eurocurrency  Loans,  $10,000,000  or a whole
multiple of $1,000,000 in excess  thereof.  Upon receipt of any such notice from
the  Borrower,  the  Administrative  Agent  shall  promptly  notify  each Lender
thereof.  Each  Lender  will  make  the  amount  of its pro  rata  share of each
borrowing available to the Administrative  Agent for the account of the Borrower
at the Funding  Office prior to 12:00 Noon, New York City time, on the Borrowing
Date  requested  by  the  Borrower  in  funds   immediately   available  to  the
Administrative Agent. Such borrowing will then be made available to the Borrower
by the  Administrative  Agent crediting the account of the Borrower on the books
of  such  Office  with  the  aggregate  of the  amounts  made  available  to the
Administrative  Agent  by the  Lenders  and in like  funds  as  received  by the
Administrative Agent.

     (b) The Borrower may borrow  Foreign  Currency  Loans during the Commitment
Period  on  any  Business  Day,  provided  that  the  Borrower  shall  give  the
Administrative  Agent  irrevocable  notice (which notice must be received by the
Administrative  Agent prior to 10:00 A.M.,  New York City time,  three  Business
Days  prior to the  requested  Borrowing  Date),  specifying  (i) the  requested
Borrowing  Date,  (ii) the respective  amounts of each Foreign  Currency Loan in
each Foreign  Currency and (iii) the respective  lengths of the initial Interest
Period therefor. Each Foreign Currency Loan under the Commitments shall be in an
amount  equal  to (x) in the  case of  Foreign  Currency  Loans  denominated  in
Sterling,  (pound)7,000,000  or a whole  multiple  of  (pound)500,000  in excess
thereof,  (y) in the  case of  Foreign  Currency  Loans  denominated  in  Euros,
(euro)10,000,000  or a whole multiple of (euro)1,000,000 in excess thereof,  and
(z) in the case of Foreign Currency Loans denominated in Yen,  Y1,000,000,000 or
a whole multiple of  Y100,000,000  in excess  thereof.  Upon receipt of any such
notice from the Borrower,  the  Administrative  Agent shall promptly notify each
Lender  thereof.  Each Lender will make the amount of its pro rata share of each
borrowing available to the Administrative  Agent for the account of the Borrower
at the Funding  Office prior to 12:00 Noon,  London time,  in each case,  on the
Borrowing Date requested by the Borrower in funds  immediately  available in the
relevant Foreign Currency to the Administrative  Agent. Such borrowing will then
be made  available to the Borrower by the  Administrative  Agent  crediting  the
account of the  Borrower on the books of such Office with the  aggregate  of the
amounts made  available to the  Administrative  Agent by the Lenders and in like

                                       18
funds  as  received  by the  Administrative  Agent or by wire  transfer  of such
amounts  to  an  account   designated   in  writing  by  the   Borrower  to  the
Administrative Agent in connection with the relevant borrowing.

     2.3 Fees. (a) The Borrower  agrees to pay to the  Administrative  Agent for
the account of each Lender a facility fee (a "Facility Fee") for the period from
and including the date hereof to the date upon which the Commitments  shall have
terminated  and all Loans  shall have been paid in full,  computed at a rate per
annum  equal  to the  Facility  Fee  Rate on the  average  daily  amount  of the
Commitment of such Lender (whether or not utilized)  during the period for which
payment  is made  (or,  if any  Lender  continues  to have any  Loans  after its
Commitment  terminates,  on the average daily amount of such Lender's Loans from
and including the date on which its  Commitment  terminates to but excluding the
date on which  such  Lender  ceases to have any Loans  outstanding),  payable in
arrears on each Fee Payment Date.

     (b) The Borrower agrees to pay to the Administrative  Agent for the account
of each  Lender in  arrears  on each Fee  Payment  Date,  a  utilization  fee (a
"Utilization  Fee") at a rate per annum  equal to the  Utilization  Fee Rate for
each Excess  Utilization  Day during the period covered by such Fee Payment Date
on such Lender's Loans then outstanding on such Excess Utilization Day.

     (c) The Borrower agrees to pay to the Administrative  Agent the fees in the
amounts and on the dates as set forth in the Fee Letter, dated as of November 1,
2002,  between the Borrower and the  Administrative  Agent, and in any other fee
agreements between the Borrower and the  Administrative  executed after the date
of this Agreement,  and to perform any other obligations  contained therein. 2.4
Optional  Termination or Reduction of  Commitments.  The Borrower shall have the
right,  upon not less than three  Business  Days'  notice to the  Administrative
Agent,  to terminate the Commitments or, from time to time, to reduce the amount
of  the  Commitments;   provided  that  no  such  termination  or  reduction  of
Commitments  shall be  permitted  if,  after  giving  effect  thereto and to any
prepayments  of the Loans,  the Total Loans would exceed the Total  Commitments.
Any such reduction  shall be in an amount equal to  $10,000,000,  or an integral
multiple of  $1,000,000  in excess  thereof,  and shall reduce  permanently  the
Commitments then in effect.

     2.4 Optional  Termination or Reduction of  Commitments.  The Borrower shall
have  the  right,  upon  not  less  than  three  Business  Days'  notice  to the
Administrative  Agent,  to terminate the  Commitments  or, from time to time, to
reduce the  amount of the  Commitments;  provided  that no such  termination  or
reduction of Commitments  shall be permitted if, after giving effect thereto and
to any  prepayments  of the  Loans,  the  Total  Loans  would  exceed  the Total
Commitments.  Any such reduction shall be in an amount equal to $10,000,000,  or
an integral multiple of $1,000,000 in excess thereof, and shall reduce
permanently the Commitments then in effect.

     2.5  Optional  Prepayments.  The  Borrower may at any time and from time to
time prepay the Loans,  in whole or in part,  without  premium or penalty,  upon
irrevocable  notice delivered to the  Administrative  Agent not later than 10:00
A.M.,  New York City time,  three Business Days prior to the date of prepayment,
in the case of Eurocurrency  Loans, and not later than 11:00 A.M., New York City
time,  one  Business  Day  prior to the date of  prepayment,  in the case of ABR
Loans,  which notice shall specify the date and amount of prepayment and whether
the prepayment is of Eurocurrency  Loans or ABR Loans and, if such prepayment is
of Foreign Currency Loans, the applicable Foreign Currency;  provided, that if a
Eurocurrency  Loan is prepaid on any day other than the last day of the Interest
Period  applicable  thereto,  the  Borrower  shall  also pay any  amounts  owing
pursuant to Section  2.16.  Upon  receipt of any such notice the  Administrative
Agent shall promptly  notify each Lender  thereof.  If any such notice is given,
the  amount  specified  in such  notice  shall  be due and  payable  on the date
specified  therein,  together  with  (except  in the case of Loans  that are ABR

                                       19

Loans) accrued interest to such date on the amount prepaid.  Partial prepayments
of Dollar Loans shall be in an aggregate  principal  amount of  $10,000,000 or a
whole multiple of $1,000,000 in excess thereof.  Partial  prepayments of Foreign
Currency Loans shall be in a minimum principal amount of (x) (pound)7,000,000 or
a whole multiple of  (pound)500,000  in excess  thereof,  in the case of Foreign
Currency Loans denominated in Sterling, (y) (euro)10,000,000 or a whole multiple
or  (euro)1,000,000  in excess  thereof,  in the case of Foreign  Currency Loans
denominated in Euros, and (z) Y1,000,000,000 or a whole multiple or Y100,000,000
in excess thereof, in the case of Foreign Currency Loans denominated in Yen.

     2.6 Mandatory Prepayments.  If, on any date, the Total Loans outstanding on
such date  exceed  102% of the Total  Commitments  in effect on such  date,  the
Borrower  shall,  without notice or demand,  promptly (but in any event,  within
three Business Days of such date) prepay such outstanding  Loans in an aggregate
principal amount such that, after giving effect thereto,  the Total Loans do not
exceed the Total Commitments. Any amounts prepaid pursuant to this Section shall
be  accompanied  by  interest  accrued  to the  date of such  prepayment  on the
principal so prepaid and any amounts  payable  under  Section 2.16 in connection
therewith.

     2.7 Conversion and  Continuation  Options.  (a) The Borrower may elect from
time to time to convert  Eurocurrency  Loans denominated in Dollars to ABR Loans
by giving the Administrative Agent irrevocable notice of such election not later
than 11:00  A.M.,  New York City  time,  one  Business  Day prior to the date of
conversion,  provided that any such conversion of Eurocurrency Loans may only be
made on the last day of an Interest  Period with respect  thereto.  The Borrower
may elect  from time to time to  convert  its ABR  Loans to  Eurocurrency  Loans
denominated in Dollars by giving the Administrative  Agent irrevocable notice of
such election  (which  notice shall  specify the length of the initial  Interest
Period  therefor) not later than 11:00 A.M., New York City time,  three Business
Days prior to the date of conversion, provided that no ABR Loan may be converted
into a  Eurocurrency  Loan  when  any  Event  of  Default  has  occurred  and is
continuing and the Administrative  Agent or the Required Lenders have determined
in its or their sole discretion not to permit such conversions.  Upon receipt of
any such  notice the  Administrative  Agent  shall  promptly  notify each Lender
thereof.

     (b) Any  Eurocurrency  Loan may be continued as such upon the expiration of
the then current  Interest  Period with respect  thereto by the Borrower  giving
irrevocable  notice  to  the  Administrative   Agent,  in  accordance  with  the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans,  provided
that no Eurocurrency  Loan  denominated in Dollars may be continued as such when
any Event of Default has occurred and is continuing and the Administrative Agent
has or the Required  Lenders have determined in its or their sole discretion not
to permit such continuation,  and provided,  further, that if the Borrower shall
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted  pursuant to the preceding  proviso any such Loans
denominated in Dollars shall be automatically converted to ABR Loans on the last
day of such then  expiring  Interest  Period and, if the Borrower  shall fail to
give such  notice of  continuation  of a Foreign  Currency  Loan,  such  Foreign
Currency Loan shall be  automatically  continued  for an Interest  Period of one
month. Upon receipt of any such notice the  Administrative  Agent shall promptly
notify each relevant Lender thereof.

     2.8 Limitations on Eurocurrency Tranches.  Notwithstanding  anything to the
contrary in this Agreement,  all borrowings,  conversions and  continuations  of

                                       20

Eurocurrency  Loans and all  selections  of  Interest  Periods  shall be in such
amounts  and be made  pursuant  to such  elections  so  that  no more  than  ten
Eurocurrency Tranches shall be outstanding at any one time.

     2.9 Repayment of Loans. The Borrower hereby unconditionally promises to pay
to each Lender on the Termination Date (or such earlier date as the Loans become
due and payable pursuant to Section 7), the unpaid principal amount of each Loan
made by such  Lender.  The  Borrower  hereby  further  agrees to pay interest in
immediately  available  funds at the office of the  Administrative  Agent on the
unpaid  principal  amount of such Loans  from time to time from the date  hereof
until  payment in full  thereof at the rates per  annum,  and on the dates,  set
forth in Section 2.10.

     2.10 Interest Rates and Payment  Dates.  (a) Each  Eurocurrency  Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the  Eurocurrency  Rate determined for such day plus the
Eurocurrency Applicable Margin.

     (b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR.

     (c) (i) If all or a portion of the  principal  amount of any Loan shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue  amount  shall bear  interest at a rate per annum equal to the rate
that would otherwise be applicable thereto pursuant to the foregoing  provisions
of this Section plus 2% and (ii) if all or a portion of any interest  payable on
any  Loan  or any  facility  fee or  utilization  fee or  other  amount  payable
hereunder  shall  not be paid  when due  (whether  at the  stated  maturity,  by
acceleration  or  otherwise),  such overdue amount shall bear interest at a rate
per annum equal to the rate then  applicable  to ABR Loans plus 2% (unless  such
overdue amount is denominated in a Foreign Currency,  in which case such overdue
amount  shall bear  interest of a rate per annum equal to the highest  rate then
applicable  under this Agreement to Foreign  Currency Loans  denominated in such
Foreign  Currency  plus 2%), in each case,  with respect to clauses (i) and (ii)
above,  from the date of such non-payment  until such amount is paid in full (as
well after as before judgment).

     (d) Interest  shall be payable in arrears on each  Interest  Payment  Date,
provided that interest  accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.

     2.11  Computation  of Interest  and Fees.  (a)  Interest  and fees  payable
pursuant  hereto  shall be  calculated  on the basis of a  360-day  year for the
actual days  elapsed,  except  that,  with  respect to (i) ABR Loans the rate of
interest on which is  calculated  on the basis of the Prime Rate,  the  interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed and (ii) Foreign Currency Loans denominated
in Sterling,  interest  shall be  calculated  on the basis of a 365-day year for
actual days  elapsed.  The  Administrative  Agent  shall as soon as  practicable
notify  the  Borrower  and  the  relevant  Lenders  of each  determination  of a
Eurocurrency  Rate.  Any change in the interest rate on a Loan  resulting from a
change  in the  Eurocurrency  Applicable  Margin,  the  ABR or the  Eurocurrency
Reserve Requirements shall become effective as of the opening of business on the
day on which such change becomes effective.  The  Administrative  Agent shall as

                                       21

soon as  practicable  notify  the  Borrower  and  the  relevant  Lenders  of the
effective date and the amount of each such change in interest rate.

     (b) Each  determination  of an interest  rate by the  Administrative  Agent
pursuant to any provision of this  Agreement  shall be conclusive and binding on
the  Borrower  and the relevant  Lenders in the absence of manifest  error.  The
Administrative  Agent  shall,  at the  request of the  Borrower,  deliver to the
Borrower a statement showing the quotations used by the Administrative  Agent in
determining any interest rate pursuant to Section 2.10(a).

     2.12 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:

     (a) the  Administrative  Agent shall have determined  (which  determination
shall  be  conclusive  and  binding  upon  the  Borrower)  that,  by  reason  of
circumstances  affecting the relevant  market,  adequate and reasonable means do
not exist for ascertaining the Eurocurrency Rate for such Interest Period,

     (b) the  Administrative  Agent shall have received notice from the Required
Lenders that the  Eurocurrency  Rate  determined  or to be  determined  for such
Interest  Period will not adequately and fairly reflect the cost to the relevant
Lenders (as  conclusively  certified by such  Lenders) of making or  maintaining
their affected Loans during such Interest Period, or

     (c) the  Administrative  Agent  determines  (which  determination  shall be
conclusive  and binding  upon the  Borrower)  that  deposits  in the  applicable
currency  are not  generally  available,  or cannot be obtained by the  relevant
Lenders,  in  the  applicable  market  (any  Foreign  Currency  affected  by the
circumstances described in clause (a), (b) or (c) is referred to as an "Affected
Foreign  Currency"),

then the  Administrative  Agent shall give  telecopy or  telephonic  notice
thereof  to the  Borrower  and the  relevant  Lenders  as  soon  as  practicable
thereafter.  If such  notice is given (x)  pursuant to clause (a) or (b) of this
Section 2.12 in respect of Eurocurrency  Loans denominated in Dollars,  then (i)
any Eurocurrency  Loans denominated in Dollars requested to be made on the first
day of such Interest Period shall be made as ABR Loans,  (ii) any ABR Loans that
were to  have  been  converted  on the  first  day of such  Interest  Period  to
Eurocurrency  Loans  denominated  in Dollars shall be continued as ABR Loans and
(iii)  any  outstanding  Eurocurrency  Loans  denominated  in  Dollars  shall be
converted, on the last day of the then-current Interest Period, to ABR Loans and
(y) in respect of any Foreign  Currency  Loans,  then (i) any  Foreign  Currency
Loans in an Affected Foreign  Currency  requested to be made on the first day of
such Interest Period shall not be made and (ii) any outstanding Foreign Currency
Loans in an Affected  Foreign  Currency shall be due and payable on the last day
of the  then-current  Interest  Period.  Until  such  relevant  notice  has been
withdrawn by the Administrative Agent, no further Eurocurrency Loans denominated
in Dollars or Foreign  Currency Loans in an Affected  Foreign  Currency shall be
made or continued as such,  nor shall the Borrower have the right to convert ABR
Loans to Eurocurrency Loans denominated in Dollars.

     2.13 Pro Rata  Treatment and Payments.  (a) Each  borrowing by the Borrower
from the  Lenders  hereunder,  each  payment by the  Borrower  on account of any

                                       22

facility fee or  utilization  fee and any  reduction of the  Commitments  of the
Lenders shall be made pro rata according to the respective  Loan  Percentages of
the Lenders.

     (b) Each payment  (including each prepayment) by the Borrower on account of
principal of and  interest on the Loans shall be made pro rata  according to the
respective outstanding principal amounts of the Loans then held by the Lenders.

     (c) All  payments  (including  prepayments)  to be  made  by the  Borrower,
whether on account of  principal,  interest,  fees or  otherwise,  shall be made
without setoff or  counterclaim  and shall be made prior to 12:00 Noon, New York
City time, on the due date thereof to the Administrative  Agent, for the account
of the relevant Lenders, at its Funding Office, in immediately  available funds.
Except as otherwise  specified in this  Agreement,  amounts  owing  hereunder on
account of  principal  and  interest on Loans  shall be paid in the  currency in
which such Loan was  borrowed,  and amounts  owing  hereunder on account of fees
shall  be paid in  Dollars.  The  Administrative  Agent  shall  distribute  such
payments  to the  relevant  Lenders  promptly  upon  receipt  in like  funds  as
received.  If any payment  hereunder  (other than  payments on the  Eurocurrency
Loans)  becomes due and payable on a day other than a Business Day, such payment
shall be  extended  to the next  succeeding  Business  Day.  If any payment on a
Eurocurrency  Loan  becomes due and payable on a day other than a Business  Day,
the  maturity  thereof  shall be extended to the next  succeeding  Business  Day
unless the result of such extension would be to extend such payment into another
calendar  month,  in which event such payment  shall be made on the  immediately
preceding Business Day. In the case of any extension of any payment of principal
pursuant to the preceding two  sentences,  interest  thereon shall be payable at
the then applicable rate during such extension.

     (d) Unless the Administrative  Agent shall have been notified in writing by
any Lender  prior to a borrowing  that such Lender will not make the amount that
would  constitute  its share of such borrowing  available to the  Administrative
Agent,  the  Administrative  Agent may assume  that such  Lender is making  such
amount available to the Administrative  Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative  Agent by the
required  time on the  Borrowing  Date  therefor,  such Lender  shall pay to the
Administrative  Agent,  on  demand,  (i) in the case of amounts  denominated  in
Dollars, such amount with interest thereon at a rate equal to the greater of (x)
the Federal Funds Effective Rate and (y) a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank  compensation,  for
the period  until such Lender  makes such amount  immediately  available  to the
Administrative  Agent  or (ii) in the case of  amounts  denominated  in  Foreign
Currencies,  such  amount  with  interest  thereon at a rate  determined  by the
Administrative  Agent to be the cost to it of  funding  such  amount  until such
Lender makes such amount immediately  available to the  Administrative  Agent. A
certificate of the Administrative  Agent submitted to any Lender with respect to
any amounts  owing under this  paragraph  shall be  conclusive in the absence of
manifest  error.  If such Lender's share of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the  Administrative  Agent shall also be entitled to recover (i)
in the case of amounts denominated in Dollars, such amount with interest thereon
at the rate per annum  applicable to ABR Loans, on demand,  from the Borrower or
(ii) in the case of amounts denominated in Foreign Currencies,  such amount with
interest thereon at a rate determined by the Administrative  Agent to be the sum

                                       23

of (x)  the  cost  to it of  funding  such  amount  plus  (y)  the  Eurocurrency
Applicable Margin, on demand,  from the Borrower.  The failure or refusal of any
Lender to make available to the Administrative Agent such Lender's share of such
borrowing  shall  not  relieve  any other  Lender  from its  several  obligation
hereunder to make available to the Administrative Agent the amount of such other
Lender's  share of such  borrowing.  Nothing herein shall be deemed to limit the
rights of the  Borrower  against  any Lender  that has failed or refused to make
available such Lender's share of any borrowing.

     (e) Unless the Administrative  Agent shall have been notified in writing by
the  Borrower  prior to the date of any payment  due to be made by the  Borrower
hereunder  that the Borrower  will not make such  payment to the  Administrative
Agent,  the  Administrative  Agent may assume  that the  Borrower is making such
payment,  and the  Administrative  Agent may,  but shall not be required  to, in
reliance upon such  assumption,  make available to the Lenders their  respective
pro rata shares of a  corresponding  amount.  If such payment is not made to the
Administrative  Agent by the Borrower  within three Business Days after such due
date, the  Administrative  Agent shall be entitled to recover,  on demand,  from
each relevant  Lender to which any amount which was made  available  pursuant to
the preceding sentence,  (i) in the case of amounts denominated in Dollars, such
amount with  interest  thereon at the rate per annum equal to the daily  average
Federal  Funds  Effective  Rate and (ii) in the case of amounts  denominated  in
Foreign  Currencies,  such  amount  with  interest  thereon  at a rate per annum
determined  by the  Administrative  Agent to be the cost to it of  funding  such
amount. Nothing herein shall be deemed to limit the rights of the Administrative
Agent or any Lender against the Borrower with respect to such payment.

     2.14  Requirements  of Law.  (a) If the  adoption  of or any  change in any
Requirement  of Law or in  the  interpretation  or  application  thereof  by any
Governmental Authority charged with the interpretation or administration thereof
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central  bank or other  Governmental  Authority  made
subsequent to the date hereof:

     (i) shall subject any Lender to any tax of any kind whatsoever with respect
to this  Agreement  or any Loan made by it, or change the basis of  taxation  of
payments  to such  Lender in respect  thereof  (except  for  Non-Excluded  Taxes
covered by Section 2.15 and changes in the rate of tax on the overall net income
of such Lender);

     (ii) shall impose, modify or hold applicable any reserve,  special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities  in or for the account of,  advances,  loans or other  extensions of
credit by, or any other  acquisition of funds by, any office of such Lender that
is not otherwise included in the determination of the Eurocurrency Rate; or

     (iii) shall impose on such Lender any other  condition  relating to funding
of assets that would include the  Eurodollar  Loans or the income or earnings in
respect  thereof  (except for  Non-Excluded  Taxes  covered by Section  2.15 and
changes in the rate of tax on the overall net income of such Lender);

                                       24

and the result of any of the  foregoing  is to increase the cost to such Lender,
by an amount  that such  Lender  reasonably  deems to be  material,  of  making,
converting into, continuing or maintaining  Eurocurrency Loans, or to reduce any
amount  receivable  hereunder in respect  thereof,  then, in any such case,  the
Borrower  shall,  promptly after its receipt of a notice with respect thereto in
accordance  with  Section  2.14(d),  pay  such  Lender,  upon  its  demand,  any
additional  amounts  necessary to compensate such Lender for such increased cost
or reduced amount receivable.

     (b) If any Lender shall have reasonably  determined that the adoption of or
any  change in any  Requirement  of Law  regarding  capital  adequacy  or in the
interpretation or application  thereof by a Governmental  Authority charged with
the interpretation or administration thereof or compliance by such Lender or any
corporation  controlling  such Lender with any  request or  directive  regarding
capital adequacy  (whether or not having the force of law) from any Governmental
Authority  made  subsequent to the date hereof shall have the effect of reducing
the  rate  of  return  on  such  Lender's  or such  corporation's  capital  as a
consequence of its obligations hereunder to a level below that which such Lender
or such  corporation  could  have  achieved  but for such  adoption,  change  or
compliance  (taking  into  consideration  such  Lender's  or such  corporation's
policies  with respect to capital  adequacy) by an amount  reasonably  deemed by
such  Lender to be  material,  then from time to time,  after  such  Lender  has
provided  written  notice in  accordance  with  Section  2.14(d) to the Borrower
requesting  compensation  for such reduction under this paragraph,  the Borrower
shall pay to such Lender such  additional  amount or amounts as will  compensate
such Lender or such corporation for such reduction.

     (c) If  any  Governmental  Authority  of the  jurisdiction  of any  Foreign
Currency  (or any other  jurisdiction  in which the  funding  operations  of any
Lender shall be conducted with respect to such Foreign  Currency)  shall have in
effect any  reserve,  liquid  asset or similar  requirement  with respect to any
category  of  deposits  or  liabilities  customarily  used to fund loans in such
Foreign Currency, or by reference to which interest rates applicable to loans in
such Foreign Currency are determined,  and the result of such requirement  shall
be to  increase  the cost to such  Lender of making or  maintaining  any Foreign
Currency  Loan in such Foreign  Currency,  and such Lender shall  deliver to the
Borrower  a  written  notice  in  accordance  with  Section  2.14(d)  requesting
compensation  for such additional  cost under this paragraph,  then the Borrower
will pay to such  Lender on each  Interest  Payment  Date with  respect  to each
affected  Foreign  Currency Loan an amount that will  compensate such Lender for
such additional cost.

     (d) If any  Lender  becomes  entitled  to  claim  any  additional  amounts,
compensation  or additional  costs pursuant to this Section,  it shall deliver a
written notice in accordance with this paragraph to the Borrower (with a copy to
the Administrative  Agent) requesting such additional  amounts,  compensation or
additional  costs and  notifying the Borrower of the event by reason of which it
has become so entitled.  Such Lender agrees to use reasonable efforts to deliver
such notice  promptly  following the time at which it becomes aware of the event
giving rise to such additional amounts,  compensation or additional cost payable
(provided that the failure by such Lender to give such notice promptly shall not
adversely  affect  any  of  its  rights  hereunder).  A  certificate  as to  any
additional  amounts,  compensation  or  additional  costs  payable to any Lender
pursuant to this  Section 2.14  submitted by any Lender to the Borrower  (with a
copy to the Administrative Agent) shall be conclusive in the absence of manifest
error. Notwithstanding anything to the contrary contained in paragraphs (a), (b)

                                       25

and (c)  above,  the  Borrower  shall not be  required  to  compensate  a Lender
pursuant to such  paragraphs  for any amounts  incurred  more than three  months
prior to the date  that such  Lender  notifies  the  Borrower  of such  Lender's
intention to claim  compensation  therefor;  and provided  further  that, if the
circumstances  giving rise to such claim have a  retroactive  effect,  then such
three-month  period shall be extended to include the period of such  retroactive
effect.  The  obligations  of the  Borrower  pursuant to this Section 2.14 shall
survive the  termination  of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

     (e)  Notwithstanding  any other  provision  of this  Agreement,  if (x) the
adoption of or any change in any Requirement of Law or in the  interpretation or
application thereof by a Governmental  Authority charged with the interpretation
or  administration  thereof  or  compliance  by any Lender  with any  request or
directive  (whether  or not  having the force of law) from any  central  bank or
other  Governmental  Authority made  subsequent to the date hereof shall make it
unlawful for any Lender to make or maintain any Foreign Currency Loan or to give
effect to its  obligations  as  contemplated  hereby with respect to any Foreign
Currency  Loan,  or (y) there  shall have  occurred  any change in  national  or
international  financial,   political  or  economic  conditions  (including  the
imposition  of or any change in  exchange  controls,  but  excluding  conditions
otherwise  covered by this Section 2.14) which would make it  impracticable  for
any  Lender  to make or  maintain  Foreign  Currency  Loans  denominated  in the
relevant  Foreign  Currency after the date hereof to, or for the account of, the
Borrower,  then,  by written  notice to the Borrower  and to the  Administrative
Agent:

          (i) such  Lender  may  declare  that  Foreign  Currency  Loans (in the
     affected  Foreign  Currency or  Currencies)  will not  thereafter  (for the
     duration  of such  unlawfulness  or change in  conditions)  be made by such
     Lender or  Lenders  hereunder  (or be  continued  for  additional  Interest
     Periods),  whereupon  any  request  for a  Foreign  Currency  Loan  (in the
     affected  Foreign Currency or Currencies) or to continue a Foreign Currency
     Loan (in the affected Foreign Currency or Currencies),  as the case may be,
     for an additional  Interest Period) shall, as to such Lender only, be of no
     force and effect, unless such declaration shall be subsequently  withdrawn;
     and

          (ii) such Lender may require  that all  outstanding  Foreign  Currency
     Loans (in the  affected  Foreign  Currency  or  Currencies),  made by it be
     converted to ABR Loans or Eurocurrency Loans denominated in Dollars, as the
     case may be  (unless  repaid  by the  Borrower),  in which  event  all such
     Foreign  Currency  Loans (in the affected  Foreign  Currency or Currencies)
     shall be  converted  to ABR  Loans or  Eurocurrency  Loans  denominated  in
     Dollars,  as the case may be, as of the  effective  date of such  notice as
     provided in  paragraph  (f) below and at the  Exchange  Rate on the date of
     such  conversion or, at the option of the Borrower,  repaid on the last day
     of the then current Interest Period with respect thereto.

In the event any Lender shall  exercise its rights under (i) or (ii) above, all
payments and  prepayments of principal made  thereafter that would otherwise
have been applied to repay the converted  Foreign  Currency Loans of such Lender
shall  instead  be  applied  to  repay  the  ABR  Loans  or  Eurocurrency  Loans
denominated in Dollars,  as the case may be, made by such Lender  resulting from
such conversion.

                                       26

     (f) For purposes of Section 2.14(e), a notice to the Borrower by any Lender
shall be  effective  as to each Foreign  Currency  Loan made by such Lender,  if
lawful,  on the last day of the Interest  Period  currently  applicable  to such
Foreign  Currency Loan; in all other cases such notice shall be effective on the
date of receipt thereof by the Borrower.

     2.15 Taxes.  (a) All  payments  made by the Borrower  under this  Agreement
shall be made free and clear of, and without  deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties,  charges,  fees,  deductions or withholdings,  now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income  taxes and  franchise  taxes  (imposed  in lieu of net income  taxes)
imposed  on the  Administrative  Agent or any Lender as a result of a present or
former  connection  between  the  Administrative  Agent or such  Lender  and the
jurisdiction of the  Governmental  Authority  imposing such tax or any political
subdivision  or  taxing  authority  thereof  or  therein  (other  than  any such
connection  arising solely from the  Administrative  Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced,  this Agreement or any other Loan Document).  If any such non-excluded
taxes,  levies,  imposts,  duties,  charges,  fees,  deductions or  withholdings
("Non-Excluded  Taxes") or Other  Taxes are  required  to be  withheld  from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative  Agent or such Lender shall be increased to the
extent  necessary  to yield to the  Administrative  Agent or such Lender  (after
payment of all  Non-Excluded  Taxes and Other Taxes)  interest or any such other
amounts  payable  hereunder  at the rates or in the  amounts  specified  in this
Agreement,  provided,  however,  that the  Borrower  shall  not be  required  to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are  attributable  to such  Lender's  failure to comply  with the
requirements  of  paragraph  (d) or (e) of this  Section or (ii) that are United
States  withholding  taxes imposed on amounts payable to such Lender at the time
such Lender  becomes a party to this  Agreement,  except to the extent that such
Lender's assignor (if any) was entitled,  at the time of assignment,  to receive
additional  amounts from the Borrower  with respect to such  Non-Excluded  Taxes
pursuant to this paragraph.

     (b) In  addition,  the  Borrower  shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

     (c)  Whenever  any  Non-Excluded  Taxes or Other  Taxes are  payable by the
Borrower,  as promptly as possible  thereafter  the  Borrower  shall send to the
Administrative  Agent for its own  account or for the  account  of the  relevant
Lender,  as the case may be, a certified  copy of an original  official  receipt
received by the Borrower showing payment  thereof.  If the Borrower fails to pay
any  Non-Excluded  Taxes  or Other  Taxes  when  due to the  appropriate  taxing
authority or fails to remit to the Administrative Agent the required receipts or
other  required   documentary   evidence,   the  Borrower  shall  indemnify  the
Administrative  Agent and the Lenders  for any  incremental  taxes,  interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.

     (d) Each Lender (or Transferee)  that is not a "U.S.  Person" as defined in
Section  7701(a)(30)  of the Code (a  "Non-U.S.  Lender")  shall  deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant,  to the
Lender  from which the  related  participation  shall have been  purchased)  two

                                       27

copies of either U.S.  Internal Revenue Service Form W-8BEN or Form W-8ECI,  or,
in  the  case  of  a  Non-U.S.  Lender  claiming  exemption  from  U.S.  federal
withholding  tax under  Section  871(h) or  881(c) of the Code with  respect  to
payments  of  "portfolio  interest",  a statement  substantially  in the form of
Exhibit E and a Form W-8BEN,  or any subsequent  versions  thereof or successors
thereto,  properly completed and duly executed by such Non-U.S.  Lender claiming
complete  exemption  from U.S.  federal  withholding  tax on all payments by the
Borrower under this Agreement and the other Loan Documents.  Such forms shall be
delivered  by each  Non-U.S.  Lender on or before the date it becomes a party to
this Agreement (or, in the case of any  Participant,  on or before the date such
Participant  purchases the related  participation).  In addition,  each Non-U.S.
Lender shall deliver such forms promptly upon the  obsolescence or invalidity of
any form  previously  delivered  by such  Non-U.S.  Lender,  to the extent  such
Non-U.S.  Lender is  legally  able to  deliver  such  replacement  forms..  Each
Non-U.S.  Lender shall  promptly  notify the Borrower at any time it  determines
that  it  is no  longer  in a  position  to  provide  any  previously  delivered
certificate to the Borrower (or any other form of  certification  adopted by the
U.S. taxing authorities for such purpose).

     (e) The  agreements in this Section shall survive the  termination  of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

     2.16  Indemnity.  The Borrower  agrees to indemnify each Lender for, and to
hold each Lender harmless from, any loss or expense that such Lender may sustain
or incur as a  consequence  of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurocurrency Loans after the Borrower has
given a notice  requesting  the same in accordance  with the  provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from  Eurocurrency  Loans  after  the  Borrower  has given a notice  thereof  in
accordance  with  the  provisions  of  this  Agreement  or (c) the  making  of a
prepayment  of  Eurocurrency  Loans  on a day  that  is not the  last  day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the  excess,  if any,  of (i) the  amount of  interest  that would have
accrued on the amount so prepaid,  or not so borrowed,  converted or  continued,
for the period from the date of such  prepayment  or of such  failure to borrow,
convert or continue to the last day of such Interest  Period (or, in the case of
a failure to borrow,  convert or continue,  the Interest  Period that would have
commenced on the date of such  failure) in each case at the  applicable  rate of
interest for such Loans provided for herein (excluding,  however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable  period with leading banks in
the  interbank  Eurocurrency  market.  A certificate  as to any amounts  payable
pursuant  to this  Section  submitted  to the  Borrower  by any Lender  shall be
conclusive in the absence of manifest  error.  This  covenant  shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

     2.17 Change of Lending Office. Each Lender agrees that, upon the occurrence
of any event  giving  rise to the  operation  of Section  2.14 or  2.15(a)  with
respect to such Lender,  it will, if requested by the Borrower,  use  reasonable
efforts (subject to overall policy  considerations  of such Lender) to designate
another  lending  office for any Loans affected by such event with the object of
avoiding the consequences of such event; provided, that such designation is made
on terms that,  in the sole  judgment of such Lender,  cause such Lender and its
lending   office(s)  to  suffer  no  economic,   legal,   regulatory   or  other

                                       28

disadvantage,  and provided,  further, that nothing in this Section shall affect
or postpone any of the  obligations  of the Borrower or the rights of any Lender
pursuant to Section 2.14 or 2.15(a).

     2.18 Replacement of Lenders. The Borrower shall be permitted to replace any
Lender that (a) requests  reimbursement  for amounts  owing  pursuant to Section
2.14 or 2.15(a) or (b) defaults in its obligation to make Loans hereunder,  with
a replacement financial institution; provided that (i) such replacement does not
conflict  with any  Requirement  of Law,  (ii) no Event of  Default  shall  have
occurred and be continuing at the time of such  replacement,  (iii) prior to any
such  replacement,  such Lender shall have taken no action under Section 2.17 so
as to eliminate the continued  need for payment of any amounts owing pursuant to
Section  2.14 or  2.15(a),  (iv) the  replacement  financial  institution  shall
purchase,  at par (unless the Lender being replaced otherwise agrees to accept a
lesser  payment in its  discretion),  all Loans and other  amounts owing to such
replaced Lender on or prior to the date of  replacement,  (v) the Borrower shall
be liable to such replaced  Lender under Section 2.16 if any  Eurocurrency  Loan
owing to such replaced  Lender shall be purchased  other than on the last day of
the  Interest  Period   relating   thereto,   (vi)  the  replacement   financial
institution,  if not already a Lender,  shall be reasonably  satisfactory to the
Administrative  Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance  with the provisions of Section 9.6 (provided that the
Borrower shall be obligated to pay the  registration and processing fee referred
to therein),  (viii) until such time as such  replacement  shall be consummated,
the Borrower  shall pay all  additional  amounts (if any)  required  pursuant to
Section 2.14 or 2.15(a), as the case may be, and (ix) any such replacement shall
not be deemed to be a waiver of any rights that the Borrower, the Administrative
Agent or any other Lender shall have against the replaced Lender.

     2.19 Judgment  Currency.  (a) If, for the purpose of obtaining  judgment in
any court, it is necessary to convert a sum owing hereunder in one currency into
another  currency,  each party hereto agrees,  to the fullest extent that it may
effectively  do so,  that the rate of exchange  used shall be that at which,  in
accordance  with normal  banking  procedures in the relevant  jurisdiction,  the
first  currency  could be purchased with such other currency on the Business Day
immediately preceding the day on which final judgment is given.

     (b) The  obligations of the Borrower in respect of any sum due to any party
hereto  or any  holder  of the  obligations  owing  hereunder  (the  "Applicable
Creditor")  shall,  notwithstanding  any judgment in a currency  (the  "Judgment
Currency")  other  than the  currency  in which  such  sum is  stated  to be due
hereunder (the "Agreement Currency"),  be discharged only to the extent that, on
the  Business  Day  following  receipt  by the  Applicable  Creditor  of any sum
adjudged to be so due in the Judgment Currency,  the Applicable  Creditor may in
accordance with normal banking procedures in the relevant  jurisdiction purchase
the  Agreement  Currency  with  the  Judgment  Currency;  if the  amount  of the
Agreement  Currency  so  purchased  is less than the sum  originally  due to the
Applicable  Creditor  in the  Agreement  Currency,  the  Borrower  as a separate
obligation  and  notwithstanding  any such  judgment,  agrees to  indemnify  the
Applicable Creditor against such loss. The obligations of the Borrower contained
in this Section shall survive the  termination of this Agreement and the payment
of all other amounts owing hereunder.

                                       29

                    SECTION 3. REPRESENTATIONS AND WARRANTIES

     To induce  the  Administrative  Agent and the  Lenders  to enter  into this
Agreement and to make the Loans, the Borrower hereby  represents and warrants to
the  Administrative  Agent  and each  Lender,  as of the date of this  Agreement
(except as to the  representations  and  warranties  made as of a date  certain,
which  shall be true  and  correct  as of such  date)  and as of the  date  such
representations and warranties are deemed to be made under Section 4.2(a), that:

     3.1 Financial  Condition.  The audited  consolidated  balance sheets of the
Borrower and its consolidated  Subsidiaries as at January 1, 2000,  December 30,
2000 and December 29, 2001 and the related consolidated statements of income and
of cash flows for the  fiscal  years  ended on such  dates,  reported  on by and
accompanied by an unqualified  report from Arthur  Andersen LLP,  present fairly
the  consolidated  financial  condition  of the  Borrower  and its  consolidated
Subsidiaries as at such dates,  and the  consolidated  results of its operations
and its consolidated  cash flows for the respective fiscal years then ended. The
unaudited  consolidated  balance  sheet  of the  Borrower  and its  consolidated
Subsidiaries  as at September 28, 2002, and the related  unaudited  consolidated
statements  of income and cash  flows for the  nine-month  period  ended on such
date,  present fairly the consolidated  financial  condition of the Borrower and
its consolidated  Subsidiaries as at such date, and the consolidated  results of
its operations and its  consolidated  cash flows for the nine-month  period then
ended  (subject  to  normal  year-end  audit  adjustments).  All such  financial
statements,  including  the  related  schedules  and  notes  thereto,  have been
prepared in  accordance  with GAAP  (subject to the  absence of  footnotes  with
respect to unaudited quarterly  statements) applied consistently  throughout the
periods involved (except as approved by the  aforementioned  firm of accountants
and disclosed  therein).  As of the date of this Agreement,  no Group Member has
any material Guarantee  Obligations,  contingent liabilities and liabilities for
taxes,  or any  long-term  leases or unusual  forward or long-term  commitments,
including any interest rate or foreign currency swap or exchange  transaction or
other  obligation in respect of  derivatives,  other than those that (i) are not
material  to the  Borrower  and its  Subsidiaries  taken  as a whole or (ii) are
reflected in the most recent financial  statements referred to in this paragraph
or in the Borrower's most recent report on Form 10-K and any subsequent  reports
on Form 10-Q or Form 8-K filed with the SEC prior to the date of this  Agreement
(such filings,  the "SEC Filings").  During the period from December 29, 2001 to
and including the date of this  Agreement  there has been no  Disposition by any
Group  Member of any part of its  business or property  material to the Borrower
and its  Subsidiaries  taken as a whole  except as set forth in the most  recent
financial  statements  referred to in this  paragraph or in the  Borrower's  SEC
Filings.

     3.2 No Change.  Since  December 29, 2001,  there has been no development or
event that has had or could  reasonably  be expected to have a Material  Adverse
Effect.

     3.3  Existence;  Compliance  with  Law.  Each  Group  Member  (a)  is  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right,  to own and operate its  property,  to lease the  property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign  corporation  and in good standing under the laws of each
jurisdiction where its ownership,  lease or operation of property or the conduct
of its business  requires such  qualification  and (d) is in compliance with all

                                       30

Requirements of Law except to the extent that the failure to conform to the
requirements of clauses (a) through (d) could not, in the aggregate,  reasonably
be expected to have a Material Adverse Effect.

     3.4 Power;  Authorization;  Enforceable  Obligations.  The Borrower has the
power and authority,  and the legal right, to make, deliver and perform the Loan
Documents to which it is a party and to borrow hereunder. The Borrower has taken
all necessary  organizational  action to authorize the  execution,  delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower,  to authorize the  extensions of credit on the terms and conditions of
this Agreement.  No consent or authorization of, filing with, notice to or other
act by or in  respect  of, any  Governmental  Authority  or any other  Person is
required of any Group Member in connection  with the  borrowings by the Borrower
hereunder or with the execution,  delivery and  performance by the Borrower,  or
the validity or enforceability against the Borrower, of this Agreement or any of
the Loan  Documents.  Each Loan Document has been duly executed and delivered on
behalf of the Borrower. This Agreement constitutes, and each other Loan Document
upon execution will  constitute,  a legal,  valid and binding  obligation of the
Borrower,  enforceable against the Borrower in accordance with its terms, except
as  enforceability  may  be  limited  by  applicable   bankruptcy,   insolvency,
reorganization,   moratorium  or  similar  laws  affecting  the  enforcement  of
creditors'  rights  generally  and  by  general  equitable  principles  (whether
enforcement is sought by proceedings in equity or at law).

     3.5 No Legal Bar.  Except as, in the  aggregate,  could not  reasonably  be
expected  to  have a  Material  Adverse  Effect,  the  execution,  delivery  and
performance  of this  Agreement  and the other Loan  Documents,  the  borrowings
hereunder and the use of the proceeds  thereof will not violate any  Requirement
of Law or any Contractual Obligation of any Group Member and will not result in,
or require,  the creation or imposition  of any Lien on any of their  respective
properties  or  revenues  pursuant  to  any  Requirement  of  Law  or  any  such
Contractual Obligation.

     3.6 Litigation. No litigation, investigation or proceeding of or before any
arbitrator  or  Governmental  Authority  is pending or, to the  knowledge of the
Borrower,  threatened  by or against  any Group  Member or against  any of their
respective  properties or revenues  that could  reasonably be expected to have a
Material Adverse Effect.

     3.7 Ownership of Property;  Liens.  Except as, in the aggregate,  could not
reasonably be expected to have a Material Adverse Effect,  each Group Member has
title in fee simple to, or a valid leasehold interest in, all its real property,
and good title to, or a valid leasehold interest in, all its other property, and
none of such property is subject to any Lien except as permitted by Section 6.4.

     3.8 Taxes. Except as, in the aggregate, could not reasonably be expected to
have a Material  Adverse  Effect,  each  Group  Member has filed or caused to be
filed all Federal,  state and other material tax returns that are required to be
filed and has paid all taxes shown to be due and  payable on said  returns or on
any assessments made against it or any of its property and all other taxes, fees
or  other  charges  imposed  on it or any of its  property  by any  Governmental
Authority  (other than any the amount or validity of which are  currently  being
contested  in good faith by  appropriate  proceedings  and with respect to which
reserves in conformity with GAAP have been provided on the books of the relevant
Group Member).

                                       31

     3.9 Federal Regulations.  No part of the proceeds of any Loans will be used
for any purpose that violates the provisions of Regulation U or any of the other
Regulations  of the Board.  If  requested  by any  Lender or the  Administrative
Agent, the Borrower will furnish to the  Administrative  Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1, as applicable, referred to in Regulation U.

     3.10 ERISA.  Except as, in the aggregate,  could not reasonably be expected
to  have  a  Material  Adverse  Effect,   neither  a  Reportable  Event  nor  an
"accumulated  funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred  during the five-year  period prior to the
date on which this  representation  is made or deemed  made with  respect to any
Plan,  and each Plan has complied in all material  respects with the  applicable
provisions of ERISA and the Code. No termination  of a Single  Employer Plan has
occurred that could  reasonably be expected to have a Material  Adverse  Effect,
and no Lien in favor of the PBGC or a Plan has  arisen,  during  such  five-year
period.  The present value of all accrued  benefits  under each Single  Employer
Plan  (based on those  assumptions  used to fund such  Plans) did not, as of the
last annual  valuation  date prior to the date on which this  representation  is
made or deemed  made,  exceed the value of the assets of such Plan  allocable to
such accrued  benefits by an amount that is material in relation to Consolidated
Net Worth. Except as in the aggregate could not reasonably be expected to have a
Material Adverse Effect, neither the Borrower nor any Commonly Controlled Entity
has had a complete  or  partial  withdrawal  from any  Multiemployer  Plan,  and
neither the Borrower nor any Commonly  Controlled Entity would become subject to
any liability under ERISA that, in the aggregate,  could  reasonably be expected
to result in a Material  Adverse  Effect if the  Borrower  or any such  Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which this  representation
is made or deemed  made.  No such  Multiemployer  Plan is in  Reorganization  or
Insolvent under  circumstances  that could reasonably be expected to result in a
Material Adverse Effect.

     3.11  Investment  Company Act;  Other  Regulations.  The Borrower is not an
"investment  company",  or a company  "controlled"  by an "investment  company",
within the  meaning of the  Investment  Company  Act of 1940,  as  amended.  The
Borrower is not subject to regulation  under any  Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.

     3.12  Use of  Proceeds.  The  proceeds  of the  Loans  shall be used by the
Borrower and its  Subsidiaries for working  capital,  non-hostile  acquisitions,
repurchases of Capital Stock,  debentures and other  securities of the Borrower,
the refinancing of present and future debt and general corporate purposes.

     3.13  Environmental  Matters.  Except  as,  in  the  aggregate,  could  not
reasonably be expected to have a Material Adverse Effect:

     (a) the facilities and  properties  owned,  leased or operated by any Group
Member (the "Properties") do not contain, and have not previously contained, any
Materials  of  Environmental  Concern  in  amounts  or  concentrations  or under
circumstances  that constitute or constituted a violation of, or could give rise
to liability under, any Environmental Law;

                                       32

     (b) no Group  Member has  received or is aware of any notice of  violation,
alleged violation,  non-compliance,  liability or potential  liability regarding
environmental  matters or compliance with  Environmental Laws with regard to any
of the Properties or the business operated by any Group Member (the "Business"),
nor does the Borrower  have  knowledge or reason to believe that any such notice
will be received or is being threatened;

     (c)  Materials  of  Environmental  Concern  have  not been  transported  or
disposed of from the Properties in violation of, or in a manner or to a location
that could give rise to liability  under,  any  Environmental  Law, nor have any
Materials of Environmental Concern been generated,  treated,  stored or disposed
of at, on or under any of the  Properties  in violation  of, or in a manner that
could give rise to liability under, any applicable Environmental Law;

     (d) no judicial  proceeding or  governmental  or  administrative  action is
pending  or,  to  the   knowledge  of  the  Borrower,   threatened,   under  any
Environmental  Law to which any Group Member is or will be named as a party with
respect to the Properties or the Business,  nor are there any consent decrees or
other decrees,  consent orders,  administrative orders or other orders, or other
administrative or judicial requirements  outstanding under any Environmental Law
with respect to the Properties or the Business;

     (e)  there  has been no  release  or  threat of  release  of  Materials  of
Environmental  Concern at or from the Properties,  or arising from or related to
the  operations  of any  Group  Member  in  connection  with the  Properties  or
otherwise in connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws;

     (f) the  Properties and all operations at the Properties are in compliance,
and  have in the  last  five  years  been in  compliance,  with  all  applicable
Environmental  Laws,  and  there is no  contamination  at,  under  or about  the
Properties or violation of any  Environmental Law with respect to the Properties
or the Business; and

     (g) no Group  Member has assumed any  liability  of any other  Person under
Environmental Laws.

     3.14 Accuracy of Information, etc. No statement or information contained in
this Agreement,  the Confidential  Information Memorandum or any other document,
certificate  or  statement  furnished  by or on  behalf of the  Borrower  to the
Administrative  Agent or the Lenders, or any of them, for use in connection with
the  transactions  contemplated  by this Agreement or the other Loan  Documents,
contained as of the date such  statement,  information,  document or certificate
was so furnished (or, in the case of the Confidential Information Memorandum, as
of the date of this  Agreement)  when taken  together with the SEC Filings,  any
untrue  statement  of a  material  fact or  omitted  to  state a  material  fact
necessary to make the statements contained herein or therein not misleading. The
projections  and pro forma  financial  information  contained  in the  materials
referenced above are based upon good faith estimates and assumptions believed by
management  of  the  Borrower  to be  reasonable  at the  time  made,  it  being
recognized  by the  Lenders  that such  financial  information  as it relates to
future  events is not to be viewed as fact and that  actual  results  during the
period or periods  covered by such  financial  information  may differ  from the
projected results set forth therein by a material amount.

                                       33

                        SECTION 4. CONDITIONS PRECEDENT

     4.1 Conditions to Initial  Loans.  The agreement of each Lender to make the
initial Loans requested to be made by it is subject to the  satisfaction,  prior
to or concurrently  with the making of such Loans,  of the following  conditions
precedent:

     (a) Credit  Agreement.  The  Administrative  Agent shall have received this
Agreement,  executed and delivered by the Administrative  Agent, the Syndication
Agent,  the  Co-Documentation  Agents,  the Borrower  and each Person  listed on
Schedule 1.1.

     (b) Fees. The Lenders and the Administrative  Agent shall have received all
fees  required  to be paid,  and all  expenses  for  which  invoices  have  been
presented  (including the reasonable fees and expenses of legal counsel),  on or
before the Closing  Date.  All such amounts will be paid by wire transfer on the
Closing Date.

     (c)  Closing  Certificate;  Certified  Certificate  of  Incorporation.  The
Administrative  Agent shall have received a certificate  of the Borrower,  dated
the  Closing  Date,  substantially  in the form of Exhibit  B, with  appropriate
insertions and  attachments,  including the certificate of  incorporation of the
Borrower.

     (d) Legal Opinions.  The Administrative Agent shall have received the legal
opinion of Seth Hoogasian, General Counsel of the Borrower and its Subsidiaries,
substantially  in the form of  Exhibit D. Such legal  opinion  shall  cover such
other matters incident to the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require.

     (e) Other  Agreement.  The Other  Agreement  shall have been  executed  and
delivered by the Borrower and all other  parties  thereto,  and the Closing Date
(as defined therein) shall have occurred thereunder.

     4.2  Conditions to Each Loan. The agreement of each Lender to make any Loan
(other  than a  Refunding  Borrowing)  requested  to be made  by it on any  date
(including  its initial  Loan) is subject to the  satisfaction  of the following
conditions precedent:

     (a)  Representations  and  Warranties.  Each  of  the  representations  and
warranties made by the Borrower in or pursuant to the Loan Documents (other than
representations  and warranties made as of a specified earlier date, which shall
be true and correct as of such earlier date) shall be true and correct on and as
of such date as if made on and as of such date.

     (b) No Default.  No Default or Event of Default  shall have occurred and be
continuing on such date or after giving effect to the Loans requested to be made
on such date.

     Each borrowing by the Borrower  hereunder shall constitute a representation
and  warranty  by the  Borrower  as of the  date  of  such  borrowing  that  the
conditions contained in this Section 4.2 have been satisfied.

                                       34

                        SECTION 5. AFFIRMATIVE COVENANTS

     The Borrower  hereby  agrees  that,  so long as the  Commitments  remain in
effect or any Loan or other amount is owing to any Lender or the  Administrative
Agent  hereunder,  the Borrower  shall and (except in the case of Sections  5.1,
5.2, 5.4(a)(i) and 5.7) shall cause each of its Subsidiaries to:

     5.1 Financial Statements.  Furnish to the Administrative Agent (which shall
promptly make a copy thereof available to each Lender, including by posting on a
secure website):

     (a) as soon as available,  but in any event within 90 days after the end of
each fiscal year of the  Borrower,  a copy of the audited  consolidated  balance
sheet of the Borrower and its  consolidated  Subsidiaries  as at the end of such
year and the related audited consolidated statements of income and of cash flows
for such year,  setting forth in each case in  comparative  form the figures for
the previous year,  reported on without a "going concern" or like  qualification
or  exception,  or  qualification  arising  out of the  scope of the  audit,  by
PriceWaterhouseCoopers  LLP or other independent certified public accountants of
nationally recognized standing; and

     (b) as soon as available, but in any event not later than 45 days after the
end of each of the first  three  quarterly  periods of each  fiscal  year of the
Borrower,  the  unaudited  consolidated  balance  sheet of the  Borrower and its
consolidated  Subsidiaries  as at the  end  of  such  quarter  and  the  related
unaudited  consolidated  statements of income and of cash flows for such quarter
and the portion of the fiscal  year  through  the end of such  quarter,  setting
forth in each  case in  comparative  form the  figures  for the  previous  year,
certified  by a  Responsible  Officer  as being  fairly  stated in all  material
respects (subject to normal year-end audit adjustments).

     All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable  detail and in accordance with GAAP
(subject  to the  absence  of  footnotes  with  respect to  unaudited  quarterly
statements)  applied (except as approved by such accountants or officer,  as the
case may be, and disclosed in reasonable detail therein) consistently throughout
the periods reflected therein and with prior periods.  Notwithstanding  anything
to the  contrary  contained  in this  Section  5.1,  the  Borrower  shall not be
required to deliver any financial  statements to the  Administrative  Agent with
respect to any period for which it has timely  filed its Form 10-K or Form 10-Q,
as the case may be, with the SEC (provided  that such Form 10-K or Form 10-Q, as
the case may be,  is  publicly  available  on the  SEC's  website  (or a similar
website) within the time periods required by this Section).

     5.2 Certificates;  Other Information.  Furnish to the Administrative  Agent
(which shall promptly make a copy thereof available to each Lender, including by
posting on a secure website):

     (a) within the time period in which the Borrower is required to deliver any
financial statements pursuant to Section 5.1, (i) a certificate of a Responsible
Officer stating that, to the best of such Responsible  Officer's knowledge,  the

                                       35

Borrower during the period covered by such financial  statements has observed or
performed  all of its  covenants  and  other  agreements,  and  satisfied  every
condition  contained in this  Agreement and the other Loan Documents to which it
is a  party  to be  observed,  performed  or  satisfied  by it,  and  that  such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except  as  specified  in such  certificate  and (ii) a  Compliance  Certificate
containing all information and calculations necessary for determining compliance
by the Borrower with the provisions of this Agreement  referred to therein as of
the last day of the fiscal  quarter or fiscal year of the Borrower,  as the case
may be;

     (b) as soon as available,  and in any event no later than 60 days after the
end of each fiscal year of the  Borrower,  a  reasonably  detailed  consolidated
budget (set forth on a quarter by quarter basis) for the following fiscal year;

     (c)  unless  publicly  available  at such time on the SEC's  website  (or a
similar  website),  within  five days  after  the same are  sent,  copies of all
financial  statements  and reports that the Borrower sends to the holders of any
class of its debt  securities or public equity  securities and, within five days
after the same are filed,  copies of all financial  statements  and reports that
the Borrower may make to, or file with, the SEC; and

     (d) promptly, such additional financial and other information as any Lender
may from time to time reasonably request.

     5.3 Payment of  Obligations.  Pay,  discharge  or  otherwise  satisfy at or
before  maturity or before they become  delinquent,  as the case may be, all its
obligations of whatever nature that, if not paid,  could  reasonably be expected
to result in a Material  Adverse  Effect,  except  where the amount or  validity
thereof is currently  being  contested in good faith by appropriate  proceedings
and reserves in conformity  with GAAP with respect thereto have been provided on
the books of the relevant Group Member.

     5.4 Maintenance of Existence;  Compliance.  (a)(i) Preserve, renew and keep
in full force and effect the Borrower's  organizational  existence and (ii) take
all reasonable action to maintain all rights,  privileges and franchises of each
such Group Member  necessary or desirable in the normal conduct of its business,
except,  in each case, as otherwise  permitted by Section 6.5 and except, in the
case of  clause  (ii)  above,  to the  extent  that  failure  to do so could not
reasonably be expected to have a Material Adverse Effect;  and (b) except to the
extent that, in the aggregate,  non-compliance  could not reasonably be expected
to have a Material Adverse Effect,  comply with all Contractual  Obligations and
Requirements of Law.

     5.5 Maintenance of Property;  Insurance.  Except to the extent that, in the
aggregate,  non-compliance  could not  reasonably be expected to have a Material
Adverse  Effect,  (a) keep all property  useful and necessary in its business in
good  working  order and  condition,  ordinary  wear and tear  excepted  and (b)
maintain with financially sound and reputable  insurance  companies insurance on
all its  property in at least such  amounts and against at least such risks (but
including  in  any  event  public  liability,  product  liability  and  business
interruption)  as are  usually  insured  against  in the  same  general  area by
companies engaged in the same or a similar business.

                                       36

     5.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper
books of  records  and  account  in which  full,  true and  correct  entries  in
conformity  with GAAP and all  Requirements of Law shall be made of all dealings
and  transactions  material to the  Borrower  and its  Subsidiaries,  taken as a
whole, in relation to its business and activities and (b) permit representatives
of any Lender to visit and  inspect any of its  properties  and examine and make
abstracts from any of its books and records at any reasonable  time and as often
as may reasonably be desired and to discuss the business, operations, properties
and  financial  and other  condition  of the Group  Members  with  officers  and
employees  of the Group  Members  and with their  independent  certified  public
accountants.

     5.7 Notices. Promptly after the Borrower becomes aware thereof, give notice
to the Administrative  Agent (which shall promptly make a copy thereof available
to each Lender, including by posting on a secure website):

     (a) the occurrence of any Default or Event of Default;

     (b) any (i) default or event of default under any Contractual Obligation of
any Group Member or (ii) litigation,  investigation or proceeding that may exist
at any time between any Group  Member and any  Governmental  Authority,  that in
either case, if not cured or if adversely determined,  as the case may be, could
reasonably be expected to have a Material Adverse Effect;

     (c) any  litigation or  proceeding  affecting any Group Member (i) in which
the amount  involved is $10,000,000 or more and not covered by insurance or (ii)
which relates to any Loan Document;

     (d) the  following  events,  as soon as possible and in any event within 30
days after the Borrower knows or has reason to know thereof:  (i) the occurrence
of any  Reportable  Event with  respect to any Plan which  could  reasonably  be
expected  to have a Material  Adverse  Effect,  a failure  to make any  required
contribution  to a Plan, the creation of any Lien in favor of the PBGC or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer  Plan,  (ii) the  institution  of proceedings or the taking of any
other  action  by  the  PBGC  with  respect  to  the  withdrawal  from,  or  the
termination, Reorganization or Insolvency of, any Plan, or (iii) the institution
of proceedings or the taking of any other action by the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan which, in the case
of this clause (iii),  could  reasonably be expected to have a Material  Adverse
Effect; and

     (e) any  development or event that has had or could  reasonably be expected
to have a Material Adverse Effect.

Each notice pursuant to this Section shall be accompanied by a statement of
a  Responsible  Officer  setting  forth  details of the  occurrence  referred to
therein and stating what action the relevant Group Member  proposes to take with
respect thereto.

     5.8 Environmental Laws. Comply in all material respects with all applicable
Environmental  Laws,  and obtain and comply in all  material  respects  with and
maintain  any and  all  licenses,  approvals,  notifications,  registrations  or

                                       37

permits required by applicable Environmental Laws, except to the extent that the
failure to comply, or obtain and comply,  therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

                         SECTION 6. NEGATIVE COVENANTS

     The Borrower  hereby  agrees  that,  so long as the  Commitments  remain in
effect or any Loan or other amount is owing to any Lender or the  Administrative
Agent  hereunder,  the  Borrower  shall  not,  and shall not  permit  any of its
Subsidiaries to, directly or indirectly:

     6.1 Financial Condition Covenants.

     (a) Consolidated  Interest Coverage Ratio. Permit the Consolidated Interest
Coverage  Ratio  for any  period  of four  consecutive  fiscal  quarters  of the
Borrower  ending on any fiscal  quarter of the  Borrower  ending on or after the
fiscal quarter ending on March 29, 2003 to be less than 3.75:1.00.

     (b)  Consolidated  Total  Debt to Total  Capitalization  Ratio.  Permit the
Consolidated Total Debt to Consolidated Total Capitalization Ratio at the end of
any fiscal quarter of the Borrower  ending on or after the fiscal quarter ending
on March 29, 2003 to be greater than 0.50:1.00.

     6.2  Standby  and  Performance  Letters of  Credit.  Permit at any one time
outstanding  the sum of (a) the aggregate then undrawn face amount of surety and
performance bonds, bank guarantees and standby and performance letters of credit
as to which the Borrower  and/or any  Subsidiary is or are the account party and
which do not secure or otherwise  assure the payment of Indebtedness and (b) the
aggregate  then  unreimbursed  amount of all amounts paid in respect of drawings
under such surety and performance  bonds,  bank guarantees and letters of credit
to exceed $200,000,000.

     6.3  Indebtedness of Subsidiaries.  In the case of any Subsidiary,  create,
issue,  incur,  assume,  become  liable  in  respect  of or  suffer to exist any
Indebtedness of such Subsidiary, except:

     (a) Indebtedness of such Subsidiary to the Borrower or any other Subsidiary
and Guarantee  Obligations of any Subsidiary with respect to Indebtedness of the
Borrower or any other Subsidiary;

     (b) (i)  Indebtedness  outstanding  on the date  hereof  and  described  on
Schedule  6.3(b),  and  additional  Indebtedness  incurred after the date hereof
under the  revolving  credit  arrangements  described  on Schedule  6.3(b) in an
aggregate  principal  amount  at any one  time  outstanding  not to  exceed  the
commitments  or limits  existing  with  respect  thereto on the date  hereof and
described  on such  Schedule,  and (ii)  Indebtedness  under  any  replacements,
refinancings,  refundings,  renewals or extensions of the Indebtedness described
in clause (i) (without  increasing the principal amount above the commitments or
limits,  or shortening the maturity thereof to a date earlier than the maturity,
respectively, thereof described on Schedule 6.3(b));

                                       38

     (c) Indebtedness (including, without limitation, Capital Lease Obligations)
secured by Liens  permitted by Section 6.4(g) in an aggregate  principal  amount
not to exceed the greater of  $25,000,000 or 2.5% of  Consolidated  Net Worth at
any one time outstanding; and

     (d)  additional  Indebtedness  in an  aggregate  principal  amount  for all
Subsidiaries (on a consolidated basis) not to exceed the greater of $100,000,000
or 10.1% of Consolidated Net Worth at any one time outstanding.

     6.4 Liens.  Create,  incur,  assume or suffer to exist any Lien upon any of
its property  (other than any Lien on Margin Stock created,  incurred or assumed
at a time when such Margin Stock constitutes Unrestricted Margin Stock), whether
now owned or hereafter acquired, except:

     (a) Liens for taxes not yet due or that are being  contested  in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP;

     (b) carriers', warehousemen's,  mechanics',  materialmen's,  repairmen's or
other like Liens arising in the ordinary course of business that are not overdue
for a period of more than 30 days or that are being  contested  in good faith by
appropriate proceedings;

     (c)  pledges  or  deposits  in  connection   with  workers'   compensation,
unemployment insurance and other social security legislation;

     (d) deposits to secure the performance of bids, trade contracts (other than
for borrowed money),  leases,  statutory  obligations,  surety and appeal bonds,
performance  bonds  and  other  obligations  of a like  nature  incurred  in the
ordinary course of business;

     (e) easements,  rights-of-way,  restrictions and other similar encumbrances
incurred in the ordinary  course of business  that,  in the  aggregate,  are not
substantial  in amount and that do not in any case  materially  detract from the
value of the property subject thereto or materially  interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;

     (f)  Liens  in  existence  on the  date  hereof  (or,  in the case of Liens
securing  Indebtedness in respect of the securities  lending  arrangements  with
JPMorgan  Chase  Bank and ABN AMRO Inc.  described  on  Schedule  6.4(f),  Liens
created  with  respect  thereto)  and  described  on  Schedule  6.4(f)  securing
Indebtedness described on such Schedule, or Liens on the assets that are subject
to  such  existing  Liens  securing  any  replacement  or  refinancing  of  such
Indebtedness;  provided that  Indebtedness in respect of the securities  lending
arrangements  with JPMorgan  Chase Bank and ABN AMRO Inc.  described on Schedule
6.4(f) may not be replaced or refinanced beyond December 31, 2003; and provided,
further that (i) no Lien permitted by this Section 6.4(f) is spread to cover any
additional  property after the Closing Date and (ii) the amount of  Indebtedness
secured thereby is not increased  beyond the commitments or limits  described on
Schedule 6.4(f);

     (g) Liens securing  Indebtedness  incurred (in the case of any  Subsidiary,
pursuant  to  Section  6.3(c) or (d)) to  finance  the  acquisition  of fixed or

                                       39

capital assets or Liens on such fixed or capital assets securing any refinancing
of such  Indebtedness,  provided that (i) such Liens (other than those  securing
any such refinancing Indebtedness) shall be created substantially simultaneously
with the acquisition of such fixed or capital assets,  (ii) such Liens do not at
any time  encumber  any  property  other  than  the  property  financed  by such
Indebtedness   and  (iii)  (in  the  case  of  any  Subsidiary)  the  amount  of
Indebtedness secured thereby is not increased;

     (h) any interest or title of a lessor  under any lease  entered into by the
Borrower or any other  Subsidiary  in the  ordinary  course of its  business and
covering only the assets so leased;

     (i) other incidental Liens that (i) are not, in the aggregate,  material to
the  Borrower  and  its  Subsidiaries  taken  as a  whole,  (ii)  do not  secure
Indebtedness  and (iii) do not cover at any time assets having an aggregate fair
market value in excess of $10,000,000;

     (j) Liens incurred  pursuant to a Permitted  Receivables  Securitization on
the Receivables that are subject thereto;

     (k)  Liens  on  assets  of  a  Subsidiary  securing  Acquired  Indebtedness
permitted  by  Section  6.3(d) in an  aggregate  principal  amount  for all such
Subsidiaries  not to exceed  $75,000,000 at any one time  outstanding;  provided
that such Liens are not spread to other assets of such Subsidiary  following the
consummation of the applicable acquisition; and

     (l) Liens securing  Indebtedness  in an aggregate  principal  amount not to
exceed $25,000,000 at any one time outstanding.

     6.5  Fundamental   Changes.   Enter  into  any  merger,   consolidation  or
amalgamation,   or  liquidate,  wind  up  or  dissolve  itself  (or  suffer  any
liquidation  or  dissolution),  or  Dispose of all or  substantially  all of its
property or business, except that:

     (a) any  Subsidiary of the Borrower may be merged or  consolidated  with or
into the  Borrower  (provided  that the  Borrower  shall  be the  continuing  or
surviving corporation) or any other Subsidiary;

     (b) any  Subsidiary of the Borrower may Dispose of any or all of its assets
(i) to the  Borrower or any other  Subsidiary  (upon  voluntary  liquidation  or
otherwise) or (ii) pursuant to a Disposition permitted by Section 6.6;

     (c) any Investment  expressly permitted by Section 6.7 may be structured as
a merger, consolidation or amalgamation; and

     (d) any Subsidiary may be liquidated, wound up or dissolved, as deemed
appropriate by the Borrower.

     6.6 Disposition of Property. Dispose of any of its property (other than any
property which, at the time of any Disposition thereof, constitutes Unrestricted
Margin Stock),  whether now owned or hereafter acquired,  or, in the case of any
Subsidiary,  issue or sell any shares of such Subsidiary's  Capital Stock to any
Person, except:

                                       40

     (a) the Disposition of obsolete or worn out property in the ordinary course
of business;

     (b) the sale of inventory in the ordinary course of business;

     (c) Dispositions permitted by clause (i) of Section 6.5(b);

     (d) the sale or issuance of any Subsidiary's  Capital Stock to the Borrower
or any other Subsidiary;

     (e) the Dispositions listed on Schedule 6.6;

     (f) the Disposition  during any period of four consecutive  fiscal quarters
of the Borrower,  commencing with the  four-quarter  period ending on January 3,
2004,  of  other  property   having  an  aggregate  book  value  not  to  exceed
$200,000,000  at the beginning of such period,  provided that the Borrower shall
deliver to the Administrative  Agent written notice ten Business Days in advance
of any Disposition in excess of $50,000,000;

     (g)  Dispositions  of  Receivables  pursuant  to  a  Permitted  Receivables
Securitization;

     (h) Dispositions of Investments permitted by Section 6.7(b); and

     (i)  Dispositions  by  any  Group  Member  to  the  Borrower  or any of its
Subsidiaries.

     6.7  Investments.  Make any advance,  loan,  extension of credit (by way of
guaranty or  otherwise)  or capital  contribution  to, or  purchase  any Capital
Stock,  bonds,  notes,  debentures  or other debt  securities  of, or any assets
constituting  a  business  unit of, or make any other  investment  in, any other
Person (all of the foregoing,  "Investments"),  except:

     (a)  extensions  of trade  credit in the ordinary  course of business;

     (b) investments in Cash Equivalents;

     (c)  obligations  in respect of letters of credit,  surety and  performance
bonds and bank  guarantees  permitted by Section 6.2, and Guarantee  Obligations
permitted by Section 6.3;

     (d) loans and  advances to  employees  of any Group  Member in the ordinary
course of business (including for travel, entertainment and relocation expenses)
in an aggregate amount for all Group Members not to exceed $5,000,000 at any one
time  outstanding;

     (e)  intercompany  Investments  by any Group  Member in the Borrower or any
Subsidiary;

     (f)  non-hostile  acquisitions  of businesses or the  acquisition  (through
merger or  otherwise)  of or  Investments  in  Persons if (i) in the case of the

                                       41

acquisition of the Capital Stock of any Person (whether by merger or otherwise),
such Person has become a  Subsidiary  of the Borrower as a result of thereof and
(ii) after giving pro forma effect to such  acquisition or Investment,  there is
no  Default  or Event  of  Default  (it  being  understood  and  agreed  that in
determining  pro forma  compliance  with Section 6.1,  such  covenants  shall be
recomputed  as of the most recent  fiscal-quarter-end  date for which  financial
statements  shall have been delivered  pursuant to Section 5.1,  adjusted (x) in
the case of Section 6.1(a), to recompute  Consolidated  EBITDA to give effect to
such  acquisition  or  Investment  as if it had occurred on the first day of the
applicable  four-quarter period and to recompute  Consolidated  Interest Expense
for such  period to include  the  additional  interest  that would have  accrued
during such period in respect of Indebtedness  acquired or assumed in connection
with such  acquisition  or Investment  if such  acquisition  or  Investment  had
occurred  on the first day of such  period and in  respect  of any  Indebtedness
incurred to finance such acquisition or Investment if such Indebtedness had been
incurred on such day (and had borne interest  throughout such period at the rate
per annum applicable thereto on the date it was incurred) and (y) in the case of
Section  6.1(b),  to recompute  Consolidated  Total Debt to include  therein all
Indebtedness acquired,  assumed or incurred by the Borrower and its Subsidiaries
in  connection  with  and to  finance  such  acquisition  or  Investment  and to
recompute  Consolidated  Net  Worth  to  give  effect  to  such  acquisition  or
Investment);

     (g)  Investments  consisting  of promissory  notes  received as proceeds of
Dispositions permitted by Section 6.6; and

     (h) in  addition  to  Investments  otherwise  expressly  permitted  by this
Section, Investments by the Borrower and its Subsidiaries in an aggregate amount
(valued  at  cost)  not  to  exceed  $200,000,000  during  any  period  of  four
consecutive  fiscal quarters of the Borrower,  commencing with the  four-quarter
period ending on January 3, 2004.

     6.8 Transactions with Affiliates. Enter into any transaction, including any
purchase,  sale, lease or exchange of property,  the rendering of any service or
the payment of any  management,  advisory or similar  fees,  with any  Affiliate
(other than the Borrower or any other Group Member) unless such  transaction (a)
is (i)  otherwise  permitted  under  this  Agreement  and  (ii)  upon  fair  and
reasonable  terms no less  favorable to the relevant  Group Member than it would
obtain in a  comparable  arm's length  transaction  with a Person that is not an
Affiliate  or (b)  involves,  when taken  together  with all other  transactions
covered by this clause (b) entered  into during any fiscal year,  $1,000,000  or
less.

     6.9 Changes in Fiscal Periods.  Change the Borrower's method of determining
fiscal years and quarters  without  prior written  notice to the  Administrative
Agent.

     6.10 Lines of Business. Enter into any business, either directly or through
any  Subsidiary,  except  for those  businesses  in which the  Borrower  and its
Subsidiaries  are engaged on the date of this  Agreement or that are  reasonably
related thereto.

                          SECTION 7. EVENTS OF DEFAULT

     If any of the following events shall occur and be continuing:

     (a) the  Borrower  shall fail to pay any  principal of any Loan when due in
accordance with the terms hereof; or the Borrower shall fail to pay any interest

                                       42

on any Loan,  or any other  amount  payable  hereunder  or under any other  Loan
Document,  within five days after any such interest or other amount  becomes due
in accordance with the terms hereof; or

     (b) any  representation  or warranty  made or deemed  made by the  Borrower
herein or in any other Loan  Document or that is contained  in any  certificate,
document or financial or other statement furnished by it at any time under or in
connection  with this  Agreement or any such other Loan Document  shall prove to
have been inaccurate in any material respect on or as of the date made or deemed
made; or

     (c) the Borrower  shall  default in the  observance or  performance  of any
agreement contained in clause (i) or (ii) of Section 5.4(a) (with respect to the
Borrower only), Section 5.7(a) or Section 6 of this Agreement; or

     (d) the Borrower  shall  default in the  observance or  performance  of any
other  agreement  contained in this Agreement or any other Loan Document  (other
than as  provided in  paragraphs  (a)  through  (c) of this  Section),  and such
default shall  continue  unremedied  for a period of 30 days after notice to the
Borrower from the Administrative Agent or the Required Lenders; or

     (e) any  Group  Member  shall (i)  default  in making  any  payment  of any
principal of any Indebtedness (including any Guarantee Obligation, but excluding
the Loans) on the scheduled or original due date with respect  thereto;  or (ii)
default in making any payment of any  interest on any such  Indebtedness  beyond
the period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created; or (iii) default in the observance or performance
of any  other  agreement  or  condition  relating  to any such  Indebtedness  or
contained  in any  instrument  or  agreement  evidencing,  securing  or relating
thereto,  or any other event shall occur or condition exist, the effect of which
default  or other  event or  condition  is to cause,  or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder
or  beneficiary)  to  cause,  with  the  giving  of  notice  if  required,  such
Indebtedness  to become due prior to its stated  maturity or (in the case of any
such Indebtedness  constituting a Guarantee Obligation) to become payable (other
than any such default, event or condition arising solely out of the violation by
the  Borrower  or any  Subsidiary  of any  covenant in any way  restricting  the
Borrower's,  or any such  Subsidiary's,  right or  ability  to sell,  pledge  or
otherwise dispose of Unrestricted Margin Stock); provided, that a default, event
or condition  described in clause (i), (ii) or (iii) of this paragraph (e) shall
not at any time constitute an Event of Default unless, at such time, one or more
defaults,  events or conditions  of the type  described in clauses (i), (ii) and
(iii) of this  paragraph (e) shall have occurred and be continuing  with respect
to  Indebtedness  the  outstanding  principal  amount  of which  exceeds  in the
aggregate $15,000,000; or

     (f) (i) any Group  Member  shall  commence  any case,  proceeding  or other
action (A) under any  existing  or future law of any  jurisdiction,  domestic or
foreign,  relating  to  bankruptcy,  insolvency,  reorganization  or  relief  of
debtors,  seeking to have an order for  relief  entered  with  respect to it, or
seeking to  adjudicate it a bankrupt or  insolvent,  or seeking  reorganization,
arrangement,  adjustment, winding-up, liquidation,  dissolution,  composition or
other relief with respect to it or its debts,  or (B) seeking  appointment  of a
receiver,  trustee,  custodian,  conservator or other similar official for it or

                                       43

for all or any substantial part of its assets,  or any Group Member shall make a
general  assignment  for the  benefit of its  creditors;  or (ii) there shall be
commenced  against any Group  Member any case,  proceeding  or other action of a
nature referred to in clause (i) above that (A) results in the entry of an order
for relief or any such  adjudication or appointment or (B) remains  undismissed,
undischarged  or  unbonded  for a period  of 60 days;  or (iii)  there  shall be
commenced against any Group Member any case,  proceeding or other action seeking
issuance of a warrant of  attachment,  execution,  distraint or similar  process
against all or any  substantial  part of its assets that results in the entry of
an order for any such relief that shall not have been  vacated,  discharged,  or
stayed or bonded pending  appeal within 60 days from the entry thereof;  or (iv)
any Group  Member shall take any action in  furtherance  of, or  indicating  its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its  inability to, pay its debts as they
become due; or

     (g) (i) any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code)  involving  any Plan,  (ii)
any  "accumulated  funding  deficiency"  (as  defined in Section  302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan  shall  arise on the  assets  of any  Group  Member or any
Commonly  Controlled  Entity,  (iii) a Reportable Event shall occur with respect
to, or  proceedings  shall  commence to have a trustee  appointed,  or a trustee
shall be appointed,  to administer or to terminate,  any Single  Employer  Plan,
which  Reportable  Event or  commencement  of  proceedings  or  appointment of a
trustee is, in the reasonable opinion of the Required Lenders,  likely to result
in the  termination  of such Plan for  purposes  of Title IV of ERISA,  (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,  (v) any
Group Member or any  Commonly  Controlled  Entity  shall,  or in the  reasonable
opinion of the Required  Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization  of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan;  and in each  case in  clauses  (i)  through  (vi)  above,  such  event or
condition,  together  with all other such events or  conditions,  if any,  could
reasonably be expected to have a Material Adverse Effect; or

     (h) one or more  judgments  or decrees  shall be entered  against any Group
Member  involving  in the  aggregate a liability  (not paid or fully  covered by
insurance as to which the relevant insurance company has acknowledged  coverage)
of  $10,000,000  or more,  and all such judgments or decrees shall not have been
vacated,  discharged,  stayed or bonded  pending  appeal within 30 days from the
entry thereof; or

     (i) (i) any  "person" or "group" (as such terms are used in Sections  13(d)
and 14(d) of the  Securities  Exchange Act of 1934,  as amended  (the  "Exchange
Act")),  excluding  the  Permitted  Investors,  shall  become,  or obtain rights
(whether by means or warrants,  options or otherwise) to become, the "beneficial
owner"  (as  defined in Rules  13(d)-3  and  13(d)-5  under the  Exchange  Act),
directly or indirectly,  of more than 40% of the outstanding common stock of the
Borrower;  or (ii) the board of directors of the Borrower shall cease to consist
of a majority of Continuing Directors;

then, and in any such event, (A) if such event is an Event of Default  specified
in clause  (i) or (ii) of  paragraph  (f) above with  respect  to the  Borrower,
automatically the Commitments  shall  immediately  terminate and the Loans (with
accrued  interest  thereon) and all other amounts owing under this Agreement and

                                       44

the other Loan Documents shall  immediately  become due and payable,  and (B) if
such  event is any  other  Event of  Default,  either  or both of the  following
actions  may be  taken:  (i) with  the  consent  of the  Required  Lenders,  the
Administrative  Agent may,  or upon the  request of the  Required  Lenders,  the
Administrative Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith,  whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders,  the Administrative Agent shall, by
notice to the Borrower,  declare the Loans (with accrued  interest  thereon) and
all other amounts owing under this  Agreement and the other Loan Documents to be
due and payable  forthwith,  whereupon the same shall immediately become due and
payable.  Except  as  expressly  provided  above in this  Section,  presentment,
demand, protest and all other notices of any kind are hereby expressly waived by
the Borrower.

                             SECTION 8. THE AGENTS

     8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative  Agent as the agent of such Lender under this  Agreement  and the
other  Loan  Documents,   and  each  such  Lender  irrevocably   authorizes  the
Administrative  Agent, in such capacity, to take such action on its behalf under
the  provisions of this  Agreement and the other Loan  Documents and to exercise
such  powers  and  perform  such  duties  as  are  expressly  delegated  to  the
Administrative  Agent  by the  terms  of  this  Agreement  and  the  other  Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding  any provision to the contrary elsewhere in this Agreement,  the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary  relationship with any Lender,  and
no  implied  covenants,  functions,  responsibilities,  duties,  obligations  or
liabilities  shall be read into this  Agreement  or any other Loan  Document  or
otherwise exist against the Administrative Agent.

     8.2 Delegation of Duties. The  Administrative  Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining  to such  duties.  The  Administrative  Agent  shall  not be
responsible for the negligence or misconduct of any agents or attorneys  in-fact
selected by it with reasonable care.

     8.3 Exculpatory  Provisions.  Neither any Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable to any Lender for any action lawfully taken or omitted to be taken by
it or such Person under or in connection  with this  Agreement or any other Loan
Document  (except to the extent that any of the  foregoing  are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross  negligence or willful  misconduct)  or (ii)
responsible  in any manner to any of the Lenders for any  recitals,  statements,
representations  or  warranties  made by any Loan Party or any  officer  thereof
contained in this  Agreement or any other Loan  Document or in any  certificate,
report,  statement or other document referred to or provided for in, or received
by the Agents  under or in  connection  with,  this  Agreement or any other Loan
Document or for the value, validity, effectiveness,  genuineness, enforceability
or  sufficiency  of this Agreement or any other Loan Document or for any failure
of any Loan Party a party  thereto  to  perform  its  obligations  hereunder  or

                                       45

thereunder.  The  Agents  shall not be under  any  obligation  to any  Lender to
ascertain  or to  inquire  as to the  observance  or  performance  of any of the
agreements  contained  in, or  conditions  of, this  Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.

     8.4 Reliance by  Administrative  Agent. The  Administrative  Agent shall be
entitled to rely, and shall be fully protected in relying,  upon any instrument,
writing, resolution, notice, consent, certificate,  affidavit, letter, telecopy,
telex or teletype  message,  statement,  order or other document or conversation
believed by it to be genuine and correct and to have been  signed,  sent or made
by the proper Person or Persons and upon advice and  statements of legal counsel
(including counsel to the Borrower),  independent  accountants and other experts
selected by the  Administrative  Agent.  The  Administrative  Agent may deem and
treat the  payee of any Note as the  owner  thereof  for all  purposes  unless a
written  notice of assignment,  negotiation or transfer  thereof shall have been
filed with the  Administrative  Agent. The  Administrative  Agent shall be fully
justified in failing or refusing to take any action under this  Agreement or any
other Loan Document  unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement,  all Lenders) as it
deems  appropriate or it shall first be indemnified to its  satisfaction  by the
Lenders  against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully  protected in acting,  or in refraining from acting,
under this Agreement and the other Loan  Documents in accordance  with a request
of the Required  Lenders (or, if so specified by this  Agreement,  all Lenders),
and such request and any action taken or failure to act pursuant  thereto  shall
be binding upon all the Lenders and all future holders of the Loans.

     8.5 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the  occurrence of any Default or Event of Default unless
the  Administrative  Agent has  received  notice  from a Lender or the  Borrower
referring  to this  Agreement,  describing  such Default or Event of Default and
stating  that such  notice  is a  "notice  of  default".  In the event  that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders.  The Administrative  Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required  Lenders (or, if so specified by this  Agreement,  all Lenders);
provided that unless and until the Administrative Agent shall have received such
directions,  the  Administrative  Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of  Default  as it shall  deem  advisable  in the  best  interests  of the
Lenders.

     8.6  Non-Reliance  on  Agents  and Other  Lenders.  Each  Lender  expressly
acknowledges  that  neither  the  Agents nor any of their  respective  officers,
directors,  employees,  agents,  attorneys-in-fact  or affiliates  have made any
representations  or  warranties  to it and  that no act by any  Agent  hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party,  shall be deemed to constitute any representation or warranty by any
Agent  to any  Lender.  Each  Lender  represents  to the  Agents  that  it  has,
independently and without reliance upon any Agent or any other Lender, and based
on such  documents and  information as it has deemed  appropriate,  made its own
appraisal  of  and  investigation  into  the  business,  operations,   property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans  hereunder and enter into
this  Agreement.  Each Lender also represents  that it will,  independently  and

                                       46

without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem  appropriate at the time,  continue to make its
own credit  analysis,  appraisals  and  decisions in taking or not taking action
under  this  Agreement  and  the  other  Loan   Documents,   and  to  make  such
investigation  as it  deems  necessary  to  inform  itself  as to the  business,
operations,  property, financial and other condition and creditworthiness of the
Loan  Parties  and their  affiliates.  Except  for  notices,  reports  and other
documents   expressly   required  to  be   furnished   to  the  Lenders  by  the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or  responsibility  to provide any Lender  with any credit or other  information
concerning  the  business,   operations,   property,   condition  (financial  or
otherwise),  prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the  possession of the  Administrative  Agent or
any  of  its  officers,  directors,  employees,  agents,   attorneys-in-fact  or
affiliates.

     8.7  Indemnification.  The  Lenders  agree to  indemnify  each Agent in its
capacity  as such (to the extent not  reimbursed  by the  Borrower  and  without
limiting the  obligation of the Borrower to do so),  ratably  according to their
respective Loan  Percentages in effect on the date on which  indemnification  is
sought under this Section (or, if  indemnification is sought after the date upon
which the  Commitments  shall have terminated and the Loans shall have been paid
in full,  ratably in accordance with such Loan Percentages  immediately prior to
such  date),  from and  against any and all  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (whether before or after the payment
of the Loans) be imposed on,  incurred by or asserted  against such Agent in any
way relating to or arising out of, the Commitments,  this Agreement,  any of the
other Loan Documents or any documents  contemplated  by or referred to herein or
therein or the transactions  contemplated  hereby or thereby or any action taken
or omitted  by such  Agent  under or in  connection  with any of the  foregoing;
provided  that no Lender  shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  that are found by a final and  nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross  negligence or willful  misconduct.  The  agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

     8.8 Agent in Its  Individual  Capacity.  Each Agent and its  affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with any Loan Party as though such Agent were not an Agent.  With respect to its
Loans made or renewed by it,  each Agent  shall have the same  rights and powers
under this Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not an Agent,  and the terms  "Lender" and  "Lenders"
shall include each Agent in its individual capacity.

     8.9 Successor  Administrative Agent. The Administrative Agent may resign as
Administrative  Agent upon 10 days' notice to the Lenders and the  Borrower.  If
the  Administrative  Agent  shall  resign as  Administrative  Agent  under  this
Agreement and the other Loan Documents,  then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders,  which successor agent
shall  (unless  an Event of Default  under  Section  7(a) or  Section  7(f) with
respect to the Borrower  shall have  occurred and be  continuing)  be subject to
approval by the Borrower (which  approval shall not be unreasonably  withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and

                                       47

duties of the Administrative  Agent, and the term  "Administrative  Agent" shall
mean such successor agent effective upon such appointment and approval,  and the
former Administrative  Agent's rights, powers and duties as Administrative Agent
shall be  terminated,  without  any other or further  act or deed on the part of
such former  Administrative Agent or any of the parties to this Agreement or any
holders  of the  Loans.  If no  successor  agent  has  accepted  appointment  as
Administrative  Agent  by  the  date  that  is  10  days  following  a  retiring
Administrative  Agent's  notice  of  resignation,  the  retiring  Administrative
Agent's  resignation  shall  nevertheless  thereupon become  effective,  and the
Lenders shall assume and perform all of the duties of the  Administrative  Agent
hereunder  until such time, if any, as the Required  Lenders appoint a successor
agent  as  provided  for  above.  After  any  retiring   Administrative  Agent's
resignation  as  Administrative  Agent,  the  provisions of this Section 8 shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.

     8.10 Syndication Agent and Co-Documentation Agents. Neither the Syndication
Agent nor any  Co-Documentation  Agent shall have any duties or responsibilities
hereunder in its capacity as such.

                            SECTION 9. MISCELLANEOUS

     9.1  Amendments  and  Waivers.  Neither  this  Agreement,  any  other  Loan
Document,  nor any terms  hereof or  thereof  may be  amended,  supplemented  or
modified  except in  accordance  with the  provisions  of this  Section 9.1. The
Required  Lenders and the  Borrower  may,  or,  with the written  consent of the
Required Lenders,  the  Administrative  Agent and the Borrower may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and
to the other Loan  Documents  for the purpose of adding any  provisions  to this
Agreement  or the other Loan  Documents  or changing in any manner the rights of
the Lenders or the Borrower  hereunder or thereunder or (b) waive, on such terms
and conditions as the Required Lenders or the Administrative  Agent, as the case
may  be,  may  specify  in  such  instrument,  any of the  requirements  of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences;  provided,  however,  that no such  waiver and no such  amendment,
supplement or modification  shall (i) forgive the principal amount or extend the
final  scheduled  date of  maturity  of any Loan,  reduce the stated rate of any
interest  or fee  payable  hereunder  (except in  connection  with the waiver of
applicability of any post-default increase in interest rates (which waiver shall
be effective with the consent of the Required  Lenders)) or extend the scheduled
date of any payment  thereof,  or increase  the amount or extend the  expiration
date of any Lender's  Commitment,  in each case  without the written  consent of
each Lender  directly  affected  thereby;  (ii)  eliminate  or reduce the voting
rights of any Lender under this Section 9.1 without the written  consent of such
Lender;  (iii) reduce any  percentage  specified in the  definition  of Required
Lenders or consent to the  assignment  or transfer by the Borrower of any of its
rights and  obligations  under this Agreement and the other Loan  Documents,  in
each case  without the written  consent of all  Lenders;  (iv) amend,  modify or
waive  any   provision  of  Section  9  without  the  written   consent  of  the
Administrative  Agent; or (v) add additional currencies as Foreign Currencies in
which  Foreign  Currency  Loans may be made under  this  Agreement  without  the
written  consent of all the  Lenders.  Any such  waiver and any such  amendment,
supplement or modification  shall apply equally to each of the Lenders and shall
be binding upon the  Borrower,  the Lenders,  the  Administrative  Agent and all
future  holders of the  Loans.  In the case of any  waiver,  the  Borrower,  the

                                       48

Lenders and the Administrative  Agent shall be restored to their former position
and rights  hereunder  and under the other Loan  Documents,  and any  Default or
Event of Default waived shall be deemed to be cured and not  continuing;  but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.

     9.2 Notices.  All notices,  requests and demands to or upon the  respective
parties hereto to be effective  shall be in writing  (including by telecopy) and
shall not be effective  until  received,  provided  that any notice given by the
Administrative  Agent  pursuant  to the final  paragraph  of  Section 7 shall be
deemed to have been duly given or made when  delivered,  or three  Business Days
after being deposited in the mail, postage prepaid,  or, in the case of telecopy
notice, when received. All such notices, requests and demands shall be addressed
as follows, in the case of the Borrower and the Administrative Agent, and as set
forth in an administrative  questionnaire  delivered to the Administrative Agent
in the  case  of the  Lenders,  or to such  other  address  as may be  hereafter
notified by the respective parties hereto:

      Borrower:                        Thermo Electron Corporation
                                       81 Wyman Street
                                       Waltham, Massachusetts 02454-9046
                                       Attention: Treasurer
                                       Telecopy: 781-622-1181
                                       Telephone: 781-622-1000

                                       With a copy to:

                                       Thermo Electron Corporation
                                       81 Wyman Street
                                       Waltham, Massachusetts 02454-9046
                                       Attention: General Counsel
                                       Telecopy: 781-622-1283
                                       Telephone: 781-622-1000

      Administrative Agent:            Barclays Bank PLC
                                       222 Broadway
                                       New York, New York 10038
                                       Attention: Charles Ray
                                       Telecopy: 212-412-5306
                                       Telephone: 212-412-3355

     Notices and other  communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative  Agent;  provided that the  foregoing  shall not apply to notices
pursuant to Section 2 unless  otherwise agreed by the  Administrative  Agent and
the  applicable  Lender.  The  Administrative  Agent or the Borrower may, in its
discretion,  agree to accept notices and other communications to it hereunder by
electronic  communications  pursuant to procedures approved by it; provided that
approval  of  such   procedures   may  be  limited  to  particular   notices  or
communications.

                                       49

     9.3 No Waiver;  Cumulative Remedies. No failure to exercise and no delay in
exercising,  on the part of the  Administrative  Agent or any Lender, any right,
remedy,  power or privilege  hereunder or under the other Loan  Documents  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right,  remedy,  power or  privilege  hereunder  preclude  any other or  further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights,  remedies,  powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

     9.4 Survival of Representations  and Warranties.  All  representations  and
warranties  made  hereunder,  in the other Loan  Documents  and in any document,
certificate or statement  delivered  pursuant  hereto or in connection  herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.

     9.5  Payment of  Expenses  and  Taxes.  The  Borrower  agrees (a) to pay or
reimburse the Administrative  Agent for all its reasonable  out-of-pocket  costs
and  expenses  incurred in  connection  with the  development,  preparation  and
execution of, and any amendment,  supplement or modification  to, this Agreement
and the other Loan  Documents  and any other  documents  prepared in  connection
herewith  or  therewith,   and  the  consummation  and   administration  of  the
transactions contemplated hereby and thereby,  including the reasonable fees and
disbursements  of counsel to the  Administrative  Agent,  with  statements  with
respect to the  foregoing to be  submitted to the Borrower  prior to the Closing
Date (in the case of  amounts to be paid on the  Closing  Date) and from time to
time  thereafter  on a  quarterly  basis  or such  other  periodic  basis as the
Administrative Agent shall deem appropriate, (b) after the occurrence and during
the continuance of an Event of Default,  to pay or reimburse each Lender and the
Administrative  Agent for all its  reasonable  out-of-pocket  costs and expenses
incurred in connection  with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents, including
the fees and  disbursements  of  counsel  to each  Lender  and of counsel to the
Administrative  Agent and (c) to pay,  indemnify,  and hold each  Lender and the
Administrative  Agent  and  their  respective  officers,  directors,  employees,
affiliates, agents and controlling persons (each, an "Indemnitee") harmless from
and  against  any and  all  other  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any
kind or nature  whatsoever  (including  reasonable fees and expenses of counsel)
with  respect  to such  Lender  or  Administrative  Agent  being a party to this
Agreement or any other Loan Document,  or the enforcement or performance of this
Agreement, the other Loan Documents and any such other documents,  including any
of the  foregoing  relating to the use of proceeds of the Loans or the violation
of,  noncompliance  with or liability under, any Environmental Law applicable to
the operations of any Group Member or any of the  Properties  (all the foregoing
in this clause (c), collectively, the "Indemnified Liabilities"), provided, that
the Borrower shall have no obligation  hereunder to any Indemnitee  with respect
to Indemnified  Liabilities to the extent such Indemnified Liabilities are found
by a final and  nonappealable  decision of a court of competent  jurisdiction to
have resulted from the gross negligence or willful misconduct of such Indemnitee
or the  breach by such  Indemnitee  of its  obligations  under  this  Agreement.
Without  limiting the foregoing,  and to the extent permitted by applicable law,
the Borrower agrees not to assert and to cause its  Subsidiaries  not to assert,
and hereby waives and agrees to cause its  Subsidiaries to waive, all rights for
contribution  or any other  rights  of  recovery  with  respect  to all  claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature,  under or related to Environmental Laws, that any of

                                       50
them might have by statute or otherwise against any Indemnitee.  All amounts due
under this  Section  9.5 shall be payable  not later than 10 days after  written
demand therefor. Statements payable by the Borrower pursuant to this Section 9.5
shall be  submitted  to Office  of the  General  Counsel  (Telephone  No.  (781)
622-1000)  (Telecopy  No.  (781)  622-1283),  at the address of the Borrower set
forth in Section  9.2,  or to such other  Person or address as may be  hereafter
designated by the Borrower in a written notice to the Administrative  Agent. The
agreements  in this  Section 9.5 shall  survive  repayment  of the Loans and all
other amounts payable hereunder.

     9.6  Successors  and  Assigns;  Participations  and  Assignments.  (a)  The
provisions of this  Agreement  shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby,
except that (i) the  Borrower  may not assign or  otherwise  transfer any of its
rights or obligations hereunder without the prior written consent of each Lender
(and any attempted  assignment or transfer by the Borrower  without such consent
shall be null and void) and (ii) no Lender may assign or otherwise  transfer its
rights or obligations hereunder except in accordance with this Section.

     (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender  may  assign to one or more  assignees  (each,  an  "Assignee")  all or a
portion of its rights and obligations  under this Agreement  (including all or a
portion of its Commitments and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:

          (A)  the Borrower,  provided that no consent of the Borrower  shall be
               required  for an  assignment  to a  Lender,  or,  if an  Event of
               Default has occurred and is continuing, any other Person; and

          (B)  the  Administrative  Agent,  provided  that  no  consent  of  the
               Administrative  Agent shall be required for an  assignment of any
               Commitment  to an  assignee  that is a Lender  with a  Commitment
               immediately prior to giving effect to such assignment.

         (ii) Assignments shall be subject to the following additional
conditions:

          (A)  except in the case of an assignment to a Lender,  an affiliate of
               a Lender  or an  Approved  Fund or an  assignment  of the  entire
               remaining amount of the assigning Lender's  Commitments or Loans,
               the amount of the  Commitments  or Loans of the assigning  Lender
               subject to each such  assignment  (determined  as of the date the
               Assignment  and  Assumption  with respect to such  assignment  is
               delivered  to the  Administrative  Agent)  shall not be less than
               $5,000,000  unless each of the  Borrower  and the  Administrative
               Agent otherwise consent, provided that (1) no such consent of the
               Borrower  shall be required  if an Event of Default has  occurred
               and is  continuing  and (2) such amounts  shall be  aggregated in
               respect of each Lender and its affiliates or Approved  Funds,  if
               any;



                                       51

          (B)  the parties to each  assignment  shall execute and deliver to the
               Administrative Agent an Assignment and Assumption,  together with
               a processing and recordation fee of $3,500; and

          (C)  the Assignee,  if it shall not be a Lender,  shall deliver to the
               Administrative Agent an administrative questionnaire.

     For the  purposes of this Section  9.6,  the term  "Approved  Fund" has the
following meaning:

     "Approved  Fund"  means any Person  (other than a natural  person)  that is
engaged in making,  purchasing,  holding or  investing in bank loans and similar
extensions  of  credit  in the  ordinary  course  of its  business  and  that is
administered or managed by (a) a Lender,  (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

     (iii) Subject to acceptance  and  recording  thereof  pursuant to paragraph
(b)(iv) below,  from and after the effective  date specified in each  Assignment
and  Assumption  the  Assignee  thereunder  shall be a party  hereto and, to the
extent of the interest  assigned by such  Assignment  and  Assumption,  have the
rights and  obligations  of a Lender  under this  Agreement,  and the  assigning
Lender  thereunder  shall,  to the  extent  of the  interest  assigned  by  such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption  covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall  continue to be entitled to the benefits of Sections
2.14,  2.15,  2.16 and 9.5). Any assignment or transfer by a Lender of rights or
obligations  under this  Agreement  that does not comply  with this  Section 9.6
shall be treated for  purposes of this  Agreement  as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

     (iv) The Administrative  Agent,  acting for this purpose as an agent of the
Borrower,  shall  maintain at one of its offices a copy of each  Assignment  and
Assumption  delivered to it and a register for the  recordation of the names and
addresses of the Lenders,  and the Commitments  of, and principal  amount of the
Loans owing to, each Lender  pursuant to the terms hereof from time to time (the
"Register").  The entries in the Register shall be conclusive, and the Borrower,
the  Administrative  Agent,  and the Lenders may treat each Person whose name is
recorded in the Register  pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.

     (v) Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an Assignee, the Assignee's completed  administrative
questionnaire  (unless the Assignee  shall already be a Lender  hereunder),  the
processing and  recordation fee referred to in paragraph (b) of this Section and
any  written  consent  to such  assignment  required  by  paragraph  (b) of this
Section,  the  Administrative  Agent shall accept such Assignment and Assumption
and record the  information  contained  therein in the  Register.  No assignment

                                       52

shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

     (c)  (i) Any  Lender  may,  without  the  consent  of the  Borrower  or the
Administrative Agent, sell participations to one or more banks or other entities
(a  "Participant")  in all or a portion of such Lender's  rights and obligations
under this  Agreement  (including  all or a portion of its  Commitments  and the
Loans  owing to it);  provided  that (A) such  Lender's  obligations  under this
Agreement  shall  remain   unchanged,   (B)  such  Lender  shall  remain  solely
responsible to the other parties hereto for the performance of such  obligations
and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other
Lenders  shall  continue  to deal  solely  and  directly  with  such  Lender  in
connection with such Lender's rights and obligations  under this Agreement.  Any
agreement  pursuant to which a Lender sells such a  participation  shall provide
that such Lender shall retain the sole right to enforce  this  Agreement  and to
approve  any  amendment,  modification  or  waiver  of  any  provision  of  this
Agreement;  provided that such  agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment,  modification or
waiver that (1) requires the consent of each Lender  directly  affected  thereby
pursuant to the proviso to the second  sentence of Section 9.1 and (2)  directly
affects such  Participant.  Subject to paragraph  (c)(ii) of this  Section,  the
Borrower  agrees that each  Participant  shall be  entitled  to the  benefits of
Sections  2.14,  2.15 and 2.16 to the same extent as if it were a Lender and had
acquired its interest by  assignment  pursuant to paragraph (b) of this Section.
To the extent  permitted by law, each  Participant also shall be entitled to the
benefits of Section 9.7(b) as though it were a Lender, provided such Participant
shall be subject to Section 9.7(a) as though it were a Lender.

          (ii) A  Participant  shall not be entitled  to receive any greater
payment under Section 2.14 or 2.15 than the  applicable  Lender would have been
entitled to receive with respect to the participation  sold to such
Participant,  unless the sale of the  participation  to such  Participant is
made with the Borrower's prior written consent.  Any Participant  that is a
Non-U.S.  Lender shall not be entitled to the benefits of Section 2.15 unless
such  Participant  complies with Section 2.15(d).

     (d) Any Lender may at any time pledge or assign a security  interest in all
or any portion of its rights under this Agreement to secure  obligations of such
Lender,  including any pledge or assignment to secure  obligations  to a Federal
Reserve Bank,  and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest  shall  release  a Lender  from  any of its  obligations  hereunder  or
substitute any such pledgee or Assignee for such Lender as a party hereto.

     (e) The Borrower,  upon receipt of written notice from the relevant Lender,
agrees to issue Notes to any Lender  requiring Notes to facilitate  transactions
of the type described in paragraph (d) above.

     (f)  Notwithstanding  the  foregoing,  any Lender may assign its rights and
obligations  to a Conduit  Lender  organized  and  administered  by such Lender,
provided that such  assignment  shall be subject to all the  requirements of the
definition  of the term  "Conduit  Lender" in Section 1.1.  Notwithstanding  the
foregoing,  any  Conduit  Lender  may assign any or all of the Loans it may have
funded  hereunder to its designating  Lender without the consent of the Borrower

                                       53
or the  Administrative  Agent and without regard to the limitations set forth in
Section 9.6(b). Each of the Borrower,  each Lender and the Administrative  Agent
hereby confirms that it will not institute  against a Conduit Lender or join any
other  Person  in  instituting   against  a  Conduit   Lender  any   bankruptcy,
reorganization,  arrangement,  insolvency or  liquidation  proceeding  under any
state  bankruptcy  or similar law, for one year and one day after the payment in
full of the latest maturing commercial paper note issued by such Conduit Lender;
provided, however, that each Lender designating any Conduit Lender hereby agrees
to indemnify, save and hold harmless each other party hereto for any loss, cost,
damage or expense  arising out of its  inability to institute  such a proceeding
against such Conduit Lender during such period of forbearance.

     9.7  Adjustments;  Set-off.  (a) Except to the extent  that this  Agreement
expressly  provides for payments to be allocated to a particular  Lender, if any
Lender (a  "Benefitted  Lender") shall receive any payment of all or part of the
Obligations  owing to it  (whether  voluntarily  or  involuntarily,  by set-off,
pursuant to events or proceedings of the nature  referred to in Section 7(f), or
otherwise),  in a greater  proportion  than any such  payment  to or  collateral
received by any other  Lender,  if any, in respect of the  Obligations  owing to
such other Lender, such Benefitted Lender shall purchase for cash from the other
Lenders a  participating  interest in such portion of the  Obligations  owing to
each such other Lender, or shall provide such other Lenders with the benefits of
any such  collateral,  as shall be necessary to cause such Benefitted  Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter  recovered  from such  Benefitted  Lender,  such purchase
shall be rescinded,  and the purchase price and benefits returned, to the extent
of such recovery, but without interest.

     (b) In addition to any rights and remedies of the Lenders  provided by law,
each  Lender  shall  have  the  right  after  the   occurrence  and  during  the
continuation of an Event of Default,  without prior notice to the Borrower,  any
such notice being  expressly  waived by the Borrower to the extent  permitted by
applicable  law,  upon any  amount  becoming  due and  payable  by the  Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits  (general
or special,  time or demand,  provisional  or final),  in any currency,  and any
other credits,  indebtedness  or claims,  in any currency,  in each case whether
direct or indirect,  absolute or contingent,  matured or unmatured,  at any time
held or owing by such  Lender  or any  branch or  agency  thereof  to or for the
credit or the account of the  Borrower,  as the case may be. Each Lender  agrees
promptly  to notify the  Borrower  and the  Administrative  Agent after any such
setoff and  application  made by such Lender,  provided that the failure to give
such notice shall not affect the validity of such setoff and application.

     9.8  Counterparts.  This  Agreement  may be  executed by one or more of the
parties to this  Agreement  on any number of separate  counterparts,  and all of
said counterparts  taken together shall be deemed to constitute one and the same
instrument.  Delivery  of an  executed  signature  page  of  this  Agreement  by
facsimile  transmission  shall be effective  as delivery of a manually  executed
counterpart  hereof.  A set of the  copies of this  Agreement  signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

                                       54

     9.9  Severability.  Any provision of this  Agreement  that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

     9.10 Integration. This Agreement and the other Loan Documents represent the
entire agreement of the Borrower,  the Administrative Agent and the Lenders with
respect to the subject  matter  hereof and  thereof,  and there are no promises,
undertakings,  representations or warranties by the Borrower, the Administrative
Agent or any Lender  relative to the subject  matter  hereof not  expressly  set
forth or referred to herein or in the other Loan Documents.

     9.11 GOVERNING LAW. THIS  AGREEMENT AND THE RIGHTS AND  OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     9.12 Submission To Jurisdiction;  Waivers.  The Borrower hereby irrevocably
and unconditionally:

     (a) submits for itself and its property in any legal  action or  proceeding
relating to this  Agreement and the other Loan Documents to which it is a party,
or for recognition and  enforcement of any judgment in respect  thereof,  to the
non-exclusive  general  jurisdiction of the courts of the State of New York, the
courts of the United States for the Southern District of New York, and appellate
courts from any thereof;

     (b)  consents  that any such  action or  proceeding  may be brought in such
courts and waives any objection  that it may now or hereafter  have to the venue
of any such  action  or  proceeding  in any such  court or that  such  action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

     (c) agrees that service of process in any such action or proceeding  may be
effected  by mailing a copy  thereof by  registered  or  certified  mail (or any
substantially  similar form of mail),  postage  prepaid,  to the Borrower at its
address  set  forth  in  Section  9.2 or at such  other  address  of  which  the
Administrative Agent shall have been notified pursuant thereto;

     (d) agrees that nothing  herein shall affect the right to effect service of
process in any other manner  permitted by law or shall limit the right to sue in
any other jurisdiction; and

     (e) waives,  to the maximum  extent not prohibited by law, any right it may
have to claim or recover in any legal action or  proceeding  referred to in this
Section any special, exemplary, punitive or consequential damages.

     9.13    Acknowledgements.    The   Borrower   hereby   acknowledges   that:

     (a) it has been  advised  by  counsel  in the  negotiation,  execution  and
delivery of this Agreement and the other Loan Documents;

                                       55

     (b)  neither  the  Administrative  Agent nor any Lender  has any  fiduciary
relationship  with or duty to the Borrower  arising out of or in connection with
this Agreement or any of the other Loan Documents,  and the relationship between
Administrative Agent and Lenders, on one hand, and Holdings and the Borrower, on
the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

     (c) no joint  venture is created  hereby or by the other Loan  Documents or
otherwise  exists by virtue of the  transactions  contemplated  hereby among the
Lenders or among the Borrower and the Lenders.

     9.14  Confidentiality.  Each of the  Administrative  Agent and each  Lender
agrees  on its own  behalf  and on  behalf  of each  Affiliate  thereof  to keep
confidential all non-public  information provided to it by any Group Member, the
Administrative  Agent or any  Lender  pursuant  to or in  connection  with  this
Agreement that is designated by the provider thereof as  confidential;  provided
that nothing  herein shall prevent the  Administrative  Agent or any Lender from
disclosing  any such  information  (a) to the  Administrative  Agent,  any other
Lender or any  affiliate  thereof  solely for the  purposes  of, or otherwise in
connection with, this Agreement, (b) subject to an express agreement to maintain
the  confidentiality  of such  information in compliance  with the provisions of
this  Section  (which may be a standing  agreement  between such Lender and such
Transferee),  to any actual or prospective  Transferee or any direct or indirect
counterparty  to any  Swap  Agreement  (or  any  professional  advisor  to  such
counterparty),  (c) to its employees, directors, agents, attorneys,  accountants
and other professional advisors or those of any of its affiliates,  in each case
who have a need to know such  information in accordance with customary  business
practices (it being  understood  that the Person to whom such disclosure is made
will be informed of the  confidential  nature of such information and instructed
to keep such  information  confidential),  (d) upon the request or demand of any
Governmental  Authority,  (e) in  response  to any  order of any  court or other
Governmental  Authority  or  as  may  otherwise  be  required  pursuant  to  any
Requirement  of Law, (f) if required to do so in connection  with any litigation
or similar proceeding, (g) that has been publicly disclosed, (h) to the National
Association  of  Insurance  Commissioners  or any  similar  organization  or any
nationally  recognized rating agency that requires access to information about a
Lender's investment  portfolio in connection with ratings issued with respect to
such Lender,  or (i) in connection with the exercise of any remedy  hereunder or
under any other Loan Document.  Unless specifically prohibited by applicable law
or court order,  the  Administrative  Agent and each Lender shall,  prior to any
disclosure under clause (d), (e) or (f) above to (x) any Governmental  Authority
that does not have  supervisory,  regulatory  or other  similar  authority  with
respect to the Administrative Agent or such Lender, as the case may be, and that
is  seeking  such  disclosure   solely  in  connection  with  an  investigation,
litigation   or  other   proceeding   that  does  not   otherwise   involve  the
Administrative Agent or such Lender, as the case may be, or (y) any other Person
that is not a  Governmental  Entity,  notify the Borrower of any request for the
disclosure of any such non-public information so as to provide the Borrower with
the  reasonable  opportunity  to obtain a protective  order or other  comparable
relief.

     9.15 WAIVERS OF JURY TRIAL. THE BORROWER,  THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL

                                       56

ACTION OR PROCEEDING  RELATING TO THIS  AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.

     [Rest of page left intentionally blank]








     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed and delivered by their proper and duly  authorized  officers as of
the day and year first above written.

                                THERMO ELECTRON CORPORATION


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


                                BARCLAYS BANK PLC, as Administrative Agent
                                and as a Lender


                                By:     /s/ John Giannone
                                        ----------------------------------------
                                Name:   John Giannone
                                Title:  Director


                                ABN AMRO BANK N.V., as Syndication Agent
                                and as a Lender


                                By:     /s/ Richard Scrage /s/ James S. Kreitler
                                        ----------------------------------------
                                Name:   Richard Scrage     James S. Kreitler
                                Title:  Vice President     Senior Vice President


                                FLEET NATIONAL BANK, as Co-
                                Documentation Agent and as a Lender


                                By:     /s/ Debra E. DelVecchio
                                        ----------------------------------------
                                Name:   Debra E. DelVecchio
                                Title:  Director


                                JPMORGAN CHASE BANK, as Co-
                                Documentation Agent and as a Lender


                                By:     /s/ Dawn Lee Lum
                                        ----------------------------------------
                                Name:   Dawn Lee Lum
                                Title:  Vice President







                                THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                NY BRANCH, as a Lender


                                By:     /s/ Lillian Kim
                                        --------------------------------------
                                Name:   Lillian Kim
                                Title:  Authorized Signatory








                                INTESABCI S.P.A., NEW YORK BRANCH, as a Lender



                                By:     /s/ F. Maffei
                                        --------------------------------------
                                Name:   F. Maffei
                                Title:  Vice President


                                By:     /s/ J. Dickerhof
                                        --------------------------------------
                                Name:   J. Dickerhof
                                Title:  Vice President








                                KEY CORPORATE CAPITAL INC., as a Lender



                                By:     /s/ Jeff Kalinowski
                                        --------------------------------------
                                Name:   Jeff Kalinowski
                                Title:  Vice President








                                NORDEA BANK FINLAND PLC, as a Lender



                                By:     /s/ Thomas P. Hickey
                                        --------------------------------------
                                Name:   Thomas P. Hickey
                                Title:  Vice President



                                By:     /s/ Henrik M. Steffensen
                                        --------------------------------------
                                Name:   Henrik M. Steffensen
                                Title:  First Vice President

EX-10.74

                                                                   Exhibit 10.74

MASSACHUSETTS
GENERAL HOSPITAL

The MGH Executive Registry and
Corporate Care Program
101 Merrimac Street, M01-201
Boston, Massachusetts 02114-4719
Tel: 617.726.4444, Fax: 617.726.4249


Welcome to the Executive Registry Program at the Massachusetts General Hospital!


As an Executive  Registry  member you are  entitled to a world of benefits.  The
Executive  Registry was designed to meet the needs of busy executives for rapid,
discrete  access  to the best  health  care  possible.  The  Executive  Registry
provides:

     o    Hospital  assistance  services  including  coordination of routine and
          emergency inpatient admissions,  outpatient primary or specialty care,
          second opinions and follow-up care

     o    Health care  planning  for members and their  families who relocate to
          another city or country

     o    Predeparture  services such as  coordinating services for
          immunizations

     o    Global emergency transportation coordination

Professional  staff assist with arranging  local care at the MGH during business
hours.  After  hours  health  care  assistance  is  available  around the clock,
twenty-four  hours a day, seven days a week,  through the specialized  emergency
paging system.

The primary objective of the Executive Registry program is to be the facilitator
of the  highest  quality  medical  care  for  executives  while  traveling  both
domestically and internationally,  but we are also committed to facilitating the
same excellent  care at any time of need to the executive and his/her  immediate
dependent  family  members.  While  traveling,  either for business or pleasure,
Executive Registry members can obtain care at any affiliate worldwide.  The toll
free number on the back of your Executive Registry card routes the caller to the
nearest  Executive  Registry  location,  and program staff assist with arranging
care.

The Executive  Registry  adds value to your current  health care  coverage.  The
program is not a substitute or replacement  for a health  insurance plan, but it
is a very valuable  supplementary service which will ensure ready access to some
of the finest medical care to be found both domestically and abroad.

Please call  617-726-4444  to access the Executive  Registry  services or if you
have questions regarding your benefit.

EX-21

                                                                      EXHIBIT 21

                           THERMO ELECTRON CORPORATION

                         Subsidiaries of the Registrant


As of February 28, 2003, Thermo Electron Corporation owned the following
companies:




                                                                                                                


- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                           STATE OR
                                                                                        JURISDICTION OF               PERCENT OF
                                           NAME                                         INCORPORATION                 OWNERSHIP
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo CRS Holdings Ltd.                                                                    Canada                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo CRS Ltd.                                                                        Canada                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         CRS Robotics Inc.                                                                  Michigan                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         Robocon GmbH                                                                       Austria                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         CRS Robotics France SARL                                                           France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Coleman Corporation                                                                  Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Coleman Services Incorporated                                                          Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Information Solutions Inc.                                                      Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Peter Brotherhood Holdings Ltd.                                                             England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Aircogen Ltd.                                                                          England                      80
- ------------------------------------------------------------------------------------------------------------------------------------
     Peter Brotherhood Limited                                                              England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Peter Brotherhood Pension Fund Trustees Ltd.                                       England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Electron Realty Limited                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Holdings Limited                                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Electron, S.A. de C.V.                                                               Mexico                       100
- ------------------------------------------------------------------------------------------------------------------------------------
Fi SA                                                                                       France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
Gulf Precision, Inc.                                                                        Arizona                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Hypersil-Keystone Inc.                                                               Pennsylvania                 100
- ------------------------------------------------------------------------------------------------------------------------------------
Loftus Furnace Company                                                                      Pennsylvania                 100
- ------------------------------------------------------------------------------------------------------------------------------------
NAPCO, Inc.                                                                                 Connecticut                  100
- ------------------------------------------------------------------------------------------------------------------------------------
North East Surgical Tool Corp.                                                              Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
Staten Island Cogeneration Corporation                                                      New York                     100
- ------------------------------------------------------------------------------------------------------------------------------------
TE Great Lakes Inc.                                                                         Michigan                     100
- ------------------------------------------------------------------------------------------------------------------------------------
TEC Cogeneration Inc.                                                                       Florida                      100
- ------------------------------------------------------------------------------------------------------------------------------------
South Florida Cogeneration Associates                                                       Florida                      50*
- ------------------------------------------------------------------------------------------------------------------------------------
     North County Resource Recovery  Associates                                             California                  100*
     (50% of which is owned directly by
      Thermo Securities Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Electron Export Inc.                                                                 Barbados                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Foundation, Inc.                                                                     Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Leasing Corporation                                                                  Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Capital Company LLC                                                             Delaware                     50
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Detection Inc.                                                                       Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Orion Inc.                                                                      Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
         Orion Research Limited                                                             England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Orion Puerto Rico Inc.                                                      Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         Russell pH Limited                                                                 Scotland                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Keytek LLC                                                                      Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermedics Detection de Argentina S.A.                                                 Argentina                    99
     (additionally 1% of the shares are owned
     directly by Thermo Detection Inc.)
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Detection de Mexico, S.A. C.V.                                                  Mexico                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Detection Limited                                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermedics Detection Scandinavia AS                                                    Norway                       100
- ------------------------------------------------------------------------------------------------------------------------------------


                                       1

                           THERMO ELECTRON CORPORATION

- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Allen Coding Limited                                                                 England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Allen Coding Corporation                                                        Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Electron Weighing & Inspection Limited                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Best Checkweighers Limited                                                             England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Intertest (UK) Limited                                                                 England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Goring Kerr Detection Limited                                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Goring Kerr (NZ) Limited                                                               New Zealand                  100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Sentron Canada Inc.                                                             Canada                       95
     (additionally, 5% of the shares are owned directly by Thermo Electron Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
Ramsey France S.A.R.L.                                                                      France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Allen France                                                                           France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Ramsey S.A.                                                                          Spain                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Ramsey Italia S.R.L.                                                                        Italy                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Ramsey TecnoEuropa S.r.l.                                                       Italy                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Ramsey Inc.                                                                          Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
Xuzhou Ramsey Technology Development Co., Limited                                           China                        50*
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Sentron Australia Pty. Ltd.                                                          Australia                    100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Sentron Limited                                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Hitech Electrocontrols Limited                                                         England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Hitech Licenses Limited                                                            England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Hitech Metal Detectors Ltd.                                                        England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Westerland Engineering Ltd.                                                            England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Westerland Limited                                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Sentron (South Africa) Pty. Ltd.                                                     South Africa                 100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Voltek Europe B.V.                                                                   Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
     Comtest Italia S.R.L.                                                                   Italy                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Comtest Limited                                                                        England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
UVC Realty Corp.                                                                            New York                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Administrative Services Corporation                                                  Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
KFP Operating Company, Inc.                                                                 Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
KFx Fuel Partners, L.P.                                                                     Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Electron of Maine, Inc.                                                              Maine                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Gorbell/Thermo Electron Power Company                                                  Maine                        80*
- ------------------------------------------------------------------------------------------------------------------------------------
Star/RESC LLC                                                                               Texas                        75
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Electron Foundation, Inc.                                                            Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Electron Metallurgical Services, Inc.                                                Texas                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Eberline Corporation                                                                 New Mexico                   100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Life Sciences Limited                                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Denley Instruments Limited                                                             England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Life Sciences International Limited                                                         England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Electron (Management Services) Limited                                          England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Comdata Services Limited                                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Lipshaw Limited                                                                    England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Luckham Limited                                                                    England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Phicom Limited                                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Southions Investments Limited                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Sungei Puntar Rubber Estate Limited                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Westions Limited                                                                   England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Whale Scientific Limited                                                           England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Forma Scientific Ltd.                                                              England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Life Sciences (Europe) Limited                                                         England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     E-C Apparatus Ltd.                                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Shandon (Germany) Ltd.                                                                 England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Savant Instruments Ltd.                                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------


                                       2

                           THERMO ELECTRON CORPORATION

- ------------------------------------------------------------------------------------------------------------------------------------
     Helmet Securities Limited                                                              England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         International Equipment Company Limited                                            England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Life Sciences International Kft                                                    Hungary                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Life Sciences International, Inc.                                                  Pennsylvania                 100
- ------------------------------------------------------------------------------------------------------------------------------------
              LSI (US) Inc.                                                                 Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         LSI North America Service Inc.                                                     Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         Life Sciences International Holdings BV                                            Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Labsystems OY                                                          Finland                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                  Thermo BioAnalysis S.A.                                                   Spain                        100
- ------------------------------------------------------------------------------------------------------------------------------------
                  Thermo Labsystems (Shanghai) Co. Ltd.                                     China                        90
- ------------------------------------------------------------------------------------------------------------------------------------
                  Thermo Labsystems India Pvt. Ltd.                                         India                        100
- ------------------------------------------------------------------------------------------------------------------------------------
                  Thermo Clinical Labsystems Oy                                             Finland                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                  Labsystems (Hong Kong) Limited                                            Hong Kong                    99
- ------------------------------------------------------------------------------------------------------------------------------------
                  JSC Thermo Labsystems                                                     Russia                       95
- ------------------------------------------------------------------------------------------------------------------------------------
                  Labinstruments Oy                                                         Finland                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Life Sciences International (Poland) SP z O.O                                 Poland                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Labsystems Christioan-Gassauer-Fleissner GmbH                                 Austria                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Britlowes Limited                                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Commendstar Limited                                                                    England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Consumer & Video Holdings Limited                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Video Communications Limited                                                       England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Greensecure Projects Limited                                                           England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Hybaid Limited                                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Equibio Limited                                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                  Cell One S.A.R.L.                                                         France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Labsystems Ges mbH                                                                     Austria                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Omnigene Limited                                                                       England                     58.5
- ------------------------------------------------------------------------------------------------------------------------------------
     Shenbridge Limited                                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Southern Instruments Holdings Limited                                                  England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Finishlong Ltd.                                                                    England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Gamma-Metrics Minerals Pty Ltd.                                                             Australia                    100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Gamma-Metrics Inc.                                                                   California                   100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Electron India Private Limited                                                  India                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo MF Physics Corporation                                                               Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Radiometrie Corporation                                                              Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Radiometrie U.S.A., Inc.                                                                    California                   100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Radiometrie Limited                                                                  England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
ONIX Systems Inc.                                                                           Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Process Instruments GP, LLC                                                     Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Process Instruments LP                                                          Texas                       99.9
     (an additional 0.1% of Thermo Process Instruments LP is owned by Thermo Process
     Instruments GP, LLC)
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Measuretech Canada Inc.                                                     Canada                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Onix Holdings Limited                                                           England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         CAC UK Limited                                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Measurement Limited                                                         England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Peek Measurement Limited                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Sarasota Data Products Limited                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Sarasota Instrumentation Limited                                              England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Onix Limited                                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo ONIX B.V.                                                              Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
              VG Gas Analysis Limited                                                       England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Quadropols Limited                                                            England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
VG Systems Japan K.K.                                                                       Japan                        100
- ------------------------------------------------------------------------------------------------------------------------------------


                                       3

                           THERMO ELECTRON CORPORATION

- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Projects OY                                                                          Finland                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Electron Scientific Instruments Corporation                                          Wisconsin                    100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Electron German Holdings Inc.                                                   Delaware                    35.4
     (7.2% of shares are owned directly by TDI Inc. of VA, 6.6% of shares
     are owned directly by Thermo Radiometrie Corporation, 19.3% of shares
     are owned directly by Thermo Electron Corporation, 29.3% of shares
     are owned directly by Thermo Finnigan LLC, 2.2% of shares are owned
     directly by Thermo Detection Inc.)
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Vacuum Generators Inc.                                                          Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     FI Instruments Inc.                                                                    Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Spectronic Inc.                                                                 Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         SLM International Inc.                                                             Illinois                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Elemental Inc.                                                                  Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
         A.R.L. Applied Research Laboratories S.A.                                          Switzerland                  100
- ------------------------------------------------------------------------------------------------------------------------------------
              Fisons Instruments (Proprietary) Limited                                      South Africa                 100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Electron Wissenschaftliche Gerate GesmbH                               Austria                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Baird Do Brazil Representacoes Ltda.                                               Brazil                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Beijing Baird Analytical Instrument Technology Co. Limited                         China                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Cahn Corporation                                                                Wisconsin                    100
- ------------------------------------------------------------------------------------------------------------------------------------
         Mattson Instruments Limited                                                        England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Optek Italia S.p.A.                                                         Italy                        100
- ------------------------------------------------------------------------------------------------------------------------------------
         Unicam S.A.                                                                        Belgium                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Nicolet Japan K.K.                                                                     Japan                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Optek Limited                                                                   England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo VG Systems Limited                                                          England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Norlab Instruments Limited                                                         England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Electron Spectroscopy Limited                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Elemental Limited                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Unicam Export Limited                                                         England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Nuclear Enterprises Limited                                                   England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Planweld Holding Limited                                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Hilger Analytical Limited                                                          England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Electron Limited                                                            England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Nicolet Limited                                                                 England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Nippon Jarrell-Ash Co Ltd.                                                             Japan                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Instruments (Canada) Inc.                                                       Canada                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Unicam Analytical Inc.                                                             Canada                       100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Optek Materials Analysis (S.E.A.) Pte Limited                                        Singapore                    100
- ------------------------------------------------------------------------------------------------------------------------------------
Gould Instrument Systems, Inc.                                                              Ohio                         100
- ------------------------------------------------------------------------------------------------------------------------------------
     Gould & Nicolet S.A.                                                                   France                       95
         (additionally, 5% of the shares are owned directly by
         Thermo Electron Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Kevex X-Ray Inc.                                                                     Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo NESLAB Inc.                                                                          New Hampshire                100
- ------------------------------------------------------------------------------------------------------------------------------------
Nicolet Instrument Technologies Inc.                                                        Wisconsin                    100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Noran Inc.                                                                           Wisconsin                    100
- ------------------------------------------------------------------------------------------------------------------------------------
ThermoSpectra Limited                                                                       England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Nicolet Technologies Ltd.                                                              England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Spectrace Instruments Inc.                                                                  California                   100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Electron Sweden Forvaltning AB                                                       Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics AB                                                                     Sweden                       99
- ------------------------------------------------------------------------------------------------------------------------------------
         Spectra-Physics Holdings USA, Inc.                                                 Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
              Spectra-Physics Canada Ltd.                                                   Canada                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Spectra-Physics Holdings Ltd.                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------


                                       4

                           THERMO ELECTRON CORPORATION

- ------------------------------------------------------------------------------------------------------------------------------------
              Decorex Limited                                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Spectra-Physics Holdings S.A.                                                      France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Saroph B.V.                                                                        Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
         Spectra Precision (Asia) Pte. Ltd.                                                 Singapore                    100
- ------------------------------------------------------------------------------------------------------------------------------------
         Saroph Sweden AB                                                                   Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Labsystems Sweden AB                                                   Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Finnnigan AB                                                           Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Instruments Nordic AB                                                  Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Life Sciences AB                                                       Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Radiometrie Oy                                                         Finland                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Nobel AB                                                               Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
                  Nobel Electronique S.A.R.L.                                               France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
                  Nobel Elektronikk A/S                                                     Norway                       100
- ------------------------------------------------------------------------------------------------------------------------------------
                  AB Givareteknik                                                           Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
Spectra-Physics, Inc.                                                                       Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Laser Analytical Systems GmbH                                                          Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Laser Analytical Systems, Inc.                                                     California                   100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics Semiconductor Lasers, Inc.                                             Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics Laser Data Systems, Inc.                                               Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics France S.A.                                                            France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics GmbH                                                                   Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics K.K.                                                                   Japan                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics Lasers B.V.                                                            Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics Limited                                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics Lasers Ltd.                                                            England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Finnigan LLC                                                                         Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Finnigan MAT S.R.L.                                                                    Italy                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Finnigan Ltd.                                                                   England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         ThermoQuest AB                                                                     Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermoquest Limited                                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
               Thermo Hypersil Limited                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Finnigan MAT China, Inc.                                                               California                   100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Finnigan Australia Pty. Ltd.                                                Australia                    100
- ------------------------------------------------------------------------------------------------------------------------------------
     Finnigan Mat Ltd.                                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Instruments Australia Pty. Limited                                          Australia                    100
- ------------------------------------------------------------------------------------------------------------------------------------
     Finnigan Properties, Inc.                                                              Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Electron Business Trust                                                     Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
              TMOI Inc.                                                                     Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Forma Inc.                                                                           Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo IEC Inc.                                                                        Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Savant Inc.                                                                     New York                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Masslab Limited                                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     H.D. Technologies Limited                                                              England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Life Sciences International (HK) Limited                                                    Hong Kong                    100
- ------------------------------------------------------------------------------------------------------------------------------------
TMQ SEG (Hong Kong) Limited                                                                 Hong Kong                    100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Finnigan Italia S.p.A.                                                               Italy                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Finnigan AG                                                                          Switzerland                  100
- ------------------------------------------------------------------------------------------------------------------------------------
ThermoQuest K.K.                                                                            Japan                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Fisons Instruments NV                                                                       Belgium                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Fisons Instruments K.K.                                                                     Japan                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Haake Ltd.                                                                           England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Instruments S.A.                                                                     Spain                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo BioAnalysis Corporation                                                              Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------


                                       5

                           THERMO ELECTRON CORPORATION

- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo LabSystems S.A.                                                                 Spain                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Holding European Operations Corp.                                               Delaware                     85
     (an additional 15% is owned by Thermo Electron German Holdings Inc.)
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Luxembourg Holding S.a.r.l.                                                 Luxembourg                   100
- ------------------------------------------------------------------------------------------------------------------------------------
              Grond en Watersaneringstechniek Nederland B.V.                                Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
                  Thermo Electron Holding BV                                                Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
                      Thermo Instruments NV                                                 Belgium                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                      Thermo Electron BV                                                    Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
                           Thermo Finance Company BV                                        Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
                           Nicolet Technologies BV                                          Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
                           Thermo Separation Products B.V. B.A.                             Belgium                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                           Thermo Finnigan S.A.                                             Spain                        100
- ------------------------------------------------------------------------------------------------------------------------------------
                      ThIS Gas Analysis Systems B.V.                                        Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
                           Thermo Euroglas B.V.                                             Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
                               Thermo Electron Deutschland Verwaltvngs GmbH                 Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                               Thermo Luxembourg S.a.r.l.                                   Luxembourg                   100
- ------------------------------------------------------------------------------------------------------------------------------------
                                    Thermo Electron Deutschland GmbH & Co. KG               Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        Thermo BioSciences GmbH                             Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                            Thermo Finnigan GmbH                            Germany                      90
                                            (additionally, 10% of the shares are owned
                                            directly by Thermo Electron Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
                                                 Thermo Life Sciences GmbH                  Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                                 Thermo Hypersil GmbH                       Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                                 Thermo Finnigan GmbH                       Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                            Thermo Nicolet  GmbH                            Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                            Thermo Haake GmbH                               Germany                      90
                                            (additionally, 10% of the shares are owned
                                            directly by Thermo Electron Scientific
                                            Instruments Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
                                            ESM Andersen Instruments GmbH                   Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        ITC Grundstucksverwaltungs GmbH                     Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                            ITC Grundstucksverwaltungs GmbH & Co.           Germany                      90
                                            (additionally 10% of the shares are owned by
                                            Thermo Securities Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
                                        Thermo BLH GmbH                                     Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        Thermo Shandon GmbH                                 Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        Thermo Radiometrie GmbH                             Germany                      90
                                        (additionally 10% of the shares are owned
                                        directly by Thermo Electron Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
                                            ESM Eberline Instruments GmbH                   Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        Thermo LabSystems Vertriebs GmbH                    Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        Thermo Ramsey GmbH                                  Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        Nobel Elektronik GmbH                               Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        Thermo Detection GmbH                               Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                        ThermoSpectra GmbH                                  Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                            Gould Nicolet Messtechnik GmbH                  Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                                                 Thermo NORAN GmbH                          Germany                      100
- ------------------------------------------------------------------------------------------------------------------------------------
                      ThermoSpectra  B.V.                                                   Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo TLH (U.K.) Limited                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo TLH L.P.                                                               Delaware                   99.99*
              (additionally 0.01% is owned by Thermo TLH (U.K.) Limited
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo BioStar Inc.                                                                    Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo DMA Inc.                                                                        Texas                        100
- ------------------------------------------------------------------------------------------------------------------------------------
         DMA Latinoamericana S.A. de C.V.                                                   Mexico                       50
- ------------------------------------------------------------------------------------------------------------------------------------


                                       6

                           THERMO ELECTRON CORPORATION

- ------------------------------------------------------------------------------------------------------------------------------------
     Labsystems (SEA) Pte. Ltd.                                                             Singapore                    100
- ------------------------------------------------------------------------------------------------------------------------------------
     Fastighets AB Skrubba                                                                  Sweden                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Dynex Technologies spol. s.r.o.                                                        Czech Republic               100
- ------------------------------------------------------------------------------------------------------------------------------------
     TDI Inc. of VA                                                                         Virginia                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Labsystems, Inc.                                                                       Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Projects Limited (BVI)                                                          England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Bioanalysis Japan K.K.                                                          Japan                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Shandon Ltd.                                                                    England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Anglia Scientific Instruments Limited                                              England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Shandon Southern Instruments Limited                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Shandon Inc.                                                                    Pennsylvania                 100
- ------------------------------------------------------------------------------------------------------------------------------------
         E-C Apparatus Corporation                                                          Florida                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Whale Scientific Corporation                                                       Colorado                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         ALKO Diagnostic Corporation                                                        Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo BioAnalysis (Guernsey) Ltd.                                                     Channel Islands              100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo BioAnalysis Limited                                                             England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Fast U.K. Limited                                                           England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Projects Limited                                                                England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo LabSystems Limited                                                          England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Toolquip Group Limited                                                             England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Toolquip International Limited                                                     England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
            Medquip International Limited                                                   England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Labquip International Limited                                                      England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Simple Paper Limited                                                               England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Shockblock Limited                                                                 England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Electron Holding France SA. (Additionally owned by 47.52% by Thermo Electron    France                      22.59
     Corporation and 29.9% owned by Thermo Electron Scientific Instruments Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo VG Scientific                                                               France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Finnigan France                                                             France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Finnigan Automass S.A.                                                        France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Thermo Hypersil S.A.                                                          France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Konelab SA                                                                         France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Shandon France S.A.                                                                France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Radiometrie                                                                 France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Instruments SAS                                                             France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
              Rutter Instrumentation S.A.R.L.                                               France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Optek EURL                                                                  France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo LabSystems S.A.R.L.                                                         France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Rheo S.A.                                                                          France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
         Labsystems S.A.                                                                    France                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo LabSystems (Australia) Pty Limited                                              Australia                    100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo LabSystems Inc.                                                                 Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Trace Ltd.                                                                      Australia                    100
- ------------------------------------------------------------------------------------------------------------------------------------
         Trace BioSciences Pty. Ltd.                                                        Australia                    100
- ------------------------------------------------------------------------------------------------------------------------------------
         Thermo Trace BioSciences NZ Limited                                                New Zealand                  99
- ------------------------------------------------------------------------------------------------------------------------------------
         Trace America, Inc.                                                                Florida                      100
- ------------------------------------------------------------------------------------------------------------------------------------
         Herbos Dijaganosticka                                                              Croatia                      50
- ------------------------------------------------------------------------------------------------------------------------------------
         Shanghai Long March Chiron Trace Medical Science Co. Ltd.                          China                        22
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Environmental Instruments Inc.                                                       California                   100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Gastech Ltd.                                                                    Canada                       100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Andersen Inc.                                                                   Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------

                                       7

                           THERMO ELECTRON CORPORATION

- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Instruments do Brasil Ltda.                                                          Brazil                       100
(1% of which shares are owned directly
by Thermo Elemental Inc.)
- ------------------------------------------------------------------------------------------------------------------------------------
Van Hengel Holding B.V.                                                                     Netherlands                  100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Optek S.A.                                                                      Spain                        100
- ------------------------------------------------------------------------------------------------------------------------------------
Spectra-Physics Franklin Inc.                                                               Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics Syracuse Inc.                                                          New York                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Hilger Crystals Limited                                                         England                      100
- ------------------------------------------------------------------------------------------------------------------------------------
     Spectra-Physics Stratford Inc.                                                         Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Power Corporation                                                                    Massachusetts                100
- ------------------------------------------------------------------------------------------------------------------------------------
     ACI Holdings Inc.                                                                      New York                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     T-Lyte Corporation                                                                     Delaware                     98
- ------------------------------------------------------------------------------------------------------------------------------------
TTT Metals of Minnesota, Inc.                                                               Minnesota                    100
- ------------------------------------------------------------------------------------------------------------------------------------
     TTT Metals of California, Inc.                                                         California                   100
- ------------------------------------------------------------------------------------------------------------------------------------
TTT Metals of Wisconsin Inc.                                                                Wisconsin                    100
- ------------------------------------------------------------------------------------------------------------------------------------
TMA/Hanford, Inc.                                                                           Washington                   100
- ------------------------------------------------------------------------------------------------------------------------------------
RGPC Inc.                                                                                   Michigan                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Lancaster Laboratories LLC                                                                  Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo EuroTech (Delaware) Inc.                                                             Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo EuroTech Ireland Ltd.                                                                Ireland                      100
- ------------------------------------------------------------------------------------------------------------------------------------
ThermoRetec Corporation                                                                     Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     GeoWest Golden Inc.                                                                    Colorado                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         GeoWest TriTechnics of Ohio, LLC                                                   Colorado                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     RETEC Thermal, Inc.                                                                    Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
         TRI Oak Ridge LLC                                                                  Delaware                     50
         (additionally, 50% of the shares are owned
         directly by Coleman Services Incorporated)
- ------------------------------------------------------------------------------------------------------------------------------------
         TRUtech L.L.C.                                                                     Delaware                    47.5*
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Securities Corporation                                                               Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Thermo Eberline LLC                                                                    Delaware                     51
     (49% owned by Thermo BioAnalysis Corporation)
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Technology Ventures Inc.                                                             Idaho                        100
- ------------------------------------------------------------------------------------------------------------------------------------
     Plasma Quench Investment Limited Partnership                                           Delaware                     60*
- ------------------------------------------------------------------------------------------------------------------------------------
ThermoLase LLC                                                                              Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     ThermoLase Japan L.L.C.                                                                Wyoming                       50*
- ------------------------------------------------------------------------------------------------------------------------------------
Trex Medical Corporation                                                                    Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
     Trex Medical Systems Corporation                                                       Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------
Thermo Corporation                                                                          Delaware                     100
- ------------------------------------------------------------------------------------------------------------------------------------

 * Joint Venture/Partnership


                                       8

EX-23.1

                                                                    Exhibit 23.1

                       Consent of Independent Accountants


We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (Nos. 33-00182, 33-8993, 33-8973, 33-16460, 33-16466,
33-25052, 33-37865, 33-37867, 33-36223, 33-52826, 33-52804, 33-52806, 33-52800,
33-37868, 33-51187, 33-51189, 33-54347, 33-54453, 33-65237, 33-61561, 33-58487,
333-19535, 333-14265, 333-90761, 333-90823, 333-94627, 333-48432, 333-46408,
333-43702, 333-43698, 333-40578, 333-40576, 333-33070, 333-33062, 333-33068,
333-33064, 333-33058, 333-33066, 333-33060, 333-33074, 333-33072, 333-62004,
333-76670, 333-83470), and Forms S-3 (Nos. 333-01277, 333-01893,
333-34909-01, 333-62957, 333-32035-01, 333-60024) of Thermo Electron Corporation
of our report dated February 4, 2003, except as to the information in Note 19,
for which the date is February 28, 2003, relating to the financial statements,
which appears in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report dated February 4, 2003 relating to the
financial statement schedule, which appears in this Form 10-K.


PricewaterhouseCoopers LLP


Boston, Massachusetts
March 6, 2003

EX-99.1

                                                                    Exhibit 99.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

                             AS ADOPTED PURSUANT TO

                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


       In connection with the Annual Report on Form 10-K of Thermo Electron
Corporation (the "Company") for the period ended December 28, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, Marijn E. Dekkers, President and Chief Executive Officer of the
Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

       (1) The Report fully complies with the requirements of Section 13(a) or
           15(d) of the Securities Exchange Act of 1934; and

       (2) The information contained in the Report fairly presents, in all
           material respects, the financial condition and results of operations
           of the Company.



                                           /s/ Marijn E. Dekkers
                                           -------------------------------------
Dated:  March 7, 2003                      Marijn E. Dekkers
                                           President and Chief Executive Officer

EX-99.2

                                                                    Exhibit 99.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

                             AS ADOPTED PURSUANT TO

                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


       In connection with the Annual Report on Form 10-K of Thermo Electron
Corporation (the "Company") for the period ended December 28, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, Theo Melas-Kyriazi, Chief Financial Officer of the Company, hereby
certifies, pursuant to 18 U.S.C. Section 1350, that:

       (1) The Report fully complies with the requirements of Section 13(a) or
           15(d) of the Securities Exchange Act of 1934; and

       (2) The information contained in the Report fairly presents, in all
           material respects, the financial condition and results of operations
           of the Company.



                                                         /s/ Theo Melas-Kyriazi
                                                         -----------------------
Dated:  March 7, 2003                                    Theo Melas-Kyriazi
                                                         Chief Financial Officer